Esprit’s losses: first its soul, now its leadershipFriday, 15 June 2012
“The moves could lead to questions regarding whether there are issues with the operation/accounts or there is a power struggle among the management team and the board,” Anne Ling, an analyst at Deutsche Bank AG, said in a note to clients.
Esprit Holdings Ltd. plunged for a second day in Hong Kong trading after its chairman quit within 24 hours of the chief executive officer’s resignation. In just two days, the company has seen its stock losing 31.5% and flourishing speculations around a possible take over. "Resignations of the top two executives are not a good sign. The stock is set to face pressure in the immediate run as investors lose faith in the company," said Francis Lun, managing director at investment firm Lyncean Holdings. "As the stock falls, it could easily become an acquisition target by rivals or private equity funds," Lun advanced.
"I have to be realistic. On those circumstances and after a clear feedback from my family, I cannot continue the way I have been working. I have been neglecting my family situation too much and I need to bring more balance," Ronald van der Vis said in a conference call with analysts. He stressed as well that both he and the chairman decided to resign purely for personal reasons. He said he would remain in his position for another year before leaving the company and that though he is passionate about his role, the requisite 150 days of travel per year had become too much of a burden on his family. "Esprit is my life," he said, "but there is no other way."
He added that the resignations of both top executives within two days had nothing to do with one another and that the company plans will be executed as planned. Aimed at turning around the business and restoring the clear identity of the brand, the $2.3 billion transformation plan calls for measures such as the divestment of its loss-making North American operations and the closure of structurally loss-making stores, the company said in September last year, summarized ‘FinanceAsia’.
Hans-Joachim Koerber, who resigned literally hours after Van der Vis, will be replaced by Raymond Or Ching Fai, vice chairman of Hong Kong- based China Strategic Holdings Ltd., Esprit said after the market closed Wednesday. Van der Vis resignation will be effective on or before July 1, 2013, in accordance with his service contract, according to Esprit. The now ex CEO is leaving as the company started showing some improvement in same-store sales.
The company's restructuring has been complicated by such a management exodus, as in just over a year's time, the company has seen four top executives resign, all citing personal reasons. In addition to this week's resignations from van der Vis and Koerber, Chief Financial Officer Chew Fook Aun left Esprit on June 1. Thomas Tang, previously CFO at Sino Land Co., succeeded Chew. Last February the company's previous chairman, Heinz Jurgen Krogner-Kornalik, resigned for "his intended pursuit of other personal commitments."
Esprit plunged 73 percent in Hong Kong trading last year and reported a 74 percent drop in first-half profit in February. The company got 79 percent of revenue from Europe in the 12 months ended June 2011, according to data compiled by Bloomberg.