Express has entered into a strategic partnership with WHP Global.
WHP Global is investing a total of $260 million in Express in a two-part deal.
The brand-licensing company, whose holdings include Toys “R” Us, will invest $235 million for a 60% stake in an intellectual property joint venture (with 40% owned by Express). The deal will allow the retailer to accelerate its growth scale through licensing in non-core categories and international expansion.
"Our partnership with WHP will drive greater scale and profitability of the Express brand through their category licensing and international expertise and strengthen our balance sheet,” said Express CEO Tim Baxter in a statement. “We expect to accelerate our growth by acquiring multiple brands in partnership with WHP and operating them on our platform.”
In addition, WHP will purchase $25 million worth of Express common stock through a common equity PIPE investment. The company will purchase 5.4 million newly issued shares at $4.60 per share, which represents a 7.4% stake.
Express and WHP also plan to will launch an omnichannel platform to acquire, operate and grow multiple fashion brands.
“The global growth potential of the Express brand and the EXPR omnichannel platform will give our company a distinct competitive edge as we look to acquire more consumer brands," said Yehuda Shmidman, WHP Global chairman and CEO. "We are excited to partner with Tim and his management team and view this partnership as a huge win for both of our companies."
Third Quarter In separate news, Express swung to a loss in its third quarter amid what it called an "extremely challenging" macroeconomic climate.
The company reported a net loss of $34.4 million, or $0.50 a share, for the quarter ended Oct.30, compared to net income of $13.1 million, or $0.19 a share, in the year-earlier period.
Net sales fell 8% to $434.1 million from $472.0 million last year.
Consolidated comparable sales were down 8% in the quarter. Comparable retail sales, which includes both Express stores and e-commerce, were down 11% compared to the third quarter of 2021. Retail stores decreased 6% while eCommerce demand declined 17%. Comparable outlet store sales remained flat, versus the third quarter of 2021.
"The third quarter was tougher than we anticipated and that is reflected in our results," stated Baxter in a release. "The macroeconomic, consumer and competitive environments were extremely challenging, and became more acute as the quarter progressed."
Baxter added that the chain’s strategy to elevate its brand through higher average unit retails and reduced promotions, which has driven steady growth for the past five quarters, came up against the consumer's reduced spending in discretionary categories and increased appetite for deep discounts.
In addition, Baxter said there some misses in the company’s women's business. In a bright spot, Express posted its sixth consecutive quarter of positive comps in its men's business.
The retailer now expects that comparable sales could be flat to up 1% for the full fiscal year versus its earlier estimate of mid-single-digit increase.
Express operates more than 550 retail and outlet stores in the United States and Puerto Rico.