By Sherry Qin
Esprit shares surged after the troubled fashion retailer said it was on the cusp of winning investment from an international private-equity group, coming in the wake of insolvency filings by units in Belgium and Switzerland.
Shares rose 24% to 0.26 Hong Kong dollars (3 U.S. cents) early Thursday, taking gains to 39% since the company said it was in talks with a potential investor last week. Shares are still down 38% this year amid widening losses.
Esprit said Thursday that it had signed a nonbinding deal with an unnamed investor to potentially acquire a stake in the company and help restructure its European businesses.
Esprit said it had decided to "embark on a rebranding journey with new partnerships," and that the potential investment was in line with its growth and restructuring strategies. A completed deal would allow it to focus on its "key strategic markets, including the North America market and Asian market," it added.
Esprit said terms of a deal were subject to further negotiation, and that as part of the preliminary pact it will refrain from speaking with other parties about the European businesses through the end of May.
The Hong Kong-based retailer's European operations have been under pressure from high energy and logistics costs and weak consumer sentiment. Units in Belgium and Switzerland recently filed for insolvency, citing cash flow difficulties.
Esprit's losses widened to HK$2.24 billion (US$286.0 million) last year from HK$642 million in 2022.
For 2024, the company has flagged concern that slowing global growth will cut into consumer spending beyond essential needs.
Write to Sherry Qin at sherry.qin@wsj.com
(END) Dow Jones Newswires
April 17, 2024 23:31 ET (03:31 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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