* Esprit says receives no resignation letter from CEO
* shares recover some of earlier losses (Updates with company clarification on news report)
By Parvathy Ullatil and Donny Kwok
HONG KONG, March 30 (Reuters) - Shares in fashion retailer Esprit recovered some of their earlier sharp losses on Monday after the company said its CEO had not tendered his resignation, quashing talk of more management changes.
The world's No.6 fashion retailer announced the surprise departure of a senior executive late last week, sending its shares down more than 9 percent on Friday and almost 11 percent on Monday.
In an attempt to soothe investor nerves, Esprit issued a statement saying it had not received a resignation letter from CEO Heinz Krogner.
A local newspaper quoted a German media report on Monday as saying Krogner, who is CEO and chairman, planned to step down as chief executive. The German report also said a successor, an external hire, would be announced this week.
Shares in Esprit were down 5.67 percent at HK$39.90 by 0745 GMT, rebounding from a low hit earlier at HK$37.75 even as the broader stock market <.HSI> extended losses.
WORRIES AHEAD
Still, analysts said news of the sudden resignation of Thomas Grote as an Esprit director and president of brand operations, heightens investor concern as the Europe-focused retailer is grappling with a recession in its key markets. [ID:nSEO66033]
Grote is the third senior executive, after chief financial officer John Poon and North America operations head Jerome Griffith, to leave Esprit in the past year.
Grote, who was touted as a successor to 67-year old Krogner, resigned as a director on Thursday but will stay on as president of brand operations until June 30.
"The sooner the company announces the successor the better. It should announce the replacement before Grote leaves in June, otherwise I would have doubts about the efficiency of the management," said an analyst who declined to be named.
Esprit said Krogner, widely regarded as the chief architect of Esprit's business model, will take over Grote's responsibilities until a replacement is found.
Analysts said a search for a replacement for Grote and
successor to Krogner could prove to be difficult, drawing a
comparison with U.S. retailer Gap Inc
"Our analysis of Drexler's departure from Gap suggests that it is relatively difficult to find a suitable successor if the departing CEO is widely perceived as the key architect of the company," Goldman Sachs' said in a report.
"If this turns out to be the case with Esprit, the stock could face a prolonged period of underperformance."
Esprit shares have fallen more than 25 percent since hitting a six-month high earlier this month.
HSBC on Monday reduced its rating on the stock to neutral from overweight after the share price topped its HK$47 target price last week, while Goldman Sachs downgraded Esprit to sell from neutral and cut its earnings estimate for the second half to June by 16 percent. (Editing by Dhara Ranasinghe)