According to Wall Street Journal (WSJ), Esprit is reportedly seeking potential investors to assist the company in "restructuring and turnaround of its European business" as its revenues continue to slide and operational expenses pile up.

GlobalData's retail analyst Louise Deglise-Favre believes Esprit's decision to seek out investors seems to be stemming out of "necessity" to prevent a possible collapse and help balance its financial situation.

She told Just Style: "The brand has failed to remain at the top of consumers’ minds in many of its European markets due to its relatively stale product offering. Its upper mass market price positioning also contributed to its decline in the current inflationary climate."

Esprit told WSJ that it is engaged in discussions with an "international private-equity firm" regarding potential investments. The potential investor has reportedly expressed interest in submitting a "non-legally binding framework memorandum of understanding" as a precursor to a possible partnership.

WSJ claimed the potential investor intends to assist the retailer in the restructuring and turnaround of its European business, which Esprit will have control of.

Esprit told WSJ that the potential investor was also interested in investing in its North American and Asian markets, adding: "The potential cooperation is subject to the signing of the definitive transaction agreement. Therefore, the potential cooperation may or may not proceed."

Esprit had not responded to Just Style's request for a comment at the time of going to press.

This update follows a profit warning issued by Esprit after it incurred a net loss of HK$1.9bn ($243m) for the year ending 31 December 2023.

At the time, the retailer attributed the decline in revenues to various factors including the unfavourable macroeconomic environment in Europe, particularly in Germany characterised by high interest rates due to high inflationary pressures, ongoing geopolitical tensions worldwide, particularly the conflict in Ukraine; and high energy costs, particularly in Germany, which Esprit point out impacted consumer purchasing power.

However, Esprit had been struggling through 2023 as it reported a 17% decline in sales and a shift to negative financial territory in the six months ended 30 June.

Even then, the retailer cited its performance woes to the challenging economic climate and the ongoing Ukraine war as factors contributing to its setbacks.