Esprit Restructuring Globally, Layoffs Hit N.Y. Headquarters
● CEO William Pak tells WWD there are no plans to abandon its New York operations in the wake of the bankruptcies of Esprit's businesses in Belgium and Switzerland.
Esprit has put its operations in Belgium and Switzerland into bankruptcy and is laying off personnel at its New York base, but the company is not planning on abandoning its U.S. business or pursuing a restructuring in court.
That's according to the brand's chief executive officer William Pak, who on Friday told WWD: “The insolvencies in Belgium and Switzerland were one part of a larger restructuring strategy that has been in motion for quite some time. I can confirm that there are no plans for the North American business to file for bankruptcy. I've communicated to the market over the last couple of years that the EU problem has been an issue for Esprit for over a decade, and we are finally able to address the issue through the restructuring so that Esprit can return to its original traits of having good design, quality and fit that the customer has been longing for in the U.S.”
One source close to the company, speaking to WWD anonymously, said there were fabric suppliers in Asia that hadn't been paid by Esprit in four or so months, and were owed millions.
In a separate statement provided to WWD, executives cited a “strategic restructuring and repositioning in the U.S. market. The new management team is focused on reengaging with the brand's American heritage and amplifying the foundations on which it was originally established. The new management has already begun the necessary strategic restructuring, rebranding and repositioning of Esprit and is now set to accelerate on this path. These efforts unfortunately necessitated a reduction in positions in the New York office in order to right-size operations.”
Esprit announced a new management team in March 2022, which included bringing in Pak as CEO.
The company would not disclose how many people were being let go, though one source estimated that 18 people were let go from the New York headquarters. In February 2023, the company opened its two-level, 38,000-square-foot New York headquarters for the global design, branding, creative and marketing teams, a showroom and a photo studio at 160 Varick Street in Manhattan. Collections of the past couple of seasons emphasized versatility, oversize looks, masculinefeminine unisex, layering and gorpcore, a combination of outdoor and city, so for example, wearing dressy pants with a cashmere sweater.
With the bankruptcies in Belgium and Switzerland, “the closure of select retail stores in Belgium and Switzerland was unavoidable,” the company said in its statement, adding, “The overall economic development in combination with the sharp rise in energy and logistics costs, negative consumer sentiment and, last but not least, the long-term legacy high rents for the unsuitably-sized stores ultimately made it impossible to continue that business.” However, Esprit will continue to be sold in Belgium and Switzerland through franchised stores, multilabel stores, and online.
The company cited a plan for the revitalization of Esprit's wholesale distribution involving “partnering with industry leaders who will be announced in coming months ahead of commercial launch.”
Esprit also indicated that the company will continue to open “strategic” retail destinations in North America. Over the past year and a half, Esprit has tested several North American markets with pop-ups and will utilize the data gathered during trial runs to inform future decisions. Esprit also indicated that it continues to improve its e-commerce and acquire new customers in North America by optimizing the user journey.
Tony Strippoli, chief operating officer for Esprit in the Americas, said: “Drawing inspiration from the brand's heyday in the 1980s and 1990s, Esprit is embracing optimism, bold patterns, and vibrant clashes of color for its upcoming collections. By returning to the brand's core values and capitalizing on its innovative history, we aim to position the brand within the elevated contemporary market, attracting style-obsessed and culturally influenced customers.”