HONG KONG–Clothing retailer Esprit said it recorded a half year profit of 61 million Hong Kong dollars or about US$7.9 million on Wednesday, helped by zealous costcutting.
The company said it was working on its “progressive rejuvenation of the Esprit brand image” and was accelerating its turnaround with an “ambitious reduction of operating expenses.”
The mid-priced brand finally turned a corner last fall posting its first full year net profit of $2.71 million. Still, there’s significant work cut out for ceo Jose Manuel Martinez and his team as they attempt to shift the business to a verticalized model and repair damage done to the brand over the years.
The company said it cut back on promotional activities, price markdowns and discounts given to wholesale partners in the period, as well as reducing its retail square footage. The measures put a pressure on the top line leading to a 9.9 percent year on year decrease in local currency terms–revenue was for the six months ended December was 8.32 billion Hong Kong dollars, about $1.07 billion–as its controlled retail space shrunk by 14.3 percent. Taking into account the six months prior, the company has lost 16.8 percent of its controlled retail space in a year.
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However, the company was able to increase gross profit margin by 2 percentage points, it said and operating expenses were reduced by 11.2 percent year on year.
Germany remained its biggest market followed by the rest of Europe, its ecommerce business then Asia Pacific.