Esprit Shares Jump as Fashion Retailer Nears Deal to Sell Chinese Brand Rights

Dow Jones06-26

By Kimberley Kao

Esprit shares surged in Hong Kong after the troubled fashion retailer said it is nearing a deal to sell its Chinese brand rights.

The stock rose as much as 35% to 0.23 Hong Kong dollars (3 U.S. cents) early Wednesday and was recently at HK$0.19.

Shares remain more than 50% lower this year, with the once high-flying retailer suffering losses due to high energy and logistics costs and weak consumer sentiment.

Esprit said late Tuesday that it is in the final stages of negotiations with an independent third party to sell its trademarks and main domain names in China, Hong Kong, Macau and Taiwan for US$47.5 million. The company didn't identify the potential buyer.

"The group generates negligible revenue and incurs losses from its operations in the Greater China markets," Esprit said.

In April, the company said 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's European operations have been under pressure, and its units in Belgium, Switzerland and Germany have filed for insolvency, citing cash-flow difficulties.

Write to Kimberley Kao at kimberley.kao@wsj.com

(END) Dow Jones Newswires

June 25, 2024 23:20 ET (03:20 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

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