Hong Kong headquartered fashion brand Esprit and French childrenswear retailer Groupe Zannier have signed a five-year licensing agreement.
The partnership includes the development, production and distribution of Esprit’s Kids apparel and Kids accessories, which will be converted into a license product in Europe and the Middle East.
Esprit has acknowledged that – in effectively contracting out its Kids division, it is going against its core strategy of running its core business by itself. But it stressed Kids represents just 3.4 per cent of total group turnover.
Esprit Kids products will continue to be available in Esprit’s online store and company-owned stores, and remain available for the many retail and wholesale partners of Esprit Group.
Full implementation of Esprit Kids by Groupe Zannier will begin on January 1, 2016. With immediate effect, the two companies are working closely together to ensure a seamless handover and the placement of all people from Esprit Kids. Over time, this will come to a first Esprit Kids collection fully developed by Groupe Zannier as of Fall/Winter 2016. For this partnership, a German Zannier entity is in foundation, its company headquarters is also expected to be in Ratingen.
“Signing this license agreement is the result of year long careful assessment of the best business solution to turn around Esprit Kids’ weak top-line development over recent financial years,” Esprit said in a statement.
“Pressures on operating margins make it crucial for every brand to maintain a relevant scale in the market and the alliance of two strong international players provides the opportunity to effectively expand a quality distribution network, drive top line growth and capture essential cost efficiencies. The initial assessment of this agreement early signalled the positive synergies possible under the new partnership.
Jose Manuel Martínez, group CEO of Esprit, said: “Esprit is delighted that in Groupe Zannier, we have found the perfect partner to enhance our Esprit Kids brand. With our joint approach, Esprit Kids will be present in Europe’s top kids wear destinations and our consumers will continue to enjoy Kids collections made with maximum care at an excellent value for money.
“We are convinced that we have selected a licensee that complements Esprit’s overall brand positioning and strategy, and who can sustainably exploit the growth potential of a highly competitive market. That said, it is important to clarify that the great advantages that we obtain from this partnership are possible due to the specific characteristics of our kidswear segment, which contributes just 3.4 per cent to the total group turnover, but are not possible in our bigger divisions.”
Martinez said in that sense, the new Esprit Kids license represents an exception to the company’s overall business strategy, which is based on Esprit running its core business by ourselves.
“With this license agreement, Esprit stays abreast of the fact that its Kids business will much benefit from the introduction of a specialised kidswear partner that provides strong product, supply and distribution capabilities. For instance, allowing for increased investments in product quality by leveraging Groupe Zannier’s sourcing power, with 37 million pieces each year and a buying force of 500 people,” says Ute Wethmar, Global Business Manager Esprit Kids.
“Adding Esprit Kids to our portfolio of brands perfectly complements our offer in the lifestyle segment. We are proud to build on Esprit’s positive foundation and be a partner to spread out these inspiring kids products” said Remy Baume, Zannier Group CEO.
“As Europe’s largest group in children’s apparel, our strong distribution network allows us to commercially amplify Esprit Kids’ great brand awareness.”
Collaborating with Groupe Zannier, Esprit Kids will continue its presence in Esprit retail and franchise stores including the e-shop and at selected online and offline retailers. Group Zannier operates 900 retail stores and manages 10,000 points of sales such as shop-in-shops in department stores.