Esprit shares fall 20 percent after disappointing earnings

HONG KONG | Fri Sep 16, 2011 - Shares of Europe-focused fashion retailer Esprit Holdings Ltd (0330.HK) fell more than 20 percent on Friday morning after Asia's No.6 apparel and accessories retailer reported a worse-than-expected plunge in full-year profit.

Esprit's AW 2011 campaign

A 98 percent decline in profit, which triggered a 17 percent share price drop on Thursday, led to a spate of downgrades for the counter at several securities houses, brokers said.

CLSA said in a research note that it had cut its earning estimates for Esprit by 52-83 percent for the next two years and slashed its price target by 47 percent to HK$12.50 from HK$23.50. It downgraded the stock to sell from underperform.

Esprit on Thursday said it planned to sell its North American operations after reporting the worse-than-expected drop in full-year profit that had already sent its shares down more than 17 percent to the lowest in eight years.

Esprit, whose competitors include Swedish clothing retailer Hennes & Mauritz AB (HMb.ST), U.S. group GAP Inc (GPS.N) and Spain's Inditex (ITX.MC), said the business outlook for the next six months was challenging, citing weak consumer sentiment in Europe, which is embroiled in a worsening debt crisis.

"Since the restructuring and transformation needs to 3-4 years to complete, there is still a long, tough way to go; a lot of uncertainty ahead," said UOB Kay Hian director Steven Leung, adding that the stock would come under more selling pressure.

Shares of Esprit were trading at HK$12.32 on Friday morning, down more than 18 percent after sinking to HK$12 -- the lowest since October 2002. It was the worst performer on the benchmark Hang Seng Index .HSI, which was up 2 percent.

Esprit is also the biggest loser among Hang Seng Index components for the year, down nearly 70 percent.

(Editing by Charlie Zhu and Chris Lewis)