Longtime mall retailer Express recently filed for Chapter 11 bankruptcy protection, but a group of investors led by brand management firm WHP Global is looking to save the company by acquiring it. Express plans to close 95 of its stores and all of its UpWest locations, with closing sales expected to start soon. However, the hours for remaining stores will remain unchanged, and the company will continue to accept orders and returns as usual. Express filed for bankruptcy to facilitate a sale process of most of its retail stores and operations to the investor group, which includes WHP, Simon Property Group, and Brookfield Properties. The investors have provided a nonbinding letter of intent to purchase the assets and have secured $35 million in new financing, subject to court approval.
The CEO of Express, Stewart Glendinning, stated that the proposed transaction will provide the company with additional financial resources, better positioning it for profitable growth and maximizing value for its stakeholders. The company has also secured $49 million in cash from the IRS related to the CARES Act, providing crucial liquidity to help stabilize its balance sheet. Express has faced declining sales over the last few years due to debt burdens and costly mall leases, putting it under significant financial strain. The acquisition of Bonobos’ assets from Walmart last year was seen as a way to shore up its business as its core operations struggled. Neil Saunders, managing director of GlobalData, highlighted declining revenue as the key issue, with sales falling by about 10% since 2019, contrasting with the overall growth in the apparel sector.
Bankruptcy will provide relief to Express by allowing it to exit costly leases, many of which are in struggling malls, and make the company more attractive to potential buyers. The move will help Express implement its turnaround strategy and work towards a stronger financial footing. Powerhouse law firm Kirkland & Ellis, known for assisting other retailers through bankruptcy proceedings, is serving as Express’ legal counsel during this process. Moelis & Co. has been appointed as the investment banker, while M3 Partners is acting as the financial advisor. While Express has faced challenges adapting to changing trends in the retail industry, bankruptcy proceedings are seen as a crucial step in its efforts to stabilize its operations and overcome financial difficulties.
The challenging retail environment, marked by shifts in consumer behavior and the impact of the COVID-19 pandemic, has added to the pressure on traditional mall-based retailers like Express. The company’s struggle to pay vendors on time and manage cash flows indicated its financial distress prior to the bankruptcy filing. Express has been working to refine its product offerings, drive demand, and connect with customers; however, the decline in revenue and failure to adapt to changing consumer preferences have posed significant obstacles. The rise of remote work and the casualization of fashion have contributed to a softening of the business casual market, further complicating Express’ position within the industry.
The acquisition by WHP Global and its investor group presents an opportunity for Express to restructure its operations, strengthen its financial position, and find a path towards sustainable growth. The influx of new financing and cash from the CARES Act will provide the company with the resources needed to navigate through the bankruptcy process and emerge stronger on the other side. As Express works to address its financial challenges and implement changes to its business model, the support from the investors and the guidance from experienced advisors will be instrumental in determining the company’s future success. The bankruptcy filing marks a pivotal moment for Express as it seeks to turn its fortunes around and adapt to the evolving retail landscape in a post-pandemic world.
