Esprit chief executive resigns

File photo of Ronald van der Vis, chief executive officer of Esprit Holdings Ltd, on February 3, 2010.

Story highlights

  • Ronald van der Vis has resigned as chief executive of Esprit, the clothing chain
  • Departure sparked a sell-off, falling more than 20% before trade was suspended

Ronald van der Vis has resigned as chief executive of Esprit, sparking a sell-off of the Hong Kong-listed clothing chain's shares as his departure raises concerns about the group's ability to carry through a transformation aimed at reviving profits.

Esprit said in a statement on Wednesday that Mr van der Vis, who joined the company as chief executive in November 2009, was leaving for personal and family reasons and wished to pursue other interests. His resignation will be effective by July 1 next year, in line with the terms of his contract.

Shares of Esprit were suspended in the afternoon after falling more than 20 per cent in morning trading on Wednesday.

His unexpected departure would be viewed negatively by investors because Mr van der Vis had developed a "very credible-sounding" transformation plan and hired well-respected managers from competitors, said Aaron Fischer, head of consumer and gaming research at CLSA, the Asian brokerage.

Esprit, which in February reported a 74 per cent drop in first-half profit, also recently lost its chief financial officer when Chew Fook Aun quit in December.

The Europe-focused clothing brand has struggled in recent years as sales in developed markets have been badly hit by the economic downturn and more recently, the eurozone debt crisis.

Last year, net profit fell 98 per cent to HK$79m (US$10.2m) as the mid-priced brand lost its appeal to customers who gravitated instead toward "fast fashion" rivals such as H&M and Zara, which offer trendier products and lower prices.

Mr van der Vis admitted the brand had "lost its soul" in September, and hired supermodel Giselle as part of a HK$18bn investment to rejuvenate the brand and expand in China by 2015. He tirelessly promoted the turnround plan to investors and analysts this year and has been credited for a 70 per cent rise in Esprit's share price since it bottomed in September at HK$7.93.

The stock was down 22 per cent at HK$10.53 before being suspended, while the broader Hong Kong market was up 0.3 per cent.

As CEO he "brought a tremendous amount of enthusiasm to the role and was well liked by investors," Mr Fischer said.