Esprit drops goal of saving 100 million per year

Esprit drops goal of saving 100 million per year

Chinese clothing group Esprit will not succeed in annually cutting costs of one billion Hong Kong dollar, about a hundred million euro, by 2015. According to new CEO Jose Manuel Martinez Gutierrez they are no longer applicable.

Savings “outdated” but still continuing

The goals were set in a reorganisation plan in 2011, made by then CEO Ronald Van der Vis. They were necessary to get the onerous company, mostly active in Europe, back on the rails.

 

Esprit wanted to improve its results by closing down unprofitable activities: unprofitable production lines, unprofitable stores and even whole unprofitable countries, were left behind. The new CEO Jose Manuel Martinez Gutierrez said at an investors' day in Germany he want to keep operating costs under 50% of the turnover.

 

This financial year, which ends at the end of June, Esprit is expecting a substantial loss, mainly due to the costs for closing loss making shops and write-offs of goodwill. The company has also spent more on advertising and on upgrading the remaining shops to compete better with H&M and Zara.

 

Turnaround thanks to China

A turnaround is expected for next year at the earliest and it will not be easy: by closing a number of shops sales of the company keep on dropping. Across the first nine months of the fiscal year sales dropped by 15.5% to 20.3 billion dollar or two billion euro.

 

To turn the tide, Esprit wants to start focusing on mainland China. It wants to have sales worth of 600 million euro by 2015 in China, four times more than today. At the moment the opening of new shops is slowed down, but “once we reach a certain level, we will speed up again,” said Gutierrez.

Questions or comments? Please feel free to contact the editors


Small Belgian brewery conquers Brazil thanks to playing cards

13/09/2017

Het Nest, a small brewery from Turnhout, will get its beers brewed in Brazil as well. It has struck a deal with Cervejaria Premium Paulista, which will brew and distribute the beers locally.

Price cuts drive 25 % more customers to Whole Foods

12/09/2017

Supermarket chain Whole Foods welcomed an additional 25 % of customers in the first few days following Amazon’s price cuts.

Ter Beke enters British food service industry

12/09/2017

Belgian food group Ter Beke has acquired a 90 % stake in British competitor KK Fine Foods for an undisclosed fee. The current shareholders hold onto the other 10 %.

Godiva wants to conquer the world through supermarkets

12/09/2017

Belgian praline brand Godiva will soon sell its chocolate in supermarkets all over the world after signing a deal with chains like Albert Heijn and Sainsbury’s. Previously, it sold nearly all its chocolate through its own store network.

Insight: Xavier Piesvaux' seven labours at Delhaize

10/09/2017

Can one French and several Dutch managers do what the Belgian management failed to do these past few years at Delhaize Belgium? Its new CEO will face plenty of challenges: we count at least seven.

Nestlé USA acquires food manufacturer Sweet Earth

08/09/2017

Nestlé USA has acquired American Sweet Earth for an undisclosed fee. The company mainly manufactures meat replacements, a rapidly-growing market, but also several frozen meals.

Back to top