Diesel USA Bankruptcy : A Restructuring Plan for Survival
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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 |
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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