Express trimming stores in new turnaround move
Express Inc. launched a new corporate strategy that involves closing stores and cost reductions.
The apparel retailer said it plans to close approximately 100 stores by 2022, with the total including nine locations that closed in 2019. Another 31 stores will shutter by the end of January 2020, and an additional 35 by the end of January 2021. Currently, Express operates approximately 600 stores.
The company said the planned closures would reduce revenue by $90 million by 2022, which will be offset by the elimination of costs and by leveraging the remaining stores and online infrastructure for additional sales.
As part of the new strategy, Express also expects to realize $80 million in cost reductions during the next three years. A previously announced workforce restructuring will be responsible for $55 million of the savings, with another $25 million to be driven by process improvements, inventory optimization and systems implementations.
“My expectation is that we will return to a mid-single-digit operating margin through a combination of low-single-digit comp sales growth, margin expansion and cost reductions, said Tim Baxter, CEO, Express. “This will of course take some time, but we have a clear path.”
As part of its new turnaround initiative, dubbed “The EXPRESway Forward strategy, Express will also relaunch its loyalty program and private label credit card in fall 2020, “optimizing marketing spend through new tools and predictive models, and more personalized customer communications.” A new product approach, called “The Express Edit,” will result in a curated assortment reflecting versatility and consistent newness in every category, the company said.
In addition, other initiatives expected to create operational efficiency across the company include a new go-to-market process, inventory optimization, an improved customer experience and enhanced omnichannel capabilities.
Express’ business has been in a slump. The company reported a $3.1 million loss for the third quarter ended Nov. 3. Same-store sales fell 5%.
For the fourth quarter, Express narrowed its earnings-per-share guidance to $0.17 to $0.19 on an adjusted basis, from a previous range of $0.16 to $0.21. It expects same-stores sales for the quarter to be down approximately 3%, versus previous guidance for a decrease of 1% to 3%.