Esprit, the Hong Kong-listed fashion company, has announced it expects another significant annual loss, citing the insolvency of its European and US subsidiaries and a challenging operating environment, according to reports.
The company projects an unaudited net loss of US $ 150 million for the year ending December 31st, compared to a US $ 298 million loss in the previous year. Esprit also anticipates a 73 per cent decline in revenue and a 76 per cent decrease in gross profit for the year.
Management attributed these results to the insolvency proceedings of its European and US subsidiaries, which led to their deconsolidation. This was additionally impacted by excess logistics capacity and the expenses related to inflation, elevated interest rates, and energy prices, as well as legacy costs like high rents, and labour costs.
The company noted that ongoing restructuring efforts helped mitigate the net loss, although this was partially offset by impairment losses and inventory provisions.
Esprit’s board stated that the company is now better positioned to pursue an asset-light, licensing-focused business model that aims to sustainably maximize the value of the Esprit global brand.
The company is set to release its audited annual results in late March.
