The Group recorded a gross profit of HK$15,206 million (2011: HK$18,198 million) reflecting a gross profit margin of 50.4% (2011: 53.9%). A combination of higher input costs, increase in discounts and higher returns associated with the wholesale support initiatives, resulted in the decline in the gross profit margin. The Group deliberately decided to maintain its price points in order to preserve its price-value perception. The year-on-year decrease of the Group’s gross profit margin was narrowed to 2.1% points in the second half of the financial year.
The Group continued to maintain a strict focus on cost control. Despite Transformation Plan related expenses, operating expenses, excluding the effects of store closures and the divestment of North American operations, were down by 2.3%.
The Group recorded a 69.2% rise in operating profit (“EBIT”) to HK$1,171 million (2011: HK$692 million), reflecting an EBIT margin of 3.9% (2011: 2.0%).
The Group’s retail EBIT margin improved to 6.5% (2011: -5.4%), while the wholesale EBIT margin decreased to 17.7% (2011: 22.9%) as a result of the initiatives and support measures under the Transformation Plan.
The Group recorded an increase in net profit, to HK$873 million (2011: HK$79 million) and a net profit margin of 2.9%, up 2.7% points from 0.2% in FY10/11.
Commenting on the results, Mr. Thomas Tang, Esprit’s Group Chief Financial Officer, said, “As a result of the first year of the Transformation Plan, our operating profit in FY11/12 has grown despite the significant spending as part of the Transformation Plan and the challenging operating environment. Our collection is being invigorated and we are delivering an exciting new shopping experience in our refurbished stores. Together with the rest of the executive management team, we have laid the foundation for future growth and to enhance shareholders’ value.”
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