Hong Kong-based fashion retailer Esprit is to axe its 93 stores in North America after it failed to find a buyer for its ailing store network.

Group earnings fell 98 per cent last year and Esprit is now determining whether to file for bankruptcy protection in the US and Canada.

“We are continuing our process of closing the stores. It is in line with what we said last September; we have made provisions for the closures,” said Patrick Lau, head of investor relations and mergers and acquisitions.

According to Esprit, the US and Canada subsidiaries lost HK$1.6 billion (US$206 million) over a four year period ending last year.

“Esprit is cutting losses in a tough market that it hasn’t been able to break into,” said Andrew Sullivan, principal sales trading at Piper Jaffray Asia Securities in Hong Kong.

“Retailers in the US all face a difficult moment since US consumer spending continues to shrink.”

On a lighter note, Esprit in Hong Kong gained a profit of as much as 3.9 per cent , just after Esprit US and Canada reported a 98 per cent profit fall in September. CEO Ronald Van der Vis plans to regain Esprit earnings in European markets and double sales in China within four years by launching improved designs. Managers and designers from H&M, Puma and Adidas have been hired to lead the design teams in China and Paris.

Esprit North America is now negotiating with landlords over the termination of leases.

Esprit’s shares lost 73 per cent last year, however, they rose up to 15 per cent this year.

GB