The Swiss branch of Esprit has filed for bankruptcy. All company-owned Swiss stores will close, but the franchise locations will continue to exist.
No longer viable
Esprit Switzerland Retail AG filed for insolvency on Monday. “The bankruptcy and closure of the stores was inevitable,” the company said in a press release. Financially, it is not viable to continue retail operations in their current structure in Switzerland, the group said.
The clothing chain cites the general economic slowdown in combination with the sharp increase in energy and logistics costs, but also negative consumer sentiment in Europe as causes. In addition, rents for “shops of inappropriate size” became too high. The cash flow in particular has become insolvent.
Extensive reorganization
The bankruptcy only affects the retail company’s activities in Switzerland. Other countries therefore remain exempt, just like franchise stores and wholesale activities. However, Esprit says it is now focusing “on an extensive reorganization and on strengthening its activities with wholesale and franchise partners”. The fashion brand also wants to generate new momentum in e-commerce.
In the first half of 2023, Esprit’s turnover fell by 17%, also due to negative consumer sentiment, while the profit plunged deeply into the red to 714 million Hong Kong dollars loss (80 million euros). The group predicted improvement in the second half of the year, but at the beginning of February the chain had to issue a new profit warning. Turnover and profit continue to decline, the fashion formula admits.
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The Swiss branch of Esprit has filed for bankruptcy. All company-owned Swiss stores will close, but the franchise locations will continue to exist.