NATIONAL: Failing to keep up with the latest fashion trends and the belligerent pursuit of expansion plans have contributed to the demise of 80 Esprit stores, with closures now set to hit local shores.
The global men’s, children’s and womenswear retailer, listed on the Hong Kong Stock Exchange, has announced a huge restructure involving the closure of 13 shops across Australia and New Zealand.
Head of retail and wholesale, Sophia Hwang-Judiesch, said the company had ‘lost its footing a bit’ along the way and decisions made by ex-management in hindsight were not good for Esprit.
“There was an aggressive approach to the expansion plans and this was at the expense of the probability of the company,” Hwang-Judiesch said. “We focused too much on the opening of more stores and as a result some of our other stores were neglected. We did lose our footing a little bit.”
Despite a fresh management team now steering the company, with group chief executive officer Ronald Van Der Vis at the helm, Esprit is still suffering the aftershocks from former decisions.
Hwang-Judiesch also said Esprit failed to keep up with the ever-changing fashion trends required by the consumer, which is something the group will now prioritise in a bid to hold onto and gain more customers.
“We got a bit slower in terms of reacting to the trend aspect of the business and we were not delivering the trends as quick as we should have been,” Hwang-Judiesch said.
After taking on too much too soon, Esprit is now focused on nurturing the stores which are excelling and will close or sell-off under performing stores. In Australia Esprit has 60 free-standing stores and nine outlets, and in New Zealand there are nine free-standing stores and two outlets. Esprit also wholesales to David Jones and has concessions in Myer, but this element of the brand will not be affected.
“In essence, Esprit is a strong and profitable brand, but the brand has gradually lost its soul over the past few years,” Van Der Vis said. “The heritage of the brand has been neglected and the company lost its customer focus.”
Further investigations are ongoing to determine the poorest performing stores and the bottom 13 across Australia and New Zealand will close. A total of 80 unprofitable stores will shut globally, which includes the exits of the retail operations in Spain, Denmark and Sweden. More than 20 will also close in Germany and six or seven in France.
“These measures need to be taken to recharge the profit potential of Esprit and to reestablish Esprit again as an inspiring fashion brand, and with this we will bring Esprit back on track,” Van Der Vis said.
Esprit plans to invest a total of over HK$18 billion into the future of the company until 2014/15, with HK$7 billion to be spent on long-term investments and HK$11.5 billion on business operations. There will be investments in stores, product design and brand communication in a bid to revive customers’ awareness.
The company’s price points begin at $25 and most of the manufacturing is done in China, however Hwang-Judiesch said the company is now looking at other manufacturing options within Indonesia and India.
Pippa Chambers