Esprit Holdings Ltd (思捷環球控股), the once high-flying Hong Kong fashion retailer before it tumbled into years of losses, is planning a comeback in Asia, pivoting away from a fast-fashion strategy where it failed to compete with brands such as Zara and H&M.
The company is now focusing on better-quality clothing that is more expensive than fast-fashion apparel, but more sustainable, chief executive officer William Pak (朴義源) said in an interview with Bloomberg Television yesterday.
It is also returning to Asia after closing all 56 stores in the region in early 2020 amid COVID-19 lockdowns.
A pop-up store opened in Seoul in April, and a flagship outlet in Hong Kong’s Causeway Bay shopping hub is set to open next month.
While the focus would remain on e-commerce, the company wants to have at least one signature store in key Asian markets where it also has an online presence, Pak said.
It has launched online platforms in Taiwan, South Korea, Hong Kong and the Philippines, and plans to expand into mainland China, Singapore and Thailand by the end of the year.
Esprit’s changing strategy comes as the fast-fashion model faces increasing criticism over environmental, social and governance issues such as wastefulness, questionable sourcing of materials and sweat-shop manufacturing.
The company, which became a global household name in the 1980s and 1990s, is hoping to create a clean and youthful image to return to those heydays of double-digit growth.
“We are really targeting exponential growth of revenue,” Pak said. “Esprit is not fast fashion and it took a long time for this to be realized in the company.”
Still, Esprit faces an uphill battle winning back market share in Asia, one of the world’s most competitive fashion markets crowded with global giants who are expanding aggressively physically and online.
While many fast-fashion brands like Zara and H&M are already switching to focus on sustainability, it also faces the rise of ultra-cheap online platforms such as China’s Shein, which is eyeing an initial public offering in the US as soon as 2024.
In its shift toward sustainability, Esprit has reduced its fashion cycles from 12 collections a year to just four, supplemented with limited-edition collections with other partners. It has also moved its headquarters back to Hong Kong to streamline communications and logistics, because most of the company’s suppliers are in Asia.
The strategy helped Esprit turn a profit last year, the first in five years, with net income of HK$381 million (US$48.5 million).
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