Krogner, Heinz

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Heinz Krogner

Deputy Chairman and Group Chief Executive Officer of Esprit Holdings Ltd.

Born Heinz Jü Krogner–Kornalik, c. 1941, in Czechoslovakia. Education: Earned degree in business administration and industrial engineering.

Addresses:

Office—Esprit Europe GmbH, Esprit–Allee, D–40882 Ratingen, Germany.

Career

Worked as a retail consultant with Kurt Salmon Associates; worked as a textile–company executive; joined Esprit, January, 1995; became chief executive officer of Esprit Europe; named chief executive officer of Esprit International; named deputy chairman and group chief executive officer of Esprit Holdings Ltd., November, 2002.

Sidelights

Heinz Krogner has grand plans to revive the Esprit clothing line in the United States and make it a serious contender in the range of fashionable, affordable styles, featuring good quality for democratic prices. As the focused, somewhat fierce new chief executive officer of Esprit International, Krogner has guided the company's once–moribund performance to an impressive turnaround in Europe, and by 2003 had set his sights on re–conquering the U.S. market, Esprit's original home turf.

Krogner was born in the early 1940s in Czechoslovakia into a German èmigrè family there. He grew up in the post–World War II Communist bloc, first in Czechoslovakia and later, after the age of 17, in what was then known as the German Democratic Republic, or Communist East Germany. Later he became one of the many young adults who fled the restrictions of Soviet–style socialism in Eastern Europe, and he eventually earned a degree in business administration and industrial engineering in what was then West Germany.

Krogner was a highly successful retail consultant in Germany for a number of years, working with Kurt Salmon Associates, and also held executive posts with various textile companies. He joined Esprit in January of 1995, at a time when the company was still doing well in Europe and Asia, but was being run by creditor banks in the United States. The irony behind Esprit's plummeting U.S. fortunes was one that was almost a quintessentially American tragedy: founded in California in 1968 by two design–conscious hippies, Esprit enjoyed tremendous success in the 1980s, with sales peaking at $400 million in 1987. Its fresh styles were instantly recognizable by their bright hues and modern textile patterns, and its mail–order catalogue and print campaigns were the innovative work of Oliveiro Toscani, who later went on to take a similar approach for Benetton. Esprit also pioneered the socially conscious advertising campaign. It moved into Europe in the 1980s, and the Hong Kong office, established to reach a potentially huge Asian market, was established in the late 1980s.

By the time Krogner joined the company, Esprit's founders, Douglas and Susie Tompkins, had gone through a bitter divorce, and the legal proceedings on how the company's assets should be split between them dragged on for years. Meanwhile, the company faltered, and began losing market share to brands like The Gap. In 1996, creditor banks gained control of Esprit de Corp, as the company was formally known in the United States. Its brands in Europe and Asia, meanwhile, were managed separately, and the latter did particularly well under the guidance of a Hong Kong businessman, Michael Ying, whose links to the company dated back to the early 1970s.

Krogner served as head of Esprit's Europe division, which in 1996 was acquired by the Asian arm. Under the newly named Esprit Holdings Ltd., the company moved to recapture its lost European market share. He ran a tight ship out of Esprit Europe's Düsseldorf, Germany, offices, and made the division a more cohesive unit. For example, he eradicated the practice of pricing items differently in the various countries, which was common practice for many retailers in Europe. The introduction of the Euro, the common currency adopted by most Europe union member nations, ended that business practice. "You can not ask for more money in Britain than you would on the Continent," Krogner told Sunday Times journalist Dominic Rushe. "All the price tags will be in euros and people will know they are being cheated. People who try it will not survive."

By the new millennium, Krogner was a key executive in a thriving empire that did business in some 44 countries and rang in retail sales in the $2 billion range. In the fall of 2002, Ying named him chief executive officer of Esprit Holdings, and stepped aside to take a post as chairman of the supervisory board. It was a move that signaled the company's determination to become a truly global player, along the lines of hip, affordable clothing chains like H&M and Zara, which had captured the European market and then headed into North American cities. That same year, Esprit Holdings, the parent company, bought the rights to the "Esprit de Corp" name from the company's ailing U.S. operations.

Krogner's mission was to re–integrate the company's operations and position it as a global presence. During his first year, noted Forbes writer Leigh Gallagher, "he fired the company's six division heads, eliminated 100 additional positions, and reorganized the company's structure by business unit instead of by function. He also nearly quadrupled revenues." Esprit was even planning 20 company–owned, entirely new megastores for the United States. The American retail sector was ripe for such a move, Krogner told Brandweek's Sandra Dolbow. "There's too much sameness and too much discounting," he asserted, noting that the climate was similar to that of department stores in Europe in the early 1990s. After losing sales to H&M, the department stores revamped their clothing lines, and "they went with companies like Esprit. We bring differentiation to the market and a new flavor to the table." The cost–conscious CEO had no plans to create an "Old Navy"–style marketing blitz to re–launch, however. He claimed that sixty percent "of American women still know Esprit," according to Dolbow in the Brandweek interview.

The company's stock, listed in the Hong Kong and London exchanges, was one of the few retail–industry successes during the recession–plagued first years of the 21st century. Krogner oversaw this newly global company from his Düsseldorf office; Esprit's financial staff was still in Hong Kong, and there was an "image" headquarters slated to open in New York City around 2004. The CEO spends two hours a day on videoconference calls. "We are becoming more or less a virtual company," he told Forbes's Gallagher. "I am sitting in the middle, like the spider in the net." Taking a page from the immensely successful H&M, Esprit would no longer offer regional lines geared toward an American, Asian, or European consumer. "People have become more international," he said in the Forbes interview. "They travel, and their taste level has become more similar." Market research had also declared Esprit's new target customer as the 28–year–old—in mind and spirit, that is. "A 20–year–old wouldn't mind becoming 28—it represents career and marriage and family," Krogner told Wall Street Journal writer Sarah McBride. "And a 40–year–old woman wouldn't mind becoming 28." Krogner summed up this feeling when he said, as noted on the Esprit.com website, "Esprit is not an age, but an attitude."