Esprit shares fall 17% on fundraising announcement

Shares of clothing retailer Esprit (0330.HKG) fell nearly 17% to a two-month low on Wednesday after the company announced fundraising plans, highlighting investor concerns over the its finances, South China Morning Post reported. After the market closed on Monday, Esprit announced a proposal to issue one rights share for every two existing shares at US$8, representing a discount of 36% against Monday’s closing price. The company plans to use the US$671 million the issue would raise to revive its brand. Also on Monday night, the company announced that third-quarter turnover fell 23% year-on-year to US$851 million. The revenue slump could be due to cautious spending in Europe, which accounts for 80% of turnover, Merrill Lynch analyst Tony Tseng said. Espirit launched a US$2.39 billion transformation just 18 months ago to improve product design, refurbish shops and streamline operations.