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Esprit Said to Explore Sale of U.S., Canadian Operations

Hannelore Foerster/Bloomberg

Esprit Holdings Ltd.’s stock has plummeted 55 percent in the past year amid slumping sales in Europe, its biggest market.

Esprit Holdings Ltd.’s stock has plummeted 55 percent in the past year amid slumping sales in Europe, its biggest market. Photographer: Hannelore Foerster/Bloomberg

Esprit Holdings Ltd. (330), the biggest
Hong Kong-listed clothier, is exploring the sale of its U.S.
and Canadian operations, according to three people familiar
with the matter.

Rothschild in New York has been hired to advise Esprit,
said the people, who declined to be identified because the
process isn’t public. The assets are likely to be shown to a
number of private-equity funds, said one of the people.

Esprit’s sales in the North American countries, where it
has more than 90 stores, grew 11 percent to HK$657 million ($84
million) in its fiscal first half ended December. The clothing
retailer’s stock has plummeted 55 percent in the past year amid
slumping sales in Europe, its biggest market.

A representative of Rothschild didn’t immediately return a
phone message seeking comment. Patrick Lau, Esprit’s senior
vice-president for finance and head of investor relations,
declined to comment on the matter. Chief Financial Officer Chew
Fook Aun couldn’t immediately be reached.

Esprit fell 3.8 percent to HK$20.50 at 9:45 a.m. in Hong
Kong trading as Asian stocks slumped amid concerns that the U.S.
economic recovery is weakening and Europe’s debt crisis may
spread. The retailer’s shares are down 45 percent this year as
it contends with higher materials costs and competition from
Hennes Mauritz AB (HMB) and Inditex SA (ITX)’s Zara.

Esprit’s Outlets

Esprit, which began in 1968 in California, has more than
1,150 directly managed retail locations worldwide and more than
12,000 wholesale outlets, including franchises and “shops in
stores.” The North American division accounted for 3.7 percent
of Esprit’s HK$17.7 billion revenue in the six months through
December.

The company, with a market value of HK$26.5 billion, was
started by Susie and Doug Tompkins when they sold clothes out
of the back of a station wagon in San Francisco, according to
the company’s website.

The transformation into a global brand began three years
later, when the couple met Hong Kong businessman Michael Ying,
who was chairman from 1993 until 2006. The current chairman is
Hans-Joachim Koerber, the former chief executive officer of
Germany’s Metro AG, who took over from Heinz Krogner in
February.

To contact the reporters on this story:
Lauren Coleman-Lochner in New York at
llochner@bloomberg.net;
Jeffrey McCracken in New York at
jmccracken3@bloomberg.net

To contact the editors responsible for this story:
Frank Longid at flongid@bloomberg.net
Kevin Orland at korland@bloomberg.net