Express, a multi-brand fashion retailer whose portfolio includes Express, Bonobos, and UpWest, has filed for Chapter 11 bankruptcy and intends to close more than 100 stores. The move, according to the company, is to better position Express for stronger growth in the future. The company has been struggling over the past few years to keep up with consumer preferences, differentiating itself in the market with product offerings and fighting off intense competition in an over-stored U.S. market.
Trouble Ahead
In August of 2023, Express planned to lay off about 150 employees through 2024 to save $30 million but that move only represented a portion of the planned $120 million cost reduction effort. The company had taken cost reductions in 2023 and had planned to continue reducing expenses going into 2025. However, by filing for bankruptcy, the company has the opportunity to restructure its operations including renegotiating its many lease agreements that will remain after the closure of some of its stores.
Loses Mounted As Sales Dwindled
The company’s losses mounted through last year, and by October of 2023, Express had tripled their losses compared to 2022. The company ended year-to-date in October 2023 with over $154 million in losses for 39 weeks. The company sales at that time were down 5.6% while inventory was up 32%. Gross Margins dropped from 30% in 2022 to 21.5% through October 2023. The company has not filed its fourth quarter and full-year annual financials which usually come out in March or April. Instead, the company has filed for bankruptcy protection and will continue its operations under debtor in possession status which means the company can continue its normal operations of business with the protection of the courts to help the company restructure its financial position. In March 2024, Express received notification from the New York Stock Exchange indicating that the common stock of the company would be delisted, and trading of its common stock on the NYSE was suspended.
A White Knight May Save Express
Part of Express’s motivation to file for bankruptcy is to help secure funding that could save the business in the long term. The company has confirmed that it received a non-binding letter of intent from a consortium led by WHP Global (“WHP”) and participants including a wholly owned indirect subsidiary of Simon Property Group, L. P. (“Simon”) and Brookfield Properties (“Brookfield”) for the potential sale of a substantial majority of Express’ retail stores and operations. Simon Property Group and Brookfield Properties have extreme competence in real estate leasing and operations. WHP Global is a company that has brought back many legendary brands and has a knack for providing brands with a clear focus and vision for success and expansion.
WHP Global A Powerhouse Of Brand Management
WHP Global does over $7 billion in sales and recently was the powerhouse behind bringing back Toys R Us by engineering its partnership with Macy’s. More recently WHP Global announced a new strategic partnership with Kohl’s. The agreement includes opening Baby R Us shops within Kohl’s stores starting this August with plans to roll out 200 of the in-store shops through the end of year. Kohl’s will offer Baby R Us products through the Kohls.com website. WHP Global is also bringing Lotto, a premier Italian sports brand established in 1973, to the U.S. market in a big way through a deal with Dick’s Sporting Goods. Yehuda Shmidman, chairman and CEO of WHP Global, owner of the Lotto brand, commented in its press release, “We’re thrilled to bring the Lotto brand to U.S. athletes in partnership with Dick’s, the largest and most trusted sporting goods retailer in the country. This breakthrough collaboration not only ensures a new generation of Lotto athletes and customers but also charts an exciting new path as we continue to grow this legendary brand around the globe.”
Moving Forward
Effective immediately, Express named Mark Still as its new CFO. Still was appointed the interim CFO in November 2023. Express has already received a commitment for $35 million in new financing from some of its existing lenders and recently received $49 million in cash from the Internal Revenue Service related to the CARES Act (government relief that provided economic assistance for small businesses and industries based on the impacts of COVID). Express’ revenue dropped 40% in 2020 due to the pandemic mandating non-essential stores to close, equating to over $800 million in sales losses for the year. The company currently operates 530 Express retail and Express Factory Outlet stores in the United States and Puerto Rico, the Express.com online store and the Express mobile app, in addition to approximately 60 Bonobos Guideshop locations, the Bonobos.com online store, 12 UpWest retail stores and the UpWest.com online store, as stated on its website.