Esprit dives and pulls down peers in fashionThursday, 27 September 2012
Hong Kong-based fashion chain Esprit missed market’s
estimates for second half of the year and saw its shares dive on late trade Wednesday. Its fashion pees also saw a gloomy session Wednesday, with general losses and quite weak gains, if any.
Esprit Holdings Ltd posted second-half profit that missed analyst forecasts and said a slowing Chinese economy and lingering euro zone problems continue to pose risks to its business, briefly sending its shares more than 8 percent lower.
Esprit reported a net profit of 873 million HK dollars (112.6 million dollars), missing the average estimate of 1.01 billion HK dollars in the poll of 10 analysts compiled by Reuters.
Turnover for the fiscal year fell to HK dollars30.17 billion from 33.77 billion HK dollars a year earlier, due to the sale of its North American operations, store closures and a tough business climate, it said. Retail turnover declined 6.1 percent in local currency terms and wholesale turnover dropped 16.5 percent.
Elsewhere, Hennes & Mauritz AB Thursday postponed its online launch in the U.S. until the summer of 2013 and said it will launch a new fashion brand with a range of apparel and accessories during the spring of 2013. "Conditions in the fashion retail industry continued to be challenging in many markets," said Chief Executive Karl-Johan Persson.
At the same time, the company reported a lower-than-expected 0.8 percent rise in third-quarter net profit, as both unfavorable weather conditions and the tough economic climate weighed on consumer spending. The Stockholm-based retailer said net profit rose to 3.62 billion Swedish kronor (549 million dollars) in the three months to Aug. 31, from SEK3.59 billion a year earlier. Analysts had expected a net profit of around 3.94 billion Swedish kronor.
Better news for its Japanese competitor, Uniqlo, which owner, Fast Retailing, is rapidly expanding in the US and threating to step on Gap and American Apparel’s heels.
Other stock that has people talking in the industry is Skechers. Analysts at ‘The Street’ explain how although the company has not yet returned to profitability, the markets have warmed up to the stock, and shares are now back near the 20 dollars level (+ 60 percent year to date). Currently, consensus estimates for the third quarter are calling for revenue of 435.3 million dollars, and earnings of 32 cents a share.
Finally, Abercrombie & Fitch‘s stock had its “sell” rating reaffirmed by Citigroup in a research note issued on Wednesday. They currently have a 32 dollars price target on the stock. Still attracted by the stock, analysts at Piper Jaffray reiterated a “neutral” rating on shares of Abercrombie & Fitch in a research note to investors released earlier in September, where they estate their current price target at 33 dollars per share. Separately, analysts at Nomura reiterated a “neutral” rating on shares of Abercrombie & Fitch also in early September while BMO Capital Markets reiterated a “market perform” rating on shares and now have a 30 dollars price target on the stock.
Abercrombie & Fitch traded up 0.23 percent Wednesday, hitting 34.65 dollars, which compares to its 1-year low of 28.64 dollars and a 1-year high of 77.49.