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Ronald Van der Vis, the executive director and group chief executive officer of Esprit, stressed Thursday that he is leaving the company for personal reasons and said he will stay in his position for another 12 months to ensure a smooth leadership transition.
This story first appeared in the June 15, 2012 issue of WWD. Subscribe Today.
“The reality is that I have been neglecting my family situation too much, and that I need to bring that back into balance,” said Van der Vis during a conference call from Europe on Thursday.
Van der Vis said his resignation, which was tendered on Tuesday, has no relation to Wednesday’s resignation of chairman Hans-Joachim Körber nor to a restructuring plan put in place last year to overhaul the retailer’s declining performance. Raymond Or Ching Fai, an independent non-executive director of the company, succeeded Körber immediately as chairman.
Esprit’s stock price has declined 32 percent since the announcement of the resignations, wiping out $700 million of value from the company’s market capitalization.
“It is very important for me to stress that this is the reason and nothing else,” Van der Vis said. “I have seen speculations in the press that the transformation plan is not on track. That is nonsense. The transformation plan approved by the board will continue. The board is pleased with the progress, and the plan will continue to be executed in the way we have been doing [it].”
In 2011, Esprit unveiled a dramatic restructuring plan to improve the “fashionability” of the brand and to focus on Asia and select European markets for future growth. In February, the company said it planned to shutter all of its stores in North America by the end of March. At that time, it said it was looking for a licensing partner for its North American operations.
Van der Vis did not elaborate on any further specifics relate to the restructuring plan.
“The transformation plan is not up for discussion,” he said. “This is what we have communicated; however logically every time when we execute and implement the plan, we are looking for better ways to optimize.”
He added: “We will do everything possible to make sure that shareholders benefit from our transformation plan.”
When asked on the conference call why it took the company more than 24 hours after the second executive resignation to make this clarification, Van der Vis said board meetings and the executives’ travel between Germany and Hong Kong caused the delay.
“I am sorry if you feel we have not been transparent,” he said. “It has always been our company policy to be very, very transparent. We have tried to respond as quickly as possible.”
The executive shrugged off speculation that there could potentially be a takeover of the company. “Let me be crystal clear: There are no discussions with any party ongoing nor has the board received any letter of proposal whatsoever,” he said. “I cannot look into the future as we are a public company. Anyone can buy our shares.”
He said the European debt crisis had impacted Esprit’s business in the region, yet denied speculation that the company had placed too much emphasis on markets in Europe rather than other regions. Van der Vis said Esprit made a strategic decision to focus more on Asia Pacific, specifically China, where he said Esprit hopes to double sales within the next five years as well as double the number of retail locations in the country. Esprit recently opened a design center in China to develop products for mainland consumers.
China is currently Esprit’s second largest market and the decision to appoint Or Ching Fai as chairman stems from his “experience and understanding of the Chinese market” which is “of extremely great value to the company,” he said.
Investors and analysts said Van der Vis’ clarification of the reasons for his departure will do little to assuage market concerns about Esprit’s future.
“Ronald Van der Vis has been the architect of Esprit’s revitalization, so his resignation has come as a negative surprise to investors,” Matthew Marsden, an independent equity analyst in Hong Kong, said. “The market has taken a dim view of this. Investors are taking the resignation as a sign that the restructuring plan has run into trouble. Esprit has simply failed to keep up with the competition in terms of product design and store differentiation.”
“Management made it extremely clear that there will be no changes to the transformation plan and execution remains on track,” CLSA analyst Aaron Fischer said after the conference call. “This will be taken very positively by the market. Nonetheless, we still maintain our view that the execution risk is very high given the competitive nature of the global mass market apparel segment.”
Esprit saw sales for the third quarter ending March 31 decline 7.8 percent in local currency terms. Company sales, excluding newly opened locations, rose 0.5 percent. The company’s net profit for the six months ending Dec. 31 slumped 74 percent to 555 million Hong Kong dollars, or $71.6 million at current exchange rates. Sales for the period declined 5.6 percent to 16.7 billion Hong Kong dollars, or $2.15 billion.