Yahoo Finance Esprit Execs Address Widespread Downsizings and the Brand’s Future
Esprit is downsizing dramatically but not winding down completely, according to senior officials of the ’80s-inspired brand that’s been striving for a revival.
Esprit is seeking financing to sustain European wholesale and e-commerce operations, while shutting down its entire retail operation in the continent.
More from WWD
Meanwhile, Esprit is cutting more than half of the staff at its U.S. base in New York, according to Esprit top officials who said this week’s market speculation that the New York operation would shut down in a few months was false.
“We’re not closing the U.S.,” Tony Strippoli, chief operating officer of Esprit in the Americas, told WWD.
“We are right-sizing this due to a mismanagement situation from prior management that was tasked to move this [brand] forward and develop the North American business.”
The cuts are happening at Esprit’s two-level, 38,000-square-foot New York headquarters for the global design, branding, creative and marketing teams, a showroom and a photo studio at 160 Varick Street in Manhattan. It’s been in operation since February 2023, and was tasked to revive the brand. It staffed up to about 115 employees, but Strippoli said the head count is being reduced to about 50.
“What I’ve been working on in the last few months is a kind a right-sizing of the business,” said Strippoli. “There was really just an overstaffing.”
Aside from the layoffs, some remaining workers were told they have to accept salary reductions. “We’re not going to comment on people’s personal income,” Strippoli said, when asked about the pay cuts.
In the U.S., Esprit is available on esprit.com and one Esprit store, in Venice Beach, Calif., but Europe is a different story.
“We are closing down retail stores in Europe,” William Pak, Esprit’s chief executive officer, told WWD. “It’s part of the problem Esprit has had over 10 years in terms of retail stores that are 20,000 to 30,000 square feet and way too large, and way too many. It’s an old strategy from 20 years ago. So those are being closed down. The plan is to do a total restructure.” He said what’s occurring in Europe is a furtherance of the same restructuring plan the company has been working on for the past nine months.
Two months ago, Esprit’s retail operations in Belgium and Switzerland were shut down through bankruptcies. “This includes now Germany, which happened about a couple of weeks ago,” Pak said. “So Germany is being completely restructured, and we are working on the rest of it.” The bulk of Esprit’s European sales have been generated in Germany, Austria and the Switzerland region, Pak said.
“The plan is to do a total European restructure,” Pak said. “We are currently going forward with the plan. It will take a few months [more] this year.”
He said the company will emerge “right-sized” in Europe, with wholesale and e-commerce but no stores. At the beginning of the year, Pak said, there were about 160 Esprit stores in Europe. As of Friday, the store count was down to “under 50,” Pak said. “There is also a corporate headquarters restructuring in Germany, and we will emerge as a new right-size company with a new brand strategy and new product strategy.”
However, the future of Esprit in Europe depends on whether Pak can find new financing for the business. “We are in very extended discussions with a couple of investors to do this,” Pak said, speaking from Düsseldorf, where he said he’s in “very late-stage negotiations.”
Pak said the U.S. operations are unaffected by what transpires in Europe. Esprit’s headquarters moved from San Francisco to Ratingen, near Düsseldorf, years ago, while factory, sourcing and financial operations are situated in Hong Kong, where the company is listed on the stock exchange.
Esprit has been on a mission, but not to revive its youthful California cool spirit and wildly bold prints, bright colors and baggy silhouettes that were so popular in the ’80s and ’90s. Instead, the brand has sought to regain relevance with a more modern, urbane, practical approach and multigenerational appeal. The brand was founded in 1968 in San Francisco by Doug and Susie Tompkins with a West Coast sensibility, but recently shifted to New York.
Despite the downsizing and restructurings, Strippoli contended that Esprit has a future, referencing the U.S. “There’s a real [demand] for this brand to come back. We’ve made significant wholesale placements for the fall ’24 market on a national level with various key retailers and over 125 boutiques. The reentry into the U.S. from a wholesale point of view was always planned to be fall ’24,” Strippoli said.
“The brand itself has always retained very loyal followers, fans and customers,” Pak said. “It’s the corporate side that always needed a big restructuring. And I’ve been signaling that to the market for the last two years. We’re actually doing it this year. This is the outcome.
“We are more focused on the fundamentals, in terms of wholesale, servicing the customer and e- commerce with a smaller footprint in retail, and leveraging the nostalgia of Esprit from the ’80s and ’90s,” Pak said. “It’s reflective in our Instagram right now, which is really the best window at this point to see the direction we’re taking creatively.”
Outside the U.S. and Europe, Esprit operations include a distributor in Canada, a licensee and distributor in South America and a partnership in the Philippines.
Best of WWD
