Esprit's (330.HK) delusional plan?

Market cap of HK$14B (peaked over $140B in 2007).

September quarter SSS falling in high single digits. CFO resigned due to 'personal reasons'. Closing 80 non profitable stores.

Plan to spend additional $18.5B in capex and opex in marketing, upgrading designs and stores in the next 4 years. With this spending they expect to expand operating margin by 15%.

All this in the face of increased competition from H&M, Forever 21, GAP,... probability of slowdowns in the European consumer spending and in China where they expect to double sales.

Considering 10year annual run rate earnings of ~$4B Expect more plan tweaking as the results of their 'transformation' comes in the next year or two as they try and nail a fickle discretionary fashion market.

Hero or Zero? Probabilities trend more to Zero, residual value in the brand. Check back in 6months.

Australian proposal to tax efficiency

"The nine-person working group, set up by Mr Swan after the tax summit, is examining a proposal known as Allowance for Corporate Equity, which would apply no tax to the portion of corporate profits necessary to get a reasonable return on equity. Most companies - especially manufacturers - fail to meet that hurdle and would pay no corporate tax.

Banks and mining companies make a much greater return on equity and so would be liable for the super tax on the excess portion of their earnings. A working group member, John Freebairn from Melbourne University, told the conference the super tax rate could be as high as 40 or 50 per cent. He nominated McDonald's and KFC as examples of companies able to make larger than normal profits because of the power of their brands."

Read more: http://www.smh.com.au/business/swan-tax-shakeup-targets-super-rich-20111205-1ofj9.html#ixzz1fiQQSP6i