Shares of Esprit increased by 24% to HKD0.26 ($0.03) on Thursday morning, marking a 39% gain since the company announced its discussions with a potential investor last week, according to a report by the Wall Street Journal.
However, Esprit’s shares have seen an overall 38% decline this year due to expanding losses, swelling to HKD2.24bn ($286.0m) in 2023 from HKD642m in 2022.
On Thursday, Esprit said that it had entered into a nonbinding agreement with an unidentified investor who may acquire a stake in the company and assist in restructuring its European operations.
Esprit added that it had decided to “embark on a rebranding journey with new partnerships” aligning with the company’s growth and restructuring plans. The completion of the deal would enable Esprit to concentrate on its primary strategic markets, including North America and Asia.
Terms of the agreement are subject to further negotiation. As part of the initial agreement, the company will abstain from discussions with other parties regarding its European operations until the end of May.
The European operations of the Hong Kong-based retailer have been strained due to high energy and logistics costs and subdued consumer sentiment. Its units in Belgium and Switzerland recently declared insolvency, attributing it to cash flow issues.
