Right from the runway is the Express way. Express operates nearly 640 stores throughout the US, Canada, and Puerto Rico that sell trendy private-label apparel and accessories targeted to men and women between the ages of 20 and 30. (The chain's fashions are styled to have an international influence and modern appeal.) The stores are located primarily in malls. Express also sells denim and lingerie and operates a growing online business. The chain's international footprint is growing through franchise agreements in the Middle East and Latin America. Launched by Limited Brands (later renamed L Brands) in 1980, Express was taken public in 2010 by the private equity firm Golden Gate Capital.
Express' brick-and-mortar stores generated about 82% of its total sales in fiscal 2015 (ended February 1, 2015), while its E-commerce channel contributed another 16% to total sales. By merchandise type, apparel made up 87% of the retailer's total sales, while accessories and other items made up an additional 11%. Women's merchandise made up 62% of sales, while men's merchandise made up the remainder. The retailer had 18,000 employees at the end of 2014.
On a purchase order basis, the retailer sources its merchandise from some 60 vendors operating through 285 manufacturing facilities out of 20 countries (mostly in Asia and South and Central America). The top five countries it sourced merchandise from in FY2015, based on cost, included: China, Indonesia, Vietnam, Sri Lanka, and the Philippines.
Express operates nearly 580 stores and 60 factory outlet stores in 47 US states, the District of Columbia, Puerto Rico, and Canada. California, Texas, Florida, and New York are major markets for the retail chain. The retailer has more than 15 locations in Canada. Overseas, franchisees operate about a dozen stores in the Middle East, nearly 20 in Mexico and a handful of other Latin American countries, and three stores in South Africa.
Sales and Marketing
Express relies on a variety of marketing vehicles to increase store traffic and build its brand. These include direct mail, e-mail, and in-store promotions, as well as print, TV, and digital advertising. It also makes use of mobile tactics and social networking sites.
The retailer has been boosting its advertising spend in recent years. It spent $104.6 million in FY2015 (ended January), up from $85.5 million and $83.2 million in fiscal years 2014 and 2013, respectively.
Express' annual sales have been slowly rising over the past few years with new store openings and an increase in e-commerce sales, though its annual profits have been declining with higher costs of sales, higher overhead costs, and increased advertising spending.
The retailer's revenue dipped 2% to $2.17 billion in fiscal 2015 (ended February) despite sales growth from its e-commerce channel, mostly due to a 5% decline in comparable store sales with lower transaction volumes and average dollar sales in retail stores. Its 41 new outlet store openings offset the decline by $60.3 million, though the retailer's existing stores continue to suffer from "a highly promotional retail landscape" and lower store traffic.
Lower revenue in FY2015 combined with higher sales costs and overhead expenses caused Express' net income to dive 41% to $68.33 million for the year. The retailer's operating cash levels fell 20% to $156.6 million on lower earnings and an increase in inventory levels.
Express is seeking to grow through a combination of new store openings, growth of its e-commerce operation, and improving sales and margins at existing stores. More recently, it's been closing more traditional stores in favor of opening more factory outlet stores for the budget-conscious in appropriate markets. Indeed, the retailer planned to close 22 retail stores in the US in 2015 (and 50 retail stores through 2017) while opening 35 new factory outlet stores in 2015.
With comparable sales (sales at stores open for more than one year) posting declines over the past few years, the retailer is looking to improve the performance of its go-to-market strategy, which is designed to reduce inventory risk and markdowns by offering a product assortment that's more appealing to customers. It also hopes to boost same-store sales with higher margins on merchandise, and continue building upon its growing E-commerce channel with investments information technology.
International growth is key to achieving the company's goal of becoming a successful global brand. To that end, it opened its first four stores in Latin America in fiscal 2013 and added four locations in the Middle East through franchisees. Looking to expand in Central and South America, Express in 2012 partnered with retail franchise operator, Fastco Commercial S.A., to open stores under the Express banner in 10 countries in the region. Alshaya Trading Co. is its development partner in the Middle East.
Investment firm FMR LLC owns about 11% of the company's shares.
Golden Gate Capital, which bought ailing Express from Limited Brands in 2007, took it public in an IPO worth about $272 million in 2010. The proceeds were used to reduce debt, which stood at $199 million at the end of January 2013 compared with $367 million in January 2011. The IPO followed years of pain for Express, which had closed more than 300 stores since 2005 amid declining sales. During that time it converted most of its remaining locations to a dual-gender format, which the company believes is more productive and profitable.