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Esprit has reported a loss of HK$664m (£68.4m) as its 2022 revenues decreased to $7.1m (£856m), marking a 15% decline over 2021, according to its results for the period ending 31 December 2022.
It said that “the unfavourable economic environment” in Germany and the rest of Europe resulted in a loss.
This was compared with a profit of HK$381m (£39.2m) the previous year.
It also claimed that the Russia-Ukraine conflict and an overreliance on natural gas from Russia, resulted in high energy prices and triggered a large inflationary spike. This also led to an increase in interest rates and currency volatility that has affected consumer spending behaviour.
Gross profit margin during the year was 40.7%, which was 7.9% lower than the year before, mainly driven by a higher proportion of discounted products to reduce excess stock.
The company also stated that the impact from freight cost increases and foreign exchange movements also attributed to the decrease in gross profit margin.
The retail company said that in order to address these challenges, the management team will “continue to focus on improving operational efficiency while reducing aged inventory in preparation for the company’s exciting rebrand launch”.
Overall Esprit remained essentially debt free and recorded cash, bank balances and deposits in a total of HK$2,012m (£208m) as at the end of the year.
Mr. PAK William Eui Won, executive director, CEO and COO, said: “Despite occasional slowdown in our performance as impacted by several external factors, the company and the management team are consistently building a solid foundation for rebound.
“The company launched a series of initiatives undertaken during the Year. Additionally, exciting new plans for 2023 relating to Retail, Omnichannel, Marketing, Product, and Information Technology (IT) are already in place.”
Ms. Chiu Christin Su Yi, chairperson and executive director, added: “Amidst a challenging global business environment, the on-going initiatives, and new plans for 2023 are strategic opportunities planned for Esprit’s growth. The company has a firm financial footing with a healthy balance sheet, which allows it to invest whenever good opportunities arise. We have great confidence to build towards a brighter and more successful future.”
