Another unexpected fashion company now files for bankruptcy citing “extremely high costs due to inflation”, and other troubles.
Fashion brand Esprit has filed for insolvency in Europe citing “extremely high costs due to inflation, interest rates and energy prices, the after-effects of the coronavirus pandemic and the consequences of international conflicts.”
The insolvency filing, which was submitted to a court in Germany, applies only to the company’s European businesses.
All stores and online operations will continue as normal throughout the proceedings, during which the company said it will undergo a “transformation program” to reorganize its finances and business in Europe.
However, the company did note that high rents and an “overly bloated workforce” were some of factors contributing to its financial woes, foreshadowing potential cuts in both areas.
Founded in the U.S. in 1968, the company is now headquartered in Germany and Hong Kong and is listed on the Hong Kong stock exchange.
This is the second time Esprit has entered bankruptcy in the past four years.
Esprit currently has a presence in 40 countries around the globe, with the company’s Asia-Pacific and North and South America divisions unaffected by the European proceedings.
Each group within Esprit’s European business will be tasked with proposing and executing its own restructuring plan tailored to its region “allowing for more creative solutions and potentially better outcomes,” said the company in a statement.
The group also said it is exploring new funding opportunities and that a number of “potential investors have expressed their interest for a strategic partnership.”
“The self-administration proceedings have been initiated with the primary objective of not only restoring the economic stability of the company but also retaining the strength of the Esprit brand name,” said the statement.
“By taking proactive steps to address the disproportionate operating costs and streamline the business, the company demonstrates its commitment to maintaining a strong and competitive brand presence in the market.”
This second European bankruptcy comes as the Esprit works to reestablish its presence in North America, an effort that kicked off last year with a series of pop-ups across the U.S.
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Also Read: This Massive Mall Retailer Is Now Closing In California
Other Economy News Today
A clothing mall retailer now announces an unexpected closure in California according to filing from the state Employment Department.
American Eagle Outfitters will permanently close its location within the Emporium Centre San Francisco by next month.
A final date of operation is set for June 12, 2024.
At least 52 employees at the American Eagle store will lose their jobs.
It had a lease with the mall that lasted until January 31, 2028, meaning it was terminated almost four years early, per SFGate.
The American Eagle store in the mall is the only location from the brand within San Francisco.
No closure signs have been seen outside of the store yet.
The writing was seemingly on the wall for American Eagle to leave the mall, formally known as Westfield San Francisco Centre after it filed a lawsuit against it in 2023.
American Eagle claimed the mall “neglected” the building in which it is housed and that the store suffered “significant security incidents.”
Those incidents allegedly took place between May 2022 and 2023 and included theft, violence, and customers with firearms and even a machete during one altercation.
The case is ongoing and has a jury trial slated for February 2025, per documents from the Superior Court of California for San Francisco County obtained by SFGate.
Several competitors to American Eagle Outfitters, including J.Crew and Nordstrom fled the same shopping center months prior.
J.Crew closed on January 22 officially but did not provide a reason behind the shutdown, per local CW affiliate KRON-TV.
Nordstrom closed in August 2023, citing less “foot traffic” and changes in the “dynamics of the downtown San Francisco market.”
Cinemark Theaters, Hollister, Adidas, Lucky Brand, LEGO, and others have also left the shopping center.
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Also Read: An Unexpected Retailer Is Now Closing All Stores in Illinois
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