Express files for bankruptcy, plans to close nearly 100 stores as investor group looks to save the brand

Longtime
mall
retailer


Express
filed
for
Chapter
11
bankruptcy
protection
in
Delaware
federal
court
on
Monday,
but
a
group
of
investors
led
by
brand
management
firm
WHP
Global
is
looking
to
save
the
company
by
acquiring
it. 

Express,
whose
portfolio
includes
its
namesake
banner,
Bonobos
and
UpWest,
said
it
will
close
95
of
its
eponymous
shops
and
all
of
its
UpWest
doors.
As
of
last
January,
the
company
had
553
total
stores,
according
to
company
securities
filings.
It’s
not
clear
how
many
of
those
were
UpWest
stores,
but
the
brand’s
website
shows
that
it
has
10
locations.

Closing
sales
are
expected
to
begin
Tuesday. The
company
said
hours
for
remaining
stores
won’t
change
and
it
will
continue
to
accept
orders
and
returns
as
usual.

In
a
news
release,
Express
said
it
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.
It
received
a
nonbinding
letter
of
intent
from
the
investors
to
buy
the
assets,
and
has
also
secured
$35
million
in
new
financing
from
some
of
its
existing
lenders,
subject
to
court
approval. 

“The
proposed
transaction
will
provide
Express
with
additional
financial
resources,
better
position
the
business
for
profitable
growth
and
maximize
value
for
the
Company’s
stakeholders,”
Express
said. 

Express
also
secured
$49
million
in
cash
from
the
IRS
related
to
the
CARES
Act
–
a
critical
influx
of
liquidity
that
the
company
had
been
waiting
on
to
shore
up
its
balance
sheet. 

“We
continue
to
make
meaningful
progress
refining
our
product
assortments,
driving
demand,
connecting
with
customers
and
strengthening
our
operations,”
CEO
Stewart
Glendinning
said
in
a
statement. 

“We
are
taking
an
important
step
that
will
strengthen
our
financial
position
and
enable
Express
to
continue
advancing
our
business
initiatives,”
he
added.

The
business
casual
apparel
brand,
founded
in
1980
by
Les
Wexner’s
Limited
Brands,
has
seen
sales
plummet
over
the
last
few
years
as
debt
and
costly
mall
leases
dragged
down
its
business. 

In
a
court
filing,
Express
said
that
it
had
$1.3
billion
in
total
assets
and
$1.2
billion
in
total
debts
as
of
March
2.

Earlier
this
month,
CNBC
reported
that
Express
was

struggling
to
pay
its
vendors
on
time,
indicating
it
was
in
financial
distress
and
struggling
to
manage
cash
flows.
When
retailers
can’t
pay
their
vendors,
suppliers
sometimes
tighten
payment
terms
or
refuse
to
fulfill
orders,
which
can
further
pressure
a
company’s
liquidity.

Last
spring,
Express

acquired
Bonobos’
operating
assets
and
related
liabilities
for
$25
million
from


Walmart
in
a
joint
deal
with
WHP.
The
deal
came
as
Express’ “core
business
was
weak,
and
cash
was
tight,”
GlobalData
managing
director
Neil
Saunders
said
in
a
Monday
note.

Still,
its
biggest
problem
was
declining
revenue,
which
has
fallen
by
about
10%
since
2019,
Saunders
said. 

“This
stands
in
marked
contrast
to
an
apparel
sector
that
has
grown
strongly
over
the
same
period.
This
has
put
the
company
under
a
lot
of
financial
strain
and
has
resulted
in
some
significant
losses.
None
of
this
is
sustainable
which
is
one
of
the
reasons
for
bankruptcy,”
said
Saunders.  

“The
woes
at
Express
are
not
all
of
its
own
making,”
he
said. “The
formal
and
smart
casual
market
for
both
men
and
women
has
softened
over
recent
years
because
of
a
rise
from
working
from
home
and
the
casualization
of
fashion.
This
puts
Express
firmly
on
the
wrong
side
of
trends
and,
in
our
view,
the
chain
made
too
little
effort
to
adapt.”

Bankruptcy
will
provide
some
key
relief
to
Express
and
help
it
get
back
on
stronger
footing
as
it
works
to
implement
its
turnaround
strategy.
It’ll
allow
the
retailer
to
get
out
of
costly
and
burdensome
leases,
many
of
which
are
in
struggling
malls,
and
has
made
the
company
more
attractive
to
buyers. 

Powerhouse
law
firm
Kirkland
&
Ellis,
which
led
Bed
Bath
&
Beyond
and
many
other
failed
retailers
through
their
bankruptcies,
is
serving
as
Express’
legal
counsel.
Moelis
&
Co.
has
been
tapped
as
its
investment
banker
and
M3
Partners
has
signed
on
as
its
financial
advisor.