Right from the runway is the Express way. Express operates more than 650 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 it operates online. The chain's international footprint is growing through franchise agreements in the Middle East and Latin America. The company launched in 1980.
Express sells through brick-and-mortar retail and outlet stores, an e-commerce operation, and franchises.
Express' brick-and-mortar stores generate about 80% of its total sales, while its e-commerce channel contributes the remaining 20% to total sales. By merchandise type, apparel makes up over 85% of the retailer's total sales, while accessories and other items makes up an additional 10% (leaving a small amount to "other revenue"). Women's merchandise account for over 60% of sales; men's merchandise makes up the remainder. The retailer has around 17,000 employees.
On a purchase order basis, the retailer sources its merchandise from some 110 vendors operating through 350 manufacturing facilities throughout the world (but mostly in Asia and South and Central America). The top five countries it sourced merchandise from, based on cost, were: China, Indonesia, Vietnam, Sri Lanka, and the Philippines.
Express operates over 650 stores and more than 100 factory outlet stores in 48 US states, the District of Columbia, Puerto Rico, and Canada. California, Texas, Florida, and New York are the retailer's major markets. Express has more than 15 locations in Canada. Overseas, franchisees operate 12 stores in Mexico and a handful of other Latin American countries.
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.
Net revenue has fluctuated within a small band in recent years.
In fiscal 2017 (ended January), net sales fell 7% to $2.2 billion due to challenging mall traffic trends, hefty markdowns on prices, and too much choice for customers. Comparable store sales fell 9%; excluding online, which grew 5%, they fell 12%. Express' e-commerce business grew due to improved website functionality and more targeted marketing.
Net income fell 51% to $57.4 million due to lower product margins and an increase in buying and occupancy costs as a percentage of net sales. Margins were hit by promotional markdowns.
Cash from operating activities decreased 19% to $186.7 million due to a poor business performance an bonus payouts in Q1. On the other hand, inventory balance fell due to better inventory management.
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 has been closing its traditional mall-located retail units in favor of factory outlet stores for the budget-conscious shopper. The move is also intended to lessen dependence of faltering mall traffic.
In fiscal 2017, Express opened 23 new factory outlet stores (of which four converted from retail stores) and closed 16 retail stores as part of a plan to close 50 retail stores. In fiscal 2018, the company expects to open 39 factory outlets (of which 20 converted) and close 10 retail stores.
Also to mitigate mall traffic weakness, the company is investing in e-commerce. In fiscal 2017, it transitioned its e-commerce fulfilment to a third party and saw an upswing in sales. The site benefited from improved navigation, search and category optimization, and mobile enhancements.
As part of its international growth strategy, Express exited its franchise agreements in the Middle East and South Africa to focus on the Americas. The company has 18 franchises in Latin America.
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.