Esprit provided the update on its Europe businesses as several subsidiaries opened insolvency proceedings.

Esprit said it is looking to exit loss-making operations in Europe and will embark on a new business model which includes optimising the company's structure, as well as setting up a more flexible and scalable European distribution centre, potentially in the Netherlands.

It had previously been reported to be looking for potential investors to rescue the European arm of its business.

This news came as Esprit warned of a HK$1.9bn net loss for 2023 due to a tough European market.

While its German subsidiary remains in discussions over a potential acquisition, it is likely the Swiss and Belgian subsidiaries will be closed, Esprit revealed.

Esprit added it is actively seeking financing through various channels with a view to improving the financial position of the group and enlarging the capital base of the company.

While certain investors have expressed their interest in the company with a view to grow its European business, Esprit said any funds raised will be mainly used to pay suppliers to secure a sustainable supply chain and avoid disruption in the wholesale business; and rebuild the group’s new operational infrastructure system.