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Jul 3, 2020 at 7:03 AMThe fashion label Esprit, which is under the Corona protection umbrella, can begin its restructuring. The Düsseldorf District Court approved the restructuring plan. By November 2020, around 50 stores in Germany are to be closed and approximately 1,200 jobs cut.
(Ratingen) Esprit has reached another important milestone in its transformation process. Today, the Düsseldorf District Court gave the green light for the start of the restructuring phase. Esprit’s management intends to use the next three months to consistently implement the restructuring measures and accelerate the implementation of the strategy already decided at the end of 2018. The key elements of the restructuring plan focus on sustainable profitability and regional concentration in Europe. This includes:
Optimization of Store Portfolio
The goal is to close about 50 stores in Germany by the end of November 2020. This corresponds to about 50% of the German retail stores. This optimization is in addition to the decision made in April during the shutdown to close 56 retail stores in Asia outside of China.
Job Cuts and Salary Reductions
The job cuts will affect approximately 1,200 employees (about 20% of the workforce), including 800 store employees and 300 administrative staff in Germany, as well as 100 employees at the Hong Kong location. The intended job cuts are currently being negotiated with the relevant works councils. In addition, further salary and benefit reductions for administrative staff are being discussed.
Cost Reduction
Specifically, all expenses will be carefully reviewed, and a comprehensive cost reduction program will be implemented, in which contracts with all major service providers will be renegotiated and internal structures and processes adjusted. The implementation of the above measures will lead to annual savings of more than 100 million euros. The one-time implementation costs amount to approximately 55 million euros. Anders Kristiansen, CEO of the Esprit Group, is optimistic: “The effects of COVID-19 have severely impacted the fashion industry. This extraordinary situation has been a significant challenge for us, which we have managed very well so far. With our approved package of measures, we will preserve our great brand and feel well-prepared for the future.” Further details on the implementation of the restructuring plan and strategic initiatives will be announced by the company at the end of September with the presentation of the annual results.
Photo: © Adobe Stock www.esprit.com
