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Covid-19 impact may threaten Esprit’s future

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The acting chairman of Esprit Holdings has warned that the impact of Covid-19 pandemic “may cast a significant doubt over the group’s ability to continue as a going concern”. 

In a stock-exchange filing in Hong Kong today, Christin Chiu projected a loss of HK$280 million (US$36 million) for the December half year largely due to writedowns in the value of stock and brand value, and the impact of the Protective Shield Proceedings in Germany last year during which its European business was restructured. There was also debt relief of $174 million.

Chiu warned shareholders that a third wave of Covid-19 resulting in extended lockdowns in many countries may negatively impact the group given the suspension of store trading. 

“Although the strong growth in the company’s e-commerce sector may offset part of the adverse impact on the performance of the company’s retail segment, the group remains cautious and the management is closely monitoring the latest developments of the Covid-19 pandemic and will adjust its strategies for the group’s business operation according to its assessment on the impact of the pandemic,” he said.

Revenue for the half year fell to about $114 million, as a result of the splitting off of the company’s six German subsidiaries. 

Today’s half-year loss estimate follows a deficit of US$514 million in the year to June 2020. 

Confirmed results will be published next week.

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