Espirit suffers 40% decline in customer traffic due to HK protests
Hong Kong and Germany-based fashion house Esprit Holdings has announced that its customer traffic has dropped by 40% because of the protests in Hong Kong.
Espirit suffers 40% decline in customer traffic due to HK protests
The protests have rocked Hong Kong over the last few months, as its citizens are protesting over a controversial extradition bill and expressing their unhappiness with how China is governing the island.
The company claims that its sales were down purely because of the protests, rather than a decline in the number of tourists from China. A blog by Paul Chan Mo-po, Hong Kong’s financial secretary highlighted how the tourist inflow had declined by 40% in August.
Esprit's revealed results until the end of June, where its net loss stood at HK$2.14 bn (US$273.3m), 16% less than the last financial year, while revenue stood at HK$ 12.9bn, down 12.9 %.
A company statement said that it conducted a comprehensive assessment of the loss-making retail stores to consider measures such as rent reduction, downsizing or closure. While negotiation with some landlords are still ongoing, they have already reached agreements for 206 stores, of which 169 have been closed, 14 received a rental reduction, three resized during the financial year, and the remaining 20 are either expected to be closed or with rent reduction.
Anders Kristiansen, executive director and group CEO, said in a letter to shareholders said that the brand is now looking to execute its strategic plan, while restructuring costs base and eliminating loss-making stores and aiming to improve Espirit's brand identity. The core focus will be improving the product offering and how it relates to the customers and brand positioning.
He further wrote: "Based on the redefined brand direction, we are creating a unique and easily conveyed brand expression; establishing a clear divisional strategy; launching new labels and product categories; integrating science back into creating our collections; and most importantly, improving quality is back at the top of our agenda. I am tremendously thrilled about this new product strategy because it is a game-changer for the brand. We will embark on a fresh start introducing a new and exciting concept to the market."
Espirit is not the only brand to face the brunt of the protests as other brands are being forced to choose a side as well in Hong Kong protests.