2023 was another tough year for Esprit, whose turnover fell 16 % last year, with profits dipping even deeper below zero. The fashion brand is restructuring and already let its Swiss branch go bankrupt this week.
Blame the customer
Just days after its Swiss branch had to file for bankruptcy, Esprit is announcing abysmal figures for financial year 2023. The fashion label’s profit warning, issued in February, turns out not to be a false alarm.
Last year, sales fell 16 % to 5.9 billion Hong Kong dollars (just under 700 million euros). E-commerce sales fell 16 %, wholesale sales 20 % and sales in its own stores 14 %. The only silver lining came from licence revenue, which remained fairly stable. Esprit looked for causes in the unfavourable macroeconomic climate in Europe, especially in Germany, with low consumer confidence due to the conflict in Ukraine and high energy costs.
Restructuring is costly
The drop in sales also made the losses larger: gross losses rose from 642 million Hong Kong dollars in 2022 to 2.5 billion (300 million euros) a year later. The net loss amounted to 2.3 billion Hong Kong dollars, despite having returned to profit for the first time since 2017 in 2022.
Apart from decreasing sales, the fashion retailer also failed to cut operating costs due to “historical structural problems” in the company, while short-term restructuring efforts are costing more before they start to pay off. In its biggest market, Germany, for instance, Esprit has terminated its contract with franchise operator PTH Group, forcing forty shops to close.
