Advanced negotiations: Esprit wants to say goodbye to its China business

Following insolvency filings for several of its European subsidiaries, Esprit is now set to exit China.

The Hong Kong-based clothing manufacturer has received multiple offers from several independent third parties for the potential acquisition of its Greater China trademarks, the holding company said in a statement on Wednesday. No legally binding agreement has been entered into at this stage, but negotiations are at an advanced stage.

The potential acquirer, which was not named, has offered to pay 47.5 million US dollars (around 44.4 million euros) for the trademarks, together with all rights and benefits appurtenant thereto and the key domain names in the Greater China region. The region in question comprises mainland China, Hong Kong, Macau and Taiwan. Upon successful signing, Esprit Holdings would receive an initial payment of 10 million US dollars. The sum will be used for the group’s general working capital, the statement said.

Losses in Greater China

The planned divestment is being justified by the fact that the regions have been loss-making for the holding company, despite being earmarked for investment by CEO William Pak just two years ago. In 2022, the company announced its return to key markets in Asia, launching online stores in Hong Kong, Taiwan and South Korea, with plans to open a limited number of physical stores in the regions.

No buyer has yet been found for Esprit’s insolvent subsidiaries in Europe. Talks have been held with interested parties, particularly for Esprit Europe GmbH, based in Ratingen, Germany, which is the parent company for Esprit in Germany, France, Belgium, Austria, the Scandinavian countries, Poland and the UK, but no agreement has yet been reached. Negotiations over the acquisition of the brand rights for Europe were said to be at an advanced stage in May, but it has since emerged that the CBR Group, which had been named as a potential buyer, is no longer interested in acquiring Esprit or parts thereof.

Esprit Europe GmbH and six other German Esprit companies have been insolvent since mid-May. In the preceding months, subsidiaries such as Esprit Switzerland Retail and the Belgian retail subsidiary had already filed for insolvency.