Esprit stops designing and producing clothing, switches to licensing model

The restructuring at Esprit Holdings Limited continues. Now that the biggest steps in Europe have been taken by exiting unprofitable activities, the company is looking at further opportunities. Esprit Holdings Limited is aware that the brand equity of Esprit is the most valuable asset of the company and is therefore transforming into an intellectual property management company, it is announced in a press release. Two subsidiaries are also being 'voluntarily' liquidated: Esprit Regional Distribution Limited (HKRP) and Esprit Retail (Hong Kong) Limited (HKER).

Esprit Holdings Limited will prioritize expanding its licensing business. In fiscal year 2023, the company generated HK$121 million (EUR14 million) in licensing revenue. “With the right strategic partners, there is significant growth potential in this licensing-focused business model,” the company writes.

Esprit Holdings Limited: Licensing-based business model to maximise the Esprit brand

This business model should bring benefits to retail, wholesale and e-commerce. For example, fewer assets are needed and the business model is more scalable. By introducing licensees, Esprit could be less affected by the fluctuating consumer demand in the retail and wholesale flows. On the operational side, Esprit can enter into licenses with production, distribution and inventory management partners. This allows Esprit Holdings Limited to focus on strategic IP management and marketing. Finally, the company also sees regional opportunities.

“Rather than relying on a single global licensee or operator, the company can strategically partner with regional players. These partnerships with strong local operators can improve market penetration as they have greater knowledge of local distribution channels, regulatory requirements and the ability to develop customized products that meet local customer preferences.” The company notes that each geographic region can be further segmented into separate product categories, where specialized companies can ensure quality and efficiency for each segment.

Esprit Holdings Limited says it is already in discussions with potential partners to license Esprit's intellectual property. The company wants to "maximize the profitable exploitation of Esprit's intellectual property" and is looking at ways to maximize the brand "in a sustainable way."

Esprit Holdings Limited liquidates two subsidiaries

As part of the new direction that Esprit Holdings Limited will adopt, its two subsidiaries Esprit Regional Distribution Limited (HKRP) and Esprit Retail (Hong Kong) Limited (HKER) will be voluntarily liquidated. The former is mainly active in the distribution of clothing and accessories for the wholesale and e-commerce stream. Esprit Retail (Hong Kong) Limited was active in the distribution of clothing and accessories for the retail stream.

The subsidiaries are being liquidated because they are suffering from the insolvency procedures (in Europe) of the group companies. The subsidiaries did not have sufficient resources to continue their business activities, according to Esprit Holdings Limited.

Earlier this month, the curtain also fell for the Dutch subsidiary Esprit Europe BV (NLEB). This bankruptcy follows bankruptcies in Switzerland , Belgium , Germany , Denmark and Austria .

Esprit Holdings Limited is in critical condition after the financial year 2023. The company is writing down billions in debt, leaving it with no other option than to restructure.