Esprit Tweaks U.S. Return With Juniors

Esprit's roller-coaster ride in the U.S. is taking more twists and turns, as the German brand remakes the selling floors of its recently opened stores.

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NEW YORK — Esprit’s retail ride in the U.S. is taking some more twists and turns, as the German-based sportswear brand quickly remakes the selling floors of its recently opened American stores.

The biggest step to maximize productivity involves introducing Esprit’s edc junior collection to certain U.S. doors.

After virtually disappearing from the American market, Esprit came back with a vengeance last September by opening a 10,000-square-foot store in the Flatiron neighborhood here. Esprit’s last U.S. store closed about three years before.

Five more stores subsequently opened last fall, bringing the total number of locations operating to six, in New York and New Jersey.

Esprit officials said that edc will debut in the Time Warner Center and SoHo locations set to open next spring, as well as the Flatiron store. Edc is currently sold only in Europe, and Esprit’s U.S. stores will carve out space to elevate the subbrand, primarily by reducing the square footage that’s been allocated for the Esprit men’s wear collection.

Originally, Esprit’s plan in its return to U.S. retailing was to present a more adult and sophisticated fashion image and sell just the Esprit brand, now considered a better contemporary label. The company’s idea was to convince consumers that it was not the same junior brand that was so popular in the Eighties.

But since the return to retail in America, Esprit has come to think that it won’t confuse customers by mixing labels in the same stores. About 25 percent of the selling space will be turned over to edc, which is priced about 5 to 10 percent cheaper than the Esprit collection.

Asked why edc was not introduced initially when the stores opened, Heinz Krogner, deputy chairman and group chief executive officer, replied: “It’s a learning process. We have to understand that edc is not separate. It’s a subbrand of Esprit and fits into the whole product strategy. Edc adds a lot of newness,” Krogner went on to say. “It’s the younger sister to the Esprit customer. It’s a little naughty, and more fashion. It makes the whole store fresher and younger.”

This story first appeared in the December 30, 2004 issue of WWD.  Subscribe Today.

There was another side to the decision. “We had too much space for men’s, in terms of the turnover,” Krogner added. “Men’s is not as strong as women’s at the moment. We have to be a little more patient with men’s.”

He said edc targets 15- to 25-year-olds, and does about $300 million in annual sales in Europe, while the Esprit brand targets 25- to 45-year-olds and is a $2.5 billion business. Including licenses, Esprit is about a $3.5 billion company. Edc is set to be in the stores in about a month.

Esprit has an aggressive retail program. The company projects that about two-dozen stores will be operating in the New York-New Jersey area by the end of 2005. Subsequently, the company expects to start expanding to other parts of the country, including the West Coast.

Although the men’s wear is not performing as well as expected, Krogner said that, overall, the stores are making their sales plans.

Esprit has a very limited wholesale business in the U.S., accounting for some $12 million in sales. “I don’t push [the wholesaling],” Krogner said. “I want to make my own stores strong.”

Macy’s West sells some edc, while Nordstrom, Dillard’s and Marshall Field’s sell Esprit. However, it is expected that wholesaling will be more of a priority, since Esprit last year built up its team at its Esprit North America headquarters here at 1370 Broadway, adding Andreas Adenauer as president and Carmine Porcelli as director of Esprit U.S.

Esprit was developed in the Seventies by Doug and Susie Tompkins, who were married six months after Susie picked up Doug hitchhiking near Lake Tahoe. In the Eighties, the company’s distribution expanded from the U.S. into Canada, Chile, Germany, New Zealand, the Philippines and Switzerland; a catalogue operation was developed, and scores of shop-in-shops were opened at top department stores. According to the company, U.S. sales peaked in 1987 at $400 million.

But the brand started to sink in the U.S. when the Tompkins’ marriage dissolved, and by the millennium, was virtually gone from the U.S., although it thrived in Europe and the Far East under its Hong Kong-based owner. Esprit is a significant retail player in those regions, with stores in Europe that can be 10,000 square feet and sell the “world of Esprit,” covering women’s, men’s and children’s wear as well as accessories.

Esprit’s main business operations are near Düsseldorf, while financial operations are in Hong Kong. The company’s owner, Esprit Holdings Ltd., is publicly traded in Hong Kong. In Europe, about half of Esprit’s stores are franchised. Franchising is currently not in the U.S. game plan.

The core of the business resides in four components: the Casual and Collection lines for men and women, with jeans, cotton pants and T-shirts among the bestsellers. Most of the merchandise ranges in price from $40 to $250.

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