[CNBCで英語学習！]Expressの成長と衰退、再建可能性とは [7分動画]

Remember Express? It was an American mall staple all over the country. The popular retailer was raking in $1 billion in annual sales from more than 600 stores in 1991. The sprawling stores won over young professionals with elevated essentials, and the company went public in 2010. Clothing retailer Express, ticker EXPR, celebrated their recent IPO. They were on the top of people's list in terms of affordable fashion and luxury. They were expanding significantly and felt they could have flagship stores in San Francisco, New York City, and expand internationally. They were making good money.

But in April 2024, the company filed for bankruptcy. It wasn't popular anymore, and it didn't make the right changes to win back consumers. In June 2024, a New York court approved the acquisition of the company by a new joint venture called Phoenix. So how did Express go from fashion shows in Times Square to closing its Times Square location? And now, as an investor group swoops in to save the brand, could there be another chapter to its story?

In the early 2000s, mall presence was everything. E-commerce wasn’t as big of a deal as it is today. People went to malls to shop and for entertainment, and Express's footprint was primarily in malls. They won a lot of traffic during that time, and it was also a different time in fashion as well. People went to an office five days a week.

In 2011, the company crossed $2 billion in net sales and acquired startup Bonobos in 2013. In the years that followed its listing on the New York Stock Exchange, the stock price fluctuated. Analysts say that in fashion retailing, sometimes you miss the mark on trends and styles. Express missed trends and had too much inventory. It would take 2 to 3 quarters to clear out the product, and financial results would lag. Material prices also fluctuate. Nonetheless, the business continued to grow.

Michael Weiss, the CEO, was considered a mercurial leader who knew how to run the business. Although they had some products that lasted for years, they bought yarn and fabric far in advance. Express aimed to be fashionable and affordable, which is tough. Michael Weiss had significant store growth, comp growth, and margin growth. Express hit its peak in sales and store count in 2015. Weiss retired that same year, and it was downhill from there. Offering high-end products at low prices stopped working. This hurt their ability to drive margins, a long-standing issue for Express.

Gross margins showed Express's performance over the years compared to competitors like American Eagle, H&M, and Abercrombie & Fitch. Express's products were less profitable. Mall traffic decreased, office settings became more casual, and athleisure became popular during the pandemic. Express’s stock price rebounded post-pandemic but didn't sustain. The problem was that it was making things people didn’t want to buy. It was outside of the trends, and its price point was off for the quality.

By October 2023, the company was buried in debt. Express struggled to pay its vendors on time at the end of 2023 into early 2024. This signaled issues, especially with fluctuations in vendor terms. From 2016 to 2022, Express's store count shrunk by about 15%. The remaining storefronts still cost the company hundreds of millions of dollars. Express was one of the top ten stores in terms of square footage in most malls. The New York Stock Exchange requires listed companies to maintain an average global market cap of at least $15 million over 30 consecutive trading days. Express failed to meet these standards and was delisted in March 2024. The company filed for bankruptcy the following month.

Bankruptcy can help retailers clean up their balance sheet and restructure. Express received a letter of intent from an investor group led by WHP Global. Express announced the closing of 95 stores on June 14th, 2024. The court approved a joint venture to acquire Express’s retail operations. The investor group includes Simon Property Group and Brookfield Properties, two large mall operators. Owning Express stores allows them to decide to keep them open even if they aren't making much money. Express still drives traffic and sells $1 billion in product.

Success going forward depends on key decisions: becoming either a fast fashion company or a fashion company. If a fashion company, they should cut back on inventory and sell at higher prices. If a fast fashion company, they should focus on price and quality. Trying to do both doesn’t work in today’s world.