* Morgan Stanley, JP Morgan downgrade stock to "Underweight"
* Shares hit one-month low, trim gain to 20 pct this year
(Adds analyst comments)
By Alison Leung and Yimou Lee
HONG KONG, Dec 19 Shares of Esprit Holdings Ltd
fell nearly 7 percent to a one-month low on Wednesday
after the Europe-focused retailer warned of a possible loss for
the six months ending in December, triggering a raft of broker
Esprit, which competes with Swedish clothing retailer Hennes
& Mauritz AB and Spain's Inditex, has been hit
by weak demand in the euro zone and launched a four-year
turnaround plan to revive its brand in late 2011.
But more than a year into its $2.3 billion restructuring
drive, Esprit, which sells everything from bed sheets to jeans,
is still not showing progress, analysts said.
"The turnaround is still looking very difficult," said
Gloria Tsuen of CIMB Research.
"Esprit has a revamped management team. It has a decent
plan but it still doesn't have the products to get people back
into the stores."
Morgan Stanley and JP Morgan downgraded the stock to
"Underweight" from "Equal Weight" and "Neutral", respectively,
after Esprit said it may post a loss for the six-month period
due to weaker-then-expected operating results.
Morgan Stanley also revised down its earnings forecast for
Esprit for the year ending in June 2013 to a net loss of HK$144
million from a profit of HK$695 million profit, and cut its
profit forecast by 61 percent to HK$576 million for the
following financial year.
Like China's best-known sportswear company, Li Ning Co Ltd
, Esprit is battling to revamp its brand and is
restructuring its management team in a sector weighed down by
high inventories amid a slowing global economy.
Esprit in August hired Jose Manuel Martínez Gutiérrez, an
executive from Zara owner Inditex, as its new chief executive to
reassure investors about its restructuring drive following
uncertainty created by a management reshuffle.
But some analysts remain cautious over the management
"We don't really know exactly how the new CEO would drive
the whole business," said Renee Tai, an analyst at UOB Kay Hian.
"Given the current state in Europe, it's not helping the
Shares of Esprit hit a one-month low of HK$10.88 and were
down 5.3 percent at 0200 GMT, lagging a 0.3 percent gain in the
blue chip Hang Seng Index.
This trimmed the stock's gain to about 20 percent this year
after investors had bet on the company's turnaround plan.
(Reporting by Alison Leung; Editing by Chris Gallagher)