In future Esprit hopes to establish a leaner “asset-light” model for its US market. Credit: Shutterstock.

Filed in the Bankruptcy Court for the Southern District of New York on 25 October, the move comes amid what Esprit describes as “unsatisfactory” financial results alongside poor business.

Esprit US Distributions Limited (USDS), which is responsible for wholesale distribution, and Esprit US Retail Inc (USRI), which is focused on retail and ecommerce in the US, both struggled to balance their high operating costs with declining revenues.

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According to recent financial statements, the US subsidiaries had combined assets of HK$317m ($40m) and HK$477m with intra-group liabilities amounting to approximately HK$315m. After evaluating these financial strains, the boards of both subsidiaries decided that filing for bankruptcy was in their best interests, allowing them to liquidate their assets to address outstanding debts.

This filing means Esprit will lose operational control over its US entities, reducing the company’s overall expenses by eliminating the need for further financial support to the subsidiaries.

Moving forward, Esprit plans to focus on a leaner, “asset-light” model for the US, seeking “skilled and seasoned” partners to grow its licensing business.

Esprit said it will provide further announcements if there is any material progress in connection with the bankruptcy filings.

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The company had not responded to Just Style’s request for comment at the time of going to press.

In August Esprit announced a “significant reduction” of loss for the six months ended 30 June 2023 thanks to its restructuring and deconsolidation efforts in its European business.