ESPRIT HOLD-NEW (00330) has announced that the Group expects to record an unaudited consolidated loss attributable to shareholders of approximately HK$0.7 million for the fiscal year ending December 31, 2025. This compares to a shareholder loss of about HK$1.227 billion for the previous fiscal year ended December 31, 2024. The significant reduction in loss is primarily due to a substantial decrease in operating expenses from continuing operations and a one-time gain on termination of consolidation arising from the Group's restructuring plan.

Following the comprehensive restructuring initiated in 2024, the current year represents a critical turning point in the Group's strategic shift towards a light-asset and licensing-centric business model. Given that this is the first year of operation for its licensing business, the Group's revenue for the current year remains at a relatively low level of approximately HK$20 million, compared to about HK$42 million in the prior year. This decrease in revenue is mainly attributable to the termination of licensing income from the European trademarks, which were transferred to fasbra SE, a wholly-owned subsidiary of Deichmann SE. The transfer was executed pursuant to a settlement agreement resulting from the court-approved self-administration proceedings of the Company's former German subsidiary. By retaining trademarks in all regions outside Europe (excluding the US footwear business), the Group has established a solid foundation for the future development and expansion of its licensing business.

Regarding continuing operations, the Group recorded a net loss of approximately HK$29 million for the current year, compared to a net loss of about HK$287 million for the prior year. This improvement is largely attributed to a significant reduction in operating expenses from continuing operations. During the current year, operating expenses decreased to approximately HK$45 million, a reduction of about 86% compared to the roughly HK$311 million recorded in the prior year (after deducting non-recurring items from the prior year). These non-recurring items included (1) impairments of trademarks, right-of-use assets, and property, plant, and equipment totaling approximately HK$119 million, and (2) impairments of a loan to a joint venture and trade receivables totaling about HK$28 million.

The reduction in operating expenses is partly due to the termination of the European trademark licensing business and the corresponding removal of its associated cost base. Even after accounting for the termination of the European trademark licensing business and excluding the impact of the aforementioned non-recurring items, the Group's relevant operating expense efficiency has shown significant improvement. This demonstrates substantial progress made by the Group during the year in strengthening its cost structure and enhancing working capital efficiency.

For discontinued operations, the Group recorded a net loss of approximately HK$22 million for the current year, which stems from a one-time gain on termination of consolidation. This compares to a net loss of about HK$940 million for the prior year, thereby further contributing to the reduction in the loss attributable to shareholders for the current year.