Clothing retailer Esprit says Brexit may hit consumer sentiment

A man carries a EU flag, after Britain voted to leave the European Union, outside Downing Street in London, Britain June 24, 2016. REUTERS/Neil Hall

HONG KONG (Reuters) - Esprit Holdings Ltd said Britain’s vote to leave the European Union could affect consumer sentiment in its key markets in Europe, as global businesses and political leaders grapple with the fall-out of last week’s “Brexit”.

Britain’s vote to leave the EU has reverberated through global financial markets, with the pound falling to its lowest level in 31 years, despite government attempts to relieve some of the confusion about the political and economic outlook.

“There is risk for an impact on the general consumer sentiment across Europe, where the majority of our business is located, but it is impossible to predict its timing and reach,” Thomas Tang, Esprit’s chief financial officer said in emailed comments to Reuters on Thursday.

“We obviously remain attentive to the developments in this most important matter... As for any broader impacts on the business, there are still too many uncertainties.”

Tang added the other immediate impact was the pressure on Euro currency exchange rates and that the firm had hedged most of its sourcing costs for full-year 2016-17 to protect margins over the next 12 months.

The United Kingdom itself contributed slightly less than 1 percent of the group’s revenue, and Brexit will have little direct impact on its global top line, Tang added. Esprit posted revenues of HK$19.4 billion ($2.5 billion) last year.

Esprit had said in March that it aimed to increase its margin by around 1 percentage point over the next two years, to close loss-making stores in Europe and APAC over the next 2-3 years, and to reduce operating expenses by at least HK$1.0 billion in over next two years.

Reporting by Donny Kwok; Editing by Adam Jourdan and Michael Perry