Dive Brief:

• Women’s apparel retailer Express on Thursday said it will discontinue its Canadian operations through its subsidiary there, Express Fashion Apparel Canada Inc., and close all of its 17 Canadian stores in the process, according to a company press release.

• Express will continue to operate 635 stores in the U.S., the company said.

• The company was hit by a “challenging Canadian retail environment” and unfavorable currency exchange rates, Express CEO David Kornberg said in a statement.

Dive Insight:

While Express will keep all of its U.S. stores open, it has been struggling in that market as well. Fourth quarter net sales fell 11% to $678.8 million from $765.6 million in the year-ago quarter. Same-store sales fell 13% in Q4 2016, and e-commerce sales rose 9% to $170.1 million, accounting for 25% of net sales in the quarter. 

In Canada, for the fiscal year ending Jan. 28, Express Canada’s net sales were some $34 million ($45 million in Canadian dollars), with a net loss of some $6 million, according to a press release. The company expects a pre-tax loss between $28 million and $34 million, driven by the write-down of the Express Canada investment and associated costs, including Q1 charges of about $6 million and Q2 charges between $22 million and $28 million, the company said. The company will report its second quarter results on June 1.

Express is one of the retailers formerly owned by Les Wexner’s L Brands, and it could be on track to falter in the face of dramatic shifts in shopping habits and fashion sensibilities much like The Limited, which was once Wexner’s flagship brand, but this year filed for bankruptcy and shuttered all stores.

Express may be experiencing some fallout from the 2014 departure of L Brands veteran Mike Weiss, who spearheaded the company's merchandising efforts when it was still just an experiment. Weiss went on to lead the brand from 1997 to 2004, retiring from the CEO post.

Weiss returned to the helm in 2007 after Express was sold to private equity firm Golden Gate Capital, and for many years Express flourished: its success came in part thanks to The Limited’s pivot to target older working women, says Lee Peterson, who spent 11 years at The Limited and is now executive vice president of brand, strategy and design at global retail design firm WD Partners. “Express had the younger, fashionable customer,” Peterson told Retail Dive earlier this year. “In 1990 or ’91, [The Limited] just gave the fun business to Express. And Express extended its success because it brought back Mike Weiss. [But] you’ll probably see them struggling [in the future].”

Peterson's forecast is now coming true, GlobalData Retail Managing Director Neil Saunders said in a March email to Retail Dive. “A dismal set of final quarter numbers cap what has been a torrid year for Express,” he said. “That the figures are sequentially worse than last quarter and, indeed, the worst of the current fiscal, provides little comfort that the business is getting back on track.”

While "traffic and visibility are the crux of Express’ problems," Saunders said some retail fundamentals also present headaches. "We also believe that recent seasons have seen the company make some merchandising missteps,” Saunders said.

“Although holiday quarter collections were an improvement, much of 2016 was characterized by far too much product choice in stores, over-complicated assortments and items that were aimed at too young an audience," he added. "This made shopping stores unpleasant and was a turn-off for some customers. Although we do not attribute all of the current sales dips to this, we believe that Express is still working to build back the interest of those shoppers who were deterred by previous poor product selection.