Esprit closing all of its Asian stores before June 30

In the nine months to March, retail sales in Asia fell 44.2 percent, by 48.7 percent at the store level, 45.3 percent wholesale and 8.1 percent online.

The company estimates closing its Asian stores will result in one-off costs for severance pay and to exit leases of between HK$150 million and $200 million (US$19 million to $26 million) which will be incurred in the current June quarter.

On the mainland, Esprit reduced its China investment last December. Through a subsidiary called Million Success, it retained a 40-per-cent stake in the Esprit China business, with Hong Kong-based Mulsanne Group holding the balance.

The Asia store decision comes just a month after Esprit placed its six German companies into a form of protective administration to allow restructuring and cull staff numbers under protection from creditors. Once it emerges from that process, and with its Asian business essentially all but gone, the company will focus on Europe with less staff and fewer stores, although whether the crippled, lackluster brand can survive at all up against the regional powerhouses of H&M and Zara parent Inditex is debatable.

In a stock-exchange filing overnight, Esprit described the Asian store closures as part of a restructuring initiative “to focus resources and recalibrate operations in order to cope with the challenges posed by the pandemic most effectively and efficiently”. However, as the nine-month figures above clearly show, Esprit’s sales were in freefall in the region long before Covid-19 made its appearance.

A key indicator of how dire the company’s position came in January when its most high-profile recent hire, chief product and brand officer Mia Ouakim, quit after just a year in the role. Ouakim, who had previously worked with high-end brands Burberry and Tommy Hilfiger, left to take up an opportunity outside the company.