Dressed for sale Fashion Brand Strenesse Attracting Suitors

Strenesse, a German fashion company that filed for insolvency last year, is in talks with several potential buyers after returning to a pre-tax profit in its financial year ended May, Handelsblatt has learned.
Strenesse shop in Munich's city center.

Strenesse, the German luxury fashion brand that ran into financial trouble last year and has since managed a turnaround, may soon have a new owner, Handelsblatt has learned.

“We are in intense talks with several interested and interesting investors,” Chief Financial Officer Gerhard Geuder told Handelsblatt.

Possible buyers include strategic financial investors that already have stakes in the company as well as other fashion companies, Mr. Geuder said.

“The sale could be completed by the end of this year,” he added. “We’re not under time pressure.”

We’re looking for sites and shop-in-shops in locations including medium-sized towns in Germany, Austria and Switzerland. Gerhard Geuder,, Strenesse CFO

Strenesse, which is based in the southern German town of Nördlingen, suffered a 30 percent drop in sales and fell into the red in its 2013/2014 business year. The company filed for a special form of insolvency proceedings that permits the existing management to remain in place, assisted by an restructuring expert.

In mid-2014 Luca Strehle, the son of the family that owns the firm, stepped down from the board, and Michael Pluta, a Stuttgart-based lawyer and insolvency specialist, became management board member in charge of restructuring.

Strenesse, which sells men’s and women’s fashions through fashion retailers in Germany and several other European countries, ran into financial trouble by expanding its collections too ambitiously.

It’s not the only German luxury firm to have run into difficulties in recent years. Munich-based fashion store chain Rena Lange had to close at the start of 2015 because it couldn’t find an investor.

And even though Escada, the women’s fashion group, was successfully restructured after its 2009 insolvency, its owner Megha Mittal, a member of the Indian Mittal steel-owning dynasty, said earlier this year that she was having difficulty taking the company to “a new level.” That was supposed to be the job of her new chief executive. But he stepped down after just half a year.

Mr. Pluta and Mr. Geuda reported a turnaround at Strenesse after a one-year reorganization. “We achieved a postive result before interest, tax and depreciation in the 2014/2015 business year to May 31,” said Mr. Geuder in the company’s Düsseldorf showroom.

He said the firm achieved a break-even result on earnings before interest and tax, and sales were on target at €35 million.

In the previous business year, the two men lowered costs by 40 percent, streamlined procurement and cut the workforce by 70 to 240 employees. Work on boosting efficiency is ongoing but “the time of big cuts is over,” Mr. Geuder said.

Strenesse is now back in expansion mode after closing several stores in 2014. “We’re looking for sites and shop-in-shops in locations including medium-sized towns in Germany, Austria and Switzerland,” Mr. Geuder said.

Business is also flourishing in Japan and the United States. Pre-orders for the 2016 spring collection are well above plan there, he said.

 

Georg Weishaupt covers the building sector, solar and wind energy for Handelsblatt. To contact the author: [email protected]