Diesel USA Bankruptcy : A Restructuring Plan for Survival

Diesel USA Bankruptcy : A Restructuring Plan for Survival
Case Code: BSTR587
Case Length: 10 Pages
Period: 2008-2019
Pub Date: 2019
Teaching Note: Available
Price: Rs.300
Organization: Diesel USA Inc.
Industry: Textiles & Apparel
Countries: Italy
Themes: Corporate Strategy, Bankruptcy & Turnaround Management
Diesel USA Bankruptcy : A Restructuring Plan for Survival
Abstract Case Intro 1 Case Intro 2 Excerpts

Introduction

On March 5, 2019, the American arm of Italian corporation Diesel S.p.A, Diesel USA Inc. (Diesel USA), known for high-priced denim, filed for bankruptcy after experiencing years of shrinking sales and losses that were attributed to expensive leases and incidents of theft and cyber fraud. Since its launch in 1995, Diesel USA had been the exclusive distributor of Diesel products in the US.

Diesel’s high-priced denim grew highly popular in the USA and, the company had a presence in major cities across the US. But the global recession in 2008 had an impact on the company’s profits and its sluggish growth continued up to 2018. To bring about a turnaround in the post-recession period, the management of the company took certain long-term strategic decisions including relocating Diesel USA stores to premium locations to attract high-end customers. In order to open stores in new locations, the company entered into several expensive, long-term leases...

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