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Escada Plans More Cost Cutting

BERLIN — In response to continued pressure on the international luxury goods market, Escada Group plans to intensify cost-cutting programs in the current fiscal year, which ends Oct. 31.<br><br>At Escada’s annual shareholders’...

BERLIN — In response to continued pressure on the international luxury goods market, Escada Group plans to intensify cost-cutting programs in the current fiscal year, which ends Oct. 31.

This story first appeared in the April 11, 2003 issue of WWD.  Subscribe Today.

At Escada’s annual shareholders’ meeting in Munich on Thursday, the German fashion house disclosed that it plans to save an additional $10.7 million this year through cost cutting and improved performance programs.

Dollars are converted from the euro at current exchange.

Escada had already planned more than $19 million in cost cuts this year. The additional cost-cutting initiatives will be carried out in all operative and administrative sectors, with the exception of advertising and quality control. Indeed, Escada plans to increase advertising, a spokesman said, though he declined to be more specific. In fiscal 2001, which ended Oct. 31, 2001, the Escada brand spent approximately $21 million on advertising and media, and $9 million on catalogs.

Performance-boosting measures include closer cooperation with suppliers, more direct marketing and stepped-up training programs in distribution and product. Escada also plans to expedite merchandise exchanges among its own retail doors. Should a customer want a product that is not available in one store, the spokesman explained, the goal is to have the desired product shipped from another Escada unit in 24 hours.

Escada is still targeting an increase in earnings before interest and taxes for the current fiscal year. However, the company stressed that this prognosis is dependent upon no further worsening of international business conditions in the luxury market due to the war in Iraq or SARS.