By P.R. Venkat and Sherry Qin
Esprit is in talks with an international private-equity firm regarding prospective investments as the fashion retailer struggles with its European business, after some of its units filed for insolvency.
The potential investor has expressed interest in submitting a non-legally binding framework memorandum of understanding for a possible partnership, Esprit said Wednesday.
The potential investor intends to assist the company in the restructuring and turnaround of its European business, which it will have control of, Esprit said without identifying the private-equity firm.
Esprit's shares rose as much as 44% in Hong Kong early Wednesday after the news. However, the company's shares are still down 41% since the beginning of the year.
The retailer's European business has been stressed due to high energy and logistics costs and weak consumer sentiment. Its units in Belgium and Switzerland have already filed for insolvency, citing cash flow difficulties.
The company has experienced losses in recent years. According to 2023 results, Esprit's losses widened to 2.24 billion Hong Kong dollars (US$286.0 million) from HK$642 million in 2022. This year, the company expects global economic growth to slow further and weaken consumer spending beyond essential needs.
Esprit said the potential investor was also interested in investing in its North American and Asian markets.
"The potential cooperation is subject to the signing of the definitive transaction agreement. Therefore, the potential cooperation may or may not proceed," Esprit said.
Write to P.R. Venkat at venkat.pr@wsj.com and Sherry Qin at sherry.qin@wsj.com
(END) Dow Jones Newswires
April 09, 2024 23:05 ET (03:05 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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