Esprit is betting on the economic rebound with an ambitious global return
The chief executive of Esprit Holdings struck an optimistic tone as the company embarks on a global expansion, predicting the worst is over for fashion retail despite soaring inflation and pressure from the supply chain.
William Pak said the fashion house is planning an ambitious comeback by returning to the United States, Australia and mainland China, with new outlets opening in Shanghai and Los Angeles early next year.
Esprit, a Hong Kong-listed fashion retailer that hit its peak in the 1980s and 1990s, posted its first profit in five years with a net profit of HK$381 million ($48.5 million).
Part of its new strategy has been to distance itself from fast fashion giants such as Zara, H&M and China’s Shein and focus on producing more expensive and better quality clothes.
“This year is potentially the bottom of the retail market,” Pak told the Financial Times in an interview at the company’s Hong Kong headquarters on Friday. “We have to move forward and not wait and be reactive.”
Pak said indicators such as the June U.S. Producer Price Index, which tracks the prices businesses receive for their goods and services, were a sign “that inflationary pressures will soon ease.”
The company said it hopes to win over China’s Gen Z population, with more localized products that cater to the patriotic “China-chic” trend.
The HK$3.3 billion ($420 million) group, founded in 1968, had become one of the world’s most recognizable brands, but struggled to compete with fast fashion retailers.
Over the past decade, Esprit has been forced out of markets in North America, Australia and Asia. It closed hundreds of outlets as its chief executive admitted the brand had “lost its soul”.
Most retail sales at Esprit last year came from Europe, with more than a third of its stores in Germany. Part of her changing strategy is to reduce the number of fashion collections she releases each year and increase the quality of clothing.
The fashion retailer, which moved its headquarters to Hong Kong last year, has gradually returned to Asia since February, launching online-only stores in South Korea, Hong Kong, mainland China, Taiwan, the Philippines, Singapore and Thailand. Physical stores are expected to open in the United States, Canada, Australia, Hong Kong and mainland China after a pop-up outlet opened this year in South Korea.
Its expansion into mainland China comes as fast fashion titles leave the country under its strict zero-Covid regime.
Inditex, Zara’s parent company, is pulling brands including Bershka, Pull & Bear and Stradivarius after closing brick-and-mortar outlets, while American Eagle Outfitters closed its e-commerce stores.
“We can create a local specific capsule for mainland China once we open. We can also do the designs locally,” Pak said of China, where Esprit once had more than 300 stores.
Pak said the company had “no specific targets” in terms of revenue distribution in mainland China and Asia, but would see markets develop “cautiously” on its way to winning back customers.