Esprit has flagged another annual loss, citing the insolvency of its European and US subsidiaries and an adverse operating environment.

The Hong Kong-listed fashion company expects an unaudited net loss of HK$1.172 billion ($150 million) for the year ended December 31, compared to a loss of HK$2.339 billion in the prior year.

The company also expects a 73 per cent drop in revenue and 76 per cent decrease in gross profit for the year.

Management attributed the results to the insolvency proceedings of the company’s European and US subsidiaries, which resulted in de-consolidation of subsidiaries.

They also cited high costs due to inflation, elevated interest rates and energy prices as well as legacy costs such as high rents, labour costs and expenses related to an overcapacity logistic setup.

They noted that the ongoing restructuring helped reduce net loss, partly offset by impairment losses and provision for inventories.

“Moving forward, the company is now better positioned to pursue an asset-light, licensing-focused business model that aims to maximise the monetisation of Esprit’s global brand in a sustainable manner,” the board concluded.

Esprit will publish its audited annual results in late March.