Dive Brief:
- Express Inc. on Wednesday reported net sales fell 15% to $383 million from $451 million a year ago, while comp sales for the quarter fell 14%. Retail store comp sales fell 18% while e-commerce comp sales declined 7%, according to a company press release.
- Express also reported a first-quarter net loss of $73.4 million. That’s a sharp year-over-year rise from the nearly $12 million the retailer lost in Q1 of 2022. The company also posted an operating loss of $70.1 million, up from $9.1 million a year ago, as its EBITDA turned negative.
- Also on Wednesday, Express and brand management firm WHP Global completed their acquisition of the Bonobos apparel brand from Walmart for $75 million. “This is an important step in the transformation of our company and a compelling addition to our brand portfolio,” Express CEO Tim Baxter said.
Dive Insight:
Express has posted a number of quarterly losses recently as sales and comps tumble, complicating its turnaround efforts. In each of the previous two quarters, the retailer swung to an operating loss and recorded steep sales declines.
The company’s latest full-year financial guidance forecasts net sales of $1.9 billion to $2 billion, which includes $125 million to $150 million in Bonobos sales. Express also lowered its capital expenditure guidance. It now expects to spend $30 million through the rest of the year, down from $55 million due to prioritizing capital for the Bonobos acquisition.
"We are taking aggressive action to reduce expenses and improve the operating efficiency of our business,” Baxter said in a Wednesday announcement. “In January, we disclosed $40 million in annualized expense savings versus 2022, excluding the impact of inflation, and since that time, we have implemented an additional $25 million which we expect to realize in 2023 and which is reflected in our outlook.”
Express was also warned in April that it was no longer in compliance with the New York Stock Exchange’s listing requirements and was in danger of being delisted.
Baxter said Express is looking to get back on track by achieving profitable growth in its core business, optimizing its omnichannel platform, and accelerating growth and profitability through its WHP Global partnership. In December, the retailer announced a deal with WHP Global that saw the brand management firm invest $260 million in Express. The deal gives WHP Global a 7.4% stake in the retailer.
“We are committed to identifying and implementing significant additional expense savings which we expect to be realized in the back half of 2023 and full year 2024. To do this most expeditiously, we have engaged external advisors," said Baxter.
Express’ challenges now impact Bonobos as well. WHP Global and Express acquired the Bonobos brand together. WHP Global paid $50 million for the Bonobos brand and Express acquired its operating assets and assumed related liabilities of its business for $25 million. Walmart bought Bonobos in 2017 for $310 million.
WHP Global said its portfolio now includes more than 10 brands that approach $7 billion in global retail sales across the fashion, athletic and hard goods sectors. Those brands include Toys R Us, Babies R Us, Anne Klein, activewear brand Lotto, and Joe’s Jeans, a men’s and women’s denim brand.
