Esprit is the latest casualty of the retail industry’s sluggishness, and sources have reported the retailer could shutter up to seventeen underperforming stores in France–about half of the company’s store count in the country–over the next eighteen months.
The store closings are expected to result in the loss of 150 jobs. For many retail analysts, the news is unexpected, given that the Hong Kong-based company has been showing signs that its turnaround strategy is gaining traction. As reported in the Sourcing Journal, Esprit is expected to report a profit of no less than $11 million for the six months ended December 2013, a significant improvement over last year’s loss of $60 million during the same period.
However, much of the return to profitability is a function of aggressive cost reduction, rather than newfound growth. Sales rapidly declined between July and December of 2013 to the tune of 19 percent. Overall, the retailer has experienced diminished sales consistently since 2008.
Much of Esprit’s halting progress can be attributed to the Europe’s general economic malaise; the retailer is very Euro-centric, doing approximately 78 percent of its business in Europe. However, it has also struggled to keep pace with the emergence of less expensive competitors like H&M and Zara.