Flailing apparel brand Esprit is back in the red again, reporting a net loss for the first half-year of HKD87.735 million (US$11.2 million).
The company in 2024 began its exit from the business it had been engaged in since its founding in 1968 – designing, producing and retailing apparel – in favour of becoming a brand rights management company, licensing the Esprit name to third parties to take their own chances on its popularity and relevance.
A year ago, there were brief signs the strategy might save Esprit’s legacy, when the company reported a profit of HKD1.3 million ($165,950). The company had previously announced a full-year profit only once since 2016. Over the following years, losses exceeded US$1 billion. Subsidiaries in the US, Germany and Belgium went bankrupt.
In its results filing with the Hong Kong stock exchange on Thursday, Esprit said it was confident of meeting its financial obligations and continuing to trade as an ongoing concern, citing loan facilities of HKD335 million ($42.7 million), of which only HKD125.127 million ($16 million) had been drawn down as at June 30.
The company’s revenue in the June half-year was just HKD14.9 million ($1.9 million) and net cash inflow was just $712,000. Its balance sheet shows assets of HKD295.45 million ($37.7 million) and liabilities of HKD232.187 million ($29.6 million).
This half-year’s results also included the deconsolidation of its Canadian business, which was subject to insolvency proceedings in early June.
Notes to the accounts expressed confidence in the company’s future as a brand licensor, “acquiring and disposing of trademarks”.
“By shifting away from its legacy business model and capital-intensive infrastructure, historically burdened by significant expenditures in sourcing, distribution and retail operations, the company is now moving towards an asset-light, licensing-centric business model,” the filing said.
“Furthermore, the company continues to evaluate potential distribution channels to expand market penetration and diversify revenue streams as well as consider brand portfolio expansion opportunities that align with its long-term vision when strategically suitable.”
Legal challenges
Regardless of its new operating model, Esprit still faces legacy issues from its past operations. It is embroiled in a legal stoush over the early exit of a lease, including ongoing insolvency proceedings, which it says could potentially cost HKD14 million ($1.79 million).
In the Netherlands, the bankruptcy trustee of its collapsed Esprit Europe business has issued a writ relating to intra-company transfers and seeking compensation for up to euro 49 million ($57.1 million), arguing the transactions were “detrimental to the interests of joint creditors” of Esprit Europe. The trustee is seeking compensation for damages and the costs of the proceedings. Esprit Holdings says the claim is unenforceable in Hong Kong, which is outside the Netherlands court’s jurisdiction. That dispute is proceeding.
After the reporting period, in July, Esprit said it lost a case in the ICC International Court of Arbitration over disputed legal fees dating back to 2024, and was ordered to pay the legal firm US$3,927,922.81 and HKD40,900 ($5200) together with interest. In addition to balance sheet provisions dating back to 202, Esprit Holdings has taken another HKD22.5 million ($2.9 million) hit.
Acting chairman Bradley Wright expressed confidence in the restructuring into a licensing model.
“Management actively deepened its engagement with existing licensee partners across Greater China, North America, and Latin America, through frequent strategic communications, operational guidance, and collaborative business planning, to reinforce ongoing partnerships and alignment on shared growth objectives,” he said in the filing.
“These key partnerships allow the group to efficiently harness localised expert market intelligence, advanced e-commerce capabilities, and established distribution infrastructure to maximise market penetration with optimised capital expenditure. To maximise commercial return on its intellectual property, the group worked closely with its licensee partners to diversify its product portfolio beyond its historical concentration in traditional apparel, thereby unlocking incremental revenue streams and expanding global brand reach.”
Wright said the brand’s licensee in Hong Kong has opened a second retail store, a flagship at Olympian City, and its Mainland China partner has expanded the brand’s presence across online channels including Tmall, Douyin, Vip.com and JD and is broadening the product range into activewear to expand its customer base.
In North America, Esprit’s licensee has “made significant operational strides in preparing for a major regional commercial rollout,” completing onboarding processes for core e-commerce and wholesale channels.
“Building on these operational foundations, subsequent to the reporting period in July 2026, the brand launched selected retro product lines, including iconic Esprit logo fleece crewnecks across major North American retail channels, including Costco in the US and Walmart in Canada,” said Wright. “These launches received positive social media attention and rapid inventory sell-through, driven by strong organic consumer sentiment and Gen X nostalgia.”
