Once considered Hong Kong’s blue-chip fashion brand with a global presence, Esprit is eyeing a comeback in its native Hong Kong and Asian markets, with region-specific capsule collections and a focus on e-commerce and pop-up stores. The Hong Kong-listed company seems determined to vindicate itself after a decade of mismanagement and losses. William Pak Eui-won, whose role as interim CEO of Esprit became permanent in March, told the South China Morning Post that the firm revamped its communications structure to speed up market response time. “One big thing we did was to break down barriers,” Pak said. “At any time, different departments at different levels could talk to each other freely without the old hierarchical communication, and that helped a lot.” Re-emerging amid a pandemic-induced retail slump in Hong Kong, analysts say the key to success for retailers in the city lies in tapping the right channels to reach consumers, who are demanding more from their shopping experience as business reopens. Transformers eatery turns Russell Street from fashion to foodies’ hub Esprit’s first sign of recovery came in March, reporting its first profit in five years on top of HK$8.31 billion in revenue for 2021. Profit attributable to shareholders was HK$381 million, marking a turnaround from total cumulative losses of HK$9.1 billion over the past four financial years. Seen as a trendy and hip brand in the 1990s, Esprit celebrated its 15th consecutive year of double-digit growth in 2007, recording HK$6.45 billion in net profit in the 2007/2008 financial year, with more than 690 stores worldwide. However, it has been downhill since. Esprit was removed from the Hang Seng Index in 2013 and became mired in red ink, with a HK$2.55 billion net loss in 2018. “The brand lost its identity over the decades, but people haven’t forgotten it. When you talk to people in different countries – even where we never had an official store – they still remember [Esprit]. We have a great following to go back to,” Pak told the Post . The company moved its headquarters from Germany back to Hong Kong last year and reopened online sales in its home city and in Seoul, kicking off a comeback with a capsule collection of T-shirts and hoodies emblazoned with the brand logo. Targeting young consumers with its heritage in casual lifestyle apparel, Esprit is keen to court climate-conscious youth with sustainable production processes. The brand revealed that 75 per cent of fibres used in its garments last year were biodegradable, while its capsule collection released in 2020 used natural dyes. Its main line will cover the four seasons, while about 30 capsule collections are set to be launched as well over the year. Esprit is eyeing pop-up stores as a way to offer an immersive shopping experience in Asia, as the company currently has no permanent outlets in the region. In 2020, it shut down all of its 56 stores outside mainland China. Esprit’s return to Hong Kong will be celebrated with a block party in Sham Shui Po in May, while a three-month pop-up store is expected to open in August in the city’s premier shopping district of Causeway Bay, where its former flagship store used to be. The ambitious comeback is happening as Hong Kong’s retail sales slumped 7.6 per cent year on year in the first quarter, according to government data. Rents have also taken a hit, with the vacancy rate of high street stores in core shopping districts hitting 15.2 per cent at the end of March, according to CBRE. “Retail is always about getting the right product to the right consumer at the right time,” Yew Hong Koh, consulting partner of Deloitte China, said in an interview. “That’s what less successful brands tend to miss … they missed the changing consumer preference, and were growing old with their core customers segments.” While brick and mortar shops are not expected to decline because of the pandemic, Anson Bailey, head of consumer and retail for Asia-Pacific at KPMG China, said short-term pop-up stores are on the rise. “I would think more carefully these days about entering into a multi-year contract and spending a lot of money on my fit-out if I could [instead] cut a deal with landlords to look at developing a new, cool, trendy pop-up,” Bailey said. Retail rents in the city are expected to stay flat this year despite a potential rebound as business reopens after easing of Covid-19 restrictions, according to CBRE. Analysts say Esprit could emerge a winner amid the tough times if it manages to employ the right sales channels and can understand today’s youth. “Hopefully this time they have got the product right and the right channels,” said Koh. “If they are targeting younger consumers who are into digital channels, it’s not just brick and mortar stores or e-commerce, it’s about the use of multiple channels now.”