In recent months, three top executives have resigned, key department stores have stopped carrying the brand and a number of licensing agreements have been put on hold. In addition, Esprit will cease U.S. distribution of Collection women's suits and career clothes, as well as the entire men's wear line.
Carmine Porcelli, director of Esprit U.S.; Jack Schwefel, executive vice president of North American retail, and Derong Yang, global image director, have all resigned.
"It was time for me to move on," said Porcelli, a 30-year veteran of the fashion industry. Porcelli joined Esprit in February 2004 as director of licensing and was named to his most recent post in August 2004. Earlier he was managing director of Bonjour, prior to which he was the licensing director at Oscar de la Renta, managing director at Halston International and a consultant at Bill Blass. Porcelli said he has no immediate plans and that he "officially left" Esprit in July.
Schwefel declined comment and Yang couldn't be reached.
Esprit has struggled lately in the U.S. market, both on the wholesale and retail fronts. After almost disappearing entirely from the American market, Esprit opened three freestanding boutiques in New York in the past year selling women's, men's, edc juniors and accessories. However, projected sales at the stores, according to a source close to the company, are 30 to 75 percent lower than had been anticipated. The source went on to say that roughly 20 Esprit employees based in the U.S. are expected to be laid off this week.
However, Andreas Adenauer, president of Esprit North America, denied the claim the employees will be laid off and said the changes within the company are due in part to a reorganization in structure which would allow the company to build up brand recognition in the U.S. Adenauer said the company is learning what works in the U.S. market and what doesn't.
"Some of our retail stores were underplanned. We overdid the division mix from baby to sport in both women's and mens'," he said. "We overstretched the consumer. But we're learning and we're going on, not aggressively, but wisely."Adenauer said since Esprit has been absent from the U.S. market for 15 years, the brand is not seen as a "destination spot" for shoppers. "We are definitely perceived as a brand here and we're well-known, but we're not a destination. We have to focus on triple-A locations in the future, like our shop in SoHo or the Garden State Plaza Mall. At these locations, we can build the brand and go from there," he said.
Currently, a number of wholesale accounts have ceased selling the Esprit casual women's and edc brands. According to a source, Dillard's received its last shipment in late spring; Macy's East received its last shipments last November; Macy's West received its last shipments in June, and Marshall Field's is currently receiving its last shipment. At this time, Nordstrom is the only major store to carry the brand.
But Adenauer said the decision to wholesale only to Nordstrom is a "win-win" situation for the specialty store and the brand. "Since August 2004, we've grown to over 30 Nordstrom doors," Adenauer said. "We're both successful, earning money and growing. Nordstrom is really taking care of our brand and our image. It's like a marriage and we want to strengthen it and support it. It's a success story," he said.
In addition, a number of licensing agreements have been put on hold while the brand refigures its approach in the U.S. market.
"We've been on hold for about a year with Esprit," said Mark Piccione, the executive vice president of sales at the New York-based Geneva Watch Co., which has held the Esprit license to create watches for the past two-and-a-half years. "We're waiting for the end of this year to see if they build business in department stores."
Piccione said that when they signed the licensing agreement with Esprit, the brand was making a push with its retail business. "We're hoping they can build more of a demand for the product in the department stores," he said.
A similar arrangement exists with Providence, R.I.-based Uncas Manufacturing, which holds the license for Esprit jewelry. "We're waiting for them to get through some of their internal issues," said Steve Verducci, director of brands for Uncas. "They're in the process of refocusing the stores they're going to target, so once we know that, we'll be in a better position to attack globally."Esprit, a 37-year-old brand, is owned by Esprit Holdings Ltd., a Hong Kong-based, publicly traded firm.
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