Coronavirus pandemic
12 Esprit outlets here to close as chain shuts 56 stores in Asia
Affected shops to go by June 30, but firm to continue China joint venture and focus on Europe
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The Esprit outlet at Tampines 1 Mall, which is closed during the circuit breaker period. It will be closed for good by the end of June along with the other 11 Singapore outlets as part of Esprit's efforts to cope with the impact of the coronavirus pandemic.
ST PHOTO: ARIFFIN JAMAR
Fashion chain Esprit Holdings is closing all 56 of its stores in Asia outside mainland China, including 12 in Singapore.
The firm told the Hong Kong Exchange on Monday that the shops in Singapore, Malaysia, Taiwan, Hong Kong and Macau will be shut by June 30 as it tries to meet the challenges posed by the coronavirus pandemic.
It employs around 70 people here and its outlets - including at the Jem, Ion Orchard and Paragon malls - sell clothes for men, women and children, ranging from office wear to casual outfits.
The company said in response to queries by The Straits Times that all employees have been informed that the target is to close the stores by the end of June and that they are expected to be retrenched.
The 56 stores to close generated revenue of HK$267 million (S$48.8 million) for the nine months to March 31, less than 4 per cent of total group turnover.
It estimates that the store closures will incur one-off costs, including impairment of assets and inventories and staff severance, of HK$150 million to HK$200 million.
The company, which is based in Hong Kong and Germany, will continue its joint venture business in China as well as its wholesale and licensing operations in Asia and focus on its core markets in Europe.
Esprit said in the exchange filing that government measures amid the pandemic have forced the temporary closure of many of its retail outlets.
Esprit group chief executive Anders Kristiansen noted: "The whole industry has been affected by the global crisis. We first felt the impact in Asia and now in Europe, where many of our stores have been closed. This is forcing us to look at the contribution all markets make to the group's performance."
Third-quarter revenue plunged 52.2 per cent in Asia year on year, while European turnover fell 22.2 per cent. Globally, revenue fell 25 per cent for the quarter.
The company is negotiating with landlords to seek rental relief for the stores that will remain open.
Its executive management team has taken a 35 per cent pay cut while staff at senior vice-president and vice-president levels have accepted a 25 per cent reduction.
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52.2%
Drop in third-quarter revenue in Asia year on year, while European turnover fell 22.2 per cent. Globally, revenue fell 25 per cent for the quarter.
Other high-profile fashion retail collapses during the Covid-19 outbreak include British brands Oasis, Warehouse and Cath Kidston.
Mr Amos Tan, a senior lecturer at Singapore Polytechnic's School of Business, said: "The lockdown and temporary closure of shops have caused the economy and retail sales to come to a standstill.
"Because of the uncertainty, with jobs lost and the economic crisis affecting all countries, people are hesitant to spend (on fashion apparel)."
He added that even for retailers with online platforms, the digital space is usually supplementary and not their main channel of sales.
He said: "This coronavirus situation serves as a stern warning to retailers who have refused to transform to suit the digital lifestyle of consumers."
Ms Esther Ho, director of Nanyang Polytechnic's School of Business Management, said: "The core fundamentals of the retailers are challenged to breaking point during this coronavirus crisis, which is why we are observing big chains dropping out of the race."
She added that retailers had to grapple with underlying issues even before this crisis, such as the rise of e-commerce, changing consumer preferences and high manpower costs.
