Global fashion brand Esprit has announced the closure of its Australian and New Zealand businesses by the end of 2018.
The move will see 16 retail stores, 38 concessions, and 13 factory outlets as well as Esprit’s local online store close.
The company, headquartered in Germany but listed in Hong Kong, said the move follows “loss making for some time” despite “intensive efforts” to turn the business around.
“In order to strengthen our foundation, the Group intends to withdraw from these markets and this will allow us to concentrate efforts and resources to develop other markets in Asia,” executive director and group CFO Thomas Tang said.
Esprit has been operating in Australian and New Zealand since the 1990s.
Last financial year the company booked around $50 million in sales — less than 2% of the company’s global revenues.
Esprit is the latest company to exit the local market as traditional retailers struggle to competed online sales, and the arrival of highly-aggressive online retailers such as Amazon.
Hianyang Chan, senior research analyst at Euromonitor International, says the decision by Esprit comes at no surprise.
“Espirit is the latest apparel and footwear retailer to fall victim to Australia’s competitive retail market,” he says, following Marcs and David Lawrence.
“The global fashion retailer’s decision to exit the Australian and New Zealand market was not surprising.
“Espirit opened its first store in 1991 in Melbourne and was one of the go-to retailers due to its product range, brand positioning and how it managed to relate well to the average Australian. However, in the face of the growing popularity of fast fashion, the purchasing habits of current generation of consumers has evolved and global fast-fashion giants such as Zara and H&M, which offer on-trend clothing at rock bottom prices that have resonated better with Australians.
“Furthermore, high rental, wage, transport and distribution costs have also made it expensive to operate in Australia.”
Business Insider Emails & Alerts
Site highlights each day to your inbox.