Struggling fashion house Esprit Holdings Ltd appointed an executive from rival Inditex as its new chief executive on Tuesday, driving its shares 18 percent higher just two months after the resignations of its chairman and CEO had wiped nearly a third off its market value.
The Europe-focused fashion group, which is in the midst of an HK$18 billion ($2.3 billion) restructuring due to be completed by 2015, said Jose Manuel Martínez Gutiérrez would take over as chief executive, effective by the end of September.
Martínez was most recently group director of distribution and operations at Spain’s Inditex, the world’s largest fashion retailer and owner of brands including Zara and Massimo Dutti.
It was not immediately known when Martinez would leave his position at Inditex.
“The new appointment gives investors new hopes. With a new chief, in particular from another strong brand name, investors are putting a bet on a turnaround story,” said Alfred Chan, chief dealer at Cheer Pearl Investment.
The news comes just two months after Esprit chairman Hans Joachim Korber and chief executive Ronald van der Vis resigned on successive days, fuelling worries about management stability and the future of the company’s costly turnaround.
Shares of Esprit, once known as “the bluest of blue chips in Hong Kong”, jumped 18 percent on Tuesday after news of the appointment to hit their highest level since before the resignations in June, beating a 0.2 percent gain in the benchmark Hang Seng Index.
Outgoing chief executive van der Vis had said in June that his family was the only reason behind his resignation and that the company’s crucial turnaround plan would go ahead.
Esprit, which has a market value of $1.7 billion, generates about 80 percent of its sales in Europe, where it is grappling with a slump in demand due to the euro zone debt crisis.
The management reshuffle had cast uncertainty over the company’s ability to execute its turnaround plan and revive a brand that Esprit admitted last year had “lost its soul”.