How German Fashion House Escada Clawed Its Way Back From Bankruptcy

A sports collection, new fabrics, fewer gold buttons and an influx of Indian money have Escada back on track. The German clothing company still isn't back to break-even, but sales – up 7% last year – look set to keep rising.

The Escada clothing brand is staging a comeback (Colros)
The Escada clothing brand is staging a comeback (Colros)
Carsten Dierig

BERLIN -- With Berlin Fashion Week -- the first big fashion event of 2012 -- just a week away, excitement is mounting in the world of clothing design. The energy is particularly high at Escada, as the Munich-based brand's new sports line will open the catwalk show in the German capital.

Just over two years ago, this honor would have been unthinkable. Escada, long associated with luxury and glamour, had just filed for bankruptcy. "Obviously, Escada's image suffered from the bankruptcy," says CEO Bruno Sälzer.

But after being written off as dead, the global brand is decidedly back in business. According to Sälzer, turnover for the 2011 business year was some 300 million euros -- up 7% over 2010. In the upscale Berlin department store KaDeWe, Escada now boasts the largest shop-in-shop surface area. "Both the industry and consumers have regained trust in the brand," says Sälzer.

Mid-term, the Escada CEO sees an increase in turnover of up to 500 million euros. That's still far less than the company earned during its boom years. It's also short of what Escada needs to actually turn a profit, which is something the company hasn't managed to do for quite a while.

Years of mismanagement, frequent changes at the helm, and some fashion faux pas had brought Escada to the edge of ruin. Sälzer, 54, who was brought in during in 2009 to clean up the mess after a successful run as the top executive at Hugo Boss AG, got the collections back on track, but couldn't manage to straighten out the finances in time. After attempts at re-scheduling debt failed, he was forced to declare bankruptcy.

A fresh debt-free start

Today, Sälzer calls the measure liberating because it enabled Escada to start anew. Just five days into bankruptcy proceedings, trustee Christian Gerloff sold the operational business to an investment company owned by the family of Indian steel magnate Lakshmi Mittal.

Since then, Megha Mittal, the 34-year-old daughter-in-law of the patriarch and a former Goldman Sachs investment banker, has been chairwoman of Escada. "For me it was a dream come true," says Mittal, who bought several hundred thousand euros worth of Escada clothing right after the deal went through.

The Mittal family is said to have paid 70 million euros for the company itself, and a further 30 million for development. Bruno Sälzer stayed on, and has continued to nurture the company back to health by automating production, reducing the size of collections, and giving the lines a new, modern look with different fabrics, more color, and fewer gold buttons.

Sälzer also repositioned the brand within the luxury market by reducing prices at an average rate of about 20%. Two-thirds of sales derive from the company's main line. The Escada Sport collection, which is aimed at younger customers, accounts for the other third. Just as he introduced women's fashion at Hugo Boss, Sälzer may be looking to introduce men's fashion at Escada. But any such strategy will have to wait for fashion weeks of the future.

Read the original article in German

Photo - Colros

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Migrant Lives

The Other Scandal At The Polish-Belarusian Border: Where's The UN?

The United Nations, UNICEF, Red Cross and other international humanitarian organizations seems to be trying to reach the Polish-Belarusian border, where Belarus leader Alexander Lukashenko is creating a refugee crisis on purpose.

Migrants in Michalowo, Belarus, next to the border with Poland.

Wojciech Czuchnowski

WARSAW — There is no doubt that the refugees crossing the Belarusian border with Poland — and by extension reaching the European Union — were shepherded through by the regime of Alexander Lukashenko. There is more than enough evidence that this is an organized action of the dictator using a network of intermediaries stretching from Africa and the Middle East. But that is not all.

The Belarusian regime has made no secret that its services are guiding refugees to the Polish border, literally pushing them onto (and often, through) the wires.

It can be seen in films made available to the media by... Belarusian border guards and Lukashenko's official information agencies.

Tactics of a strongman

Refugees are not led to the border by "pretend soldiers" in uniforms from a military collectibles store. These are regular formations commanded by state authorities. Their actions violate all rules of peaceful coexistence and humanitarianism to which Belarus has committed itself as a state.

Belarus is dismissed by the "rest of the world" as a hopeless case of a bizarre (although, in the last year, increasingly brutal) dictatorship. But it still formally belongs to a whole range of organizations whose principles it violates every day on the border with Poland.

Indeed, Belarus is a part of the United Nations (it is even listed as a founding state in its declaration), it belongs to the UNICEF, to the International Committee of the Red Cross, and even to the Organization for Security and Cooperation in Europe (OSCE).

Photo of Polish soldiers setting up a barbed wire fence in the Border Zone near Krynki, Belarus

Polish soldiers set up a barbed wire fence in the Border Zone near Krynki, Belarus

Maciej Luczniewski/ZUMA

Lukashenko would never challenge the Red Cross

Each of these entities has specialized bureaus whose task is to intervene wherever conventions and human rights are violated. Each of these organizations should have sent their observers and representatives to the conflict area long ago — and without asking Belarus for permission. They should be operating on both sides of the border, as their presence would certainly make it more difficult to break the law.

An incomprehensible absence

Neither the leader of Poland's ruling party Jaroslaw Kaczyński nor even Lukashenko would dare to keep the UN, UNICEF, OSCE or the Red Cross out of their countries.

In recent weeks, the services of one UN state (Belarus) have been regularly violating the border of another UN state (Poland). In the nearby forests, children are being pushed around and people are dying. Despite all of this, none of the international organizations seems to be trying to reach the border nor taking any kind of action required by their responsibilities.

Their absence in such a critical time and place is completely incomprehensible, and their lack of action raises questions about the use of international treaties and organizations created to protect them.

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