Esprit, a clothing brand, is closing several of its subsidiary companies in order to focus on growing its licensing business and re-establishing itself as an intellectual property management organisation.
Esprit said that its licensing income for FY ’23 was HK$121 million (US $ 15.48 million). It continues, “The licensing model enables it to capitalise on its brand without the significant capital outlay necessary for manufacturing, distribution, and retail operations.” As a result, the company model becomes more scalable and asset-light. It also permits market diversity, operational efficiency, and steady revenue streams.
“With the right strategic partners in place, there is significant growth potential in this licensing-focused business model,” it says. “Furthermore, each geographic region can further be segmented into individual product categories, where specialised operators in each segment can ensure product quality and efficiency. This approach has the potential to drive revenue growth in a way that a single, generalised operator may not be able to achieve,” it adds.
The news was released concurrently with the announcement of HKRP’s dissolution. HKRP is a Hong Kong-incorporated company that is an indirect wholly-owned subsidiary of the corporation, with its main business being the distribution of clothing and accessories through e-commerce and wholesale, as well as service providing.
According to Esprit, the group’s subpar performance and the insolvency of the group’s firms had a significant influence on the subsidiaries’ current financial status. Although it had hired sourcing agents, who are paid directly by HKRP, which would normally recover the expenses from the German subsidiary, the German arm’s ongoing bankruptcy proceedings meant that payment was not received, making HKRP unable to get back the fees it had paid out.
Esprit stopped talks with a possible purchaser for its China business earlier this month because the offer was not financially feasible, and it has since acknowledged that it was considering its other options.
In June, Esprit also revealed its intention to close all of its profitable operations in Europe and implement a new business strategy centred on wholesale and online sales. The disclosure coincided with Esprit’s warning of a HK$1.9 billion net loss for 2023 as a result of a challenging European market. It had previously been reported that it was searching for possible investors to save its European division.
