Esprit plans return to Asia with focus on expensive clothes

Esprit Holdings, the once-high-flying Hong Kong fashion retailer before sinking into years of losses, is planning a comeback in Asia, turning away from a fast fashion strategy where it has failed to compete with brands such as Zara and H & .

The company is now focusing on higher quality clothing that is more expensive than fast fashion but more durable, chief executive William Pak said in an interview with Bloomberg Television on Monday.

It is also returning to Asia after closing all 56 stores in the region at the start of 2020 amid coronavirus-induced closures.

A pop-up store opened in Seoul in April and a flagship outlet in Hong Kong’s Causeway Bay mall is set to open next month.

While the focus will remain on e-commerce, the company wants to have at least one signature store in vital Asian markets where it also has an online presence, Pak said.

It has launched online platforms in South Korea, Hong Kong, Taiwan and the Philippines, and plans to expand to mainland China, Singapore and Thailand by the end of the year.

Esprit’s shifting strategy comes as the fast fashion model faces growing criticism over environmental, social and management issues such as waste, questionable material sourcing and sweatshop manufacturing.

The company, which became a household name around the world in the 1980s and 1990s, hopes to create a clean, youthful image to return to the peak of double-digit growth.

“We’re really aiming for exponential revenue growth,” Pak said. “Esprit is not a passing fad, and it’s taken a long time to realize that in the business.”

Still, Esprit faces an uphill battle to regain market share in Asia, one of the world’s most competitive fashion markets, crowded with global majors aggressively expanding both physically and online.

As many fast-fashion brands such as Zara and H&A’s focus on sustainability, it also faces the rise of ultra-cheap online platforms like China’s Shein, which is considering an initial public offering in the United States. United from 2024.

In its shift towards sustainability, Esprit has reduced its fashion cycles from 12 collections per year to four, supplemented by limited edition collections with other partners. It also moved its headquarters to Hong Kong to streamline communications and logistics, as most of the company’s suppliers are in Asia.

The strategy helped Esprit turn a profit in 2021, the first in five years, with net income of HK$381 million ($48.5 million).

Founded in 1968 by Susie and Doug Tompkins in San Francisco, Esprit went global in the 1970s after the couple met Hong Kong businessman Michael Ying, who found Chinese suppliers for the group.

In 1996, Esprit was taken over by private equity investors Oaktree Capital Management and Cerberus Partners, who closed the brand‘s standalone stores and catalog business in the United States.

As sales in the United States declined, Esprit’s Asian unit increased. Esprit Far East, a Hong Kong-based unit founded by Mr. Ying, sold shares to the public in 1993.

In 1996, Mr. Ying purchased the European unit of Esprit and renamed the company Esprit Holdings. He paid $150 million for the rights to Esprit in the United States in February 2002, uniting all the brands under one company.

Once a blue chip company in Hong Kong, Esprit was dropped from the city’s Hang Seng benchmark in 2013 after sales plummeted.

Updated: July 19, 2022, 4:30 a.m.

Comments are closed.