Fashion brand Esprit has filed for insolvency in Europe citing “extremely high costs due to inflation, interest rates and energy prices, the after-effects of the coronavirus pandemic and the consequences of international conflicts.”
The insolvency filing, which was submitted to a court in Germany, applies only to the company’s European businesses. All stores and online operations will continue as normal throughout the proceedings, during which the company said it will undergo a “transformation program” to reorganize its finances and business in Europe. However, the company did note that high rents and an “overly bloated workforce” were some of factors contributing to its financial woes, foreshadowing potentials cuts in both areas.
Founded in the U.S. in 1968, the company is now headquartered in Germany and Hong Kong and is listed on the Hong Kong stock exchange. This is the second time Esprit has entered bankruptcy in the past four years. Esprit currently has a presence in 40 countries around the globe, with the company’s Asia-Pacific and North and South America divisions unaffected by the European proceedings.
Each group within Esprit’s European business will be tasked with proposing and executing its own restructuring plan tailored to its region “allowing for more creative solutions and potentially better outcomes,” said the company in a statement. The group also said it is exploring new funding opportunities and that a number of “potential investors have expressed their interest for a strategic partnership.”
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“The self-administration proceedings have been initiated with the primary objective of not only restoring the economic stability of the company but also retaining the strength of the Esprit brand name,” said the statement. “By taking proactive steps to address the disproportionate operating costs and streamline the business, the company demonstrates its commitment to maintaining a strong and competitive brand presence in the market.”
This second European bankruptcy comes as the Esprit works to reestablish its presence in North America, an effort that kicked off last year with a series of pop-ups across the U.S.
