* in talks with CEO candidate
* chairman will stay on until December 2010
* stock falls despite succession concerns easing (Repeats to fix transmission error) (Add details, background, comments, stock price)
By Donny Kwok
HONG KONG, March 31 (Reuters) - Fashion retailer Esprit <0330.HK>, whose shares have been battered by investor concerns over management moves, said it was in talks with a candidate for chief executive, and Heinz Krogner, currently chairman and CEO, would stay on as executive chairman until late 2010.
Shares of the world's No. 6 fashion retailer erased early gains to fall almost 3 percent, pressured by selling orders from Europe, brokers said. By 0700 GMT, the stock was down 1.9 percent at HK$39.
"The golden age of Esprit is now over," said Francis Lun, a general manager at Fulbright Securities. "Some funds might unload their stakes when they lose confidence in the management."
Esprit shares had earlier risen more than 5 percent after the company said it was in discussions with a candidate CEO, with Krogner staying on as chairman. It said it had not received notice of Krogner's resignation as CEO.
"Until the dust settles, the management issue would likely continue to overshadow Esprit's share," DBS Vickers said in a note. "With a new management team still being put in place, there are still uncertainties regarding the stability and ability of the new team, hence the issue would remain an overhang."
Esprit shares had slumped 17 percent in the last two trading days after the company announced on Thursday that Thomas Grote, a director and president of brand operations, was leaving. Grote, touted as a successor to 67-year-old Krogner, resigned as a director but will keep his brand operations role until June 30. He is the third senior executive to leave Esprit in the past year, following CFO John Poon and North America operations head Jerome Griffith.
Analysts said news of Grote's sudden resignation heightened investor concern as the Europe-focused retailer is grappling with a recession in its key markets. [ID:nSEO66033]
Morgan Stanley said in a note that Krogner had told an analyst call late on Monday that the management changes should help move Esprit to more of a "team show" from a "few men's show".
Krogner's clarification on Esprit's strategy and management "should provide some assurance to the market that the system is still intact," the note added.
"We believe the market will welcome this news, but whether Krogner's new dream team will succeed remains to be seen. Its retail initiative will inevitably result in lower margins given the nature of the business," Renee Tai, analyst at CIMB GK Research, said in a note.
Esprit said late on Monday it appointed Erik van Dijk, an executive at European fashion chain operator C&A, as global marketing director. (Editing by Ian Geoghegan)