After another profit warning, the Esprit share price tanked to just US 25 cents yesterday.
The ever-shrinking, one-time fashion giant has delivered more bad news to beleaguered shareholders with an “update on profit warning” foretelling even greater losses this year.
In June, Esprit said it expected a loss of HK$2.2 billion (US$280 million) based on write-downs, market exit costs – and a continuation of falling sales as customers turned their back on its overpriced product and off-point designs.
Now the company says a preliminary review of accounts shows a loss before interest and tax of about HK$2.25 billion – loosely in line with its June projection – and a further HK$328 million write-down relating to taxation in Germany as a result of continually declining sales. That takes the projected loss out to $2.55 billion, (US$324.9 million).
The news further battered the ailing retailer’s share price in Hong Kong trading this morning. It fell to just $1.99, a far cry from 52-week peak of $4.93, let alone the $15.86 of five years ago. The company’s market capitalisation now is just $3.9 billion (US$496.9 million).
Final audited results for this year will be released next month.
In June, Esprit said just over half of its projected loss results from non-cash items and one-off costs due to store closures, including the axing of its Australia-New Zealand business. It expected to post an operating loss as high as $950 million due to plummeting sales, commenting that a “decline of customer traffic” to its brick-and-mortar stores was higher than it expected.