Express, WHP complete Bonobos acquisition; Express Q1 loss widens, sales tumble
Express Inc. reported a disappointing first quarter with a wider-than-expected loss and weaker-than-expected sales as it disclosed more cost cutting.
The apparel retailer also said that it completed the joint acquisition of direct-to-consumer menswear retailer Bonobos with partner and brand management firm WHP Global. It is the first acquisition to be made jointly by the two companies since they completed their strategic partnership earlier this year, which included WHP buying a 60% stake in the Express brand.
“This is an important step in the transformation of our company and a compelling addition to our brand portfolio,” stated Express CEO Tix Baxter. “We expect the transaction will be accretive to operating income and free cash flow positive in fiscal 2023.”
Express, which is working to overhaul its business, reported a net loss of $73.4 million, or $0.99 a share, for the quarter to April 29, compared to a loss of $11.9 million, or $0.18 a share, for the year-ago period. Analysts had expected a loss of $0.79 a share.
Net sales fell 15% to $383.3 million, below estimates of $389 million.
Comparable retail sales were down 14%, due to a combination of external factors and challenges in product assortments, the company said. Retail store comp sales decreased 18%, while digital comp sales declined 7% Comparable outlet sales decreased 17%.
“The reduced consumer spending, increased price sensitivity in discretionary categories and aggressive promotional activity across the industry that began in 2022 continued into the first quarter of this year and negatively impacted our performance,” said Baxter. “We continued to take corrective actions to address the imbalances in our women's assortment architecture and delivered sequential improvement in women’s sales as the quarter progressed.”
At the same time, however, the retailer said it experienced a deceleration in its men's and outlet stores businesses due to softness in traffic and against the backdrop of record volume in the first quarter of 2022.
In January, Express disclosed $40 million in annualized expense savings versus 2022. Since that time, the company said it has implemented an additional $25 million in savings for this year.
"We are taking aggressive action to reduce expenses and improve the operating efficiency of our business,” Baxter said. “We are committed to identifying and implementing significant additional expense savings which we expect to be realized in the back half of 2023 and full year 2024. To do this most expeditiously, we have engaged external advisors.”
The company has over 530 Express retail and Express Factory Outlet stores in the United States and Puerto Rico, the Express.com online store and the Express mobile app; over 60 Bonobos locations and the Bonobos.com online store; and 13 UpWest retail stores and the UpWest.com online store