Esprit sees return to profit in H1, shares jump

HONG KONG Wed Jan 22, 2014 9:44pm EST

People shop at an Esprit shop in Singapore September 8, 2013. REUTERS/Edgar Su

People shop at an Esprit shop in Singapore September 8, 2013.

Credit: Reuters/Edgar Su

HONG KONG (Reuters) - Esprit Holdings Ltd (0330.HK) said it expects to return to profit in the first half of the business year as efforts to cut costs kick in, sending its shares 4 percent higher.

Chief Executive Jose Manuel Martinez Gutierrez, who joined Esprit from rival Zara in 2012, has been fighting to fix the unprofitable retailer, revamping its existing business model to match Zara's successful fast fashion model.

But the struggling clothing retailer said the profit would be slight and warned that the second half of the year is typically weaker than the first half. It did not specify the likely amount of the first-half profit, which compares with a loss of $60 million for the same period a year earlier.

Martinez has stacked his management team with other Zara veterans and unveiled technology and distribution upgrades that will halve the time it takes to get clothes designed, manufactured and in stores.

Gains for Esprit shares on Thursday took them to their highest in nearly two weeks and came against a flat opening for the benchmark Hang Seng Index .HSI.

(Reporting by Clare Baldwin; Editing by Edwina Gibbs)