SAN FRANCISCO — Heather Colmar of Newport Beach had one important mission to accomplish during her school break this summer: get to Esprit de Corp's Bay Area outlet store.
"It's very popular where I live," said Heather, a 17-year-old high school senior, clutching a bag containing $86 worth of Esprit wear. "It's cute and I like the style."
Executives of Esprit, a brand that was once the envy of the fashion industry, today live for such customer affirmation as they work to polish a company image tarnished over the last six years by management power struggles, fashion flops and financial woes. Having lost market share to competitors such as Gap Inc., J. Crew and Guess Inc., Esprit is making a major push to reclaim its former powerhouse position in junior and young women's apparel.
This summer, the company that made a name for itself in the 1970s and early '80s with innovative design and retail strategies opened the first of 14 stores it will add this year, including one in Old Town Pasadena and another in the Beverly Center in Los Angeles. Negotiations are underway to open a store on Santa Monica's Third Street Promenade next year. The company, which started the year with just three U.S. retail stores and 23 outlets, down from a total of 80 at its peak, plans to add 40 retail stores over the next few years.
By opening stores again, Esprit hopes to reestablish what had been a close connection with customers, as well as showcase updated clothing and accessory designs.
The company is also beefing up its presence in Macy's, Bloomingdale's and other department stores with in-store mini-shops. Esprit has also resurrected its popular catalog. The colorful oversized publication featuring customers and employees modeling Esprit clothes was last produced a decade ago, but the company said it still gets as many as 100 catalog requests a week. The new catalog, designed by Los Angeles-based Hershey Group and due out in October, is expected to introduce a new generation to Esprit as well as show previous customers that the company is back.
Esprit also is boosting its ad budget by two-thirds, to $5 million.
Despite its struggles, the company incorporated in 1970 by Doug and Susie Tompkins still has plenty of cachet to draw on in making a comeback, Chairman and Chief Executive Jay Margolis said.
"The statement I got constantly was: 'Oh, Esprit, that's a great company. What do they do now?' " said Margolis, a 20-year industry veteran who took the reins of a demoralized Esprit in January of last year. "Yes, we needed to fix the infrastructure and systems and warehousing, but more than anything we had to build credibility with the consumer."
Esprit, he said, is through running after trends. Having done some homework studying old Esprit designs and talking to former and potential customers, company executives are positioning Esprit to appeal to women ages 17 to 30. Esprit, company management is fond of saying, is "an attitude and not an age."
In its new fall collection, the company pays sharper attention to detail, uses better-quality fabrics and aims for the kind of versatile young-but-sophisticated look that helped set Esprit apart in its early days. Prices range from $48 to $68 for sweaters, $88 to $118 for lined wool jackets and $48 to $68 for matte crepe jersey skirts and pants.
"I think there is a void between the Gap and Banana Republic," Margolis said. "We're more contemporary than the Gap and younger than where Banana has gone."
Los Angeles retail consultant Sandy Potter of Directives West said the changes under Margolis are evident.
"What I saw was terrific," she said. "They are definitely back on track."
Analysts said Esprit has a solid foundation on which to build and that the company has found a strong manager in Margolis, who they said did well both as president of Tommy Hilfiger U.S.A. Inc. and as vice chairman of Liz Claiborne Inc.
"They have the experience in department stores, the know-how in free-standing stores; they just have to execute better," said Arnold Aronson, a former chief executive of Bullock's and Saks Fifth Avenue now in charge of retail strategy at Kurtz Salmon Associates in New York.
Margolis--an equity partner since October, when Esprit's domestic operations were acquired by creditors Oaktree Capital Management of Los Angeles and New York's Cerberus Partners--said he's working to tighten general operations. The warehousing division, for example, was moved from San Francisco, where the company still has its headquarters, to Los Angeles, where larger facilities allow for more efficient garment storage.
"We're running the business smarter, our inventories are in line, we don't have a lot of excess markdowns that are costing a lot of money," Margolis said.
