ESPRIT HOLDINGS LIMITED Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to i ts accuracy or completeness and expressly disclaim any l iability whatsoever for any loss howsoever arising f rom or in reliance upon the whole or any part of the contents of this announcement.
(Incorporated in Bermuda with limited liability)
(Stock Code: 00330)The board of directors (the 'Board') of Esprit Holdings Limited (the 'Company') presents the unaudited FY15/16 first quarter update of the Company and its subsidiaries (the 'Group') for the three months ended 30 September 2015 (' 1Q FY 15/ 16 '). This announcement is made pursuant to Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and Rule 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.
Product divisions | HK$ million | % to Group Turnover | HK$ million | % to Group Turnover | HK$ | Local currency |
w ome n | 2,118 | 45.4% | 2,361 | 43.1% | -10.3% | 5.0% |
women casual | 1,441 | 30.9% | 1,576 | 28.8% | -8.6% | 6.9% |
women collection | 569 | 12.2% | 643 | 11.7% | -11.5% | 3.7% |
trend # | 108 | 2.3% | 142 | 2.6% | -23.9% | -10.3% |
me n | 618 | 13.3% | 763 | 13.9% | -19.0% | -6.1% |
men casual | 507 | 10.9% | 609 | 11.1% | -16.8% | -3.8% |
men collection | 111 | 2.4% | 154 | 2.8% | -27.4% | -15.4% |
othe rs * | 829 | 17.7% | 1,052 | 19.2% | -21.2% | -7.6% |
Esprit Total | 3,565 | 76.4% | 4,176 | 76.2% | -14.6% | -0.2% |
e dc | 1,099 | 23.6% | 1,302 | 23.8% | -15.6% | -1.3% |
Group Total | 4,664 | 100.0% | 5,478 | 100.0% | -14.9% | -0.4% |
# Trend Division was set up as a laboratory to test our fast-to-market product development processes. The learnings have been transferred to other product divisions under the Women segment, hence it is more meaningful to interpret the combined performance of these product divisions
* Others mainly include shoes, accessories, bodywear, kids, licensing income and licensed products such as timewear, eyewear, jewelry, bed & bath, houseware, etc.
For the 3 months ended 30 September
2015 2014 Turnover Change in % Net change
Germany * | 2,229 | 47.8% | 2,639 | 48.2% | -15.5% | 0.5% | -5.9% |
Rest of Europe * | 1,776 | 38.1% | 2,100 | 38.3% | -15.4% | -0.4% |
Asia Pacific | 629 | 13.5% | 706 | 12.9% | -10.8% | -3.6% |
% to Group
% to Group
Local
in net sales
HK$ million Retail # 1,342 | Turnover 28.7% | HK$ million 1,441 | Turnover 26.3% | HK$ -6.9% | currency 10.7% | area ^ -2.0% |
Wholesale * 884 | 19.0% | 1,194 | 21.8% | -26.0% | -11.8% | -8.1% |
Licensing and others 3 | 0.1% | 4 | 0.1% | -24.2% | -9.6% | n.a. |
-5.9% | ||||||
Retail # 942 | 20.2% | 971 | 17.7% | -3.0% | 13.6% | 0.9% |
Wholesale * 832 | 17.8% | 1,126 | 20.6% | -26.1% | -12.4% | -9.5% |
Licensing and others 2 | 0.1% | 3 | 0.0% | -16.1% | -0.2% | n.a. |
-14.5% | ||||||
Retail # 567 | 12.2% | 623 | 11.4% | -9.0% | -1.7% | -2.7% |
Wholesale 62 | 1.3% | 83 | 1.5% | -24.8% | -18.1% | -36.8% |
-7.6% | ||||||
Retail # 2,851 | 61.1% | 3,035 | 55.4% | -6.1% | 9.1% | -1.3% |
Wholesale 1,778 | 38.1% | 2,403 | 43.9% | -26.0% | -12.3% | -11.9% |
Licensing and others 35 | 0.8% | 40 | 0.7% | -13.1% | -10.6% | n.a. |
^ Net change since 1 October 2014 |
North America ** | 30 0.6% | 33 0.6% | -11.5% -11.5% | n.a. |
Total | 4,664 100.0% | 5,478 100.0% | -14.9% -0.4% |
# Retail sales include sales from e-shops in countries where available
* Wholesale sales from other European countries mainly Romania, Bosnia-Herzegovina and Bulgaria have been re-grouped from Rest of Europe to Germany. Comparative figures have been restated accordingly
** Turnover from North America represents third party licensing income that mainly comes from Asia Pacific and Rest of Europe
Not applicable
Retail distribution channel by region (directly managed retail stores)As at 30 September 2015
No. of
Net opened
Net sales
Net change in
No. of comp-
Comp-store
stores stores ^
area (m2) net sales area ^
stores
sales growth
Germany *
148
(6)
121,441
-2.0%
105
11.3%
Rest of Europe
193
8
101,874
0.9%
116
13.3%
Asia Pacific *
527
(18)
96,400
-2.7%
275
2.4%
Total
868
(16)
319,715
-1.3%
496
10.8%
^ Net change since 1 October 2014
* All e-shops within Europe (i.e. Germany and Rest of Europe), the e-shop in China and the e-shop in Australia are shown as one comparable store in Germany and two comparable stores in Asia Pacific respectively
Wholesale distribution channel by region (controlled space only) As at 30 September 2015No. of stores
Net change in no. of stores ^
Net sales area (m2)
Net change in net sales area ^
Ge rma ny *
4,658
(171)
206,945
-8.1%
Franchise stores *
271
(42)
69,083
-14.7%
Shop-in-stores *
2,956
(74)
110,782
-5.0%
Identity corners *
1,431
(55)
27,080
-1.5%
Re st of Europe *
2,736
(32)
Franchise stores * Shop-in-stores * Identity corners *
Asia Pa cific
Franchise stores
Tota l
Franchise stores Shop-in-stores Identity corners
172,045
-9.5%
538
(48)
112,019
-13.8%
1,033
9
32,251
0.9%
1,165
7
27,775
-1.3%
281
(128)
33,346 -36.8%
281
(128)
33,346
-36.8%
7,675
(331)
412,336 -11.9%
1,090
(218)
214,448
-18.7%
3,989
(65)
143,033
-3.7%
2,596
(48)
54,855
-1.4%
^ Net change since 1 October 2014
* Controlled wholesale point-of-sales and space in other European countries, mainly Bosnia-Herzegovina and Bulgaria have been re-grouped from Rest of Europe to Germany. Comparative figures have been restated accordingly
Highlights for 1 Q FY15 /16During 1Q FY15/16, Group turnover was almost flat year-on-year with a marginal decline of -0.4% in local currency, which compares favorably against the corresponding reduction in total controlled space of -7.6%. We are especially encouraged by the noticeable gain in sales per square meter performance of our retail space, which reflects significantly improved product performance, as well as improved marketing and channel operations.
Our retail operations are off to a good start as the positive momentum of top line improvement observed in the latter part of the last financial year has continued into 1Q FY15/16. Our well received Autumn/Winter collections, together with our
#ImPerfect brand marketing campaign and Omnichannel initiatives, are the key drivers behind the increase in retail sales, both online and offline, for 1Q FY15/16. More specifically, we are seeing the following positive developments:
Retail turnover grew year-on-year by +9.1% in local currency in 1Q FY15/16, notwithstanding a reduction in retail net sales area of -1.3%, reversing the turnover decline of -10.1% in local currency of FY14/15.
Achieved a double-digit gain in productivity (sales per square meter) as evidenced by the year-on-year increase in retail comparable store sales of
+10.8% in local currency.
The positive retail sales development in 1Q FY15/16 was mostly driven by the performance of Europe, particularly the Women divisions.
Retail sales in Germany and Rest of Europe, both reported double-digit growth in turnover in 1Q FY15/16 of +10.7% and +13.6% in local currency respectively.
In Germany (the Group's largest market, accounting for 47.8% of Group turnover), our comparable full price brick and mortar stores* outperformed the market by +10.1% pts, +12.7% pts and +11.9% pts in July, August and September 2015 respectively, based on the comparable market data published by TextilWirtschaft.
*This group of stores is selected because i t is the type of stores used by Textil Wirtschaft to show the German retail market development.
Retail turnover of Esprit Women divisions (our core business), continued to see positive year-on-year performance and recorded a growth of
+14.1% in local currency in 1Q FY15/16.
Overall, we are pleased with this strong retail sales development as retail stores are the best indication of product performance with respect to end consumers.
As for our wholesale operations, turnover declined year-on-year by -12.3% in local currency, which was in line with the corresponding decline in controlled wholesale space of -11.9%. It is worth noting that this reduction in controlled wholesale space was largely a carried forward effect from the last financial year where our controlled wholesale space declined by -14.2%. While we continue to experience a reduction in controlled wholesale space in 1Q FY15/16 due to ongoing market pressure on the channel, the rate of the decline has slowed down to a smaller degree of -1.6% for the three months of 1Q FY15/16.
While the decline in wholesale turnover unfortunately offsets the growth of our retail, it is important to clarify that it is the result of wholesale orders placed some
6 months ago and it does not reflect the actual sales to end consumers through this channel.
From a regional perspective, the overall sales performance in Europe (85.9% of the Group turnover) recovered to a slight increase of +0.1% in local currency in 1Q FY15/16 (Germany: +0.5%; Rest of Europe: -0.4%). This compares favorably against the corresponding -5.9% reduction in total controlled space (Germany:
-5.9%; Rest of Europe: -5.9%). In both markets, we see the combination of very positive retail turnover growth but negative wholesale turnover development. Asia Pacific reported a -3.6% year-on-year decline in turnover in local currency, this
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