Columbus, Ohio — Express, Inc., a leading fashion apparel retailer, is launching a new corporate strategy that will include the closure of 100 stores over the next 2 years.
“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,” says Tim Baxter, chief executive officer. “This will of course take some time, but we have a clear path.”
Additionally, Express aims to reinvigorate its brand. Based on customer insights, the company is unveiling its new brand purpose, which is to create confidence and inspire self-expression, and its promise to customers to edit the best of current fashion for real-life versatility. How the brand engages with customers will be consistent with this point of view across women’s and men’s, across channels, and across communication touchpoints.
The company has identified $80 million in annualized cost reduction opportunities expected to be realized over the next 3 years. Of this, $25 million will be driven by process improvements, inventory optimization and systems implementations associated with its go-to-market transformation. The other $55 million of expense reductions will be driven mainly by the previously announced workforce restructuring. These savings are incremental to the $50 million dollars in savings that were announced in 2016 and delivered over the past 3 years.
As such, the company expects to close approximately 100 stores by 2022. This includes nine stores that have already closed in 2019, 31 by the end of January 2020, and an additional 35 by the end of January 2021. The company expects the net impact to sales to be a reduction of $90 million by 2022. This reduction is offset by the elimination of the fixed operating costs of the closed stores and leveraging the remaining stores’ and online infrastructure for additional sales, which it expects to result in a $15 million annualized increase in EBITDA by 2022.
The company has a long term goal to increase free cash flow from approximately $50 million in 2019 to $90 to $110 million by 2022. It expects to achieve this goal by increasing operating cash flow by $60 to $80 million, driven by growth in net income and improved working capital. Over the next 3 years, the company expects to spend between approximately $50 and $60 million in capital expenditures each year to fund technology investments, ongoing maintenance of technology platforms, enhance customer facing e-commerce capabilities, and refresh stores to ensure consistent representation of the brand across the entire fleet.
Since 1980, Express has provided the latest apparel and accessories to help customers build a wardrobe for every occasion, offering fashion and quality at an attractive value. The company operates retail and factory outlet stores in the United States and Puerto Rico, as well as an online destination. For more information, visit www.express.com.
SOURCE: Express, Inc.