- FashionUnited |
Esprit Holdings Limited has decided to close all its stores in Australia and New Zealand, as the region has proved to be loss-making. In a statement for investors issued on Tuesday, Esprit said the decision will allow for the company to concentrate efforts and resources in the Asian market, namely China, Hong Kong, Taiwan, Singapore and Malaysia. The focus on Hong Kong comes as a surprise, as back in January Esprit announced the closure of its flagship store there.
In total, 67 directly-managed shops, 38 concession counters in department stores and 13 outlets will be shut down. 350 workers are losing their jobs. In the financial year ended on June 30th, 2017, Australia and New Zealand contributed 37.8 million dollars to the group, which represented less than 2 percent of the total revenue.
Contacted by FashionUnited via email, the brand stated that the closure of loss-making stores is a key strategic measure to improve the financial performance of the group. With a strict control of its costs, including real estate ones, Esprit hopes to enhance profitability for investors and offer customers more value for money.
“Esprit’s operations in Australia and New Zealand have been loss making for some time, despite intensive efforts made by the teams in the past years to turnaround its business” said the company’s Executive Director & Group CFO, Thomas Tang in a media release. He called the decision “unfortunate, but unavoidable”. Esprit has been operating in the region since the 1980s.
The company predicts that the costs of closing down its operations in the region will affect the results of the following financial year. In the statement, the one-off costs are estimated between 19 million dollars and 25 million dollars, but the company emphasized these estimates are yet to be confirmed by the company’s auditors.
Esprit has been struggling financially for several years. In January, the company issued a saying they would record a net loss of between 121.5 dollars and 125 million dollars, compared to a net profit of 7.8 million dollars last year. The same month, they have opted to close their Hong Kong flagship store. But they’re not the only ones saying goodbye to Australia. Gap closed its last store in the country in February.