Esprit is overwhelmed by rent pressure, and Shanghai flagship stores are choking

Recently, the large-scale Esprit flagship store in CITIC Plaza in Shanghai quietly ended up again causing a hot debate in the industry.

Ten years ago, the large flagship store that was opened at the time was now dead. According to industry insiders, the continuous aging of the brand has resulted in persistently poor business performance. Esprit has not been consistent with CITIC Pacific Plaza and the location of its business district. Its deteriorating performance is difficult to bear the "flourishing" rent in the area.

The aging of the brand, the expansion of scale cannot match supply chain management capabilities, and excessive dependence on a single market, all inhibiting the brand's subsequent development. Esprit (trademark holders for Esprit) is drifting away from its original success.

Rent increases pressure performance

Men in a men’s clothing store on the same floor said that due to the expiration of the rent, Esprit did not renew the contract. By the end of July, all the shops had been evacuated.

A staff member of CITIC Pacific Mall revealed that the top management of the shopping mall has recently replaced the staff and the new leader will lead the mall towards a higher end. The future positioning of Esprit brand and shopping mall has been inconsistent.

It is reported that the CITIC Pacific Esprit flagship store operates its branded clothing on the first and second floors, covering an area of ​​more than a thousand square meters. The third floor is a brand-name hair salon. For the reasons for the closure of the shop, the reporter has repeatedly contacted the Esprit brand Hong Kong listed company Esprit.

People in the industry believe that the Esprit withdrawal is mainly due to its deteriorating performance and it is difficult to bear the “flourishing” rent in lots.

Xue Shengwen, a senior research fellow at China Investment Consulting Co., Ltd., told reporters yesterday that the decline in the profitability of its parent company, Esprit for three consecutive years, has had a significant impact on the Esprit brand. The company’s latest quarterly report for the fiscal year ended March 31, 2012 shows that turnover in Europe, Asia Pacific, and North America decreased by 7.8%, 5.0%, and 5.8% year-on-year in Hong Kong dollars, and wholesale sales of the company also fell by 13.3% year-on-year. .

Qi Xiaozhai, the chief researcher of the Shanghai Municipal Business Information Center, said yesterday: “At the time when Esprit entered, the high-end brands in the entire shopping mall have not yet been fully introduced.” As the follow-up adjustments continue, many non-high-end products have switched to higher levels. Or open up new ground. Afterwards, the positioning of shopping malls continued to rise, and shop rentals were also rising.

The relevant person of CITIC Pacific revealed a few days ago that the cooperation between the two parties has not ended yet. CITIC Pacific's Shenhong Plaza in Sichuan North Road will still be introduced into Esprit, and the commercial project will be officially opened at the end of September. Qi Xiaozhai stated that the historical location of the Sichuan North Road shopping district is dominated by the masses. Because it is new construction, the rent will not be so high.

Brand positioning

Insiders pointed out that as the earliest fashion brand to enter the Chinese market, Esprit was once the object of young people chasing. However, after Uniqlo, ZARA, Gap and others competed on the Chinese market with speed and fashion, Esprit's ten-year style has not changed and the brand is aging.

According to the Orient Securities research report, compared with Esprit, ZARA is more fashionable and the H&M product line is more abundant, and Uniqlo's basic models are more cost-effective. "Following the popularity, we can't afford to lower prices," said Ma Gang, an independent commentator in the apparel industry. Esprit's current position is very slim.

Xue Shengwen believes that the high level of instability in Esprit management has also brought great difficulties to the management of the company. "Esprit, which once used innovation as its core competitiveness, is gradually losing its ability to innovate."

Since last year, Esprit has suffered multiple shareholder reductions due to continued sluggish performance. In November of last year, BlackRock reduced 38.8 million shares of Esprit with a total value of 417 million Hong Kong dollars, and the latest shareholding dropped to 2.16%; JPMorgan reduced its holding of 181 million shares in June of this year, reducing its shareholding interest from 6.02% to 5.88%. . In August, Esprit was again under Marathon Asset Management at HK$9.429 per share, reducing its holding of 95.57 million shares. Investment banks including Merrill Lynch and HSBC have also given Esch Global a reduction in their ratings.

In the face of strong competitors, severe customer loss, and sluggish operating results, Esprit hired former executives of Zara to take over as Chief Executive Officer of Esprit in August.

In response, industry analysts warned investors not to place too high hopes. This appointment is positive, but it is still only the first step. "The reforms are not yet effective."

Esprit's non-executive vice president, Zheng Mingxun, previously stated that in order to cater to the market, Esprit will also transform into a fast-moving consumer apparel brand. Ma Gang, an independent clothing commentator, believes that after the Esprit transition, the problems to be faced are many. "Only one side of the adjustment is not enough. To make a clear judgment on the entire market, under the pressure of the giants, whether the market has what he expected."

The above industry analysts believe that popular things are vulnerable to external interference. Esprit is going to be light on the luxury market or the fast fashion market. It needs careful consideration. "It's more difficult to enter all operations."