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Diesel to take £60m hit as premium distribution model takes hold

Diesel is to take an €85m (£60m) hit in wholesale turnover in order to “detox” from unsuitable stockists and focus on those that are “in line” with its new premium distribution model.

As previously reported by Drapers, the Italian denim brand will withdraw from multi-brand retailer USC after spring 15 and will stop selling its products via Shop Direct’s Littlewoods and Very from spring 15 for women’s and autumn 15 for men’s as it seeks a more premium positioning.

Diesel declined to confirm how many stockists will be impacted in the UK but said the financial hit will be felt largely in 2015. The changes will take place across all international markets.

Diesel chief executive Alessandro Bogliolo told Drapers the losses will be recovered in the next two to three years through “organic growth in leading department stores and independent partners that are in line with Diesel brand positioning.”

He added: “We didn’t hesitate to commit to such a radical decision. After 37 years of success, Diesel needs a detox in order to be stronger and to stimulate an organic growth in the direction identified within the new course”.

The business has also taken a stand against counterfeiting online and illegal distribution focusing on trafficking through international customs. To date Diesel has closed 3,346 sites, sent 4,000 cease and desist letters, and delisted 19,000 sites from Google.

Earlier this year Diesel won back control of its brand in Indonesia following a 23-year long legal battle.

Diesel founder Renzo Rosso said: “International laws are not protecting brands enough: if it takes a company like Diesel, which is renowned worldwide, this long to win a fight, then imagine how difficult it is for a young designer who is just stepping into such a competitive market.”

The business also said it will continue to invest in its own retail stores with relocations and new openings to be announced later this year.

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