Due to huge asset write-offs, Esprit, Fashion retailer expects to post a substantial loss for the 12 months to June 30. It also expects to be in the red at the operating level due largely to weak sales in Europe and on the mainland. Its Chief Executive Jose Manuel Martinez says that restructuring of its mainland operation has been completed and is ready for the next growth. Sales for the three months to March 31 fell 25.5 per cent year on year, as the negative impact from an unusually warm European winter spilled over to early this year and big discounts had to be offered to clear stock. In a filing to Hong Kong’s stock exchange, Esprit said that substantial sales declines stemming from store closures and inventory clearance meant it expects to book HK $ 2.5 billion to HK $ 2.7 billion in goodwill impairment for the mainland operation, a non-cash accounting loss it said will not affect its cash position. It also expects to book HK $ 440 million to HK $ 470 million in asset provisions and impairments related to the closure of its directly managed stores. Net profit for the six months to December was HK $ 47 million, down from HK $ 95 million a year earlier, while operating profit plunged 85 per cent to HK $ 37 million and turnover dropped 16.3 per cent to HK $ 10.72 billion.
