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Abstract

The case is about the American arm of the Italian corporation Diesel SpA, Diesel USA Inc (Diesel USA), best known for its high-end denim. Diesel USA ran into problems due to some of the strategies it had adopted in the post-recession US market. Since its launch in 1995, it had been the sole distributor of Diesel products in the US. Its five-pocket jeans dominated pop culture in the 1990s and early 2000s. But the global recession had a negative impact on the retail sector and Diesel USA fell victim to it. In an attempt to turn the company around, the management wanted to develop an exclusive presence in high-end locations, for which it executed several long-term, expensive leases and repositioned some of the existing stores in premium locations. But these strategies were ill-timed and non-productive and impacted the profits of the company. Incidents of cyber theft and fraud in the company only added to its problems. These failed strategic decisions implemented by the management compelled Diesel USA to file for Chapter 11 bankruptcy protection on March 5, 2019. In the court filing, the company outlined a three-year restructuring plan, emphasizing profitability of the company by opening stores in cost-effective locations, closing some of the stores, improving the product lines, and associating with social media influencers. It remained to be seen whether the plan would help extricate Diesel USA from the situation in which it found itself.

Teaching and learning

This item is suitable for postgraduate and executive education courses.

Time period

The events covered by this case took place in 2008-2019.

Geographical setting

Region:
Americas
Country:
United States

Featured company

Diesel USA Inc
Employees:
201-500
Turnover:
USD 16.7 billion
Type:
Partnership
Industry:
Textiles & apparel

Featured protagonists

  • Mark Samson (male), Chief Restructuring Officer
  • Stefano Rosso (male), Chief Executive Officer

About

Abstract

The case is about the American arm of the Italian corporation Diesel SpA, Diesel USA Inc (Diesel USA), best known for its high-end denim. Diesel USA ran into problems due to some of the strategies it had adopted in the post-recession US market. Since its launch in 1995, it had been the sole distributor of Diesel products in the US. Its five-pocket jeans dominated pop culture in the 1990s and early 2000s. But the global recession had a negative impact on the retail sector and Diesel USA fell victim to it. In an attempt to turn the company around, the management wanted to develop an exclusive presence in high-end locations, for which it executed several long-term, expensive leases and repositioned some of the existing stores in premium locations. But these strategies were ill-timed and non-productive and impacted the profits of the company. Incidents of cyber theft and fraud in the company only added to its problems. These failed strategic decisions implemented by the management compelled Diesel USA to file for Chapter 11 bankruptcy protection on March 5, 2019. In the court filing, the company outlined a three-year restructuring plan, emphasizing profitability of the company by opening stores in cost-effective locations, closing some of the stores, improving the product lines, and associating with social media influencers. It remained to be seen whether the plan would help extricate Diesel USA from the situation in which it found itself.

Teaching and learning

This item is suitable for postgraduate and executive education courses.

Settings

Time period

The events covered by this case took place in 2008-2019.

Geographical setting

Region:
Americas
Country:
United States

Featured company

Diesel USA Inc
Employees:
201-500
Turnover:
USD 16.7 billion
Type:
Partnership
Industry:
Textiles & apparel

Featured protagonists

  • Mark Samson (male), Chief Restructuring Officer
  • Stefano Rosso (male), Chief Executive Officer

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