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