金融雲端：思捷危機
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It was, according to Esprit, the troubled clothing brand, all the most extraordinary coincidence. On Tuesday, Esprit’s chief executive told a board meeting in Shanghai that he was resigning for personal reasons – a meeting attended by the chairman.
That same night, the chairman also decided to quit for personal reasons, after apparently giving no sign of his intention during the day.
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Ronald van der Vis, who will stay on as chief executive for another 12 months to ensure a smooth transition, said on Thursday evening that chairman Hans-Joachim Körber’s immediate departure had nothing to do with his own resignation.
“I was not pleased about the timing,” he said. But any speculation that they were jumping ship or quitting because of an impending takeover was “complete and utter nonsense”.
Mr van der Vis sounded genuinely distressed when explaining that he had been given an ultimatum by his family, who live in the Netherlands and do not want to relocate to either Esprit’s dual headquarters in Ratinger, Germany, or to Hong Kong. It was between them, or the job, which requires him to travel 150 days a year, he said.
Coincidence or not, the double departure could not have happened at a worse time for the company. Mr van der Vis has been the frontman for the new Esprit since 2009, when he joined from optical retailer Pearle Europe to revive the 44-year-old brand.
Esprit has fallen out of fashion among a new generation that prefers cheaper “fast fashion” brands such as H&M and Zara. With its mid-market offering, it has also missed out on booming luxury sales to Asian consumers.
The company is also hampered by a messy supply chain, with too many suppliers, and its dependence on Europe, a slowing market accounting for 80 per cent of its sales last year.
Mr van der Vis is credited with making several promising hires – including Esprit veteran Melody Harris-Jensbach, who was lured back last year from Puma, where she was deputy chief executive.
But it was not until last September, nearly two years after he started, that he unveiled a four-year, HK$18bn transformation plan. At the time, Esprit shares had hit a record low of HK$7.93, full-year net profit was down 98 per cent and it pulled out of the North American market.
“The execution of the transformation plan has only just started, and it was Mr van der Vis who made it sound credible,” says Gabriel Chan, analyst at Credit Suisse. “The worse thing would be for a new CEO to come in and abandon it half way,” he adds.
Investors had started to buy the transformation story and Esprit shares climbed as much as 70 per cent since September, buoyed by news such as the decision by Lone Pine Capital, run by veteran investor Stephen Mandel, to build up a 12 per cent stake during the past few months to become the largest shareholder.
Mr van der Vis on Thursday said he had been in touch with Lone Pine and other institutional shareholders but refused to divulge details of the discussions.
Analysts are still concerned by Mr Körber’s departure, which remains unexplained. Mr van der Vis refused to comment on it, saying it would infringe the privacy of Mr Körber, former head of German retailer Metro, as it was a personal matter that forced him to quit.
Vineet Sharma, analyst at Barclays Capital, also questions the wisdom of launching expensive advertising campaigns featuring supermodel Gisele, and refurbishing shops around the world, before Esprit has significantly improved product design.
This week Esprit held a glitzy party to mark the reopening of its London flagship store after a costly revamp.
The man stepping into the breach is Raymond Or, former head of Hang Seng Bank, an HSBC subsidiary, who has been non-executive director since 1996.
Speaking just after a check-up at a Hong Kong hospital – “Just to made sure I’m in good health” – he said that the company had started a global search for a chief executive. He was confident the transformation plan would remain on track, he said.
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GS(14)@2012-06-16 12:14:45http://www.ftsyndication.com/sea ... ex&title=Lex&tl=col
How about this for a tale of two cities – and two retailing models? In Hong Kong, Esprit lost its chief executive and chairman in one move, raising a large cloud over the fashion chain’s HK$18bn turnround plan. In Spain, Inditex – owner of Zara, beloved of office girls – blew past expectations for first-quarter sales and margin growth. The reality is more nuanced than it looks, however.
Inditex is famed for its fast-fashion model. Zara can produce and sell hot items within days, and dump mistakes just as quickly. Esprit relies on its wholesale unit for two-fifths of sales, a clunky supply chain that requires fashion bets far in advance. The Hong Kong-listed company’s latest woes are not its business model, however, but the men who were trying to change it. Ronald van der Vis has resigned to “pursue other interests”. No wonder its shares fell 20 per cent: fortysomething CEOs in their first job should not need “other interests” after championing a turnround that has yet to produce results. Esprit’s shares had gained a third this year in the belief that Mr van der Vis and chairman Hans-Joachim Körber could deliver. That belief looked unjustified: Esprit’s sales fell 9 per cent year-on-year in the last update, against a flat reading last year.
By contrast, Inditex looked in sparkling form. First-quarter sales were up 14 per cent in local currencies and gross margins were 60.2 per cent, compared with 58.8 per cent a year earlier. Store expansion, though, is relentless, so like-for-like sales growth was probably nearer 5 per cent after allowing for an extra February trading day. That is still very good for a business that drew one-quarter of store sales from ailing Spain in 2011 and 45 per cent from the rest of Europe. But while the company said pricing was stable, it was coy on whether the quarter saw reduced markdowns or a deflationary impact on sourcing.
Retailers should be more upfront with investors. In particular, Esprit should not ask them to accept as just a coincidence the exits of two top bosses in one day.