Old Fashion Leader Esprit Is Getting Old.

This old

The leaders are getting old.

Recently, the Esprit parent company Hongkong 00330.HK Global Holdings Limited (00330.HK) released its annual report for fiscal 2016. By the end of June 30, 2016, the company achieved a net profit of HK $21 million, an increase of 100.57% over the same period last year.

Although the surface of the financial report looks very bright, however, a reporter survey found that later, UNIQLO, Zara, H&M and so on.

"Brand" has now taken the baton of Esprit in the past, and has become the leader of the new round of clothing industry. For the younger generation, there are more new brands such as LALABOBO and STAYREAL.

Faced with aggressive competitors, Esprit seems to have no way to fight.

Revenue continued to fall

Despite the fact that Esprit has finally made profits in the 2016 fiscal year, it still failed to change the company's annual turnover.

According to the 2016 earnings report, the turnover of the company was HK $17 billion 788 million in that year, while in 2015, the turnover of the company was HK $19 billion 421 million, and its turnover decreased by 8.41% compared with the same period last year.

But the net profit loss was as high as HK $3 billion 696 million compared to HK $19 billion 421 million in the previous year, and the net profit of HK $21 million in spite of a slight decline in the sales volume in the year.

It is reported that the figures for losses include the HK $725 million income from the sale of Hongkong property, the HK $409 million provision for tax provision and the net tax income of HK $203 million.

This situation is quite similar to 2013, 2014 and two fiscal years.

In 2014, the company's turnover amounted to HK $24 billion 227 million, net profit of HK $210 million, while its turnover was HK $25 billion 902 million in 2013, and net profit loss amounted to HK $4 billion 388 million.

Comparing the revenue of these 4 years, it is easy to see that the turnover of Esprit is facing a dilemma of declining year by year, and the highest historical data of the company's turnover is in fiscal year 2008, up to HK $37 billion 227 million and net profit of HK $6 billion 450 million.

This means that the turnover of Esprit in 2016 is less than half of that in 2008.

In September 2012, the CEO invited Ma Hao Si as the CEO, and Ma Hao Si was from the Indian textile company, the parent company of Esprit, the largest competitor.

At that time, the management team of Si Jie world realized that the fast fashion brands such as Zara and H&M were eating the market of Esprit a little bit, and the performance of Esprit was a great drain.

But even today, although Ma Hao Si led the global management team, it finally turned the company into a deficit, but the continued decline in revenue remained unsolved.

Two changes

When the management of the Si Jie world invited Ma Hao Si to do CEO, it means that the management of the group has already realized that the Esprit turnover has continued to decline. Besides the existing problems of the company, more reasons come from the huge impact of the new business mode in the clothing field on the traditional garment enterprises.

When it comes to "fast fashion" brand, many people will blurt out Zara, UNIQLO, H&M, but no one will define Esprit, Only, Giordano as fast fashion, but the latter did enter China earlier, and consumers knew highly.

The biggest impact of fast fashion brands on traditional brands such as Esprit lies in their "fast" stores, which basically adopt direct business mode and lower inventory pfer rate.

But the traditional distribution mode of Esprit is dealer ordering system, from product design to production, to total distribution, sub distribution and department stores, the chain is quite long, and inventory is relatively high.

Most Esprit stores are in the clothing department of department stores, but in contrast to those fast fashion brands, almost all of them occupy a very prominent position in the first floor of shopping centers. Through pparent shop windows, people can often see people in front of the cash register holding several clothes and waiting in long lines to check out.

But this shot is rarely seen in Esprit stores. After all, most stores are dealers' stores.

Since 2014, Ma Hao Si has implemented bold pformation within the group, citing the "vertical mode", which is a Zara like mode, with a faster and more cost effective development and supply chain process, which greatly improves product design and cost performance.

Specific measures include reducing the number of 1/3 suppliers, reducing the style, and changing the product series of the past 12 months into 4 quarter products. Some products are reduced from design to shelf time to 2~3 months, and inventory optimization is achieved.

It is reported that in the 2016 fiscal year, the first financial year of the whole vertical mode adopted by Si Jie world, compared with the previous year, the group finally achieved profitability, although the net profit of HK $21 million was somewhat more than that of HK $17 billion 788 million.

By introducing the "vertical mode", Esprit improves the product, improves the speed of product updates and optimizes the supply chain, "greatly improving product design and cost-effective."

Ma Hao Si said.

The fast fashion industry is known as "the winner of the channel". In order to make the vertical mode more efficient, Ma Hao's another way to change is to adopt an omnidirectional channel mode to improve sales channel efficiency.

All directional channels refer to online, offline, retail and wholesale.

It is true that traditional clothing enterprises are no longer suitable for today's development only by wholesale business, and more and more consumers are accustomed to buying clothes through online channels such as Tmall and Jingdong.

But Xu Bin, the founder of garment industry, believes that Esprit's O2O channel pformation is more difficult than fast fashion brands.

Reporters at the official flagship store of Tmall website Esprit, the average monthly sales volume of each product is basically less than 200, and the number is only a single digit, and this time coincides with the Esprit anniversary promotion. The monthly sales volume of UNIQLO products is up to 4 digits. The official Tmall flagship store of Tmall has shielded the monthly sales figures, but the reporter has opened several products, and the cumulative number of users has been basically maintained at about 3 digits.

{page_break}

If the offline channel is concerned, Esprit has lost the fast fashion brand due to the relatively high cost of the traditional mode. However, the online channel has several initial stages and the market changes are almost the same. However, the sales of Esprit on the online channel are not optimistic.

According to Xu Bin analysis, the change of consumption habits has made the competitiveness of traditional offline stores decreasing day by day. However, no one in the field of clothing has really done O2O.

The sales volume of Esprit online stores is much lower than that of other fast fashion brands.

"Picture cheap" is still one of the main mentality of many consumers online shopping. But by visiting offline stores, reporters found that whether Esprit or UNIQLO, Zara and other brands, the basic principles are "online and offline parity", but "UNIQLO" and other brands of single product price is lower than Esprit, although the proportion of online sales is not large, but moving online consumers do not feel expensive, because pricing itself is cheap, but Esprit is different, its product pricing is relatively high, the same price to move online, consumers will feel expensive.

Xu Bin said.

Brand old?

Ma Hao Si's two major killer of change will definitely improve the performance of Esprit. However, this series of changes can make Esprit return to the path of high growth. The industry is quite worried. "This is a problem that old brands like Esprit can't avoid."

Fashion industry commentator Ma Gang said.

Consumption habits, Xu Bin research found that clothing, the market is more and more rich brands, more and more options, but consumers in the same amount of consumption, clothing overall spending ratio is declining, travel time spent more than shopping, while shopping protagonists from the past shopping to buy clothes to eat and watch movies.

Esprit's high growth years are the biggest advantages of traditional channels. At that time, there was no Internet and mobile Internet.

Therefore, whether the brand's popularity and influence, the role of traditional stores can not be underestimated.

But nowadays, the cost of passenger flow is increasing, and the profitability of single store has not been significantly improved. It is very difficult for Esprit to turn a big margin.

From the brand itself, it is also faced with the embarrassment that old customers abandon and new customers do not recognize, which is a common problem encountered by many brands.

For example, 10 years ago, Ms. Chen often took her daughter to the Esprit store. Ms. Chen was the loyal powder of the brand and bought many brands of this brand.

Today, Esprit casual clothing has been unable to meet its needs, and its consumption power has greatly improved, turning to higher priced, more styled fashion brands and even some luxury brands.

Although Ms. Chen often takes her daughter to go shopping, her daughter has gone to university to choose clothes independently. However, in her impression, Esprit is still "Mom's favorite brand, too old and not suitable for me."

Xu Bin believes that the biggest problem facing Esprit is whether it can better maintain its original customers, and have new product changes to attract young people. However, this approach is obviously a great challenge for the world.

"Fast fashion brands like UNIQLO and Zara are often not making brands, but making products, pursuing cost-effective products, and adding fashionable elements on this basis.

But the difference between Esprit and them is that they entered the Chinese market earlier. Many consumers are rushing to this brand and selling the brand premium.

While maintaining the old customers, while affecting young consumers is not a simple matter. Many fashion brands encounter the same situation, the usual practice is to launch a younger brand, of course, Esprit also has Edc sub brand. However, the problem is that all two brands are facing the same problem. However, it is even more impossible to make a new brand for the current Si Jie world. After all, the main brand is not ready yet, and it can not be abandoned.

Ma Hao Si changed the products and channels drastically, and realized losses in the 2016 fiscal year.