Esprit's $2.3 Billion Turnaround Plan Stumbles as CEO Quits

Esprit has been trying to engineer a turnaround, last year announcing a $2.3 billion, four-year plan and hiring supermodel Gisele Bundchen as the Hong Kong-based brand's global face. Despite a minor uptick in sales as a result, the turnaround hasn't been dramatic — and company announced this week that CEO Ronald Van der Vis was quitting, making him the second top exec (following the chairman) to walk out in the last six months.

Bloomberg reports that Esprit Holding’s stock took a nosedive after the news. "The unexpected resignation is a serious blow to the company's transformation plan and will cast doubt on the execution," said Andrew Sullivan, principal trader at Piper Jaffray Asia Securities, to Bloomberg. "Investors may fear that his stepping down will bring the transformation efforts back to square one."

Van der Vis said on a conference call that he’ll remain in his post for 12 more months, and that he's stepping down for family reasons and not because of any dispute with the board. No strategic changes are planned to Esprit’s transformation program, he added, although some “adjustments” are possible during the transition.

Esprit was founded as a fashion line in 1968 by then-married Susie and Doug Tompkins that was sold from a VW bus in San Francisco. But it's faced tough competition in recent years from Zara and H&M, and stunned observers and brand fans earlier this year by closing all North American retail stores.

Even so, some improvement was starting to happen, albeit minor in the scheme of things. “The retailer in May said revenue at outlets open more than a year grew 0.5 percent in the three months ended March after dropping 4.6 percent in the six months to December 31,” Bloomberg reports.

Gabriel Chan, a Hong Kong-based analyst at Credit Suisse Group AG, commented that he wasshocked that Van der Vis was leaving. "The transformation plan is going quite well,” he said. “At least they had a good start with improvement in sales growth."