Clothing and fashion accessories company Esprit Holdings is planning to close down all of its Asian stores outside of mainland China. The company announced on Monday that it will be shutting down around 56 retail outlets located in countries such as Singapore and Malaysia. Stores outside mainland China, specifically those in Macau, Hong Kong, and Taiwan, will also be closed.

The company, with its headquarters in Hong Kong and Germany, reasoned that the closures were necessary for it to better handle the economic downturn caused by the coronavirus pandemic. The publicly traded firm outlined that the outlets will be officially closed on June 30.

Esprit's stores outside of mainland China represent only about 4 percent of its global turnover, which means that the impact to its bottom line will not be that significant. The closures are also part of the company's planned restructuring strategy, which Esprit mentioned is aimed at refocusing and recalibrating its operations.

Apart from closing down its underperforming stores, company executives have agreed to forego some of their payments. The company's executive chairman of the board, Ching Fai, and its CEO have both agreed to forfeit their pay, while the rest of the executive management team have agreed to a 35 percent pay cut.

Esprit Group chief executive officer, Anders Kristiansen, mentioned in a statement that the global crisis has forced the company to immediately asses its global business and to look closely at the contributions of each market to its overall performance. The pandemic has heavily affected the retail sector worldwide as consumption of non-essential items and fashion brands continue to decline. Some retailers have already thrown in the towel and filed for bankruptcy, while others have turned to the government for relief.

The company is reportedly negotiating with landlords across all of its affected markets, seeking better terms and possible rental reliefs. Esprit stated that it will likely be closing down stores in locations where landlords are unwilling to negotiate or provide acceptable terms. It added that it will be utilizing all government-provided relief where available.

The proposed closure of Esprit's Asian outlets is expected to cost the company around HK$200 million, which could affect its full financial year's results. The company's fiscal year will end on June 30. Despite its decision to keep its stores in mainland China open, Esprit explained that it will eventually be "winding down" its business in the region.

For its previous quarter earnings results, which the company had published Monday, Esprit reported a 52.2 percent decline in revenue for its business in Asia.  The overall contribution from the region to the company's overall revenue had also dropped from 9.3 percent last year to only 5.9 percent this year.