Express, a longtime mall retailer, has filed for Chapter 11 bankruptcy protection and announced the closure of nearly 100 stores. However, there is hope for the brand as an investor group led by brand management firm WHP Global aims to salvage the company by acquiring it. The investor group includes WHP, Simon Property Group, and Brookfield Properties.
Express will be closing 95 of its eponymous shops and all of its UpWest doors, with closing sales expected to begin soon. However, the hours for the remaining stores will not change, and the company will continue to accept orders and returns as usual.
The bankruptcy filing is a part of Express’ plan to facilitate a sale process of most of its retail stores and operations to the investor group. The company has received a nonbinding letter of intent from the investors to buy the assets and has secured $35 million in new financing from its existing lenders, subject to court approval. This proposed transaction will provide Express with additional financial resources, better position the business for profitable growth, and maximize value for the company’s stakeholders.
Additionally, Express has received $49 million in cash from the IRS related to the CARES Act, which will help strengthen its balance sheet. The company has been waiting for this influx of liquidity to address its financial challenges.
Express, founded in 1980 by Les Wexner’s Limited Brands, has been facing declining sales in recent years due to debt and costly mall leases. The company’s revenue has fallen by about 10% since 2019, while the apparel sector has experienced strong growth. This financial strain and significant losses have led to the need for bankruptcy.
According to Neil Saunders, the managing director of GlobalData, one of the reasons for Express’ decline is its failure to adapt to changing trends. The rise of working from home and the casualization of fashion have softened the formal and smart casual market for both men and women. Express did not make enough effort to adapt to these trends, putting them on the wrong side of the industry.
However, bankruptcy will provide relief to Express and enable the company to implement its turnaround strategy. It will allow the retailer to get out of costly and burdensome leases, many of which are in struggling malls. This will make the company more attractive to potential buyers.
Express has enlisted powerhouse law firm Kirkland & Ellis as its legal counsel, Moelis & Co. as its investment banker, and M3 Partners as its financial advisor to navigate through the bankruptcy process.
While Express faces challenges, there is hope for its revival with the support of the investor group. The brand has an opportunity to adapt to changing consumer preferences and strengthen its financial position for future growth.
