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Esprit Holdings Limited ("Esprit"), the leading fast-growing international fashion giant, has today been overshadowed by many competing brands in its voice and image.
Esprit recently released its financial year 2011 results (as of June 30 this year), the company's net profit of 0.79 billion Hong Kong dollars, compared with 4.226 billion Hong Kong dollars in the same period last year, a year-on-year decrease of about 98%. Market participants pointed out to reporters yesterday that the sharp drop in Esprit performance not only related to the entire market environment, but also the issue of brand aging. The top priority is to restore brand vitality.
Fast fashion industry is in a state of fatigue
Esprit’s 2011 fiscal year turnover was basically flat compared with the previous fiscal year, which was HK$33.8 billion, and was HK$33.7 billion in fiscal year 2010. While net profit fell sharply, Esprit pointed out that it was mainly due to the divestment of North American operations and the closure of direct-operated stores in some European markets that resulted in a significant reduction in impairment provision.
The financial report shows that in fiscal year 2011, the Esprit brand's retail sales in North America was HK$897 million, and EBIT was a loss of HK$308 million. Esprit therefore decided to spin off North America’s business, mainly including closing 93 directly-operated stores. The resulting total impairment and provision of store assets amounted to HK$1.268 billion.
Esprit also decided to close another 80 directly-operated stores, of which 65 are in the European market and 15 in the Asia-Pacific market. Esprit has decided to withdraw its retail business in Spain, Denmark and Sweden. In fiscal year 2011, Esprit's retail sales of the above-mentioned 80 directly-operated stores totaled HK$1,039 million, and EBIT recorded a loss of HK$222 million. The store’s asset impairment and provision for closing the above-mentioned stores totaled HK$1.161 billion.
This year, the entire fast fashion apparel market has shown a certain degree of fatigue. According to the latest data released by the Japan Fast Retailing Company that operates the Uniqlo brand, from September 2010 to May this year, the company’s revenue was 652 billion yen, a year-on-year decrease of 1.1% and net profit of 53.4 billion yen, a decrease of 20.5% year-on-year. .
Spain's Inditex, which operates the “ZARA†brand, saw sales and net profit increase by 11% and 10% year-on-year in the first quarter of this year. In the first quarter of 2010, Inditex’s sales and net profit increased by 14% and 63%, respectively. It has obviously slowed down. From December 2010 to May 2011, H&M’s revenue increased by 10% year-on-year, but pre-tax profit decreased by 23.2% year-on-year.
A person in the clothing foreign trade business in China introduced that this year's clothing industry has shown a sluggish trend, which can be observed from the perspective of logistics. The logistics companies that he knows have received orders for clothing and other types this year compared with the same period of last year. About 30% reduction. The foreign trade orders currently received by the above-mentioned persons can only be maintained until November of this year, and gross profit is only about 5%. He estimates that the proportion of garment enterprises in some areas around Shanghai has been closed down from 15% to 20%. There will be more garment factories will not be able to hold off by the end of this year.
Self-adjusted
Zhao Weiguo, a member of the China Fashion Designers Association, believes that the large changes in Esprit's performance should be the cause of its own. He said: "Esprit entered the mainland of China in the 1990s. It was popularized by consumers and became one of the trend indicators of fashion. Today, facing the problem of aging brands, the apparel market has undergone tremendous changes in these 20 years."
Now, in addition to Esprit in the fast fashion field, “Uniqukuâ€, “ZARA†and “H&M†are available for consumers to choose. From the price point of view, “Uniquku†is cheaper than Esprit, but at a similar price point. , "ZARA", "H&M" can provide a richer and more varied style choices.
Zhao Weiguo said that in addition to the growing maturity of the market, some changes have also taken place within Esprit. Some of the core executive teams either left or were exhumed, and the brand operation methods and practices have changed. Previously, Xing Li, one of the founders
Already resigned from the position of chairman of the board of directors of Esprit, the shares held by the company are basically sold out.
Esprit publicly acknowledges that Esprit is essentially a strong and profitable brand, but the brand has gradually lost its soul in the past few years, and customer cohesion is losing. As a remedy, Esprit announced that it will spend more than HK$1.7 billion each year on brand promotion in the most recent four years, bringing advertising sales to 6% to 8% of sales, setting up a trend office in Paris and setting up services in China to serve the Chinese market. Design Center to strengthen Esprit's design capabilities.
In fiscal year 2010, Esprit's marketing and promotional expenses accounted for only 2.1% of the total turnover. In fiscal year 2011, the ratio rose to approximately 3%. In FY10, Japan’s fast-selling company’s marketing and promotional expenses accounted for 4.6% of total sales, which is much higher than Esprit’s.
Lost by Unifuku, ZARA, Esprit net profit fell by 98%
Now, in addition to Esprit in the fast fashion field, “Uniqukuâ€, “ZARA†and “H&M†are available for consumers to choose. From the price point of view, “Uniquku†is cheaper than Esprit, but at a similar price point. , "ZARA", "H&M" can provide a richer and more varied style choices.
Is it because of its own reason or the winter of the industry?