By  on June 8, 1994

LONDON -- Recognizing the changing retail scene, Esprit Europe is on an expansion drive that includes plans for more than 30 new freestanding stores throughout Europe over the next two years.

Esprit Europe, based in Dusseldorf, Germany, is expected to have sales of about $374 million (625 million marks) in the year ending June 30, said John Short, the company's chief executive officer, in an interview during a recent visit here.

The company's future focus, Short said, will be on opening freestanding stores or leased departments in department stores and by wholesaling to department stores and specialty chains rather than relying on wholesale sales to independent retailers.

Independents have been an important part of the group's European business over the last 18 years, he noted. However, the entrance into Europe of such vertical retailers as The Gap will put pressure on these independents, especially in smaller countries, he forecast. In addition, Short said, the elimination of all internal customs barriers and the pooling of European quotas after Jan. 1 will mean retailers like The Gap will be able to establish centralized distribution centers and speed up the grabbing of market share from independents throughout Europe.

For this reason, Esprit Europe must accelerate the opening of its own freestanding stores and strengthen its involvement with financially strong department or specialty stores in Europe, Short said.

Esprit Europe's largest market currently is Germany, where it has 34 freestanding stores and 210 doors of wholesale customers, including such department stores as Karstadt and Kaufhof. Its German sales are about $299.2 million (500 million marks) a year.

Esprit Europe is experimenting with new retail formats in Germany, including a trial store selling only its footwear and accessories. The company will open another freestanding store in Germany in its next fiscal year and add another 100 wholesale customers, especially in such categories as men's wear, footwear and accessories, Short said. It also may introduce in Europe an intimate apparel line that was developed, and is now on sale, at Esprit Far East.

"We are pretty well represented in women's wear in Germany with Esprit corners in most major department stores," he said. "Now we want to grow the children's wear, men's wear, footwear and accessories businesses by adding corners for those categories."In the Benelux countries, where sales are $59.8 million (100 million marks) a year, Esprit Europe has 10 freestanding stores, and the plan is to open another five to 10 over the next two years, Short said.

In the U.K., one of the company's newest markets, it will have about 15 points of sale by the end of the month, including freestanding stores and wholesale sales to London department stores. Short said the plan is to double this number by June 1995 and over the next five years to open up to 100 stores throughout the U.K.

The plan is eventually to have separate stores selling the company's women's and men's wear collections as well as footwear and accessories.

As part of the U.K. expansion, the company will sponsor the Esprit Graduate Fashion week here June 21-24 in a bid to raise its profile. Anna Sui of the U.S. and John Rocha of the U.K. will be the international designer judges for the final award show of the fashion week, which will be held at the Business Design Centre.

The show, being sponsored by Esprit Europe for the first time, covers 31 fashion colleges from throughout the U.K. The colleges include such names as Central St. Martins, Kingston University, Ravensbourne, the London College of Fashion and Middlesex University. There will be 21 runway shows as well as an exhibition, and the winning designer will be offered a job at Esprit.

Esprit Europe also is looking to expand in France, where it has annual sales of $12 million (20 million marks), by opening freestanding stores and leased departments. It also plans to move into such new markets as Spain, Greece and Turkey.

The company also aims plans to open freestanding stores in Spain beginning in June 1995 and is in talks with potential joint venture partners in Greece and Turkey, Short said.

Esprit Europe designs all its women's, men's and children's wear collections in Dusseldorf; accessories in Amsterdam; footwear in Amsterdam, Dusseldorf and Paris, and knitwear in Hong Kong.

Its collections are separate from those of Esprit in the U.S. and are aimed at an older, more fashion-conscious customer. About a third of the European collection, for example, is tailored apparel, Short said."It has to do with the demographic skew in Europe, which is older than in the U.S. or the Far East," he said. "Our target customer in Europe is 27 or 28, but we stretch from 20 to 39."

The largest shareholder in Esprit Europe is Juergen Friedrich, who helped set up the company in 1976 and who has a 30 percent stake. Susie Tompkins, who controls Esprit U.S. with a 67 percent share, owns 10 percent of Esprit Europe. The remaining 60 percent is held by companies involved in Esprit Far East, which, in turn, is controlled by Michael Ying, Short said. Ying also owns the remaining 33 percent of Esprit in the U.S., and Tompkins owns 25 percent of Esprit Far East.

All three interlocking companies in turn own Esprit International, the overall parent group.

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