Fashion Industry

Esprit Not Dressed to Impress

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Esprit is a global brand but half its sales are made in Germany.
  • Why it matters

    Why it matters

    Esprit was once one of Europe’s biggest fashion retailers, but poor management and over-expansion have seen it overtaken by brands such as Zara and H&M.

  • Facts

    Facts

    • Esprit was founded in San Francisco in 1968but is now based near Düsseldorf in Germany.
    • In the past five years, its sales fell by a third to €2.2 billion ($2.4 billion); last year the firm lost €428 million.
    • José Manuel Martinez, a former executive at Spanish fashion giant Inditex, took over Esprit’s management in 2013.
  • Audio

    Audio

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José Manuel Martinez, the chief executive of German fashion company Esprit, likes to make an analogy between his struggling firm and the fortunes of his favorite German football club, Borussia Mönchengladbach. The team, based in a town not far from Esprit’s headquarters near Düsseldorf, has a glorious past. But in recent years it suffered a worrying decline, only to mount a remarkable comeback in the past year and compete among Europe’s elite.

Esprit’s past is much the same – except it is yet to mount a comeback. The company has massive problems, and Mr. Martinez is still working on a return to the big time, competing with the likes of H&M, Gap and Zara, owned by the Spanish firm Inditex from where Mr. Martinez hails.

“With the right coach and strategy, Gladbach returned to the top echelon calmly and modestly,” he said. “I want to get back there with Esprit.”

It is still an open question whether the battered fashion firm will manage to resurrect itself. Years of bad decisions have eaten away at the company’s substance. The decisions led to, among other things, poor quality goods at excessively high prices; a bloated network of stores; and problems with large department store chains such as Kaufhof, Karstadt and P&C.

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