By Frank Longid
Sept. 1 (Bloomberg) -- Esprit Holdings Ltd., the clothing retailer that makes more than four-fifths of sales in Europe, fell in Hong Kong trading, continuing a drop that began after its earnings last week showed slowing profit growth.
Esprit tumbled 7.4 percent to HK$60.20 at noon, the biggest loser on the benchmark Hang Seng Index. That extended its slide to 25 percent since earnings on Aug. 27, followed by ratings downgrades by at least nine companies including Goldman Sachs Group Inc., Lehman Brothers Holdings Inc. and JPMorgan Chase & Co. Before 2008, the stock gained for seven years.
Chief Executive Officer Heinz Krogner, battling a shrinking economy in Europe, told reporters after earnings that he's no longer looking for acquisitions. The retailer's net income grew 13 percent in the six months to June, the weakest expansion since at least 2002, when it joined the Hang Seng Index.
Esprit's net income rose to HK$3.16 billion ($405 million) in the six months to June, its fiscal second half, from HK$2.8 billion in the previous year. Sales rose 25 percent to HK$18.7 billion. Second-half figures were derived from full-year results.
Full-year net income climbed 25 percent to HK$6.45 billion, 2 percent lower than the HK$6.6 billion average estimate of six analysts surveyed by Bloomberg. Operating profit margin narrowed to 20.7 percent from 21.1 percent in the previous year.
The euro-area economy contracted in the second quarter for the first time since the debut of the currency almost a decade ago, as faltering sales undermined investment by companies and soaring costs eroded consumer spending. The stronger euro and slower global growth damped the region's exports just as the fastest inflation in 16 years hurt domestic purchasing power.
Hong Kong's Hang Seng Index fell 1.6 percent to 20,921.43 today.
To contact the reporter on this story: Frank Longid at flongid@bloomberg.net
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