Esprit has filed for bankruptcy once again. The fashion company is seeking self-administration for its European operations. Experts have long criticized the challenging situation imposed by the management in Hong Kong.
For decades, the fashion brand Esprit defined the clothing style in Germany, but now it appears to be in decline. The European subsidiary, including its German entities, has slipped into insolvency once more. Esprit Europe announced today that it, along with six German group companies, has filed for self-administration bankruptcy. The company stated that its business operations would continue for the time being. Approximately 1,500 employees were directly affected and informed about the plans at the company’s headquarters in Ratingen.
The goal is to “restructure and sustainably reposition” the predominantly Germany-led European business. To this end, “all options for viable future solutions” will be explored “very promptly.”
However, it is uncertain how many such options exist. Shortly after the outbreak of the coronavirus pandemic in early 2020, Esprit sought self-administration bankruptcy, closing half of its 100 stores in Germany and cutting 2,000 of its 6,000 jobs worldwide. Although the company managed to return to profitability, the crisis clearly wasn’t solely due to the pandemic and mandated store closures. For years, Esprit has struggled to achieve a profitable business.
The latest bankruptcy indicates that the relocation of the headquarters to Hong Kong, which was supposed to handle purchasing, marketing, and collections, did not solve Esprit’s problems and likely exacerbated them. The billionaire Karen Lo Ki-yan, head of Esprit’s major shareholder North Point Talent and heiress to a soy milk empire, resides in Hong Kong. Under her leadership, the goal was for Esprit to “return to its former glory.”
Founded by American environmentalist Douglas Tompkins in San Francisco in the late 1960s, the company quickly moved to Germany, becoming successful with knitwear, shorts, and jeans. Its hallmark of good, reliable quality helped it conquer the European market. However, since the company was later mostly sold to co-shareholders in Hong Kong, there has been tension between the power centers in both regions.