long-term mall retailer Express It filed for Chapter 11 bankruptcy protection on Monday, but a group of investors led by brand management company WHP Global is seeking to save the company through acquisitions.
Express, which owns eponymous brands Bonobos and UpWest, said it would close 95 eponymous stores and all UpWest locations. Closed sales are expected to begin Tuesday. The company said the opening hours of its remaining stores will not change and will continue to accept orders and returns as normal.
Express said in a news release that it filed for bankruptcy to “facilitate” the sale of most of its retail stores and operations to a group of investors that includes WHP, Simon Property Group and Brookfield Properties. The company received non-binding letters of intent from investors to purchase the assets and also secured $35 million in new financing from a number of existing lenders, subject to court approval.
“The proposed transaction will provide Express with additional financial resources to better position the business for profitable growth and maximize value for the company’s stakeholders,” Express said.
Express also received $49 million in CARES Act-related cash from the IRS, an important influx of liquidity the company has been waiting for to shore up its balance sheet.
“We continue to make meaningful progress in refining our product offerings, driving demand, connecting with customers and strengthening our operations,” CEO Stuart Glendinning said in a statement.
He added: “We are taking an important step that will strengthen our financial position and enable Express to continue advancing our business plans.”
The business casual apparel brand, founded by Les Wexner’s Limited Brands in 1980, has seen sales plummet in the past few years as debt and expensive mall leases weighed on its business.
Earlier this month, CNBC reported that Express was struggling to pay suppliers on time, a sign that the company was in financial trouble and struggling to manage cash flow. When retailers are unable to pay suppliers, suppliers sometimes tighten payment terms or refuse to fulfill orders, which can further stress the company’s liquidity.
Last spring, Express acquired Bonobos’ operating assets and related liabilities for $25 million. Walmart Joint agreement with WHP. The deal comes at a time when Express’ “core business is weak and cash is tight,” GlobalData managing director Neil Saunders said in a note on Monday.
Still, its biggest problem is declining revenue, which is down about 10% since 2019, Sanders said.
“This is in sharp contrast to the apparel industry, which was growing strongly during the same period. This put the company under a lot of financial pressure and led to some significant losses. None of this was sustainable and was one of the reasons for the bankruptcy,” Sanders said. explain.
“Express’s troubles are not entirely of its own making,” he said. “The formal and smart casual market for men and women has softened in recent years due to working from home and the rise of fashion-casualization. This puts Express firmly on the wrong side of the trend, and in our view, the chain’s efforts to adapt Too little.
The bankruptcy will provide Express with some important relief and help it get back on its feet as it implements its turnaround strategy. That would free the retailer from expensive and onerous leases, many of which are located in struggling malls, and make the company more attractive to buyers.
Kirkland & Ellis, a law firm that has led Bed Bath & Beyond and many other failed retailers through bankruptcy, is now serving as Express’ legal counsel. Moelis & Company has been appointed as its investment banker and M3 Partners has been signed on as its financial advisor.
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