Luxury brand Espirit FY'13 profit down 14.1%

As expressed in our Interim Report for the six months ended 31 December 2012, the combination of external and internal challenges has had considerable impact on the Group’s performance this year. For the financial year ended 30 June 2013, Group turnover amounted to HK$25,902 million (2012: HK$30,165 million), representing a -14.1% decline from the same period last year; which was attributable to:

i) Strategic decision to divest North American operations and the closure of certain loss-making stores as announced in prior financial years
ii) Decline in wholesale and retail turnover due to weak performance in most markets
iii) Negative impact of foreign exchange effect excluding the impact from currency exchange rates, the Divestment of NA and the Store Closures, turnover from the core businesses of the Group declined by -7.7% year-on year.

This percentage decline in turnover was -6.4% in the second half of the financial year versus the -8.8% decline in the first half of the financial year.

The Group markets its products under two brands, namely the Esprit brand and the edc brand. In FY12/13, turnover from Esprit and edc branded products represented 76.0% (2012: 75.1%) and 24.0% (2012: 24.9%) of Group turnover respectively.

Turnover from Esprit branded products reported a -10.5% year-on-year decline in local currency. The results among the twelve product divisions of the Esprit branded portfolio were mixed. In general, we observed a more favorable development of the Collection divisions (more dressed up than the Casual lines). In fact, on a positive note, Women Collection, the third largest product division under the Esprit brand, contributed 11.1% (2012: 9.5%) of Group turnover and recorded a year-on-year turnover growth of +3.3% in local currency.

Also worth mentioning is the introduction of our Denim division as an opportunity to grow in the under-penetrated denim segment. Since the delivery of its first collection during the First Half, the reporting of Denim products sales was carved out from Women Casual, Men Casual, Women Collection and Men Collection.

The Trend division was also launched during the financial year with its first collection delivered to selected retail stores in Europe in July 2012. These two new divisions represented 2.5% and 0.9% of Group turnover in the current financial year respectively.

Due to the carving out of Denim’s turnover from existing divisions (Women Casual, Men Casual, Women Collection and Men Collection), and the effect of the Trend division against Women Casual and Women Collection, it is more meaningful to interpret their performances together with Denim and Trend as a whole. In FY12/13, the total turnover from Women Casual, Men Casual, Women Collection, Men Collection, Trend and Denim amounted to HK$14,433 million as compared to HK$16,539 million in FY11/12, representing a year-on-year decline of -10.3% in local currency.