For the time being, it will only affect the German headquarters in Ratingen, North Rhine-Westphalia, with approximately 1160 employees. By the end of June, it will have to reduce 35 to 40 percent of its administrative offices, as will the company’s worldwide network. However, there will also be store closures as part of a profitability test.

At the end of last year, the 137 stores in Germany employed around 1540 people. As early as November 2018, Esprit boss Anders Kristiansen had announced a significant reduction in staff in order to counteract the poor economic situation.
The fashion group, which is listed on the Hong Kong stock exchange, had already posted a net loss of 1.773 billion Hong Kong dollars in the first six months of the current 2018/19 financial year, which ends on 30 June. In the past fiscal year, Esprit had generated a net loss of around 2.5 billion Hong Kong dollars.

Kristiansen announced an increasing concentration on the Asian market as part of a restructuring program. To date, the company has generated more than 50 percent of its sales in Germany. Almost 90 percent of its revenues are generated in Europe.

In a recent press release on its results for the first half of fiscal 2018/19, Esprit announces that its strategic plan to restore sustainable growth and profitability is on track.

Esprit to close loss-making stores

Kristiansen assured a press conference: “We have a very good plan and we are making the courageous changes necessary to restore Esprit to sustainable growth and profitability. The teams are working hard on all initiatives, but it will take time for the repositioning of the brand and product changes to become visible and win back customers.

He continues: “Looking ahead, we expect the next two fiscal years to be a period of transition. We are reducing complexity and bringing the organization to an appropriate size. At the same time, we are working on liquidating our loss-making stores. At the same time, we are developing a new model for the future. We expect sales to continue to decline over the next two years due to the closure of loss-making stores before product and brand initiatives drive growth.”

 

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Link: Esprit implements restructuring plan with job cuts

Image: Getty

//CF