June 14th, 2012

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Esprit share price slides on CEO exit

Thursday, June 14th, 2012

Esprit suspended the trading of shares in its company yesterday (13 June) after its share price fell by nearly a quarter following the resignation of its CEO; casting uncertainty over its costly restructuring plan and efforts to revitalize a brand that it admitted last year had “lost its soul”.

The company said late on Tuesday its executive director and group CEO, Ronald van der Vis, had resigned for personal and family reasons, marking a second senior management change in two months. He will leave the company on or before 1 July.

“The Board regrets this, but respects Mr van der Vis’s decision to devote more time to his personal endeavours. Mr van der Vis has confirmed that he has no disagreement with the Board and there is no matter that needs to be brought to the attention of the shareholders of the company in relation to his resignation,” Esprit said in statement on the Hong Kong stock exchange.

On the back of the announcement, the clothing brand’s share price dipped 23% to a low of HK$10.36. The company suspended trading on the back of the fall.

“The resignation of the CEO, combined with the departure of the former CFO Chew Fook Aun, is not seen as an isolated incident. It may suggest that the transformation, in particular revitalizing the brand, is tougher than expected,” said Alex Wong, a director at Ample Finance Group, as reported by Reuters. Chew quit for personal reasons in December and was replaced in April by Thomas Tang, a former chief financial officer of blue-chip property developer Sino Land Co Ltd.

Esprit did not announce a replacement for van der Vis, who would have played a key role in thecompany’s HK$18 billion ($2.3 billion) restructuring plan due to be completed by 2015.

“As they both resigned almost at the same time, the impact will be huge. Investors are likely to lose confidence in the company,” said Linus Yip, chief strategist at First Shanghai Securities, adding further pressure is expected on the stock of a company which last year admitted it had “lost its soul”.

In September last year, the company announced a broad transformation plan which saw it exit North America, exit its retail businesses in Spain, Denmark and Sweden as well as closing down under-performing stores worldwide.

As part of the plans, it is working to develop new branding and sourcing strategies, while growing its presence in China

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Mulberry FY profit in 54% surge

Thursday, June 14th, 2012

Luxury brand Mulberry Group plc reported Thursday a 54 percent surge in pre-tax profit for fiscal year 2012, as revenues grew 38 percent on improved international demand for its brand. But its shares dropped some 22 percent in morning trade as the group said its short-term trading outlook is more challenging, given the current economic conditions.

Announcing preliminary results for the year ended March 31, the company said its profit before tax surged 54 percent to 36 million pounds. On a per share basis, earnings climbed to 43.4 pence from 29.1 pence per share in the prior year. Revenues for the year grew 38 percent to 168.45 million pounds.

The UK company highlighted a 61% boost to international revenues, which now account for 39% of group revenues, up from 33% last year – buoyed by store openings in the Netherlands, US, Korea, Singapore, Thailand and Taiwan.

Mulberry said retail sales increased 36 percent from the preceding year, and were up 12% in the 10 weeks to 9 June, with UK full-price like-for-like store sales rising 26% and 14% respectively, while autumn/winter 2012 third party wholesale orders 11% higher than last year.

Online sales were up 58%, boosting their share of overall revenues to 9%. Wholesale shipments to customers during the year were up 43 percent.

Mulberry opened 14 new stores during the year in the UK, the Netherlands, the USA, Korea, Singapore, Thailand and Taiwan. It targets to open 15 to 20 new international stores in the current financial year.

Meanwhile, the company confirmed that it was to build a second factory in Somerset, doubling UK capacity and creating 300 jobs. The company also noted that the investment in a second factory in the UK will make it the largest UK manufacturer of luxury leather goods.

Godfrey Davis, company chairman said: “This year has seen us deliver another strong set of results and we have performed well against expectations… While the current economic conditions make the short-term trading outlook more challenging in some markets, we remain confident about Mulberry’s long-term future.

“We continue to focus on developing our business internationally, opening new stores and building the foundations for long-term growth. The investment in a second factory in the UK will reinforce the group’s position as the largest UK manufacturer of luxury leather goods,” he added.

The board is also recommending a dividend of 5 pence per share, up from 4 pence paid last year, to shareholders of record on August 17, 2012, payable on September 17.

Mulberry shares are currently trading at 1,575 pence, down 438 pence or 21.76 percent, on a volume of 89 thousand shares, against a three-month average volume of 38 thousand shares on the LSE.

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U.S. Retail Sales Edge Down 0.2% In May

Thursday, June 14th, 2012

Retail sales in the U.S. showed a modest decrease in the month of May, according to a report released by the Commerce Department on Wednesday, with the report also showing a notable downward revision to the sales data for April.

The Commerce Department said retail sales edged down by 0.2 percent in May, matching the revised decrease seen in April. Economists had expected sales to dip by 0.2 percent compared to the 0.1 percent increase originally reported for the previous month.

The modest drop in retail sales in May came despite a notable increase in sales by motor vehicle and parts dealers, which rose by 0.8 percent in May following a 0.1 percent increase in April.

Excluding the increase in auto sales, retail sales fell by a sharper 0.4 percent in May compared to a 0.3 percent decrease in April. Economists had expected ex-auto sales to come in roughly flat.

The decrease in ex-auto sales reflected a 1.7 percent decrease in sales by building material and garden equipment and supplies dealers as well as a 2.2 percent drop in sales by gas stations.

May retail sales came in roughly flat excluding gasoline, autos and building materials compared to a 0.1 percent increase in April.

Paul Dales, Senior U.S. Economist at Capital Economics, said, “A lot could change from now until the end of the quarter, but it looks as though real annualized consumption growth in Q2 may come in between 1.5% and 2.0%, down from Q1’s 2.7%. The smaller gains in employment therefore appear to be taking a toll on spending.”

“Looking ahead, the continued fall in gasoline prices should support consumption by freeing up cash to be spent on other items,” he added. “So although real consumption growth looks set to slow in Q2, we doubt it will grind to a complete halt.”

The report showed that the drops in sales of gasoline and building materials were partly offset by notable increases in sales by non-store retailers, clothing and accessories stores, and electronics and appliance stores.

Additionally, the Commerce Department noted that retail sales in May were up by 5.3 percent compared to the same month a year ago.

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Gerry Weber H1 profit up 24% on strong Q2

Thursday, June 14th, 2012

Fashion and lifestyle business Gerry Weber International AG reported a 24% surge in first-half profits with a double-digit revenue gain boosted by a strong second quarter performance. The firm saw a higher second-quarter net income of 20.2 million euros or 0.44 euros per share, compared with last year’s 15.7 million euros or 0.341 euros per share.

The German company’s retail business was its strongest performer, increasing its share of overall revenues to 35% with a 30% increase in the first half, while wholesale revenues were also slightly up on the same period in 2011.

Quarterly earnings before interest and taxes or EBIT totaled 29.3 million euros, up from 25.1 million euros a year ago.

Group sales revenues for the latest quarter improved to 211.0 million euros from 187.0 million euros in the comparable period.

Describing its first-half performance as “good”, Gerry Weber said it supported its sales and earnings forecasts for the full year.

Taking into account the effects of the takeover of the former WISSMACH stores, the company projects Group revenues of 795 million euros and an EBIT margin of 14.5% – 14.6% for the full year, taking into account the impact of its takeover of the former Wissmach store chain.

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