HONG KONG (Reuters) - Fashion group Esprit Holdings Ltd (0330.HK) on Wednesday reported a more-than-threefold rise in full-year profit that came in slightly above the midpoint of the company’s forecast as it trimmed operating costs.
The Europe-focused clothing retailer is undergoing a multi-year revamp that includes store closures, price adjustments, new return policies, and technology and distribution upgrades.
Esprit said net profit rose to HK$67 million ($8.6 million) for the year ended in June from HK$21 million a year earlier.
The company last month forecast a net profit in the range of HK$50 million to HK$80 million for the full year.
Revenue fell to HK$15.9 billion from HK$17.8 billion, the company said.
“Growth will only come progressively as the Group still faces a downsizing process in its wholesale and retail space (as loss-making retail stores still need to be closed),” Esprit said in a statement to the Hong Kong stock exchange.
The company expects controlled retail space to shrink by single digits in percentage terms in the new financial year, while revenue is seen falling marginally.
However, the retailer forecast an improvement in gross profit margin as it continues to cut down on discounts and promotions. Operating expenses are expected to come down by single digits in percentage terms.
Bigger rival Swedish fashion retailer H&M (HMb.ST) said in June it would struggle to hit its sales target this year after falling short in the first half, and as key markets such as China and the United States remain challenging.
Shares of Esprit have fallen more than 20 percent so far this year. That compares to a 28 percent rise in the benchmark Hang Seng Index .HSI in 2017.
Reporting by Donny Kwok and Clare Jim; Editing by Amrutha Gayathri