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 its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
ESPRIT HOLDINGS LIMITED(Incorporated in Bermuda with limited liability)
Stock Code: 00330 UNAUDITED FY16/17 FIRST QUARTER UPDATE FOR THE THREE MONTHS ENDED 30 SEPTEMBER 2016 FIRST QUARTER UPDATEThe board of directors (the "Board") of Esprit Holdings Limited (the " Company") presents the unaudited FY16/17 first quarter update of the Company and its subsidiaries (the "Group") for the three months ended 30 September 2016. 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.
Revenue by product divisionFor the 3 months ended 30 September
2016 | 2015 | Change in % | |||
Product division | HK$ million | % to Group Revenue | HK$ million | % to Group Revenue | Local HK$ currency |
Esprit Women | 1,961 | 47.7% | 2,118 | 45.4% | -7.4% -7.4% |
women casual | 1,369 | 33.3% | 1,441 | 30.9% | -4.9% -5.0% |
women collection | 507 | 12.3% | 569 | 12.2% | -10.9% -10.9% |
trend # | 85 | 2.1% | 108 | 2.3% | -21.6% -21.9% |
Esprit Men | 493 | 12.0% | 618 | 13.3% | -20.4% -20.1% |
men casual | 399 | 9.7% | 507 | 10.9% | -21.4% -21.1% |
men collection | 94 | 2.3% | 111 | 2.4% | -15.9% -15.5% |
Lifestyle and others * | 703 17.1% | 878 18.8% | -19.9% -20.1% |
edc ^ | 955 23.2% | 1,050 22.5% | -9.0% -9.0% |
Group Total 4,112 100.0% 4,664 100.0% -11.8% -11.8%
# The Trend Division was set up as a laboratory to test our fast - to- market product development processes. The lessons we have learned have been applied to other product divisions under the Women segment, hence i t is more meaningful to interpret the combined performance of these product divisions
* Lifestyle and others mainly include bodywear, accessories, shoes, kids, licensing income & l i censed products such as t imewear, eyewear, jewelry, bed & bath, houseware, etc.
^ Bodywear, accessories and shoes under edc brand are grouped together with those under Esprit brand in Lifestyle and others for the three months ended 30 Se ptember 2016 while they were grouped under edc for the three months ended 30 September 2015 . Comparative f igure of edc has been restated accordingly
Revenue by region and by distribution channelFor the 3 months ended 30 September
2016 2015 Revenue Change in %
% to Group
% to Group
Local
Net change in
Germany | 2,050 | 49.9% | 2,229 | 47.8% | -8.1% | -8.4% | -9.9% |
Rest of Europe | 1,589 | 38.6% | 1,806 | 38.7% | -12.0% | -11.9% |
HK$ million Revenue HK$ million Revenue HK$ currency
net sales area ^
Retail (excl. e-shop) | 675 | 16.4% | 737 | 15.8% | -8.5% | -8.8% | -2.2% |
e-shop | 547 | 13.3% | 605 | 12.9% | -9.6% | -9.9% | n.a. |
Wholesale | 821 | 20.0% | 884 | 19.0% | -7.1% | -7.4% | -14.4% |
Licensing | 7 | 0.2% | 3 | 0.1% | 122.0% | 121.3% | n.a. |
-15.6% | |||||||
Retail (excl. e-shop) | 506 | 12.3% | 591 | 12.6% | -14.3% | -14.1% | -17.1% |
e-shop | 332 | 8.1% | 351 | 7.6% | -5.3% | -5.6% | n.a. |
Wholesale | 720 | 17.5% | 832 | 17.8% | -13.5% | -13.4% | -14.7% |
Licensing and others * | 31 | 0.7% | 32 | 0.7% | -3.6% | -3.6% | n.a. |
-24.0% | |||||||
Retail (excl. e-shop) | 404 | 9.8% | 543 | 11.7% | -25.6% | -25.0% | -18.0% |
e-shop | 33 | 0.8% | 24 | 0.5% | 40.7% | 45.6% | n.a. |
Wholesale | 36 | 0.9% | 62 | 1.3% | -42.5% | -41.0% | -41.5% |
Retail (excl. e-shop) | 1,585 | 38.5% | 1,871 | 40.1% | -15.3% | -15.2% | -11.7% |
e-shop | 912 | 22.2% | 980 | 21.0% | -6.9% | -7.0% | n.a. |
Wholesale | 1,577 | 38.4% | 1,778 | 38.1% | -11.3% | -11.4% | -16.7% |
Licensing and others | 38 | 0.9% | 35 | 0.8% | 7.5% | 7.4% | n.a. |
Asia Pacific | 473 | 11.5% | 629 | 13.5% | -24.8% | -23.9% |
Total | 4,112 | 100.0% | 4,664 | 100.0% | -11.8% | -11.8% | -14.5% |
^ Net change since 1 October 2015
* For the three months ended 30 September 2016, revenue from North America was re-grouped under Rest of Europe while it was disclosed separately for the three months ended 30 September 2015. Comparative figures have been restated accordingly
n.a. Not applicable
Retail (excl. e-shop) distribution channel by region (directly managed retail stores)As at 30 September 2016
No. of
Net opened
Net sales
Net change in
No. of
Comp-store
stores stores ^
area (m2) net sales area ^
comp-store
sales growth
Germany | 147 | (1) | 118,778 | -2.2% | 128 | -8.6% |
Rest of Europe | 139 | (54) | 84,467 | -17.1% | 121 | -1.9% |
Asia Pacific | 419 | (108) | 79,087 | -18.0% | 253 | -10.1% |
Total | 705 | (163) | 282,332 | -11.7% | 502 | -6.6% |
^ Net change since 1 October 2015
Wholesale distribution channel by region (controlled space only)
As a t 30 Se pte mbe r 2016
Net change in
No. of stores no. of stores ^
Net sales area (m2)
Net change in net sales area ^
Ge rma ny | 3,766 | (892) | 177,135 | -14.4% |
Franchise stores | 256 | (15) | 60,434 | -12.5% |
Shop-in-stores | 2,367 | (589) | 94,243 | -14.9% |
Identity corners | 1,143 | (288) | 22,458 | -17.1% |
Re st of Europe | 2,298 | (438) | ||
Franchise stores Shop-in-stores Identity corners | ||||
Asia Pa cific | ||||
Franchise stores | ||||
Tota l | ||||
Franchise stores Shop-in-stores Identity corners |
146,791 | -14.7% | ||
472 | (66) | 96,216 | -14.1% |
871 | (162) | 27,308 | -15.3% |
955 | (210) | 23,267 | -16.2% |
172 | (109) | 19,522 -41.5% | |
172 | (109) | 19,522 | -41.5% |
6,236 | (1,439) | 343,448 -16.7% | |
900 | (190) | 176,172 | -17.8% |
3,238 | (751) | 121,551 | -15.0% |
2,098 | (498) | 45,725 | -16.6% |
^ Net change since 1 October 2015
Highlights for the three months ended 30 September 2016For the first quarter ended 30 September 2016 ("1Q FY16/17" or "First Quarter"), Group revenue recorded a decline of -11.8% in local currency ("LCY") as compared to the same period last year ("yoy"), less than the corresponding reduction in total controlled space of -14.5% yoy. Nonetheless, the results of the Group in the First Quarter remained in line with our expectations due to the successful reduction of operating costs.
The development of Group sales in 1Q FY16/17 was mainly impacted by the following factors:
-
Reduction in controlled space
Total controlled space (retail and wholesale combined) declined by -14.5% yoy. The Group is actively reducing its retail space and the decision to accelerate the closure of loss making stores, as part of our strategic measures, is proving fundamental to improve the results of the Group. In this respect, during the First Quarter, 9,240 sqm of retail net sales area were closed (mainly concession counters in China), further reducing the Group's retail net sales area to 282,332 sqm as at 30 September 2016, representing a yoy reduction of -11.7%.
As for wholesale, due to structural pressure in the channel, wholesale controlled space was further reduced by 13,304 sqm in the First Quarter to 343,448 sqm as at 30 September 2016, representing a yoy reduction of
-16.7%. Notwithstanding this space reduction, the decline in wholesale revenue was -11.4% yoy in LCY, reflecting an improvement in space sales productivity.
-
Unseasonably warm weather in Europe
In 1Q FY16/17, the Group had a positive start as sales productivity continued to improve for the month of July and the beginning of August; however, this turned negative in the second half of the First Quarter, in line with general market development. Since mid-August 2016, temperatures in Europe were much above levels for the same period of the previous year and this unseasonably warm weather significantly impacted store traffic and initial sales of the autumn collections in our retail business, both offline and online.
The adverse impact was especially profound in Germany, our largest market, as reflected by the negative weekly sales performance of the German apparel market published by TextilWirtschaft through the diagram below.
Source: TextilWirtschaft, TW-TESTCLUB (26 September 2016 by Matthias Erlinger)
For the Rest of Europe, the unusually high temperatures also had a negative impact on retail performance in the region, fortunately to a lesser extent.
- Asia Pacific
Sales decline was driven by lower consumer traffic in the region as well as by our strategic decision to restructure our retail footprint and reduce promotional activity in Asia Pacific. As expected, these measures put short term pressure on revenue, but they are crucial for Esprit to regain profitability in the mid-term.
Esprit Holdings Limited published this content on 28 October 2016 and is solely responsible for the information contained herein.
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