Sunday , September 22 2019
Home / austria / Clear cut on Esprit – almost 500 points to be eliminated

Clear cut on Esprit – almost 500 points to be eliminated



DThe presentation on the future of Esprit has an impressive 117 pages. CEO Anders Kristiansen shows how he wants to bring Ratingen's battered fashion brand near Düsseldorf back on track. And while the vast extent of the document can serve with confidence as an indication of the terrible situation of the company. The content is correspondingly fierce: Kristiansen wants to close stores, simplify internal structures and, to a large extent, reduce the number of employees.

After all, 40% of the workforce in all areas outside the network of stores should lose their jobs. This threatens real clarity at the corporate headquarters in Rhineland, where currently about 1,200 employees are employed. After all, almost 500 jobs would be discarded in the proposed quota.

Although discussions are ongoing with the workers' council. Therefore, Kristiansen resisted specific statements about the location of Ratingen. The Ver.di services union had recently, but feared the worst, especially when the CEO announced in an internal letter to German officials an "immediate and forward-looking reorientation" and also spoke of "a dramatic economic situation" in Esprit .

More basic goods instead of extravagant patterns

In fact, the brand is in a seemingly endless crisis. Five years ago, it has come down with Esprit, challenging all previous restructuring efforts. Revenues in the financial year 2017/2018, which expired at the end of June, also fell sharply again: at 11%, to just € 1.7 billion. The end result was an operating loss of almost 250 million euros.

And in the new fiscal year it got even worse. At 17%, revenues in the first quarter of July to September fell, with the hot summer contributing its share. In Germany and Europe, anyway, the whole fashion trade complains about the high temperatures over lack of frequency in the stores, but also reluctance to trade online.

Read too

A woman takes on Monday (27/02/2012) in Dusseldorf a hanger with the inscription Gerry Weber in hand. Fashion company Gerry Weber expects more sales than previously planned due to the acquisition of some 200 branches of insolvent competitor Wissmach this year. Revenue is expected to rise in fiscal year 2011/12 (end of October) to now 795 million euros, said the listed company MDax. Photo: Federico Gambarini dpa / lnw [ Rechtehinweis: (c) dpa ]

Now Kristiansen pulls the ripcord. "We need to rebuild our business model," he said on the Hong Kong investor day in Hong Kong, where Esprit is listed on the stock exchange. According to his presentation, this includes, for example, a change in the portfolio. "We want to be known in the future for trousers, T-shirts and sweaters," said Kristiansen. About half the product range will be used to manufacture these major products in the future.

To this end, Kristiansen plans to attract significantly more commodities rather than extravagant patterns and impressions that are in great danger of being out of fashion. So far, commodities account for about twelve percent of the product range and in the future, the quota should be almost three times greater than 30 percent.

Degenerate to the mass mark

At the center of attention are so-called wholesale activities, that is, business with trading partners that sell many fashion brands under one roof. "The lucrative wholesale business will play a key role in reorienting," said Kristiansen, who worked for private equity firm Permira before joining Esprit.

According to information from the Group, there are currently 5400 points of sale, of which 3350 in Germany alone are the most important market for Esprit. In front of this are 140 own stores in this country – at least in any case. For Kristiansen wants to close deals deficit in the next years, to 28 already exist concrete solutions.

Read too

Empty temples in Gerry Weber. The company is a case of reorganization

opinion Decline of Gerry Weber

Until you move on, however, difficult negotiations may still be needed. Because Esprit has reported in many places long leases, as it is called by the industry. The problem: Many of these stores are located in B-locations or in the immediate vicinity of other branches, which goes back to the time of the strong expansion before the financial crisis.

Esprit has become a mass brand – and has not recovered to this day, as industry experts say. "There is no desire," says a fashion manager. "The Esprit was over-distributed. The brand became arbitrary." Kristiansen wants to work on it, too. Among other influencers to help make the Esprit again more covetous.

"That's what Esprit said five years ago"

At the same time, the manager announces a quality offensive, also for the attacks. Because so far there are no defined standards. A L-size pullover can therefore vary from collection to collection. Behind this are not the smallest responsibilities at headquarters. "Many projects fail because of double and triple responsibilities," industry experts say.

Although Kristiansen's predecessor, José Manuel Martinez, has internally improved many processes and expanded online business to almost 25% of sales. In management, he has not adjusted hierarchies and staffing levels to shrinking business over the years, observers say.

Kristiansen estimates that the costs for the next restructuring will be about 170 million euros in the next two to three years. After this period, the break-even must be reached, so Esprit will make money again. And then, according to Kristiansen, a new phase of growth can begin, especially in Asia, and especially in China, which the manager has chosen as an important target market. Then it will open in contrast to the new stores in Europe. Observers, however, remain skeptical. "This is what Esprit said five years ago: first a restructuring, then a new growth."

Financially, Martinez apparently also succeeded. After all, Esprit claims to have no liabilities and also has a three-digit figure in millions of free cash flow. But as square footage sales in the remaining stores are declining, new stores are on the list of renovations and everything starts over again. "This is a dangerous downward spiral. And that makes the restart so difficult," the experts doubt.

Read too

Roll instead of clicking: The collective Volkmar (back) and Bernd Junghans go with their neighbors Fanny Stegherr (L.) And Ella Broscheit the offer through


Source link