Fashion company Esprit files for insolvency in Europe.
European fashion chain Esprit is facing significant challenges in its primary market. Insolvency proceedings are imminent, but the brand is set to be preserved. Negotiations are taking place with an investor.
The bankruptcy trend in the German fashion industry persists. Esprit plans to file for self-administration insolvency for its Europe-focused holding company and six other firms at Düsseldorf District Court. "Our goal is to recast Esprit's European business, which is primarily operated from Germany, and reposition it for future success," the company declared. Discussions are already underway with a financial investor who is eager to own the brand rights for Europe and maintain the operational business.
Esprit had already filed for insolvency in Belgium and Switzerland in March. This is the second insolvency for Esprit within four years. Amidst the 2020 coronavirus pandemic, the fashion retailer sought shelter from insolvency laws due to store closures, downsizing its workforce by approximately one-third, and shuttering 100 stores. 1,500 staff members still remain employed by the companies going through the latest insolvency process. The company expressed that business operations will continue "until further notice."
Esprit Holdings, the parent company, is listed on the Hong Kong stock exchange. However, the bulk of the business operations occur in Europe. To date, Germany has accounted for over half of the chain's sales.
German insolvency experts Christian Gerloff and Christian Stoffler, both accomplished in the fashion industry (Escada, Gerry Weber, Adler Markets), have been recruited to guide the company through its restructuring efforts. Gerloff, commenting on the situation, stated, "Esprit is a globally recognized brand for trendy fashion, yet it has been grappling with sagging sales for quite a while. Layoffs and management shuffles haven't helped either." In insolvency, the European business is now poised to be repositioned so it can achieve long-term profitability.
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Esprit's insolvency in Europe also affects its fashion operations in other countries, potentially leading to similar filings. Despite the financial challenges, potential investors are interested in acquiring Esprit's brand rights in Europe, hoping to revitalize its operations.
Source: www.ntv.de
