Think eclipse 2.55 billion CEO: Revealing reform details in November

Esprit (00330) eroded 2.55 billion yuan last year due to large-scale provision and no tax rebate income. The new CEO, Anders Kristiansen, is planning to make drastic reforms, confident that the company will be back on track in the future and will announce more details of the reforms in November.

Rebuilding cost structure

As of the end of June, Esprit’s revenue fell 3.1% to 15.46 billion yuan, and the profit turned to loss of 2.55 billion yuan. Even after eliminating various provisions, it also recorded an operating loss of 910 million yuan before taxation, 3.9 times year-on-year. . Kristiansen said that there will continue to be one-off expenses affecting performance this year, but there is a plan for clarity reform that will be implemented gradually in the future.

Kristiansen pointed out that in the future, the cost structure will be rebuilt, and the cost reduction including the number of offices and personnel will be reduced. The product will also increase the proportion of basic lines such as sweatshirts and jeans to 50%, and reduce the proportion of high-end products. However, he denied that the company is seeking a fast-selling brand positioning. He believes that although the fast-selling apparel market is huge, Esprit has its own pricing model and its quality is more differentiated from the fast-selling brand.

Esprit China’s business is also impaired by 790 million yuan. Executive Chairman Ke Qinghui said that the Chinese business “is undeniably very disappointing for many years”, but the Chinese market is huge and “it is impossible to give up” the market. Kristiansen will accelerate Its development.

Kristiansen said that it will not open stores in Hong Kong and Europe, but will focus on opening stores in China. Currently, the stores are concentrated in Shanghai, and in the future, they will find more opportunities to open stores in second- and third-tier cities. At the same time, it will also close down poorly-operated stores, specific store closures, cost control and other reform plans, and it is expected that investors will disclose more details in November. As for when the company’s business can “return to the right track”, Kristiansen only said that turning losses into profits is not something that can be achieved immediately.