Hong Kong fashion retailer Esprit is in deep trouble

Hong Kong fashion retailer Esprit is in deep trouble

After the resignation of both the Chairman and CEO of Esprit the shares of the Hong Kong fashion retailer Esprit dived. The company has been before in troubled water

AM-AT387_ESPRIT_NS_20120614042403 Esprit WSJThe company was founded in 1968 and models such as Gisele Bündchen are associated with the company but experts voice the comment that Esprit is a tired brand and also that the company feels the intense heat of competition from Zara and H & M.

On top of that, net income decreased in the second half o 2011 by 74.1 % on an annual basis. At the end of 2011 there were more than a thousand outlets in China and Esprit will double them in the next three years. China is the largest presence outside of Europe, but sales at existing stores there dropped in the second half of 2011 by 6.3 % and global revenues fell 10 %. Esprit’s Chinese situation contrasts with Chinese retail sales of clothing because those were growing 25 %.

A clear analysis of what really went wrong at Esprit is not yet known, neither is known why the two top shots were leaving at once. Certainly, it will be very painful to try a quick turnaround of the company because this procedure might call for hefty investment in human capital and creative fashion lines and store lifting to regain a healthy demand for Esprit’s lines.

www.esprit.com

www.wsj.com


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