The apparel company Express was highly liked by both millennials and Xennials. Recently, it declared bankruptcy under Chapter 11.
Express, Inc. runs UpWest, Bonobos, and Express factory outlets in addition to its retail locations. The retailer declared it was going to close over 100 locations. Effective April 23, 2024, this covers every UpWest store and at least 95 of its 500 Express locations nationwide.
The decision was expected! It’s because Express locations need help competing with newer retailers. Sales at the renowned mall have dropped recently, a result of its inability to adapt to changing consumer demand and stay on trend. Is Express going out of business? Let’s explore that in this article.
Express declares bankruptcy
Express was a mainstay in shopping centers throughout the country. Express is based in Columbus, Ohio. The business has $1.3 billion in assets and $1.2 billion in liabilities. The chain also owns the Bonobos brand. The Express website states that the company has roughly 530 Express retail locations and Express Factory Outlet locations in the US and Puerto Rico. These are in addition to the approximately 60 Bonobos Guideshop locations and 12 UpWest stores. Also, online platforms are available for these firms.
On April 22, 2024, Express filed for Chapter 11 bankruptcy protection in a Delaware federal court. However, a group of investors headed by the brand management company WHP Global is trying to buy the business to save it.
What does the company do?
The business intends to use the bankruptcy procedure to make selling easier. With headquarters in New York and support from Ares Management Corp., WHP Global owns several companies, including Rag & Bone, Toys R Us, and Isaac Mizrahi. Through a joint venture created in 2023, the company owns a 60% share of the Express brand. The company wants to close all its UpWest facilities and 95 of its more than 500 retail outlets.
Early in January, the UpWest in Dallas’s NorthPark Centre had already shuttered. According to a spokesman, the Express location in North Park is not closing. That shop underwent a recent renovation.
“WHP has been a strong partner of Express since 2023.” This is according to a prepared statement from the CEO of Express, Stewart Glendinning. Express would get more funding from the proposed sale. This would “better position the company for successful growth. Also, it will maximize value for stakeholders.”
Meanwhile, closing sales have already started. The business stated that it plans to continue to accept orders and returns as normal. Also, the hours for its remaining outlets won’t change. According to store employees, the businesses will remain open for at least 60 days.
The business stated that it is collaborating with A&G Realty Partners to “continue to assess its store footprint.”
Court documents filed in Delaware detailed liabilities and assets totaling between $1 billion and $10 billion.
Thus, Express can continue its business. It finds a means of repaying its debt due to its Chapter 11 petition. The store secured an additional $35 million in funding from its current lenders to finance its bankruptcy. Additionally, it stated that the Internal Revenue Service paid it $49 million in April in connection with the CARES Act.
What happened to the company?
Express stated in August 2023 that it would reduce costs by thirty million dollars. At that time, it was planned to fire roughly 150 workers through 2024. However, this action was part of the company’s larger $120 million cost-cutting plan. The business started cutting costs in 2023 and planned to continue until 2025. However, the company’s bankruptcy filing allows it to reorganize its business. This includes revising many contracts remaining in place after some of its locations close.
Also, the business’s losses grew throughout the previous year. By October 2023, Express’s losses from 2022 had tripled. In October 2023, the company’s year-to-date results showed that it had lost more than $154 million over 39 weeks. Sales for the company had decreased by 5.6% at that point. But inventory had increased by 32%. By October 2023, gross margins decreased from 30% in 2022 to 21.5%.
The company’s annual financial statements are typically released in March or April, but they still need to be filed for the fourth quarter. Instead, the business has filed for bankruptcy protection. Also, it will carry on as a debtor in possession, thus allowing it to carry on as usual while having the legal protection of the courts to assist it in restructuring its financial situation.
Express’s common stock was delisted, and the company’s trade ceased on the New York Stock Exchange, according to a notification that the business received from the NYSE in March 2024.
Will the Express be saved?
Express filed for bankruptcy in part to help with getting capital. It would ultimately be able to rescue the company. The consortium led by WHP Global (“WHP”) includes:
- a wholly owned indirect subsidiary of Simon Property Group (0.0%),
- L. P. (“Simon”), and
- Brookfield Properties (“Brookfield”)
Thus, it has confirmed to the company that it has received a non-binding letter of intent regarding the possible sale of an essential part of Express’ retail stores and operations.
Both Brookfield Properties and Simon Property Group are highly proficient. They are well-versed in leasing and handling real estate. WHP Global is a company that specializes in giving brands a clear focus, expansion, and success strategy. It has successfully brought back many iconic brands.
Updations happening in Express
Mark Still was appointed Express’s new CFO with immediate effect. In November 2023, Still was named interim CFO. Express recently received $49 million in cash from the Internal Revenue Service concerning the CARES Act. Besides, the company has received $35 million in new financing agreements from some of its current lenders.
Due to the pandemic forcing non-essential outlets to close, Express’ revenue fell 40% in 2020, resulting in over $800 million in lost sales.
Express still provides customer service for its Express, Bonobos, and UpWest brands in-store and online. The company expects to carry on as usual by right-sizing its operations and leasing portfolio.
Stewart Glendinning, the CEO, said,
“We are making major strides in improving our product offerings, driving demand, and building customer relationships. We are strengthening our business operations. We are about to make a big decision to improve our financial position. It will enable Express to pursue more of our business goals.”
“WHP has proven to be a trustworthy business partner since 2023. We will have improved access to funding due to the expected purchase. It will also better position the business for profitable growth. Also, it will maximize value for all our stakeholders.”
Mr. Glendinning added, “Express offers a premier omnichannel platform. It has a strong portfolio of brands. Our major priority remains to provide our consumers with modern trends and
We value the value they expect from us. We value ongoing backing from our suppliers, distributors, and business partners. We appreciate our employees for their dedication and hard work.”
Is Express going out of business?
No, Express is not going out of business. Express filed for bankruptcy in April under Chapter 11, but the company states that it “expects to carry out business as usual.” As mentioned earlier, the company is working to right-size its lease portfolio and operations.
Express has been around for over 40 years. It was previously a popular destination for millennials, serving as a shop for reasonably priced officewear and going-out clothes. However, it has seen a decline in sales recently. This happened because it battled to compete with new online companies and changing customer tastes.
Last year, Express announced hiring external counsel to help decrease expenses. It happened weeks after agreeing to buy men’s fashion brand Bonobos Inc. with WHP Global. Following the arts and crafts company Joann Inc. in March and the 99 Cents Only Stores, this is the latest in a long line of retail bankruptcies.
Some websites have reported that several store locations are expected to close, including seven in New Jersey. The press release states that 95 of Express’s more than 500 shop locations will close nationwide. Closing sales have already started.
Conclusion
Express will greatly benefit from bankruptcy! This will put it back on a more robust financial footing as it works to carry out its turnaround plan. It will also make the shop more appealing to customers and enable it to get out of expensive and difficult leases, many of which are in failing malls.
Express is defended by the renowned law firm Kirkland & Ellis. This also guided Bed Bath & Beyond and many other bankrupt shops through bankruptcy proceedings. It has appointed Moelis & Co. as its investment banker and M3 Partners as its financial advisor.