Ratingen ((TEH)) – The catwalks of the Fashion Weeks in Milan and Paris remain empty, as do the pedestrian zones of the Republic.
Many designers shouldn’t have high hopes for their spring collection this year, because: Who needs something new to wear when you’re just sitting on the sofa anyway?
The fashion industry is noticeably affected by the fact that the majority of the population is at home because of the coronavirus. With Esprit, a big name in Germany is now announcing: We can’t keep it up.
Several Esprit German subsidiaries are insolvent, the company said in a statement. Protective shield proceedings have been applied for in order to protect themselves against claims by creditors.
A court-appointed property administrator is responsible for the supervision, while the company management is to remain in control. As part of the procedure, liabilities and leases are to be “restructured”.
“This is the right step for Esprit, as the coronavirus pandemic is having a dramatic impact on our business,” said Esprit boss Anders Kristiansen. According to the company, state aid is to be used in some cases to ensure employees’ salaries.
Long before the Corona crisis, the group, which is based in Ratingen but is listed on the Hong Kong stock exchange, was in the red – for the 2018/2019 financial year ended June 2018, lastly 2.14 billion Hong Kong dollars (about 248 million euros).
In addition, several hundred jobs were to be cut and unprofitable branches closed in Germany last year. Previously, more than 1,100 people worked at the headquarters in Ratingen and around 1,500 in the branches.
The fact that many brands can also be ordered online is helpful for the industry in these times, but not a complete compensation. Top managers from the fashion industry expect the corona pandemic to drop sales by 20 to 25 percent this year.
This emerges from a survey of 25 CEOs and CFOs of large fashion groups by the Boston Consulting Group (BCG). The managers forecast that the operating result (Ebitda) will fall even more clearly than sales – namely by 35 to 40 percent. According to BCG, the fashion industry has sales of 1.35 trillion euros worldwide.
Fashion is also an important pillar for the department store group Galeria Karstadt Kaufhof – and therefore a big problem child. The chain is negotiating state aid to save the business – so far without results. Most of the branch employees are now on short-time work, and most department stores are closed.
Because boutiques and other stores to protect against infection are closed nationwide, piles of unsold goods are now piled up there. If the closure extends beyond April, over a billion unsold items are expected, the textile trade association estimates.
On a normal sales day, more than 10 million pants, shirts, shoes, and bags are sold in Germany. It is also unlikely that all of these things will sell later, because: In summer nobody needs transition jackets or the last scarves from the winter sale.
The general association of the German textile and fashion industry points out that, especially for medium-sized companies, sales have dropped by up to 80 percent or even completely. The federal government had to put together a “corona emergency package” for the medium-sized fashion industry. This should include one billion euros in immediate funds with quick and unbureaucratic payments and a reduction in sales tax on clothing and textiles for 18 months to seven percent. Otherwise, there is a risk of bankruptcy. “If we are no longer on the market after Easter, Germany will have lost a high-performing medium-sized industry,” complains Association President Ingeborg Neumann. “It shouldn’t go that far!”
Communication from Esprit
The fashion industry is noticeably affected by the fact that the majority of the population is at home because of the coronavirus. With Esprit, a big name in Germany is now announcing: We can’t keep it up.
Several Esprit German subsidiaries are insolvent, the company said in a statement. Protective shield proceedings have been applied for in order to protect themselves against claims by creditors.
A court-appointed property administrator is responsible for the supervision, while the company management is to remain in control. As part of the procedure, liabilities and leases are to be “restructured”.
“This is the right step for Esprit, as the coronavirus pandemic is having a dramatic impact on our business,” said Esprit boss Anders Kristiansen. According to the company, state aid is to be used in some cases to ensure employees’ salaries.
Long before the Corona crisis, the group, which is based in Ratingen but is listed on the Hong Kong stock exchange, was in the red – for the 2018/2019 financial year ended June 2018, lastly 2.14 billion Hong Kong dollars (about 248 million euros).
In addition, several hundred jobs were to be cut and unprofitable branches closed in Germany last year. Previously, more than 1,100 people worked at the headquarters in Ratingen and around 1,500 in the branches.
The fact that many brands can also be ordered online is helpful for the industry in these times, but not a complete compensation. Top managers from the fashion industry expect the corona pandemic to drop sales by 20 to 25 percent this year.
This emerges from a survey of 25 CEOs and CFOs of large fashion groups by the Boston Consulting Group (BCG). The managers forecast that the operating result (Ebitda) will fall even more clearly than sales – namely by 35 to 40 percent. According to BCG, the fashion industry has sales of 1.35 trillion euros worldwide.
Fashion is also an important pillar for the department store group Galeria Karstadt Kaufhof – and therefore a big problem child. The chain is negotiating state aid to save the business – so far without results. Most of the branch employees are now on short-time work, and most department stores are closed.
Because boutiques and other stores to protect against infection are closed nationwide, piles of unsold goods are now piled up there. If the closure extends beyond April, over a billion unsold items are expected, the textile trade association estimates.
On a normal sales day, more than 10 million pants, shirts, shoes, and bags are sold in Germany. It is also unlikely that all of these things will sell later, because: In summer nobody needs transition jackets or the last scarves from the winter sale.
The general association of the German textile and fashion industry points out that, especially for medium-sized companies, sales have dropped by up to 80 percent or even completely. The federal government had to put together a “corona emergency package” for the medium-sized fashion industry. This should include one billion euros in immediate funds with quick and unbureaucratic payments and a reduction in sales tax on clothing and textiles for 18 months to seven percent. Otherwise, there is a risk of bankruptcy. “If we are no longer on the market after Easter, Germany will have lost a high-performing medium-sized industry,” complains Association President Ingeborg Neumann. “It shouldn’t go that far!”
Communication from Esprit
