Esprit is on sale – a bargain at $1.99 for the last few months. Today it is even further discounted to $1.78.
Twelve months ago, you could shop Esprit for $4.93. Five years ago it was $15.86.
I’m talking, of course, about the embattled Hong Kong-headquartered apparel retailer’s share price. Frankly, it is a shame its products are not such a bargain. But then again, are Esprit’s shares worth even US 23 cents a pop right now? Doubtful.
Fifteen years ago, I loved this brand: it predated the somewhat totalitarian invasion of fast-fashion labels. It was priced moderately and it offered comparatively good-quality fabrics and hip designs. While its peer Abercrombie & Fitch was speeding along a highway to self-destruction by putting its brand names as big and bold as it could on everything exiting its factory, and French Connection was still telling its customers to merge sex and travel, Esprit was on point with its vibrant colours, semi-retro designs, subtle rock and American-cultural references, producing tidy, everyday casual wear.
Then it, too, lost its way. In retrospect, it is hard to identify the tipping point. Undoubtedly the explosion of fast-fashion played a major role, with Primark in the UK and the ubiquitous H&M and Zara stores undercutting it on price in its once-core European market.
A&F learnt its lesson, albeit painfully slowly, scaling down its logos, brightening its stores and axing some of its diffusion lines. French Connection finally woke up to the fact its FCUK joke had run its course. But Esprit just stood still like a wild animal on a freeway at night, caught in the glare of headlights, waiting for the oncoming truck to roll right over it and hoping to avoid decapitation.
At first impression, it seemed to have ducked far enough to do so, because in February last year, after a string of losses, the company boldly announced a “significant recovery”, turning an HK$238 million loss for the first half of 2016 into record a net profit of HK$61 million for the first half of 2017. It cited store closures and a reduction in discounting (leading to higher margins) as the turning point. Selling and leasing back its head office in Central, freeing capital for its reformation plan, also helped the bottom line, with a one-off gain of $725 million.
Fast-forward to June this year and the company warned of a full-year loss of $2.55 billion, based on write-downs, costs associated with exiting the Australian market… and falling sales. It confessed its operating loss for last year would be as high as $950 million because the “decline of customer traffic” to its brick-and-mortar stores was higher than it expected.
Earlier this year, it handed back the keys to its Causeway Bay flagship.
In July I set out to take a look at Esprit’s store in Central – a clean, modern two-story retail space – searching for signs of an improvement in its offer. I genuinely wanted to find something to buy, for while I am scathing of the brand’s recent mismanagement, I still have a soft spot for Esprit; I’d actually like to see it survive.
Aside from the functional store design, it was a giant disappointment. I suspect I was not alone. While there was a scattering of customers in store, there were no lines at the cashier station; in fact I did not see a single transaction take place in the 20 minutes I was in the store, (but admittedly I could not see both floors at once).
The product assortment was – politely put – dull. It is impossible to ascertain in the store just what target market Esprit is chasing. It has no unique selling proposition. If there is a ‘focus’ to its offer, it seems to be trying to be all things to all markets. Kids, menswear, womenswear, no obvious target age-range, nothing eye catching. Nothing that stands out from rivals. Just plain, dull, vanilla clothing.
Styling seemed off point – and at least six months behind rivals like Zara or H&M. And its pricing is unjustifiable. Esprit is no longer a popular brand with the cachet to warrant spending almost US$50 on a simple t-shirt which has little apparent difference to those sold at Bossini or Giordano at less than half the price. Esprit is not Superdry – a brand which I doubt existed outside the UK when Esprit was in its heyday.
Esprit is a part of our apparel retailing history. But therein lies its problem: It is a brand of history, not the present. And the way its losses continue to mount, as its share price heads towards penny-stock level and its store network continues to shrink… it really is hard to see it as part of retailing’s future.
- This column was featured in the newly released autumn edition of Inside Retail Hong Kong’s quarterly magazine. To subscribe to the digital or print (Hong Kong only) versions visit our online store.