Fashion Company Esprit must streamline group
Author: Osman Cetinkaya
Job cuts and focus on China
The Esprit fashion group is far from running smoothly: As the company has slipped deep into the red, the new boss Anders Kristiansen wants to implement a restructuring program. The aim is to close unprofitable stores and streamline the organization as a whole. The company announced this in Hong Kong on Monday.
It is also planned to reduce the number of employees outside the branches by around 40 percent. It was not announced how many jobs in Germany will be affected. Nationwide, around 2,800 employees work full-time at Esprit, 1,600 of them work in stores and around 1,200 in administration. Worldwide, 6,400 full-time employees work for the fashion group, in Germany the company operates 140 of its own stores. The company is headquartered in Ratingen in North Rhine-Westphalia, but Esprit is listed on the stock exchange in Hong Kong.
Focus on Chinese market
Germany remains the most important market for the company. In the fiscal year 2017/2018, the Federal Republic accounted for around half of the total turnover of almost 15.5 billion Hong Kong dollars (1.74 euros). Esprit was in the red with this result.
According to the company, growth is now planned above all in China. The fashion group is represented in over 40 countries worldwide. The majority of sales, around 87 percent, are currently generated in Europe. This should change in the future.
Verdi is alarmed
The trade union Verdi is already concerned about massive cuts, especially in Germany. “We have no information about what is specifically planned” said Verdi spokesman Cosimo-Damiano Quinto. He criticized that one could not expand and not include the works councils in the sense of securing employment. However, a spokesman for Esprit commented that they were already in talks with the employee representatives.
Esprit admits own mistakes
Similar to many other fashion retailers, Esprit face the difficult market environment and numerous own problems. The company wants to concentrate more on high-quality products in the future: Esprit is not a fast fashion brand or a discounter. The company also talks about its own mistakes, in the designs, in the assortment or in the image of the brand.
Spokesman of the textile trade association BTE, Axel Augustin, thinks that it is difficult for a brand to free itself from the downward spiral. The current year of the German textile trade has so far been negative in total. Until the end of November, sales were around two to three percent below the previous year’s figure of around 65 billion euros.