Escada Tries to Improve Through Russia

The German premium brand Escada, owned by Indian tycoon Lakshmi Mittal, will open the store, the third in the Russian city in a new commercial space located in the popular area of Stare Nevsky specifically in a place that housed another German boutique Jil Sander Navy. These are no good times for many exclusive German fashion companies. Companies like Steilmann filed for bankruptcy last year, while Hugo Boss saw his stock market plummet 50% in early 2016, although he finished the year with figures and improved optimism.

Years of turbulence
Escada, founded in 1976 by Margaretha and Wolfgang Ley, quickly became one of the most famous and prestigious luxury fashion brands in Germany, but as a consequence of the global crisis and after poor management, in 2009, it went from being a A company listed on the stock exchange, to declare bankruptcy after failing to reach an agreement with its creditors. Megha Mittal (of the family that governs the world leader of steel) entered the business and rescued the brand.

Bruno Salzer, former director general of Hugo Boss, then designed a rescue plan and modernized the image of its stores. After two years in front, in February of 2014 Salzer announced his resignation. Since then, Escada has struggled to find a suitable CEO (its Chief Financial Officer, Jörg Wahlers, took care of it on an interim basis), until in mid-2016 Iris Epple-Righi has been appointed as the new  CEO of the company. Epple-Righi came from Calvin Klein, where she held the position of Brand Director for Europe. In addition to Epple-Righi Françoise Rousseau has left Ralph Lauren to join Escada, where she will lead the multi-brand business.

The challenge that had raised their owners of the Mittal family to take over the business was to reach the sales figure of 500 million euros, something that has been far from achieved, because although the sales estimate for 2012 was 300 million, we would be talking about a 275 million turnover by 2016. In addition there have been reductions in the workforce of about 200 employees, in order to improve their profitability. The problems of sales in Russia, with the crisis that has crossed this country and the slowdown of consumption in China have been highlighted as key factors. Other key markets for the company such as the US and Japan also did not shine for the company.

New store concept
Escada currently maintains 180 of its own stores around the world, including 16 in Germany. In the near future, in Dusseldorf will open a special shop with a new concept of sale: smaller spaces, with an exclusive area to show customers the main new features of their collections. It is a pilot project that will soon launch to other stores, first in Germany and then the rest will be their locations. The objective is to improve the image of the brand after the necessary programs of adjustment of expenses that has had to carry out to improve its profitability.

With Escada commitment to Russia and the opening of a new store there, they hope that the prospects of the Russian economy will improve and that the new retailing concept started in Düsseldorf will settle for the rest of the business. However, a comprehensive strategic plan has still to arrive.

Disclosure: The Luxonomist is not responsible for the views expressed in the article. The text has been written freely expressing their own ideas, without receiving any compensation. The author has no business relationship with any of the companies whose shares are listed in this article.