UK expansion plans boost Esprit

CLOTHING retailer Esprit has struggled to make headway lately, weighed down by two share placings last year by chairman and controlling shareholder Michael Ying. But the stock roared ahead in

The shares jumped HK$1.20 to HK$29.20 as analysts digested figures for the six months to December. Net profits rose 53% to HK$886m (£60.3m).

'After France, England will be our next growth market,' chief executive Heinz Kroger said. He suggested seven UK openings by the middle of next year, expanding a presence that is so far limited to a single outlet in Regent Street.

In the US - where Esprit was founded and used to have many stores - a revived flagship is being developed in New York. Ying's Hong Kong company bought out Esprit's US rights two years ago. More American store openings are planned.

The company has several factors in its favour, and these are helping it offset niggling losses in Hong Kong and Taiwan. In particular, it has benefited from the dollar's protracted slump against the euro.

Esprit, which filed its latest figures after the market's close yesterday, makes 53% of its sales in Germany. When they are translated into Hong Kong dollars - which are tied to the everweaker US dollar - the bottom line is flattered.

'Acquisitions are two to three years down the line,' said chief financial officer John Poon. 'We plan to spend about HK$400m or so in the next six months on continuous expansion and upgrades of our distribution network and enhancement of new [IT] systems.'

Esprit, which was set up in the late 1960s by a young San Francisco couple, Doug and Susie Tompkins, used to specialise in girls' and young women's fashion. Since then, and especially under Ying, it has moved to broaden its range of offerings, targeting older buyers, including men.

Ying, the Tompkins' former business partner, trimmed his stake twice last year. The latest sale came in October when he clipped his holdings by about four percentage points to 34%. The transactions put a cap on Esprit's gains until the fresh news flow carried them higher.

The rest of the Hong Kong market was in exuberant mood thanks to bullish testimony from US Federal Reserve chairman Alan Greenspan, which inspired solid gains in American equities.

Banks led the rise. HSBC advanced HK$1 to HK$125.50 while affiliate Hang Seng Bank traded up 50 cents at HK$108.50. The Hang Seng index rose 104.32 points to 13,629.08.

The commentary from the world's foremost central banker also cast a warm glow over Japanese stocks. Banks were also in the vanguard of the ascent here. Mizuho Financial firmed 7,000 to 211,000 while UFJ added 18,000 yen to 472,000. Carmaker Honda Motor edged up 10 yen to 4200 amid hopes of better sales. The Nikkei 225 Average closed up 93.86 points at 10,459.26.

Australian phones giant Telstra disappointed investors by admitting with its results that it was losing market share at home to Optus, a unit of Singapore Telecom. The shares dropped eight cents to A$4.74. The All Ordinaries index put on 24.6 points to 3339.9.