Why is the Desigual brand in crisis? | Savings and Consumption The Trust Project

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In the midst of a sales crisis, the owner of the firm has remodeled its board of directors

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Desigual was one of the fastest growing Spanish brands, even in the years of the crisis, although from 2014 turnover began to fall and today the brand is experiencing one of the most delicate moments in its history.

When did the debacle start?

In 2014, just when the French fund Eurazeo entered the capital (bought 10%). The fund promised them very happy, because Desigual had close to 1,000 million in turnover, but sales, however, began to fall. "It was a case of bad luck, because they entered just before everything started to go wrong," explain sources in the sector.

Why does the company sell less?

According to different sources consulted, the brand explains that Desigual is a brand with a very defined look, aimed at a very specific customer (among 40 and 50 years, with purchasing power). The firm "has not been able to attract a young public, which is the most dynamic, because it is the one that consumes the most, but cannot reach its prices," explains an expert close to the firm.

¿ What other problems does it face?

Desigual is changing its stores, which used to be darker, to make them brighter, "more appealing". They have a stock problem. In addition, since sales have fallen "they have a product that they have to sell, with discounts or promotions." This allows the customer to buy cheaper but the brand "loses money". This remodeling of commercial spaces also requires an investment that, at a time when you earn less, complicates the accounts.

What measures are you taking to reverse the situation?

Thomas Meyer, the owner and founder, has made changes to the board, leaving him practically in charge, surrounded only by a few trustworthy financiers. The manager "will have to form his team, surround himself with people who can help him in this transformation process, because he is not a manager," explains a fashion expert close to the brand. In 2015 Desigual began a restructuring plan to recover sales and optimize expenses. Some unprofitable stores were closed and some locations were changed. Work is also being done on a product "that goes back to the origins of the brand", with less defined, "more basic" garments, the expert explains.

What is the future for Desigual?

The sources consulted believe that a good solution would be the entry of an investor that would relaunch growth, although "after the experience of Eurazeo, it is not likely that many will be encouraged." Merging with another brand is another possibility. A specialist points to Mango, a Catalan chain that is also experiencing difficulties. Lastly, there would be the option of listing Desigual on the stock market.

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