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Esprit H1 turnover declines, offers upbeat outlook

By Prachi Singh

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Report |REPORT

Esprit Group turnover for the first half of FY15/16 declined 0.4 percent in local currency. The company said that it is a substantial improvement after the previous four consecutive interim first half periods of significant year-on-year turnover decline in local currency.

Commenting on the period under review, Jose Manuel Martínez, the Esprit Group Chief Executive Officer, said, “The performance during the first six months of this financial year gives us confidence that the implementation of our Vertical and Omnichannel model is an effective basis to turnaround our business.”

Europe positive but Asia Pacific remains challenging

From a channels perspective, topline improvement was driven by positive retail sales growth of 6 percent in local currency, while wholesale business remained challenging. From a geographic market point of view, the positive evolution was more evident in Europe with 0.6 percent rise in local currency, while business in Asia Pacific continued to face challenges. In the period under review, gross profit margin remained stable at 50.5 percent.

The company said that by following a vertical business model, it has seen positive trends in the retail sales performance. In the first half of this financial year, retail turnover grew 6 percent year-on-year in local currency, despite a year-on-year reduction in retail net sales area, fuelled by comparable store sales growth of 8 percent in local currency. Retail sales in Europe grew 8.6 percent in local currency, with comparable store sales growth of 8.3 percent. In Germany, the Group’s largest market, comparable full-price brick and mortar stores outperformed the market every month between July and December 2015 by an average of 10.2 percentage points.

Women’s segment drives positive growth

From a product perspective, growth was driven by the women divisions, which reported retail turnover growth of 9.7 percent in local currency, with comparable store sales growth of 11.9 percent. The positive retail sales development in Europe was, offset by the continued weakness in the wholesale channel and a negative development of the Asia Pacific region. Both of which remain challenging areas of our business.

Launch of omnichannel initiatives led to 23 percent year-on-year growth of active Esprit Friends members, 11 percent of Esprit Friends becoming multichannel, increase to 49 percent share of mobile traffic within the total e-shop traffic and 92 percent year-on-year growth of smartphone sales.

Outlook for the second half of FY15/16

With the operating environment appearing challenging as volatility in financial markets and economic uncertainty across regions expected to dampen consumer sentiment, especially in the Asian markets, the company says that the overall performance will continue to be in line with the guidance given to the market during the FY14/15 Annual Results presentation.

Esprit