Esprit Holdings Ltd. : Esprit's New Chairman Confident in Company's Outlook; Says Finances Healthy
06/14/2012| 03:01am US/Eastern
-- Esprit's new chairman says he is confident in the retailer's outlook and that finances are healthy
-- Esprit shares slide for a second day following management departures
-- Chairman says priority is to seek a new CEO to replace Ronald van der Vis, who resigned late Tuesday
(Adds exclusive comments from new Esprit chairman after resignation of company's CEO and former chairman)
By Fiona Law and Chester Yung
HONG KONG--Esprit Holdings' (0330.HK) new Chairman Raymond Or Thursday sought to assuage investor worries about the company's future following the resignations of two top executives, saying that he is confident in the fashion retailer's outlook and that finances look healthy.
Esprit shares plummeted for a second straight day on investor concerns about management stability, after the company chairman quit on Wednesday and its chief executive the day before.
At 0546 GMT Thursday, Esprit shares slid 11.6% to 9.32 Hong Kong dollars, off an intraday low of HK$9.03, the lowest level since mid-November. The losses add to Wednesday's 22% plunge.
The priority for Esprit now is to seek a replacement for Chief Executive Ronald van der Vis as soon as possible, said Mr. Or, a former senior executive at HSBC Holdings PLC, who has been an independent non-executive director at Esprit since 1996.
"The message we got is that Ronald's departure was because of family (related) reasons," Mr. Or told Dow Jones Newswires. He also noted that the blue-chip company's finances are healthy, though its operations in Europe remain under pressure due to the eurozone debt crisis.
Esprit, once a household name in the global apparel market known for its trendy casualwear, on Wednesday said Chairman Hans-Joachim Körber resigned "due to personal reasons," with immediate effect. Mr. van der Vis resigned on Tuesday and his last day would be on or before July 1, 2013, the company said. Esprit's board on Wednesday named Mr. Or the new company chairman, with immediate effect.
Meanwhile, Mr. Körber's resignation is unlikely to have a significant impact on the company's operations because the chairman role is non-executive in nature, Mr. Or said.
The latest resignations follow the departure of Chew Fook Aun on June 1 as chief financial officer. Mr. Chew had left Esprit to join developer Lai Sun Development Co. (0488.HK) as vice chairman. The management exodus also comes less than a year after the fashion retailer embarked on a restructuring plan, casting a dark cloud over its future strategic direction.
"CEO and chairman--that's the heart and soul of the company, and now they're both leaving, without letting investors know exactly what's happening," said Ben Kwong, chief operating officer at brokerage KGI Asia.
Mr. Kwong said he wouldn't be surprised if Esprit's share price falls to around HK$8 in the near term. At its height, Esprit's shares reached HK$130.90 per share in late October of 2007. The shares have been on a declining trend since then, amid intense competition against other casualwear brands in Europe and the company's struggle to make inroads in the mainland Chinese market.
Write to Fiona Law at firstname.lastname@example.org