Apparel chain Esprit will axe 1200 employees globally, including 100 in its Hong Kong office and 800 store employees in Germany as part of its ongoing restructuring program.
A permanent reduction in salaries and benefits will be imposed on all remaining staff, except for those working in stores.
Esprit has received court approval to open insolvency proceedings for its German subsidiaries allowing it to continue with the self-administration process under which it will streamline its business in Europe.
In a filing with the Hong Kong stock exchange, Esprit said Dusseldorf District Court-appointed custodian Dr Biner Baahr, who has worked with Esprit executives since March to complete a restructuring plan, will continue in his role overseeing the plan’s implementation in a process similar to the US’ Chapter 11 restructuring process, called Protective Shield Proceedings.
A creditors’ meeting will be held on August 19 to assess claims made before and during the Protective Shield Proceedings before a vote is held on the percentage of the creditors’ claims which will be paid out.
The job cuts announced this week following the closure of all 56 Esprit stores across Asia, outside Mainland China, this week. Another 50 will now be axed in Germany – stores which accounted for 17.2 percent of the group’s total revenue in the year to June 30.
Another part of the restructuring plan will see contracts with service providers renegotiated to obtain more favorable terms.
Esprit calculates the combined savings from these initiatives will amount to US$116 million, but one-off costs of the restructuring will add up to about $64.5 million in the June 2021 year.
Meanwhile, Esprit says its management team is currently working to strengthen the brand’s purpose, create a “consistent customer experience across all touchpoints,” improving production quality and sustainability credentials and focusing on “full-price sales”.
A further update will be released along with the company’s annual results by the end of September.
Esprit shares are currently trading in Hong Kong at around US 11 cents each.