Esprit Global (00330) PCO is not an accident, rating reduction

Morgan Stanley

Morgan Stanley reported that he was not surprised by 00330.HK 's earnings warning because of weak revenue and the effect of short-term cost savings. The bank reiterated that Esprit was in transition and that a number of good and bad quarters would not change its view. The bank maintains a "reduction" rating of Esprit and a target price of 8.2 yuan.

The bank pointed out that the company's management said in the conference call that additional provisions would be made for store closures and leases, indicating that its core market in Europe was still full of challenges. In addition, another 10 shops in Europe are undergoing closure procedures, and profitable shops are expected to take longer to improve due to the difficult trading environment.

Daimo refers to the fact that although the management believes that the transformation plan is going smoothly, it will take at least 12 months or more to have a positive effect on the performance.