Spotlight on...Esprit progresses with turnaround plans
In September last year, fashion retailer Esprit revealed a bold turnaround strategy. In an update yesterday (23 February), the company revealed how these extensive plans are set to touch all areas of its business.
Among its plans are the shuttering of its North American stores while also seeking a licence partner in the region, a new branding strategy, a new sourcing strategy, a hybrid store/franchise model in China, and a new wholesale strategy.
North America and store closures
When Esprit announced its revitalisation plans last year, the most attention-grabbing element was its decision to exit its North American retail operations. Esprit now says it will wind-down the business by 31 March, after deciding not to sell it. However, the company is not giving up on North America entirely, revealing that it is looking to work with a licence partner there.
Describing the reasons behind not selling the business, it said: "We are not willing to compromise on brand positioning and distribution channels.
"Given that the focus of our transformation process is to re-establish the Esprit brand as a leading, inspiring fashion brand, we were not willing to jeopardise our efforts by a potential different brand execution in North America.
"Hence, we believe that pursuing the option to close down the operations in North America and develop the licensing business with one or more competent license partners will serve the best interests of the group."
The store closures announced in September also remain on-track, with over 50% of the 80 stores slated for closure now shuttered or in final negotiations.
New branding strategy
Esprit's first efforts under its new branding strategy have seen "very encouraging results". The first campaign, which featured model Gisele Bündchen, helped raise consumer awareness, with a 9 percentage points rise to 59% in Germany, and a rise of 19 percentage points to 49% in China.
It has also launched a new Trend division, a China design centre and a new denim division. Esprit said the Trend division is expected to have its first product delivery in September this year, while the China design centre has already delivered its first concepts, with new product designs being launched in August. The company is already including new fits in its denim lines, with the first styles to be in store by December.
With a focus on making its products more fashionable, a more frequent six-season calendar with 12 deliveries will help ensure the "continual flow of products throughout the season".
And following the successful roll-out of its new concept store in Cologne, there are now plans to refurbish some 14 stores in key locations over the second half of the year. In addition it will also open two other store concepts, in Antwerp in April and Dusseldorf in July.
Esprit also revealed a new sourcing strategy, opening a never-out-of-stock service centre to optimise availability and inventory. It is also setting up new sourcing offices in Indonesia and India, to "realise further potential". The offices will open in the second and fourth quarters respectively.
In order to deal with the huge market size and demographic differences among provinces in China, Esprit plans to work with national and regional franchise partners to accelerate its expansion in the country. It aims to open around 40 stores in the country during the second half.
The company also intends to launch its first Asia-Pacific e-shop in China over the second-half of the year.
Key wholesale accounts
Some 650 wholesale accounts have been selected as key partners for whom Esprit has tailored support packages to help drive growth.
It is also working to develop its wholesale business in regions where it is under represented, such as Asia and Latin America. Over the half, the company saw "robust wholesale turnover growth" in Thailand, Philippines, Indonesia, Chile and Columbia.
Speaking about its outlook, the company said the results represent an "early and very important step on our route to seeing the entire plan through, and this good result has confirmed that...we are definitely heading in the right direction.
"Looking beyond this financial year, we are even more confident that we will see the tangible results of our hard work materialise in 2013 and succeed in turning Esprit into an inspiring and fashionable brand with sustainable profits and a clear identity."
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