Esprit's operating expenses plunged 15%

Revenue also treaded downhill.

According to Barclays, Esprit’s overheads were cut by more than we expected but both revenue and gross margins disappointed on the downside.

Guidance for 2H FY14 remains negative and a small loss is expected for the full year.

Here's more from Barclays:

While the company’s 15% cut in operational costs appears encouraging, revenue growth, which we believe is the key for a rebound in the business, registered a decline of 5.5% y/y to HK$12,810mn.

By segment, revenue from Wholesale was down 12% y/y to HK$4,724mn; Retail was down 2% y/y to HK$7,985mn; while Licensing and other income was up 5% y/y to HK$101mn. Meanwhile, gross margins were down 1.4 ppts y/y (1.3 ppts organic) to 49.6%.

Overheads slashed by more than we expected, but no room to cut further: Overall operating expenses were down 15% y/y (18% organic), with the op expense-to-sales ratio down 5.3 ppts y/y to 47.6%. Excluding one-off expenses on store closures, and stores with onerous contracts and North American operations, operating expenses were down by 14% (18% organic). We think there is no room to cut costs further.