Esprit Holdings Ltd, the world's fifth most valuable clothing retailer, expects growth incomparative store sales to slow this fiscal year as it clears marked-down inventory in women's wear, a senior executive said.

Esprit, which relies on Europe for the bulk of its income, last week blamed waning growth in overall store sales on a poor product mix at its European clothing divisions, and on management problems.

But Chief Financial Officer John Poon told Reuters in an interview he hoped that Esprit could improve its performance in its second fiscal half, ending in June.

"This year I don't think we're going to get there, but I don't think it will be materially worse than what we have seen for the first half," Poon said, adding it was unrealistic to expect that Esprit would match last fiscal year's store sales growth.

"But as we go between now and June, we hope that we're going to get better as we move on."

Comparative store sales grew 8.5 per cent last year.

The Hong Kong-based firm, which competes with the likes of Inditex's Zara and Gap Inc, said last week it met its guidance for comparative store sales growth of 5 per cent in the six months ended December 31, versus 9 per cent a year ago.

Esprit has hired market analysts and marketing specialists to help it return to stable growth in the year ahead and was keeping its 20 per cent sales growth target, senior executives told reporters last week.

"All the remedial actions that need to be taken have been taken," Poon told Reuters.

Esprit, which sells mid-priced goods from T-shirts to suits and bed linen, is actively expanding its presence outside its stronghold in Europe which made up 85 per cent of its turnover in the first half but has yet to turn around its businesses in newer markets such as North America, Australia and Taiwan.

Sales in Germany, where Esprit has a 2.5 per cent market share, grew 11 per cent in the first half, compared to 16 per cent for the rest of Europe.

Whether the results signal a possible slowdown in growth in Esprit's German sales which typically make up almost 50 per cent of the company's turnover will be pivotal for the firm's future prospects, said Matt Marsden, HSBC regional consumer research analyst.

"The real question for Esprit will be are the latest results we've seen a hiccup, or a signal that growth is slowing in Germany?" he said.

"And can impressive growth in the United Kingdom, France, Spain and Italy make up for possible slowing growth in Germany?"

Esprit has also said that it is looking to its Asia markets especially Malaysia and Singapore to drive growth, and plans to open its first two points of sales typically counters in a department store in South Korea in August.

In India, Esprit planned to double its points of sales to eight by October.

Esprit last week posted a 15.7 per cent jump in net profit to HK$1.87 billion (US$241 million) for its first half in July-December, versus HK$1.62 billion in the same period the previous year.

Turnover climbed 13.2 per cent to HK$11.83 billion.

Esprit shares gained over 17 per cent in 2005 compared to a 4.5 per cent rise in Hong Kong's broader Hang Seng Index.

But the stock has lost almost 8 per cent since the company announced its interim results on Wednesday, with banks such as Merrill Lynch and Credit Suisse downgrading it as the mismatch in product mix dragged down the firm's overall gross profit margin.