Esprit Holdings Ltd revenue decline decelerated from 19.8% in FY2015 to 8.4% in FY2016
20/09/2016 • About Esprit Holdings Ltd (
$330) • By InTwits
Esprit Holdings Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Esprit Holdings Ltd is a company in decline: FY2016 revenue growth was -8.4%, 5 years revenue CAGR was -12.0%
- The company operates at negative EBITDA Margin: -0.4%
- Esprit Holdings Ltd spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2012-FY2016 is 0.0%. Average EBITDA Margin for the same period was -2.8%0
- Esprit Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.6%. At the same time it's in pair with industry average of 15.1%.
- CAPEX is quite volatile: 262 in FY2016, 349 in FY2015, 375 in FY2014, 919 in FY2013, 1,420 in FY2012
- The company has unprofitable business model: ROIC is at -6.0%
- It operates with high leverage: Net Debt/EBITDA is 2.3x while industry average is 0.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Esprit Holdings Ltd ($330) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 30,165 | 25,902 | 24,227 | 19,421 | 17,788 | -8.4% |
| Gross Profit | 15,206 | 12,837 | 12,156 | 9,695 | 8,929 | -7.9% |
| SG&A | 3,031 | 2,480 | 2,109 | 1,868 | 2,037 | 9.0% |
| EBITDA | 1,848 | -3,312 | 1,153 | -2,856 | -74 | |
| Net Income | 873 | -4,388 | 210 | -3,696 | 21 | |
Balance Sheet
|
|---|
| Cash | 3,171 | 2,182 | 3,661 | 3,688 | 3,485 | -5.5% |
| Short Term Debt | 642 | 520 | 260 | 0 | 0 | |
| Long Term Debt | 1,040 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 1,420 | 919 | 375 | 349 | 262 | -24.9% |
Ratios
|
|---|
| Revenue growth | -10.7% | -14.1% | -6.5% | -19.8% | -8.4% | |
| EBITDA growth | 16.4% | -279.2% | -134.8% | -347.7% | -97.4% | |
| Gross Margin | 50.4% | 49.6% | 50.2% | 49.9% | 50.2% | 0.3% |
| EBITDA Margin | 6.1% | -12.8% | 4.8% | -14.7% | -0.4% | 14.3% |
| Net Income Margin | 2.9% | -16.9% | 0.9% | -19.0% | 0.1% | 19.1% |
| SG&A, % of revenue | 10.0% | 9.6% | 8.7% | 9.6% | 11.5% | 1.8% |
| CAPEX, % of revenue | 4.7% | 3.5% | 1.5% | 1.8% | 1.5% | -0.3% |
| ROIC | 5.7% | -22.7% | 1.4% | -23.3% | -6.0% | 17.3% |
| ROE | 5.5% | -27.3% | 1.3% | -25.7% | 0.2% | 25.8% |
| Net Debt/EBITDA | -0.8x | | -2.9x | | | 0.0x |
Revenue and profitability
The company's Revenue decreased on 8.4%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin jumped on 14.3 pp from -14.7% to -0.42% in FY2016.
Gross Margin showed almost no change in FY2016. SG&A as a % of Revenue increased slightly on 1.8 pp from 9.6% to 11.5% in FY2016.
Net Income marign surged on 19.1 pp from -19.0% to 0.12% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 1.5% in FY2016. Esprit Holdings Ltd showed decline in CAPEX/Revenue of 2.1 pp from 3.5% in FY2013 to 1.5% in FY2016. Average CAPEX/Revenue for the last three years was 1.6%.
Return on investment
The company operates at negative ROIC (-5.99%) and low but positive ROE (0.18%). ROIC jumped on 17.3 pp from -23.3% to -6.0% in FY2016. ROE surged on 25.8 pp from -25.7% to 0.18% in FY2016.
Leverage (Debt)
The company has no debt. Cash decreased on 5.5%.
Management team
The company's CEO Jose Manuel Martinez Gutierrez has spent 6 years at the company. Tang Wing Yung "Thomas" is a Esprit Holdings Ltd's CFO. Tang Wing Yung "Thomas" has spent 6 years at the company.
Appendix 1: Peers in Retail
Below you can find Esprit Holdings Ltd benchmarking vs. other companies in Retail industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Nuclear Industry 23 International Corp Ltd ($611) | 1.4% | 85.6% | -42.1% | 419.8% | |
| Noble House China Holdings Ltd ($8246) | -5.0% | -20.2% | -24.8% | 117.2% | |
| Vongroup Ltd ($318) | | 23.7% | -80.2% | 90.3% | -7.2% |
| Nanjing Sinolife United Co Ltd ($3332) | 45.6% | 29.5% | 29.6% | 57.3% | |
| Shanghai La Chapelle Fashion Co Ltd ($6116) | 54.9% | 72.8% | 23.0% | 48.3% | |
| |
|---|
| Median (117 companies) | 7.4% | 6.5% | 3.1% | -1.0% | -8.3% |
|---|
| Esprit Holdings Ltd ($330) | | -14.1% | -6.5% | -19.8% | -8.4% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Vongroup Ltd ($318) | | | 95.1% | 99.1% | 99.0% |
| Modern Beauty Salon Holdings Ltd ($919) | 97.4% | 95.9% | 96.8% | 96.7% | 96.8% |
| Moiselle International Holdings Ltd ($130) | 81.2% | 83.8% | 80.6% | 83.2% | 77.6% |
| Embry Holdings Ltd ($1388) | 81.2% | 80.4% | 82.3% | 81.6% | |
| Nanjing Sinolife United Co Ltd ($3332) | 86.5% | 89.3% | 90.9% | 80.6% | |
| |
|---|
| Median (103 companies) | 36.2% | 35.8% | 35.0% | 33.3% | 43.5% |
|---|
| Esprit Holdings Ltd ($330) | 50.4% | 49.6% | 50.2% | 49.9% | 50.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Energy Development Holdings Ltd ($228) | -58.1% | -72.3% | -84.0% | 1,070.6% | |
| Golden Eagle Retail Group Ltd ($3308) | 48.5% | 47.3% | 42.8% | 55.4% | |
| Nanjing Sinolife United Co Ltd ($3332) | 51.6% | 56.9% | 54.4% | 44.8% | |
| Lifestyle International Holdings Ltd ($1212) | 47.5% | 47.0% | 44.7% | 43.4% | |
| China Dongxiang Group Co Ltd ($3818) | 6.0% | 5.6% | 58.3% | 41.4% | |
| |
|---|
| Median (117 companies) | 10.8% | 7.8% | 9.1% | 7.4% | 5.1% |
|---|
| Esprit Holdings Ltd ($330) | 6.1% | -12.8% | 4.8% | -14.7% | -0.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Culture Landmark Investment Ltd ($674) | 11.6% | 19.4% | 15.7% | 47.2% | 3.9% |
| Springland International Holdings Ltd ($1700) | 31.9% | 17.4% | 26.5% | 36.9% | |
| Merry Garden Holdings Ltd ($1237) | 18.6% | 28.6% | 15.1% | 34.2% | |
| China Energy Development Holdings Ltd ($228) | 1.6% | 0.2% | 0.0% | 27.4% | |
| Golden Eagle Retail Group Ltd ($3308) | 28.5% | 9.4% | 26.7% | 25.4% | |
| |
|---|
| Median (117 companies) | 4.0% | 3.6% | 3.8% | 3.5% | 1.9% |
|---|
| Esprit Holdings Ltd ($330) | 4.7% | 3.5% | 1.5% | 1.8% | 1.5% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Modern Beauty Salon Holdings Ltd ($919) | 50.7% | -4.6% | 81.3% | 71.8% | 13.3% |
| JC Group Holdings Ltd ($8326) | | 215.6% | 92.8% | 66.3% | 81.7% |
| Starbucks Corp ($4337) | 36.4% | -6.0% | 52.8% | 51.4% | |
| Sa Sa International Holdings Ltd ($178) | 53.5% | 52.7% | 49.0% | 39.8% | 19.0% |
| Noble House China Holdings Ltd ($8246) | 17.7% | -67.7% | -113.8% | 35.6% | |
| |
|---|
| Median (117 companies) | 12.3% | 8.9% | 8.7% | 5.8% | 2.0% |
|---|
| Esprit Holdings Ltd ($330) | 5.7% | -22.7% | 1.4% | -23.3% | -6.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Sparkle Roll Group Ltd ($970) | 0.6x | 4.0x | 9.3x | 23.5x | 8.5x |
| Trinity Ltd ($891) | -0.2x | 0.2x | 0.6x | 18.2x | |
| Parkson Retail Group Ltd ($3368) | 0.8x | 2.3x | 3.6x | 9.8x | |
| Maoye International Holdings Ltd ($848) | 2.9x | 3.3x | 3.4x | 9.0x | |
| Century Ginwa Retail Holdings Ltd ($162) | 2.0x | 2.5x | 4.8x | 7.3x | |
| |
|---|
| Median (92 companies) | -0.5x | -0.6x | -0.2x | -0.5x | -0.6x |
|---|
