SHANGHAI — Casual clothing brand Esprit has struck a deal with Mulsanne Group Holdings to restructure its mainland China business as a joint venture.
On Sunday evening, the brand said it had agreed to partner with the investment holding company, which works with brands like GXG, Yatlas and 2XU, and operates more than 2,000 stores across mainland China.
Both companies are to contribute capital totaling 100 million renminbi, with MGH holding 60 percent and Esprit 40 percent of the joint venture entity. The deal covers mainland China and excludes Hong Kong, Macau and Taiwan. Subject to Chinese antitrust approval, the deal is expected to be completed by July next year.
“We are exceptionally happy with the deal,” Anders Kristiansen, ceo of Esprit Group said. “MGH has a proven track record of success in China and an already significant apparel business. With local knowledge and a very clear understanding of the Chinese consumer, MGH is the ideal partner for Esprit’s ambitious plans in this important market.”
“Esprit is an iconic brand with a unique heritage and authentic founding values,” Yu Yong, ceo of MGH said. “We are thrilled to have Esprit in our portfolio and are looking forward to building a bright future for the brand in China.”
The announcement said that while waiting for the deal to close, Esprit will continue to close down shops in the market, continuing its aggressive cost-cutting drive for the business globally.
Esprit’s mainland China business is very small. For the year ended June 30, Esprit’s mainland China retail sales excluding ecommerce constituted just 3.7 percent of total revenue, or 481 million Hong Kong dollars, and fell 33.8 percent year over year.
In the previous financial year, the company recorded an impairment of 794 million Hong Kong dollars for the goodwill and customer relationships relating to its China operations.