Why does the "Veterans" withdraw from Esprit and lose their first-mover advantage?

The Esprit (Esprit), the brand that urban white-collar workers once loved, is facing an embarrassing situation.
The Esprit (Esprit), the brand that urban white-collar workers once loved, is facing an embarrassing situation. As of March 18, the largest circulating shareholder of the parent company Esprit Worldwide, the US CRM fund reduced its shares in less than two weeks. Another unsightly data is that in the second half of 2010, Esprit's profits fell by 20%. At the same time, Gao Hansi, the veteran of Esprit Chairman and Shen Wenfeng, General Manager of China, left the new year.

In recent years, fast fashion brands ZARA, H&M, and Uniqlo, each with their distinctive style, have been madly attacking the Chinese market. They have a more personalized design, cheaper prices, and forced Esprit into a back-to-back situation.

High-level frequency

Esprit, edc, Red Earth, Esprit's multiple brands were initially known to Lin Qingxia's husband and former chairman Xing Liyuan for the mainland public.

On March 18th, U.S. fund CRM reduced its Esprit Holdings shares to 5.92%, which was the third time in less than two weeks to reduce its stake. CRM was once the largest circulating stock of Esprit. In previous years, it was loved by Esprit and it is gradually retreating.

One month ago, Esprit announced its semi-annual report and announced that Chairman Gao Hansi intends to develop other private businesses and resign from the company. Gao Hansi was once regarded as the soul person of Esprit Global. In 2006, he took over the position of Esprit Chairman from Xing Liyuan. He gradually faded out in 2009. In 2010, he expressed his intention to retire.

Before the Spring Festival, Esprit's China headquarters in Shanghai also reported changes in executives. General Manager Shen Wenfeng switched to the American fashion brand Tommy Hilfiger and became the first CEO of the latter in China. Tommy Hilfiger withdrew China's agency rights from Hong Kong agents in 2010 and is trying to build his own Chinese direct operation system. Shen Wenfeng has been seen for nearly 20 years of experience in fashion, brand management and retail.

A person in charge of Esprit China’s marketing department told reporters that Shen Wenfeng had left the company and she did not disclose the new general manager of Esprit China.

From 1998 to 2007, Esprit had a splendid “Golden Ten Years,” but it has become weaker in recent years. Intriguingly, Xing Liyuan, who grew up as a chairman from wage earners, has gradually reduced his shareholding in Esprit since 2002. Xing finally cashed out at HK$17.6 billion and resigned his position at Esprit in 2008.

It seems that since then, Esprit has been frequently plagued by high-level turmoil. Pan Zuming, the company’s deputy chairman and chief financial officer, resigned in July 2008 and it was not until five months later that Esprit was announced to be replaced by Zhou Fuan. In February 2009, Griffith, Esprit's executive director and president of North America for the Esprit brand also resigned.

With regard to issues raised by reporters such as high-level changes and declining performance, as of press time, Esprit Hong Kong headquarters did not reply.

Repurchase of Mainland Business

High-level turmoil and decline in performance may be mutual cause and effect.

In the second half of 2010, Esprit's net profit was HK$2.1 billion, a 20% year-on-year drop.

According to data from a year ago, Esprit is the world’s sixth-largest fashion chain by market capitalization, ranking behind competitors such as H&M, ZARA, Uniqlo, and GAP.

For the latest semi-annual report, Fang Xiwen, a retail industry analyst from Hong Kong Stock Exchange, told reporters that another reason for the disappointing performance of Esprit Worldwide is that two-thirds of the brand's markets are in Europe, with Germany’s largest share, but recently encountered The depreciation of the euro and the sluggish European market are very unsatisfactory. Esprit Global is now moving to the mainland to actively open stores, hoping to find new growth points.

In fact, Esprit is a pioneer in the Chinese mainland market. As early as 1992, Esprit's trademarks and brands entered the mainland. Esprit first established a company in the Mainland and then distributed through the Hong Kong company's trademark authorization. After 1998, Esprit developed direct operations and franchise operations in the Mainland. It chose Beijing, Shanghai, and Dalian as the three markets for direct operations, and franchise in the rest of the region. Esprit and China Resources Enterprise also established a joint venture in 1998, of which China Resources Enterprise accounted for 51%.

At the end of 2009, Esprit suddenly announced that it had purchased all the shares held by China Resources Venture at a high price of HK$3.88 billion, thereby realizing the sole proprietorship in Mainland China.

Opponent fierce

Today, the market in Mainland China is already the Red Sea, and Esprit has gradually become a chaser from a pioneer.

Ms. Sang Yuming, general manager of Hangzhou Hurdun Trading Co., Ltd., who has been in the apparel industry for many years, told reporters that Esprit has a great first-mover advantage in the mainland market.

In the past three to five years, the market has turned sharply, and international brands such as ZARA have been competing to enter China and shop quickly. In the Chinese market, the "fast fashion" brands have got together. Esprit also did not keep up with the rhythm at this stage.

"After mentioning CAT, we will think of overalls; when we talk about ZARA, we can think of a good windbreaker. And Esprit does not seem to have its own uniqueness." Sang Yanming said. In addition to the design deficiencies, Esprit's pricing is not enough for the people to be one of the reasons for customers being robbed.

Haitong Securities believes that its wholesale business has been sluggish. In the second half of 2010, the company’s wholesale business accounted for 43% of its turnover, which was lower than before.

Mulberry Ming told reporters that there are usually two types of agents in the apparel industry. One is the agent joining, the purchase of the brand, the use of the other's trademark, and the decoration of the store is done by agents. Another model is to buy the right to use the brand by an agent. The agent finds the foundry factory and produces and organizes the terminal sales. The entire process is carried out under the inspection and control of the brand.

The practice of most clothing brands is to carry out retail business that is directly facing consumers and also to carry out “wholesale” businesses that face agents. The retail business directly operated by the brand often assumes the task of establishing a brand image, while the wholesale sales business is more important for the sales promotion.

The lack of wholesale business is the lack of confidence in the performance of agents, the root cause of which is product and brand.

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