Esprit Ends US Operations and Moves to Hong Kong

Esprit de Corp., the iconic San Francisco fashion brand leaves the United States, so that its current Hong Kong owner can concentrate on other markets.

Esprit plans to close 80 outlets, including 24 in Germany and 12 in France. Photo: Thomas Stiefel/Flickr

The company expects that turnover for China will double over the next four years to around HK$6 billion, with the store network increasing from approximately 1,000 to 1,900.

“We have also planned to expand our e-shop platform coverage to include China in the second half of the new financial year. In Asia, Esprit will concentrate its expansion in the growth markets of Taiwan, Singapore, Malaysia and – above all – China,” Esprit said.

Esprit was built around the ideals of Susie and Doug Tompkins. They were a couple of local hippie merchants who sold clothing over a North Beach massage parlor, and eventually moved their corporate headquarters to the Dogpatch neighborhood east of Potrero Hill.

Susie Tompkins was, for a time, the most-heralded female entrepreneur of her generation, while her husband, Doug, was revered as a brilliant merchant deft at exploiting imagery, architecture, and design to sell products.

In the 2007/2008 business year, Esprit Holdings Limited reported worldwide sales of EUR 3.25 billion. Shares of Esprit Holdings Limited are traded on the Hong Kong stock market and are included in the Hang Seng Index, in the MCSI Index Hong Kong, as well as in the FTSE All World Index for Hong Kong, S&P/HKEx LargeCap Index and S&P Asia 50 Index.

The Group operates more than 835 directly managed retail stores worldwide and distributes its products via more than 15,150 wholesale locations around the globe. The company has more than 1.1 million square metres of sales area in more than 40 countries.

The company is going to focus on the most attractive markets with profitable growth in the future and withdraw from unprofitable locations and markets.

“In essence Esprit is a strong and profitable brand, but the brand has gradually lost its soul over the past few years. The heritage of the brand has been neglected and the company lost its customer focus…After having defined the new brand direction and having started the first steps with encouraging results, we now step-up our efforts,” the company said.

“Going forward Esprit will again be a brand with both a clear identity and a strong personality, returning the company to a high level of sustainable profitability,” it said.

“The market is worried about Esprit’s profitability in the next two years,” Hayman Chiu, an analyst with Cinda International Holding Ltd. in Hong Kong said in a phone interview today. “The divestment of North American business may not help much.”

Esprit decided to divest its business in North America after incurring losses. The planned divestment mainly involves closing down 93 directly managed retail stores in North America.

“In line with its retail business Esprit will also concentrate its efforts in the wholesale business. The company will invest in the opening of more than 200 new franchise stores (excluding China) until 2014 to 2015 and is going to support wholesale partners with refurbishing their space. The total investment in wholesale is expected to be approximately HK$3.9 billion,” the company said.

Esprit also said it plans to close 80 outlets, including 24 in Germany and 12 in France.

“The brand has gradually lost its soul over the past few years,” Esprit said in its filing yesterday. “The heritage of the brand has been neglected and the company lost its customer focus.”

In a 1997 story about the company, SF Weekly posited that, despite the socially conscious messaging and imagery, Esprit de Corps was an enterprise that lived and died on profitability.

“Esprit was one of the many attempts children of the ’60s made to soften the practice of business by wedding it to a not entirely coherent set of leftish sensibilities. In the case of Esprit, the result was charming and successful and disordered, until it was greedy and disastrous.” [via Huff Post, SF Weekly and International Business Times]

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