SAN FRANCISCO -- The turnaround of Esprit de Corp.'s embattled junior sportswear division, which has seen sales deterioration of roughly 50 percent in the last four years, is gaining momentum. A new slate of executives -- most of whom were hired in...
SAN FRANCISCO -- The turnaround of Esprit de Corp.'s embattled junior sportswear division, which has seen sales deterioration of roughly 50 percent in the last four years, is gaining momentum. A new slate of executives -- most of whom were hired in the last half of 1993 -- is radically changing the way the company operates. The new players hope to rebuild the former junior powerhouse by slashing prices, dramatically reducing the number of style offerings and exploring new ventures for the label.
Many of these steps were first implemented in June 1993 by Lynn Miller, then president of Esprit Juniors. Miller now is in charge of special projects for the company and wants to take Esprit into the active sportswear market.
Andy Cohen, who succeeded Miller as president of the juniors division last September, said sales of the current winter collection are 22 percent ahead of the year-ago season.
Late last year, the firm also consolidated some key divisions. Esprit Kids and Esprit Juniors were merged into a division dubbed Esprit Apparel, headed by Cohen.
At the same time, Engle Saez, who had been appointed president of Esprit Footwear in October, became president of Esprit Footwear and Accessories. Dan Danford, president of Esprit Kids since 1988 and president of Kids and Accessories since February 1993, resigned.
David Folkman, president and chief executive officer of the company since March 1993, said the restructuring helps eliminate duplication of efforts.
"I don't understand why support functions for the two divisions -- sourcing, purchasing and manufacturing -- can't be done by the same people," Cohen said. "When we go to deal with a factory or vendor now, we can lay out our whole program and get better deals as a result."
Cohen said there will be no layoffs as a result of the restructuring, and that the two divisions' design staffs and sales staffs will remain separate.
In another move, Cohen hired 27-year-old Claire Ortiz in November as junior design director. She was previously director of product for BWS Brands, a Los Angeles maker of junior, young men's and children's sportswear. Cohen said Ortiz's strong suit was her design experience in the young men's market, which has heavily influenced the junior market in recent years. In her previous post, Ortiz introduced hemp fabric to the young men's industry through BWS's Rag Poets line. She has said that under her direction, Esprit will also eventually offer hemp goods. Ortiz has already overhauled Esprit's April and May 1994 collections, adding knit tops, beefing up the number of short knit dresses, updating denim offerings and eliminating many floral print items in favor of plaids and geometric prints.The company has"missed the boat" on a lot of recent trends including deconstruction, Ortiz said, adding that her proposed theme for fall 1994 is "hip hick."
"It's another way of saying 'deconstructionist country,"' she said. "It's about simplicity in color and silhouette, with some patchwork and unfinished seams. What's really happening in the young men's market is the jazzy beatnik look -- peg-leg pants, argyle sweaters and tight shirts that ride up to show your belly. But, I don't know if Esprit is ready for that yet. We have to transition slowly into it."
Esprit executives acknowledge that the juniors division has lost substantial volume in recent years, although the company declines to cite figures. However, in litigation involving the company last spring, a former investor claimed in court papers that the firm's junior sportswear business did $220 million in 1990 and was projected to do only $90 million in 1993.
Ortiz blamed the company's lack of direction on its insular infrastructure.
"Esprit has built itself a little empire," she said. "People who work here eat in the company cafe and relax in the company park. They have become so sheltered. I have to bring reality into the picture around here. I'm going to do away with tools that the designers have relied on too much -- color services, trend services. I need to get them out into the streets."
True to her word, during her first week on the job, Ortiz piled her new crew into a bus bound for the University of California at Berkeley campus. There, while munching sandwiches, they observed students. Rounding out the new team at Esprit is Peter Hanelt -- chief financial officer and chief operating officer, who came aboard in September. He was previously chief financial officer of St. Francis Memorial Hospital here.
While some industry experts think the line is moving in the right direction, others continue to express doubt.
"There's finally some continuity in the collections," said Bernard Olsoff, president of Frederick Atkins, a New York buying service with 29 member stores nationwide, including Esprit accounts Dillard Department Stores, Elder Beerman Stores, Hess's, Gottchalk's and Younkers. "Something from one delivery will now work with something in the next."One major West Coast retailer who requested anonymity was less enthusiastic. He said he'll reserve judgment regarding spring 1994 goods, since he hasn't seen all the offerings. The winter collection, on the other hand, is dead, he said.
"Esprit is not performing well at retail," he said. "One problem is that they are offtrack with fashion trends. If the world is doing solids, for example, they end up doing prints. If the world is doing jackets, they do sweaters. The other problem is that they are still not priced as competitively as they need to be. Customers are not responding to the merchandise. We have had to put it on heavy markdown -- at nearly 50 percent off."
David Folkman conceded that the line "has a long way to go" to win back major retailers. He believes the Esprit label can regain its footing by taking items such as bottoms, sweaters, knit tops and jackets and expanding them into categories.
"We've always had distinctive dresses, for example," Folkman said. "But they have always been part of a collection. Stores see dresses as a classification we can grow. If we do as well as I believe we will, dresses could become its own division."
Employing the classifications concept in merchandising Esprit's spring offerings, executives interpreted key silhouettes including the flip skirt and the cropped top in various fabrications, prints and colors. Cohen -- formerly a partner at AMG, which owns the license to Sam & Libby apparel -- also advocates reducing the number of style offerings. Eventually, he wants to cut it by half. Monthly deliveries for spring 1994 are featuring 60 to 90 styles. Last spring, the company
offered about 185 styles a month.
"The more styles you have, the more mistakes you're prone to have," he said."We are helping retailers by editing out peripheral items. Much of the company's best styles will be tweaked, updated. We should not be reinventing the wheel every 30 days."
Prices -- starting with the winter collection -- have been slashed from 20 to 30 percent. Jeans previously at $28 wholesale have been lowered to $19.50. Dresses regularly priced at $44 have been reduced to between $24.50 and $29.50, depending on length."We studied the marketplace in May," Folkman said. "We did hands-on comparison shopping at stores including Wet Seal, The Gap, Limited Express and Contempo Casuals. We looked for quality, distinctiveness and prices. Our prices were too high in many cases."
Cohen emphasized, however, that Esprit is not "trending down" to appeal to the mass market. The company simply wants to offer "value," he explained.
"Our sweatshirts will not be $30 retail," he said. "They will be $36, but they will look like $42 ones."
This is not the first time in recent memory that new personalities have swept into Esprit promising change, but principal Susie Tompkins, who co-founded the innovative company in 1968 with her then-husband Doug Tompkins, said these newest faces will stick around.
Since the Tompkinses' bitter breakup in 1989, which led to their battle for control of Esprit, there has been a string of company presidents-cum-chief executive officers: Corrado Federico, Isaac Stein, Fritz Ammann and now David Folkman.
The title of president of women's apparel has also changed hands several times in recent years -- from Dick Baker to Lynn Miller to Andy Cohen. Tompkins, who managed with the help of an investor group to buy out her ex-husband in June 1990, said she is contented with the latest lineup.
"This is it," she said. "We are going to think of ourselves as a small company again and try to recapture what we were about -- expressing our lifestyles. We had gotten away from that. We have to learn to be comfortable not being the biggest, but being the best. We are downsizing, rightsizing -- whatever you want to call it. It's just like being on a diet. We are getting healthier.
"When Andy Cohen came in, he threw out our business blueprint," Tompkins continued. "I thought it was the most romantic thing ever. We have to be spontaneous, like we were in the early days. We were too professional in the Eighties. In a big organization, people tend to think that you've lost your marbles when you come up with a last-minute idea. The new crew will take that idea and run with it."