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INTERVIEW-UPDATE 1-Esprit says to open more stores, meet target

Published 05/14/2009, 09:32 AM
Updated 05/14/2009, 09:56 AM
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* Esprit aims to keep H2 same store sales growth at H1 level

* Says it still plans to open 110 stores in 2008/09

* Has signed contracts to open 40 stores in H1 2009/10

(Adds more details)

By Donny Kwok and Fion Li

HONG KONG, May 14 (Reuters) - Esprit Holdings, the world's No.6 fashion brand, said on Thursday it will continue to open new stores and is confident of meeting its target of adding 110 outlets in the fiscal year ending in June.

Esprit, which derives half of its revenue from Germany alone, also signed contracts to open 40 stores in first half of the 2009/10, mainly in Europe, Chief Financial Officer Chew Fook Aun said on Thursday.

The fashion group opened 77 stores in the first half of 2008/09 and had 782 retail outlets at the end of March.

"We are trying to achieve comparable same store numbers for the second half (of 2008/09) as in the first half," Chew told Reuters in a telephone interview.

The company posted a 6.3 percent same store sales growth in the first half period and a 6 percent growth in the nine months to March, with Europe seeing the biggest rise of 6.9 percent.

The fashion brand posted its first profit fall in a decade in the first half as a global financial crisis dampened demand and Europe, its key market battled a deep recession.

Chew said some of the firm's department store customers in Germany were facing refinancing problems and were reluctant to buy, putting pressure on its wholesale business.

"This trend is continuing," Chew said. "We have also instructed our retail side to buy less."

Esprit has also deferred store expansion in Portugal and Spain for the time being as their economies looked weak, he said.

Esprit, which has seen a spate of high-profile management exits in the past year, recently announced Ronald Van der Vis will replace Heinz Krogner as group CEO in June. Krogner, largely credited as the chief architect of the retailer, will stay on as chairman.

Its stock has been under selling pressure as investors worry about Van der Vis' lack of experience in the apparel industry.

Esprit shares, which fell 4.5 percent to close Thursday at HK$48.7, have underperformed the broader market.

They have gained 11 percent year-to-day after diving 62 percent in 2008, against the blue chip Hang Seng Index's 15 percent rally this year and a drop of 48 percent last year.

Chew, who took over as Group Chief Financial Officer in February, said he understood why people were concerned about the changes, but added that he and the new CEO "come to the business with very successful track records." (US$1=HK$7.8) (Reporting by Donny Kwok; Editing by Sharon Lindores)

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