Can Esprit Emulate The Zara Mode To Save Itself?

According to the world clothing shoes and hats net, recently,

Holdings Ltd. Si Jie Global Holdings Limited released the annual report of 2016/2017, showing that the Group recorded a net profit of HK $67 million for the period ending June 30th, up 219% from a year earlier.

Si Jie universal said that although the net profit was not large, the main reason for the improvement of the group's annual performance was the substantial improvement in its basic business. The ex dividend profit excluding the special items rose by HK $386 million. Under the prudent cash management system, the group had a net cash of HK $5 billion 220 million at the end of the fiscal year, and there was no debt. The remaining funds were enough to enable the group to invest in sales growth and further reorganization measures.

The main reason for the improvement of group performance

The financial report also showed that in the fiscal year 2016/2017, Si Jie closed the retail store area 19076 square meters, closed the shop 95 to 666, during the period 441 shops than the same store sales fell 5.2%.

And group

The income reached HK $4 billion 32 million, accounting for 25.3%, only 2.9% year-on-year.

Si Jie universal said that the group's fundamentals improved mainly because it accelerated the elimination of no profit area, that is, closing down the loss shops; commercial action was taken to protect gross margins, including the reduction of promotional efforts, the reduction in prices and the discount to wholesale partners; decisive reduction of recurrent costs and the acceleration of closing the loss shops, so that the group could achieve a cost reduction plan of HK $1 billion a year ahead of the original plan.

Previously, in its third quarter earnings report, Si Jie global said: "the group has begun to look for opportunities to promote future growth, including opening new stores, launching new product lines, and borrowing Esprit in selected markets.

We will launch promotional activities and explore the possibility of entering new markets in the 50th anniversary period of 2018.

In view of this, the strategy has begun to bear fruit.

The glory of the past is gone.

Esprit used to be a fashionable brand that needed some economic ability to afford it. It firmly occupied the position of youth memory about fashion and was the first fashion name in China to have "middle class" meaning.

However, the decline is fading.

Esprit was founded in 1968 by Douglas Tompkins, founder of North Face in San Francisco.

In 1972, Hongkong Esprit Far East Limited became the raw material purchasing agent of Esprit.

In 1981, the first Esprit retail store was opened in Tongluowan, Hongkong.

In 1993, Hongkong Esprit Far East Limited's Asia Pacific listed in Hongkong. After 4 years, it bought Esprit Europe Business and changed its name to Si Jie Global Holdings Limited.

In the next ten years, Esprit maintained its growth momentum and reached its peak in 2008.

On the one hand, it was affected by the financial crisis. On the other hand, the company's business problems were gradually exposed. In 2013, it recorded its first annual loss after listing, and then suffered losses for several consecutive years. It lost billions of Hong Kong dollars in a single year, resulting in a drop in share prices.

Perennial discount, damaged brand image

Since 2008, many of Esprit's clothing has started to go to special stores, not 50 percent off or 70 percent off, and there are discount sales promotions throughout the year.

Consumers only buy basic brands during the discount period.

At the beginning, a group of customers who had the most consumption power and consumption desire have been gradually away from this brand.

Due to the decline in performance, Esprit almost disappeared in all levels of business circle, and retired to the two or three line business circle. However, no matter where, Esprit store area in the mall has been shrinking, moving from the crowd to the edge position.

In addition, the display of Esprit stores is chaotic and immutable, and has been criticized for a long time.

Slowly, Esprit became the product of many people's hearts, and the image was damaged.

As of December 31, 2016, Esprit had only 698 direct outlets, 1/3 less than 6 years ago.

Self rescue of Zara model

The road of Esprit pformation is running fast fashion.

In 2012, the company hired Ma Hao Si, a ZARA parent company Inditex, as CEO, and introduced three other executives with Inditex strategy, procurement and sales experience.

In terms of product sales, it is not fully initiative. The most Esprit job is to design new products and open orders.

Although it is still an order mode, it will increase to two times a year, and shorten the turnover period to a certain extent, but still can not fully control the entire production and sales process.

Specifically, after the new product design is completed, the company often needs to go through the fabric purchase period for two or three months before making the production by the factories. During this period, the order meeting will be held, and the production will be adjusted according to the orders and orders of the branches and agents, and finally the distribution and replenishment stages will be reached.

A batch of new products will take several months to complete from design to rack.

After introducing the Zara mode, the delivery time was shortened from 9~11 months to 3~4 months, and about 7000 styles were launched in one year.

Next, we will focus on brand younger, product upgrading, new generation channels, market size optimization and expansion, and cost reduction.

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