Analysis of inventory and financial performances of Esprit based on its corporate financial reports

Abstract

Esprit is a leading fashion brand and principally engaged in wholesale, retail, fashion, lifestyle products. Esprit reached its peak in 2008, then fell constantly and decreased 98% net profit in 2011. According to its 10/11 financial report, inventories continued to increase, the risk gradually accumulated. The inventory amount increased from HK$ 2.46 billion to HK$ 4.22 billion, inventory turnover in the number of days grew from 65 days to 75 days. Motivated by these industrial evidence, we explore in this paper the reason behind the decline of Esprit and the high inventory level through summary of its corporate financial reports from 2008 to 2015 (since Esprit reached its peak in 2008). From this study, we identify the key factors affecting Esprit's success through various analyses based on different frameworks. We identify the strengths and weaknesses of Esprit's operations and propose recommendations from the 'systems optimisation' perspective.