HONG KONG – Esprit wants to get back to basics.
Amid significant losses and a management shakeup, the affordable apparel chain shared a new direction to restructure as a “basics brand,” although full details of a turnaround were not made clear at its full-year earnings conference here on Tuesday.
The briefing was the first time Anders Kristiansen, who stepped in as chief executive officer in June, appeared in public for the brand.
“We have to be bold and ready for changes to bring the company back to growth. We are going to create a new model and a new restructure of the cost base,” Kristiansen said, as the company revealed a loss of 2.55 billion Hong Kong dollars, or $325.1 million at current exchange, for the year ended June 30.
That amount was higher than the previous upper estimate of a loss of 2.27 billion Hong Kong dollars the company guided in June. Revenue for the period was 15.5 billion Hong Kong dollars, or $1.98 billion, dipping 11.1 percent year on year.
The group has not yet named a new chief product officer, after Rafael Pastor Espuch stepped down in May. A fuller picture of the transformation plan will be revealed in six to eight weeks’ time, Kristiansen promised, but he did share that he plans to increase basics to 50 percent of the brand business and to decrease the number of stockkeeping units overall.
“Basics are big — you see chinos, T-shirts — they have become the norm. We used to be the best at that and we need to return to that,” Kristiansen said. “Right now, we’ve got almost 50 percent [fashion-oriented]. But that’s not our customer, and the demand we have today. So we’re turning that pyramid upside down and we’re going to rectify that.”
Esprit, now in its 50th year, is a shadow of its former self. Germany is its best-performing market and contributed 50.4 percent of the chain’s business, and the rest of Europe accounted for 37.3 percent. While management expressed a desire to grow in China with “aggressive investments,” Asia Pacific for the period under review constituted less than 13 percent of revenues.
Besides revolutionizing the product, the company said at the top of the agenda is creating a “customer-centric, digitally empowered brand” through higher social media engagement, stronger partnerships with online outlets such as Asos, Zalora and Tmall, and deeper emotional engagement both online and offline. “I want to make sure that in every conversation we have we put the consumer at the center,” Kristiansen said. “We want to be consistent, simple, fast. I’ve seen the opposite so far.”
He did not rule out staff restructuring, too.
“Cuts will be in all areas if necessary, so that we can right-size the business. My immediate team, too, has halved since I joined,” Kristiansen said.
The ceo added, “Over the years, we’ve lost our mojo. When we ask consumers what the brand stands for, nobody really knows.”