Renovators in an interview
“There is a raison d’être for esprit”
May 18, 2024, 10:15 a.m
Listen to article
This audio version was artificially generated. More info | Send feedback
The wave of bankruptcies in the fashion industry in Germany continues. The Esprit chain has filed for self-administration bankruptcy for its Europa Holding and seven other companies. This is the second insolvency procedure for Esprit within four years. During the Corona pandemic, the fashion chain had already taken refuge under the protective umbrella of insolvency law, laid off around a third of its workforce and closed 100 branches. 1,500 employees still work in the companies affected by the renewed bankruptcy.
Esprit has brought on board the insolvency experts Christian Gerloff and Christian Stoffler as reorganizers, who have made a name for themselves in restructuring, particularly in the fashion industry (Escada, Gerry Weber, Adler fashion stores).
This is the second insolvency procedure for Esprit within four years. How bad is the company?
Christian Gerloff: In fact, it is the second insolvency procedure after the first was initiated during the pandemic in 2020. These were special circumstances. Attempts were made at the time to renovate. But then there were further impacts for the entire industry, for example the reluctance to buy in view of the war in Ukraine and inflation. This also had an impact on Esprit. In addition, there are the company’s own mistakes, for example when it comes to focusing on the product, decision-making processes, speed and efficiency. The overall result was that an application for insolvency had to be filed again. But we want to use the opportunity to take the right step and carry out a fundamental renovation.
What exactly is going wrong at Esprit?
These are several factors. On the one hand, it is the external factors with all the impacts that came from the Corona crisis. This also affected stationary retail, but the fashion manufacturers very hard and to a particular extent. Added to this was the reluctance to buy during the Ukraine war. In addition, a decline in sales has been noticeable for some time. This is always a sign that the product may not be well received on the market. And you also have to see: every brand has a brand life. In modern German you would say: “It is hip and will take a generation with it.” But the fear is always that it will die out again with the generation. And that’s why a brand has to constantly reinvent itself. And Esprit is in a situation where the point has been reached to reinvent itself again – to become hip again and to tap into new groups of buyers.
Sales were already weak before the corona pandemic. Shouldn’t more fundamental changes have been initiated back then?
You can always say that afterwards. And the result we have today certainly supports the theory that something should have been done. It just doesn’t help today to philosophize about whether countermeasures should have been taken three, four or five years ago. We have to accept the situation as it is today and do something with it to save the brand and bring Esprit back to where it belongs. There is a reason for the brand to exist.
How do you want to renovate Esprit?
We will look at all sales channels. This is the wholesaler [Großhandel] with different partners. This is your own retail [Einzelhandel] with its own stores, and that is the strongest at Esprit, online retail. We have to look at that and find out where the loss leaders are. We will certainly need a partner to help Esprit out of the crisis. Without that it won’t work.
Esprit joins a long list of troubled fashion suppliers. How deep is the industry in crisis?
The large number of bankruptcies in this area shows that the entire industry is in a major crisis. We ourselves have been able to support several companies in bankruptcies and crisis situations. The problems are the same everywhere, the external circumstances are very, very difficult. There is a change in terms of digitalization and online trading. There is also too little focus on the products. We have a relatively large number of old brands in Germany – with the aforementioned brand life. Attempts have often been made to find salvation in online trading. It has to be said that online trading is important, but there are not very many online stores that are profitable. In my opinion, stationary retail in particular has largely forgotten to concentrate on its own business and to make it more modern. And that means, in particular, making shopping more of an experience. It’s no longer just about meeting needs. You don’t go downtown these days and say, I need something. That still exists, but not to the same extent as before. They want entertainment. They want to have a shopping experience and that isn’t offered enough.
Will we see more fashion retailer bankruptcies in the future?
We will see consolidation. In the last 30 years, many new providers have come onto the market and the sales area has expanded significantly – both in city centers, in shopping centers and in outlet centers. It was over-expanded. But there will also be stationary retail and fashion providers in the future. Online and stationary retail will combine. In this respect, we will still experience a crisis phase, but it will end at some point. Even though people keep saying that some inner cities are dying out, I am very optimistic that in five years we will see a start-up scene there and that something new and exciting will develop. We should have the patience. It will certainly be very interesting for consumers.
Rogatus Skanta spoke to Christian Gerloff. The Interview has been shortened and smoothed for better readability.