Diesel High Priced Jeans Do Not Sell Us Business.

As demand for high-end jeans at $200 per unit for many years has been weakening for many years, coupled with its strategic mistakes and lax management, Italy's denim brand Diesel SpA's US business Diesel USA Inc. has filed for bankruptcy recently.

Diesel USA Inc. pointed out in its filing with the bankruptcy court of Delaware that the company has exclusively sold Diesel brand in the United States since 1995, and now has 380 employees, 28 independent stores and wholesale businesses.

The current assets range from $50 million to $100 million, and liabilities range from $1000-5000.

In the document, management has made clear that sales slump, successive losses, high rent and fraud and theft are the main reasons for company bankruptcy.

USA Inc. chief reorganisation officer Mark Samson Samson said sales of 28 independent stores dropped by more than 40% in the past four years, from $125 million in 2014 to $72 million 500 thousand.

At the same time, the former management made a strategy to expand the gold area at great cost. In the 2008-2015 years, the capital expenditure of the company reached US $90 million, most of which invested in the physical stores.

For example, the old management did not take the New York Fifth Avenue flagship store, which had recorded a huge loss in the past 2008-2015 years, but invested 18 million dollars in the same year. It signed the expensive lease which was due to expire in 2024 on the next Madison Avenue, and the store not only failed to sell off the cost, but also made a sharp decline in sales.

Last year, management began to discuss rent reduction with multiple shop owners, but only one shopkeeper was willing to "make a difference".

It was also in 2008 that Diesel USA Inc. did not record profits, and the total operating losses in the past eleven years amounted to US $198 million.

After the financial crisis, the company recorded the highest income of $221 million in 2012, and dropped to $104 million in 2018, of which wholesale sales fell from US $69 million in 2014 to US $19 million in 2018.

The reason for the loss is that 2016-2018 years ago, employees had stolen 900 thousand cash from a shop, and two Internet fraud resulted in a loss of 300 thousand dollars.

Diesel USA Inc. did not intend to reduce the size of retail sales as much as other bankrupt retailers. Instead, it proposed a three year profit improvement plan. In the future, it will withdraw some tenant refuses to give up the lease, reset stores to reduce operating costs, and will continue to open new stores.

Improving product lines and using net red to attract millennial generation, "Z generation" and other new customers are also the focus.

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