Dive Brief:
- Apparel retailer Express filed for Chapter 11 bankruptcy protection on Monday and plans to close 95 Express stores and all of its UpWest locations, the company said. The retailer said in bankruptcy court documents filed in Delaware that its assets and liabilities ranged from $1 billion to $10 billion. Its top five creditors are collectively owed nearly $70 million.
- Express says it received $35 million in bankruptcy financing from existing lenders and received an additional $49 million in cash from the Internal Revenue Service related to the CARES Act. The retailer plans to sell itself to a consortium led by WHP Global, which also includes Simon Property Group and Brookfield Properties.
- The company on Monday also named Mark Still the senior vice president and chief financial officer. Still had served as interim CFO since November. Express said it plans to continue business as usual as the bankruptcy case proceeds and it moves toward a court-supervised sale.
Dive Insight:
Express debuted over 40 years ago in a different era of retail and apparel. However, at the height of the pandemic, as work from home became part of the new normal, the retailer’s main offering, business casual apparel, fell out of favor. Along the way, Express lost its brand awareness.
“Although many retailers have entered bankruptcy in recent years, including 99 Cents Only Stores earlier this month and crafts retailer Joann in March, Express is the first major mall-based retailer to file for Chapter 11 in the post-Covid world,” Sarah Foss, head of legal at Debtwire, said in emailed comments.
Express Inc. reported a third-quarter operating loss of $28.7 million and a net loss of $36.8 million in November. The company did not report its Q4 or full-year earnings before filing for Chapter 11. The company’s Monday announcement did not identify which store locations are closing.
Going out of business sales will start Tuesday at the 100-plus stores set to close. Express’ DTC brand UpWest listed 10 stores on its website as of Monday. Bonobos stores were not included in the list of closures; the brand ran 60 as of September. Express also said it is working with A&G Realty Partners to continue to assess its store footprint.
“With the company struggling to gain traction with consumers, it has been obvious for quite some time that bankruptcy was the inevitable destination for Express,” Neil Saunders, managing director of GlobalData, said in emailed comments. However, Saunders said Express’ troubles were not all of its own doing.
“The formal and smart casual market for both men and women has softened over recent years because of a rise from working from home and the casualization of fashion,” Saunders said. “This puts Express firmly on the wrong side of trends and, in our view, the chain made too little effort to adapt.”
CEO Stewart Glendinning, who has led the company since September, said bankruptcy protection is “an important step that will strengthen our financial position and enable Express to continue advancing our business initiatives. WHP has been a strong partner to the company since 2023, and the proposed transaction will provide us additional financial resources, better position the business for profitable growth and maximize value for our stakeholders.”
Express closed on a strategic partnership with WHP in January 2023. WHP, whose retail brand portfolio includes Toys R Us, took a 7.4% stake in Express and invested $235 million in a joint venture with the retailer, of which it owns 60% and Express owns 40%. However, analysts questioned the value and wisdom of that deal. They pointed out that Express would owe $60 million to WHP for using their own name in the form of guaranteed minimum royalties.
If the deal with WHP, Simon and Brookfield moves forward, it could place Express in the hands of two of America’s largest mall landlords and owners, Simon and Brookfield. The move appears to mirror a deal made to acquire J.C. Penney out of bankruptcy in late 2020.
While the company’s attempts to restructure bought time, they did not fix the chief underlying issue in that the brand had become irrelevant to consumers, Saunders said. If the acquisition offer from WHP is accepted, “this would not solve all of the immediate issues, but it would at least put Express on a stable footing,” Saunders said.
