Express swings to loss; taking ‘aggressive action’ to improve bottom line
Express swung to a net loss of $44.1 million for its second quarter.
Express reported a second-quarter loss as its sales fell 6%. The company has secured a $65 million term loan to bolster liquidity.
In a statement, Express CEO Tim Baxter said the compan, whose results were in line with its expectations, has taken “aggressive action” to improve the bottom line. As a result of an ongoing review of the company’s expense structure, Express has identified and implemented $80 million in savings in 2023, $120 million in 2024, with the commitment growing to $200 million by 2025.
“In addition to these substantial cost reductions, we’ve also secured a $65 million term loan, and expect to receive a $52 million CARES Act refund in the back half of the year, which bolsters our liquidity and allows us to continue to invest appropriately in our transformation," added Baxter.
The company is also aggressively pursuing at least $50 million in gross margin expansion opportunities by leveraging efficiencies in sourcing, production and the supply chain.
Express swung to a net loss of $44.1 million, or $11.79 a share, for the quarter ended July 29, from net income of $7.0 million, or $2.05 a share, in the year-ago period.
Consolidated net sales fell 6% to $435.3 million.
Comparable sales, which includes both Express stores and e-commerce, were down 13%. Retail stores comp sales decreased 21%; online comps declined 1%. Comp outlet sales decreased 17%.
Gross margin contracted to 23.1% from 33.1%, amid increased promotional activity.
"Second quarter net sales and diluted loss per share were within the ranges of our outlook and we are gaining momentum,” stated Baxter. “In the Express brand, we drove significant, sequential improvement each month driven by a powerful trend change in our women’s and e-commerce businesses. This momentum continued through Labor Day.”
In January, Express and brand management firm WHP Global entered into a joint venture. In April, the two companies acquired digitally native menswear retailer Bonobos from Walmart. Baxter said that Bonobos’ second-quarter sales exceeded expectations, with the brand positioned to be a growth engine for the company.
“We are transforming EXPR to create shareholder value and are focused on driving long term profitable growth and delivering positive free cash flow in our core Express business, leveraging our omnichannel platform to reduce costs, and accelerating our growth and profitability through our strategic partnership with WHP Global," said Baxter.
Express still expects fiscal 2023 sales of $1.9 billion to $2.0 billon and per-share losses of $30 to $34.
The company has 530 Express retail and Express factory outlet stores in the United States and Puerto Rico.