Brief:
- Express Inc. reported a 5% rise in net sales for Q3, thanks to the acquisition of Bonobos, which generated $52.1 million in the quarter. However, net sales for Express and UpWest brands decreased by 7%.
- Comparable sales for Express stores and e-commerce dropped by 4%, with retail store comps falling 16% and e-commerce comps rising 10%.
- The retailer posted an operating loss of $28.7 million and a net loss of $36.8 million for Q3. Inventory including Bonobos increased to $480.9 million, up 14% from last year.
Insight:
- Newly appointed CEO Stewart Glendinning plans to steer the ailing apparel retailer back to profitability by accelerating ongoing cost reduction initiatives and launching new ones.
- Glendinning identified a misguided merchandise strategy as one of the reasons for Express' struggles, where the women's offering was "out of balance across categories, price points and wearing occasions."
- Glendinning replaced former CEO Tim Baxter, who resigned in September after about four years leading the company.
- WHP Global and Express entered an intellectual property joint venture last year. WHP and Express acquired Bonobos from Walmart in April for $75 million. Its portfolio also includes UpWest.
- Glendinning noted some positive indicators in the quarter, such as improved sales performance, $30 million in cost savings, and a shift in merchandising strategy that led to an improvement in women's sales.
- Interim CFO Mark Still reported that October trends continued into the first half of November, while the back half of November saw sales improve and align with last year's figures.
- WHP plans to expand the Express brand into new markets and increase its presence in Mexico and Central America.
Rewritten Article:
CEO of Express Admits Errors in Merchandising Strategies
Express Inc. recently announced its Q3 results, revealing a 5% increase in consolidated net sales, attributed to the acquisition of Bonobos, which brought in $52.1 million during the quarter. However, net sales for the Express and UpWest brands plummeted by 7%. Comparable sales for both Express stores and e-commerce dipped by 4%, with retail store comps dropping 16%, while e-commerce comps rose 10%.
The retailer faced an operating loss of $28.7 million and a net loss of $36.8 million for Q3. Inventory including Bonobos soared to $480.9 million, a 14% increase from last year. Excluding Bonobos, inventory remained flat.
Stewart Glendinning, the newly appointed CEO, has a clear vision to restore Express, Inc.'s full profit potential. This strategy includes intensifying ongoing cost reduction initiatives and launching new ones. Glendinning highlighted some of the missteps that hurt the retailer, such as a misguided merchandise strategy where the women's offering was misaligned across categories, price points, and wearing occasions, which affected sales and margins.
Glendinning took over from Tim Baxter, who resigned in September after almost four years as CEO. He reported that the decline in top-line sales for the Express brand stemmed from weaker results in retail and outlet stores, partially offset by a 10% increase in online sales. Although unit sales were consistent with expectations, they required extensive discounting to move inventory, resulting in greater gross margin erosion.
Eric Beder, CEO and senior research analyst at Small Cap Consumer Research, anticipated a focus on improving operations, creating a more balanced product mix between basics and fashion, and leveraging the WHP Global relationship to remain key tenets of Express' business model. WHP Global and Express entered an intellectual property joint venture last year, and WHP acquired Bonobos from Walmart in April for $75 million. Its portfolio also includes UpWest.
Glendinning mentioned some positive indicators in the quarter, such as improved sales performance, $30 million in cost savings that drove a 4% reduction in SG&A, and a shift in merchandising strategy that led to an increase in women's sales.
Mark Still, Interim CFO, reported that trends from October persisted into the first half of November, while the back half of November saw sales improve and align with last year's figures. The company updated its 2023 outlook, now projecting net sales of approximately $1.84 billion to $1.87 billion and approximately $150 million in Bonobos net sales. Previously, the company forecast net sales ranging from $1.9 billion to $2 billion.
WHP plans to extend the Express brand into new markets and increase its presence in Mexico and Central America. The joint venture between WHP Global and Express Inc. is beneficial to Express, as it requires minimal effort from the company being licensed and overseen by WHP.
- The acquisition of Bonobos contributed $52.1 million to Express Inc.'s Q3 consolidated net sales, which saw a 5% increase.
- Net sales for the Express and UpWest brands, however, declined by 7% in Q3.
- Comparable sales for both Express stores and e-commerce dropped by 4%, with retail store comps falling 16% and e-commerce comps rising 10%.
- The retailer announced an operating loss of $28.7 million and a net loss of $36.8 million for Q3, with inventory including Bonobos reaching $480.9 million, up 14% from last year.
- New CEO Stewart Glendinning aims to steer the company back to profitability by intensifying cost reduction initiatives and launching new ones.
- Glendinning identified a misaligned merchandise strategy as one of the reasons for Express' struggles, where the women's offering was misaligned across categories, price points, and wearing occasions.
- Former CEO Tim Baxter resigned in September after almost four years leading the company.
- WHP Global and Express entered an intellectual property joint venture last year, with WHP acquiring Bonobos from Walmart in April for $75 million, and its portfolio also including UpWest.
