Dive Brief:
- Through its deal with WHP Global and the help of new brand partners, Express is expanding into Indonesia and Paraguay, as well as growing its presence in Mexico and Central America more broadly, according to a Tuesday announcement.
- Brand management firm WHP Global, which holds a 60% stake in an intellectual property joint venture with Express, said it plans to grow Express’ retail footprint in Central America with the opening of four new flagship stores through 2026.
- WHP said its international strategy for Express includes “a full omnichannel launch” starting next year that will include the opening of flagship stores and e-commerce channels featuring men’s and women’s apparel, along with footwear and accessories.
Dive Insight:
Express and WHP Global announced the intellectual property joint venture in December. The move brought Express onto WHP’s brand management roster of retailers, which includes Toys R Us, Anne Klein and Bonobos, which WHP and Express acquired from Walmart in April for $75 million.
“Bringing the Express brand into new and emerging markets is our first major move for the brand since entering into a strategic partnership with Express to scale the iconic fashion brand and expand its international reach,” WHP Global Chairman and CEO Yehuda Shmidman said in a statement.
The company said the international expansion initiatives will include a shop-in-shop concept in Mexico and Indonesia. Beyond that, Express said more details on store openings and market-specific initiatives will be announced closer to their debut.
Express hasn’t delivered strong financial or operational performance over the last year.
“Given that Express’ Q2 2023 consolidated net sales dropped 6.4% to $435.3 million, I’d imagine international expansion is very much a strategic move to open the brand up to new markets and new sales channels,” Matthew Debbage, CEO of the Americas and Asia at Creditsafe, told Retail Dive in an email. Debbage noted that net sales have been declining while operating expenses and debt have risen.
Express’ Q2 selling, general and administrative expenses, for example, increased to $146.1 million (33.6% of net sales) compared to a year ago when SG&A was $143.3 million. The company’s total debt has also grown. It was $220.8 million at the end of Q2, compared to $202.2 million the year before and $122 million at the end of Q4 2022.
And although Express’ days beyond terms rose for five consecutive months, it remained below the industry average. According to Creditsafe data, that metric was 1 – very low – in March but reached a high of 11 in August before dropping in the last two months to 7.
However, the company’s outstanding bills have risen considerably since August. Creditsafe’s data indicates that outstanding bills up to 30 days late have risen in the last three months. In August, nearly 34% of Express’ outstanding bills were up to 30 days late. This metric rose to just over 38% in September and rose again to nearly 54% in October. Express did not immediately respond to a request for comment on its bill payments.
At face value, the international push makes sense, Debbage said. “But you have to remember that the international market already has a stable of trusted clothing retailers like Mango, Zara, Stradivarius, New Look and others,” Debbage said. “It will be interesting to see if Express simply replicates what it’s already doing in the U.S. in new international markets. That could have the opposite effect to what Express executives are hoping for.”
If Express pursues international expansion without understanding the nuances of the new markets it wants to launch in, “they could find themselves in more financial trouble than they already are,” Debbage said.
