Fashion chain Esprit has released its financial results for the second semester and year 2013, the results reveal negative numbers in this period for the company. Esprit’s turnover declined -5.5% and amounted HK$ 12,810 million, consistent with the reduction of net sales area in the retail and wholesale businesses - altogether, HK$ 744 million less than the previous year.

The gross profit was HK$ 6,348 million whereas during the full year 2012/13 it represented HK$ 6,910 million. The gross profit margin decreased by -1.4% to 49.6% due to continued investment in product quality enhancement, activation of sales with pricing initiatives and continued rationalization of smaller wholesale accounts that have higher gross profit margins.

Esprit’s Group operating expenses reached HK$ 6,094 million, representing a significant reduction of -HK$1,081 in comparison with full year 2013 figures (HK$7,175 million). This improvement was the result of cost reduction initiatives undertaken by the management team to reduce operating expenses.

Regarding inventory position, Esprit has reduced a -13.1% the inventory units. Furthermore, there has been and an 11-day decrease in inventory turnover days to 91 days as compared to a year ago.

In spite of the results, the company maintains its 2013/14 full year guidance as announced on 10 September 2013. For this year, the Group expects a further decline in turnover, basically due to reduced controlled space in both the retail and wholesale channels that will result from store closures and further rationalization of the wholesale customer base. On the positive side, Esprit expects that the cost measures undertaken by the management team will bear fruit.