The clothing store chain Esprit announced on Wednesday May 15 that it had filed for bankruptcy for its activities in Europe, banking on restructuring to overcome its difficulties linked to rising production costs and the after-effects of the Covid-19 pandemic.
The group, based in Germany and listed on the Hong Kong Stock Exchange, says it hopes that this procedure opened before the court in Düsseldorf (west of Germany) will make it possible to “reorganize the finances and cash flow” of its subsidiaries, adding that “several Potential investors have expressed interest in a strategic partnership.
The bankruptcy filing concerns the subsidiary Esprit Europe and six other German companies in the group. Subsidiaries in Switzerland and Belgium, where Esprit has stores, filed for bankruptcy in March and April. Others could follow, according to the press release. “In recent years, subsidiaries have had to face extremely high costs due to inflation, interest rates and energy prices, the after-effects of the coronavirus and the consequences of international conflicts,” explains the society.
Hecatomb
This situation was “aggravated by the weight of costs inherited from the past”, continues the group, citing high rents and stores of unsuitable sizes. This cocktail of difficulties, to which is added competition from “fast fashion” and second-hand goods, has caused a massacre in the ready-to-wear sector for more than a year with the fall of emblematic brands like Camaïeu, Burton of London, Gap France, Naf Naf, Kookaï and others.
This is the second insolvency procedure in four years for Esprit, which had cut around a third of its workforce and closed 100 points of sale at the time of the pandemic.
The clothing chain was founded in 1968 in San Francisco by an American hippie couple, Douglas and Susie Tompkins (also behind The North Face brand), who sold their first items while traveling around California on board a Volkswagen minibus.
The founders have not been in charge for a long time. The group has been listed since 1993, with headquarters in Ratingen near Düsseldorf. Esprit says it is present in more than forty countries with 586 stores.