Esprit does not overcome the fall. The German company, which became one of the largest distribution groups in the world, has initiated proceedings to declare its business in Europe insolvent. The company has already presented all the necessary documentation before the German justice system, in the courts of Düsseldorf.
The company, which is listed on the Hong Kong Stock Exchange, issued a profit warning in February, for which it expected to triple its red numbers in fiscal year 2023. At the end of the fiscal year, Esprit has recorded losses of 1,901 million Hong Kong dollars (226 million euros) and a turnover of 5,912 million dollars (703 million euros).
“In recent years, the company has been struggling with rising costs due to inflation, interest rates and energy prices, the post-coronavirus effects and the consequences of international conflicts, which has weakened the financial situation“, the company explained in a statement.
Esprit took the subsidiaries in Belgium and Switzerland to court
Esprit already announced in April the cessation of operations of its subsidiaries in Belgium and Switzerland. The company called the decision “inevitable” at the time, and has now highlighted the unviability of the business “as it is currently structured” in Germany.
The process does not contemplate the entry of an external bankruptcy administrator, but it will be each of the subsidiaries that will manage the cessation, which guarantees that the Esprit team continues to manage operations. “This will contribute to preserving the value of the company, protecting jobs and increasing the chances of success of the restructuring process,” the company has assured.
For the moment, Esprit’s stores and online platform remain operational, although the operation will affect up to 1,500 company employees. The German company has assured that it is already in negotiations to sell part of the rights to the brand in Europe.
Esprit has been looking for a buyer for its business since Aprilwhen it announced that it was already working together with an investment fund to incorporate it into its capital, with the aim of improving the profitability of European subsidiaries.
