The 34-year-old brand was riding high in the roaring Eighties as a sleek junior sportswear brand. Then, in 1996, the original owners, then husband and wife Doug and Susie Tompkins, severed all ties to the brand and sold their interests to Michael Ying and Jurgen Friedrich of Worldwide Thousand Ltd. At the time, Esprit Group was set up as three different businesses: Esprit Europe, Esprit Asia and Esprit de Corp. The following year WTL sold the entire Esprit brand to East Asia Holdings Ltd., which was then renamed Esprit Holdings Ltd.
Along the way, brand development in Europe was steady since launching there in 1976 and became recognized as a complete lifestyle brand. Meanwhile in the U.S., the name lost steam since the Eighties and became known as only a basics junior brand.
Now that’s going to change, said Heinz Krogner, chief executive officer and chairman for Europe and ceo of Esprit International in New York, who said the lifestyle approach can work in the U.S., as well.
“Esprit was a very well known name brand in this country,” he said. “There is no reason it can’t be that way again.”
Now, the company is known as Esprit International, bringing Europe, Asia and the U.S. under the same global umbrella. Design headquarters are in Germany and retail headquarters are in Hong Kong. Krogner has his plans mapped out and is taking small steps to grow in this country. The first step, he said, is to hire a staff to run the U.S. operations and deciding where it will be based.
“There will be a U.S. manager and a staff of merchandising managers, as well as fashion scouts who will report on American style to our design team in Europe,” he said.
As part of the revamping of the U.S, business, the brand’s existing stores will likely close, with the possible exception of one or two units. While there are only about 16 freestanding Esprit stores in this country, Krogner said they no longer fit the model for the brand.
“These stores are so small, like boutiques,” he said. “Esprit is not a boutique brand. It is a megabrand.”
At least it is in Europe, where it has a major presence. There are 1,300 shop-in-shops within department stores, 120 company-owned retail locations and 150 freestanding franchised stores. The stores showcase the brand’s full offerings, including junior line EDC, women’s Casual and Collection lines, men’s Casual and Collection, children’s wear, sport and bodywear. Also within the stores are products licensed under the Esprit name, including fragrance, bed and bath, eyewear, golf, home, jewelry, legwear, software, watches, toys, footwear, swimwear, girls’ swimwear, sleepwear and outerwear.
In Asia, Esprit runs 591 retail and franchised outlets. While most of the megastores throughout Europe and Asia run between 14,000 and 24,000 square feet, the largest Esprit store, in Hong Kong stands at 40,000 square feet. Unique to the brand in Asia, there are five beauty salons on the top floors of the largest stores. Esprit International plans to open more than 25 more stores in China, where it has 161 units, by the end of the year.
While Krogner plans to bring this business model to the U.S. beginning in 2003, he said he plans to grow slowly, first by working on relationships with the major department store chains where the brand is already sold.
“In Europe, there are six or seven Esprit shop-in-shops within one department store. In the U.S. there are only shop-in-shops that have the junior line,” he said. “Within the year, I hope to bring the U.S. stores to the level our European and Asian department stores are in.”
After relationships are developed between Esprit and American department stores, Krogner plans to open signature megastores, just as there are in Europe and in Asia.
“We will open these large stores in large American cities not only to make money for the company, but to grow brand recognition for Esprit,” he said. “Five years ago the brand wasn’t so strong in Europe, and look at it now. This is why I am confident that we can do just as well in the U.S. We will build this new company, offer new jobs within the business and put a lot of muscle behind the brand. This is a historical moment for us.”
While an advertising budget isn’t set, Krogner recognizes the importance of it and hopes to have a print campaign in magazines and on buses and billboards.
“It seems to me that advertising is much more important in the U.S. than it is in Europe, so I hope to do some of that here,” he said.
Krogner said part of the U.S. growth plan is to sign some additional licensing deals.
When he came to the company about five years ago, Esprit was a $350 million business and now Esprit International is a $1 billion company. Krogner said he has no doubt that the Esprit name will become even more important than it was in the Eighties.
“I really believe that the U.S. is an easier market than the European market,” he said. “In the U.S. there is such a mix of cultures, something you just don’t see overseas. I know we will make some mistakes along the way, but I am confident we will make it.”