Lifestyle retailer Esprit is considering a full-scale exit from its UK standalone stores in order to concentrate on its more profitable ecommerce and wholesale divisions.
Drapers understands that Esprit, which is headquartered in Hong Kong and Germany, is undergoing a transformation strategy that could involve the disposal of its four remaining UK stores, including the 26,000 sq ft Regent Street flagship.
The £990m-a-year turnover company has recently experienced strong growth in its UK wholesale and ecommerce arms while retail sales flatlined.
Wholesale was up 39.5% to HKD53m (£4.1m) and total UK turnover rose 19.5% to HKD92m (£7.1m) in the six months to December 31, 2013, compared with 2012. UK retail plateaued at HKD39m (£3m) for both periods.
Following a 9.9% drop in global group turnover and a 1.4% reduction in profits over the same period, it is now thought that Esprit is considering offloading the four UK stores as part of a “transformation plan”.
It has already closed nearly a dozen outlets through its property adviser Harper Dennis Hobbs in locations including Canterbury, Norwich and Manchester, and last week surrendered its 10,000 sq ft Oxford Street lease to plus-sized fashion brands Jacamo and Simply Be.
Neither Esprit nor Harper Dennis Hobbs would confirm any overall decision to move away from UK retail. Esprit said the focus would be on each store’s individual profitability, but its UK flagship at 178-182 Regent Street is believed to be up for grabs.
The store was refitted in June 2012 as part of a £227m investment in the business’s European estate, after a 74% fall in profits for the period from July 2011 to the end of 2012.
Esprit closed all of its North American stores at that point in a bid to focus on Europe and the Far East. On top of the four standalone UK stores it has three franchise stores and a range of concessions.
An Esprit spokeswoman told Drapers: “Esprit is currently undergoing a transformation process aimed at strengthening its brand and its profitability in the long term.
“Esprit still maintains a strong market presence in the UK through our wholesale and ecommerce business channels. In order to create the necessary parameters for our transformation process, Esprit has, as part of a strict cost-cutting plan, decided to close some loss-making retail stores in Europe, along with other measures.
“The closure of these locations will help to resolve the current over-presence of stores in one area and also addresses the challenging market situation and overall situation of Esprit.”