Express Management
Management criteria checks 2/4
We currently do not have sufficient information about the CEO.
Key information
Stewart Glendinning
Chief executive officer
US$2.9m
Total compensation
| CEO salary percentage | 18.33% |
| CEO tenure | 1.3yrs |
| CEO ownership | n/a |
| Management average tenure | 3yrs |
| Board average tenure | 8.3yrs |
Recent management updates
Recent updates
Seeking Alpha • Sep 10
A New CEO At Express, Inc. - But It May Not Be Enough To Save The Fashion Retailer
Summary CEO Tim Baxter is out and is being replaced by Stewart Glendinning from Tyson Foods. Express lost $11.29 per share in the latest quarter. A new $65 million FILO loan with an interest rate of SOFR+10% was announced on September 6. Express could be hurt by the new student loan repayment requirement. Read the full article on Seeking AlphaAnalysis Article • Sep 08
Is There Now An Opportunity In Express, Inc. (NYSE:EXPR)?
While Express, Inc. ( NYSE:EXPR ) might not be the most widely known stock at the moment, it saw significant share...Seeking Alpha • May 30
Fashion Retailer Express, Inc. Continues To Implode And I Worry It May Not Survive
Summary Fashion retailer Express, Inc. reported a significant decline in sales and negative operating cash flow of over $80.1 million for Q1 2023, raising concerns about its ability to survive. The company's deal with WHP Global could actually be considered an expensive loan. I rate Express, Inc. as a "sell" due to its poor financial performance and uncertain future. The annual minimum royalty payments are effectively very high interest payments that could have a significant negative impact on future cash flow. Read the full article on Seeking AlphaAnalysis Article • May 26
At US$0.65, Is Express, Inc. (NYSE:EXPR) Worth Looking At Closely?
Express, Inc. ( NYSE:EXPR ), is not the largest company out there, but it received a lot of attention from a...Seeking Alpha • Feb 26
Express Is Now Basically A Long-Dated Call Option
Summary Express has been facing a number of headwinds as consumers pull back on apparel spending. The WPH Global deal improves its balance sheet and gives it some options, but WPH is the real winner. At around $1, EXPR shares are basically a call option on a turnaround at this point. WHP Global is the real winner in its deal with Express (EXPR) given its IP JV, even though it overpaid for its stake in EXPR. However, the battered fashion retailer could still be worth a speculative bet. Company Profile EXPR is a fashion apparel retailer that sells women's and men's clothes, accessories, and related merchandise. The majority of its items are created by its in-house design team. Over 90% of its sales are of apparel, while under 10% is accessories. Women’s apparel represented 57% of sales in FY2022, with Men’s the remaining 43%. The company sells its apparel brand both online and through its own stores. Its stores are primarily located in shopping malls, lifestyle centers, outlet centers, and street locations. At the end of October, it had 351 retail stores and 202 outlet stores. Retail stores and e-commerce accounted for 72% of its sales through the first 9 months of FY23. Company Presentation The company launched the UpWest brand in 2019. UpWest is positioned as a lifestyle brand focused on comfort, offering casualwear, loungewear, and pajamas. The brand has 14 stores and a wholesale agreement with Nordstorm (JWN). Its items are generally manufactured in Asia. The company says it uses 70 vendors utilizing approximately 270 manufacturing facilities across 20 counties. EXPR also offers a private label credit card through Comenity Bank. The bank owns the credit card accounts and Alliance Data Systems services the customers. Opportunities EXPR’s biggest opportunities center around acquiring additional brands, licensing, and international expansion. In January, the company entered into a strategic partnership with global brand management firm WHP Global. Together the companies are expected to pursue acquisitions to expand EXPR's brand portfolio. The company believes that its omni-channel platform can help drive cost savings and margin expansion of an acquired company. As part of the agreement, WHP made a $25 million common equity PIPE investment in EXPR, taking a 7.4% ownership stake. The newly issued EXPR shares were issued at $4.60. EXPR received $260 million in gross proceeds from the sale. The two firms also formed an intellectual property [IP] joint venture intended to “scale the Express brand through new domestic category licensing and international expansion opportunities.” WHP will own 60% of the JV, with EXPR owning the other 40%. Company Presentation Commenting on the deal on its Q3 call, EXPR CEO Tim Baxter said: “We have entered into a mutually transformative strategic partnership with WHP Global, a leading brand management firm to advance our Express Way Forward strategy, scale our Express brand and accelerate the growth of our company through brand acquisitions. Through this partnership, we begin a bold new chapter, one that we expect will drive greater shareholder value. Let me talk you through the key components of this partnership. First, we will leverage our fully integrated omnichannel platform and operating expertise to acquire, operate and grow multiple fashion brands. Second, we will establish an intellectual property joint venture with WHP to scale the Express brand through category and global licensing expansion. And third, we will immediately strengthen our balance sheet with $260 million in gross proceeds from the WHP investment. When combined, we expect these components will lead to accelerated long-term profitable growth and increase shareholder value.” On the acquisition front, the company could buy a smaller brand that doesn’t have a huge online presence, take out corporate costs and integrate into it online infrastructure. EXPR also likely would have better sourcing scale that could help on the cost front. On the licensing front, the company plans to pursue opportunities to license its brand with international partners and in non-core categories. This is a common strategy among brands that will license its name to things such as fragrances, shoes, and eyewear. WHP is considered a licensing expert. The company could also license its stores to international partners. This is an inexpensive way to get into foreign markets, and using its brand awareness to generate additional revenue through royalty fees. An international licensee should also know local markets and trends better. Perhaps, the biggest benefit of the agreement, though, is that it strengthens EXPR's weak balance sheet through WHP's cash infusion. The company had over $230 million in debt at the end of Q3 and was burning cash, which is not a good combination for a retailer. Risks Despite the WPH deal, EXPR still faces a lot of risks. While the agreement gives the company a cash infusion, if it’s going to make an acquisition, it’s likely going to have to be in cash. Or the company could dilute shareholders through an equity offering to pay for it. Given its current stock price and current interest rates, neither is a great option. EXPR also is looking at some poor results in FY22, despite flat comps. The company noted a challenging macro environment and a highly promotional environment with deep discounts when it slightly lowered the mid-point of its full year guidance in January. It now expects a full-year EPS loss of -$1.18 to -$1.22 versus a prior forecast of -$1.12 to -$1.22. The macro environment, meanwhile, may just continue to get worse, as the Fed continues to hike rates and tech companies lay off workers. If the U.S. goes into recession, it won’t be good for a company like EXPR. EXPR also faces fashion risk, and it does have a history of not always being on trend. In Q3, the company admitted that it had some misses in its women business that impacted results. Management has previously said that there would always be some misses with fashion, but that it has a lot of hits as well. Inventory issues are another risk, and EXPR had nearly $40 million more in inventory at the end of FY023 than it did at the same period last year. Of course, elevated inventory leads to more discounted selling and margin pressure.Seeking Alpha • Jan 09
Express expects flat comp sales, provides 2022 outlook
Express Inc (NYSE:EXPR) said Monday it expects loss per share between $1.18 to $1.22 and comparable sales to be flat in 2022. The loss per share forecast excludes impact of $260 million in proceeds from WHP partnership expected to close January 2023, the company said. The Seeking Alpha consensus for 2022 EPS is -$1.20. “Reduced spending in discretionary categories and an increased appetite for deep discounts continued into the fourth quarter which negatively impacted our business," the company said in a statement.Seeking Alpha • Dec 14
Express: Transformative Investment From WHP Global
Summary Last week, Express announced a deal providing them with a $260m cash infusion. The market does not seem to fully understand or respect this transaction, as Express has sold off sharply after an initial bump. I see 10x upside for Express by 2024 if they can execute on their stated goals. On December 8th, Express (EXPR) announced a Strategic Partnership with WHP Global, which includes a $260M cash investment along the following terms: Express Deal Presentation This is a transformative deal for Express, repairing their balance sheet and helping grow their IP with an established partner. Optically, Express would take a $60m hit to operating income (the minimum annual royalty payment), but the Company benefits from negated interest expense ($10m+), and close to $20m of the royalties are returned via their 40% JV stake. Express's pro forma balance sheet was provided as follows: Express Deal Presentation Express will pre-fund FY23 minimum royalty payments of $60m, providing runway until Q1-24 before an actual cash impact to their earnings. Express has additional balance sheet tailwinds unaddressed in the above: A $52m tax refund is due from the IRS under the CARES Act. Express is carrying $423m of inventory at the end of Q3-22. They should work this down to ~$300m by the end of Q4, still higher than pre-Covid when they had a larger store base (607 in Feb-20, 558 expected in Feb-23). I expect this inventory normalization to be accompanied by a decrease in accounts payable, but still providing a positive cash contribution in Q4, and should be an additional source of cash in FY23. The "Accounts Payable to Inventory" ratio sits at a historic low, suggesting Express is not getting the vendor financing they previously enjoyed. Actually, I understand this is mostly due to stale inventory being worked through in Q4 that was already paid for, which should help this ratio recover in FY23. Express's 40% stake in the JV is being valued today at $160m based on the terms of the deal. I expect Express should finish Q4 with a net cash position prior to the tax refund. What Will it Take for This Deal to Work? Our friends over on Twitter, Clark Square and EagleFang, highlighted the type of deal WHP could land for Express to break even on the JV arrangement: $200M of international wholesale, run out of Express's owned inventory, would produce wholesale margins ($60-80m @ 30-40%) and pay net royalties of 8.5%*60%=5.1% ($10m) to the JV. Assume another 10% SG&A growth ($20m) to service this international business, and Express nets $60-80m - $10m - $20m = $30-50m of earnings growth, offsetting the 2% drag on operating income margins pre-deal. Without any incremental deals from WHP, Express would need the following in FY23 to break even on a cash flow basis: $2.0B of sales at 30% gross margin: $600m Gross Profit Less $575m SG&A Plus $60m D&A Less $50m CapEx Plus $10m Stock Compensation Less $40m net royalty (pre-funded) Less $5m interest on ABL No cash taxes Net $0 FCF This is almost exactly the current FY23 estimates for sales and margins, and a reasonably possible outcome as inventory should be less expensive in FY23 with lower inputs and freight, and discounting should cause less pressure without bloated inventory. I don't believe WHP would make this investment and sit on their hands, hopefully, they have deals already in mind. If they invest $260m and return ~$325m over the initial 10-year term (minimum royalty payments), it's not a very compelling investment assuming their average cost of capital should be higher than 6%. Howard Marks at Oaktree has sunk $350m equity (not debt) into WHP, a good sign of smart money being present. Additionally, the minimum royalty would complicate a bankruptcy process, as exiting many store leases would reduce topline sales and make the royalty less sustainable. WHP appears well-incentivized to support Express going forward. Despite product issues, Express consistently adjusted to trends, generating solid cash flow in every year prior to Covid. The company hired Tim Baxter to fix the business right before Covid, and he's laid out a plan (that got delayed a bit by Covid) to shift sales from malls to outlets and e-comm. Baxter's scenarios didn't anticipate WHP expanding international sales, but their FY24 target of mid-single digit operating margin leaves plenty of room for royalty payments to WHP, and Express has liquidity to pursue these targets. On $2.0B of sales, this would be $80m+ of operating margin before any benefit from international or payments into the JV. Lastly, Express is a Covid survivor. Their FY19 proxy identified a "peer group" of which, Tailored Brands, Ascena, and RTW Retailwinds filed for bankruptcy in 2020, as did J. Crew, J.C. Penney, True Religion, Brooks Brothers, Forever 21, Lucky Brand… the list goes on. Some, like Tailored Brands, announced the planned closing of up to 500 of their ~1,400 stores. Forever 21 filed in 2019 and has closed about 250 of their 790 locations since. The thinning out of peers gives Express more runway. Risks The main risks are (1) Express's ability to fix their core business, (2) a poor acquisition in the name of growth, or (3) macro conditions run them over. I hope you haven't read this far with the belief Express is a healthy risk-free investment. Rather, it is a brand with a new liquidity infusion to fix business issues that want to go do M&A. You need to believe in a basic level of execution for this investment to work. The most glaring business headwind has been fashion missteps in their women's segment. Conversely, their men's segment has posted six consecutive quarters of positive comps. Express will need to address their fashion misses to stop leakage in same-store sales. For other risks, feel free to peruse some negative takes from this past weekend's spirited Twitter discussion.Seeking Alpha • Dec 08
Express GAAP EPS of -$0.50 misses by $0.21, revenue of $434.15M misses by $17.62M
Express press release (NYSE:EXPR): Q3 GAAP EPS of -$0.50 misses by $0.21. Revenue of $434.15M (-8.0% Y/Y) misses by $17.62M. Comparable sales declined by 8%. Gross margin decreased by 540 basis points. FY2022 Outlook: Comparable sales of flat to up 1%; Gross margin rate to decrease approximately 150 basis points; SG&A expenses as a percent of sales to delever approximately 200 basis points; Net interest expense of $17 million; Effective tax rate essentially zero percent; Diluted loss per share of $1.12 to $1.22 vs. consensus of -$0.18; Capital expenditures of approximately $50 million; Inventory to move closer to parity with sales trends by the end of the year.Seeking Alpha • Sep 21
Express Is Suffering But May Recover
Summary EXPR is an American retailer with approximately 560 stores in the country. The company has an enormous operational leverage, and minimal variations in revenue make enormous difference in the bottom line. If the company’s revenues fall 6% below guidance in FY22, EXPR will likely have trouble paying for fixed expenses. Conversely, if the company’s revenues are 2% above guidance, EXPR could generate $10 million in FCF. The situation can be interesting for the speculator but not for the long-term investor. Express (EXPR) is an American apparel retailer with approximately 560 stores in the country. The company became a meme stock in 2021 and has fallen 85% from its June 2021 high. EXPR has been posting accounting losses but is now at revenue levels similar to those generated in 2019. Additionally, EXPR is generating more cash than its accounting losses suggest, because of higher depreciation than capital expenditures. EXPR is heavily leveraged, with a term loan and a credit facility for a total of $200 million maturing in May 2024. The company also has operational leverage, generated by its mandatory lease and payroll payments. In my opinion, EXPR could also improve its SG&A expenses, which seem too high. Coupled with a cyclical industry like apparel retailing, EXPR seems a risky proposition for an uncertain economic context. I show with a financial model that the difference between EXPR failing to pay its fixed charges or generating a $10m free cash flow is as little as 10% revenue. However, in a more positive economic context, EXPR can become an interesting company to own for the long term if its stock's price remains depressed. Note: Unless otherwise stated, all information has been obtained from EXPR's filings with the SEC. Industry characteristics In terms of customers, apparel retailing is an industry where some companies can build a moat while others have to compete on a more commoditized basis. Depending on how much the company builds a brand, its products will seem either special or common to customers. In my opinion, EXPR seems to position itself closer to the commoditized spectrum. There are several data pieces pointing in that direction. First, the company mentions on its 10-K report that it offers a value proposition to customers. It also mentions that it follows trends rather than creating them and that it uses the services of purchase agents instead of designing its product in-house. Second, its advertising expenditures are low compared to revenue, representing approximately 5% of sales. Third, 200 out of 560 stores are outlet stores. Finally, a quick google search for 'Is Express clothing expensive' shows that most forum participants find it either cheap or value priced and that the company is constantly offering discounts on its products. On the supply side, EXPR is a price taker. The company has no manufacturing facilities. Rather, the company purchases products from 70 vendors, mostly in Asia and Latin America, and outsources its logistics to third parties. In this respect, EXPR may have some bargaining power, but not too much. It may be able to obtain better pricing on volume but nothing that deviates from what the same vendors can obtain from other customers. In terms of its sales structure, EXPR faces competitive and commoditized markets, also being a price taker. For its stores, all of which are leased, the company has to pay a price that is determined by supply and demand in each particular location. The company's employees are not particularly qualified, and their bargaining power will vary depending on how constrained labor supply is in general. This all signifies to me that EXPR will compete on the basis of cost and that a significant portion of costs will not be under its control but will rather be determined at the market level (merchandise, rents and wages). Finally, the apparel industry is cyclical. If disposable income falls, people will purchase less clothing. It is true however that apparel may be positively influenced by substitution forces as well. In plain terms, this means that when the customer's income falls, apparel consumption may fall less than other discretionary goods because apparel absorbs the income previously used in more expensive consumptions. As an example, if someone is marginally unable or unwilling to buy a new car or go on vacation this year, that person's disposable income for apparel actually increases. That consumer might even be more motivated than before to purchase apparel, or to go to restaurants (discretionary but less costly consumptions) in order to compensate for the foregone pleasures. Express' operations and cost structure Express participates in the relatively commoditized end of its industry, and most of its costs are not under its control. This means that in order to be profitable, the company has to squeeze pieces of margin from everywhere it can but particularly from costs under its control. I cannot say that I am happy with the results of analyzing EXPR's cost structure. At the merchandise level the company does relatively well, but at the SG&A level its expenses are high. EXPR has had an average gross profit margin of 30%. However, the company recognizes store lease costs on Cost of Goods Sold. I think this is incorrect, because these costs are related to sales and because they are fixed while CoGS should concentrate on the variable portion of costs. As the second chart below shows, a year of store rent payments (proxied through current capital lease obligations) has generally been around 15% of CoGS. This means that after removing lease costs, EXPR's gross profit margin is closer to 40%. Data by YCharts This margin is high, also taking into consideration that it includes all inbound and outbound logistic costs, deposit costs and all purchasing, designing and sourcing costs. EXPR's problem appears at the SG&A level. The company has averaged $550 million in SG&A expenses for the past 10 years, unable to generate more profits by reducing these expenses, not even in the face of the pandemic. SG&A expenses are composed mostly of corporate, store personnel payroll and advertising. The company spends about $130 million in advertising, leaving $420 million for payroll and corporate expenses. Considering the company has 3 thousand full-time workers and 7 thousand part-time workers, we arrive at an approximate average salary of $65 thousand a year ($420 million over 6.5 thousand full-time equivalent workers). That comes to an average of $30 an hour. You can do your own numbers with this calculator. I do not think that EXPR is paying so much to its workers. In fact, a quick search in Indeed shows that the company pays between $8 and $15 an hour to its salespeople. The calculation above had the intention to show that EXPR's SG&A expenses could improve a lot. The company is probably spending too much at the corporate level. However, even although EXPR could improve at the SG&A level, it has still sustained positive operating income for most of its operating history. This can be seen in the first chart below. The company did post losses in 2019, 2020 and 2021. However, in 2020 and 2021 it was under the effect of the pandemic. This can be considered a one-time in a century. In 2019, EXPR recognized $197 million in trademark impairments. This impairment was triggered by the fall of its stock's price according to the company's 10-K for FY19, but I also believe it is related to the incorporation of a new CEO in 2019, that could then start with a clean sheet. Data by YCharts Regarding cash flows, the company has also been positive for the most part. As the second chart above shows, before changes in working capital, the company has been able to post CFO higher than its operating income. This means the company is able to convert operating profits into cash. CFO before working capital is higher than operating profits because the company depreciates PP&E at a rate of around $70 million but has consistently invested less than that. This can be seen in the chart below. Data by YCharts Finally, and before moving to the financing portion, we can comment on EXPR's seasonality. The company usually has higher operating income in the second half compared to the first half of the year, because of the holiday season. This is also seen at the working capital level below. The company increases working capital (negative below) in Q1 and Q2, and recovers most of that investment in Q4. Data by YCharts Express' finances Like most retailers, EXPR got hit hard during the pandemic. The company posted $450 million in operating losses in FY20. These losses ate most of EXPR's cash reserves and pushed the company into debt. Before the pandemic, in FY19, the company had $200 million in cash reserves and no debt. After the pandemic, in FY20, the company had $50 million in cash and $200 million in financial debts. Again, this is understandable, given that the pandemic was a one-time event that no one could forecast. The company had built a cash reserve before the pandemic, but it proved insufficient. EXPR used two sources of debt. First, a currently open credit facility for $250 million that pays 2% + LIBOR. Second, two-term loans, for $90 and $50 million respectively, paying much higher interest rates, 7% + LIBOR. The credit facility has to be repaid first and can be drawn again, while the term loans have to be paid after the credit facility and cannot be redrawn. This is inconvenient because both term loans pay a much higher interest rate. Both the credit facility and the term loans mature in May 2024. In my opinion, after the pandemic, EXPR is in a tight situation. The company has to finance its working capital requirements during the first half of the year. This is aggravated by supply chain bottlenecks that push companies into bullwhip mode, ordering more in advance to stock and hold. The company cannot issue shares without diluting current shareholders because the share price is too low. To give an example, if EXPR had financed its 1H22 working capital requirements ($70 million) by issuing shares, it would have doubled its share count. Therefore the company is pushed into drawing from the credit facility in the first half of the year, and to repay in the second half. The term loans' covenants require the company to repay the credit facility first and only then pay the term loans that yield higher interest. As of 2Q22, EXPR has $100 million drawn from the term loans and $100 million drawn from the credit facility. With LIBOR at 3%, these debts generate yearly interests of $10 million and $5 million, respectively. The bearish thesis Adding EXPR's delicate financial situation, it needs to borrow for working capital months before it can sell the finished products. With the fears of an imminent recession and the apparel industry's characteristic cyclicality, it is easy to understand the bearish viewpoint. If EXPR cannot sell its inventory during this fall season, then it may not be able to pay interest due, and it will not be able to borrow for the next season. Therefore, I think the best is to model EXPR's cost structure and find out what would be needed for the company to fail on its obligations. First we start with the assumptions. As mentioned, if we subtract $200 million of yearly lease payments from CoGS, we find that EXPR's historic gross margins are close to 40%. On the expense side, we start with $200 million in lease payments. On top of that, we add $585 million in SG&A expenses (this figure is higher than the historical $550 million average but it was the guidance provided by EXPR's management on 2Q22). From the financing side, EXPR has to pay $15 million in interest charges. Finally, on a cash basis, we need to subtract $60 million from depreciation. Those fixed charges add to $740 million. Considering a 40% gross profit margin, EXPR has to generate revenues of $1.85 billion in FY22 to break even (on a cash basis, generating an accounting loss of $60 million).Analysis Article • Sep 09
Express' (NYSE:EXPR) Earnings Are Of Questionable Quality
Express, Inc. ( NYSE:EXPR ) announced strong profits, but the stock was stagnant. Our analysis suggests that...Seeking Alpha • Aug 30
Express Q2 2023 Earnings Preview
Express (NYSE:EXPR) is scheduled to announce Q2 earnings results on Wednesday, August 31st, before market open. The consensus EPS Estimate is $0.09 (+350.0% Y/Y) and the consensus Revenue Estimate is $479.62M (+4.8% Y/Y). Over the last 2 years, EXPR has beaten EPS estimates 50% of the time and has beaten revenue estimates 63% of the time.Analysis Article • Jul 27
Express' (NYSE:EXPR) Returns On Capital Not Reflecting Well On The Business
If we're looking to avoid a business that is in decline, what are the trends that can warn us ahead of time? More often...Seeking Alpha • Jul 19
Express, Inc.: A Former Meme Stock Could Be Headed Into Serious Trouble In A Recession
Their vendors seem to be requiring stricter financing terms as the percentage of inventories financed by accounts payable drops sharply. Express reported stronger results in their latest quarter, but still had an $11.9 million loss. It is unclear when or even if they will receive the much-needed $52 million cash under the CARES Act. There is a serious risk that their inventory level is too high, given we are in the beginning of a major recession. Express, Inc. (EXPR) has been a meme stock a few times over the last eighteen months and could become a casualty of the developing recession. This leveraged apparel retailer sells fashion mostly to thin and "woke" women and men with significant disposable incomes in the 18-30 age group, who could become much more practicable in their purchases during a much weaker economic period. I think it is much less likely that some guy will buy a slim apricot colored or a slime green striped suit when he is worried about keeping his job. Since they are highly leveraged, Express can't afford to be wrong on their merchandise and with their vendors becoming much more restrictive in financing, they could be in serious financial trouble in 2023, especially if they do not receive the $52 million cash under the CARES Act. Saved By Sycamore Partners and CARES Act Many retailers, including Express, were struggling even before the pandemic, but at least Express was able to stay out of bankruptcy court. They received $140 million life-line financing in early 2021 from Sycamore Partners, who tried to buy JC Penney in 2020 and currently owns a long list of retailers such as The Limited and Stables. This hedge fund often "loans to own". Without funding from the federal CARES Act (See below), it is unlikely that Sycamore would have provided the much-needed cash and Express would have been in bankruptcy court in late 2020 or early 2021. Five-Year Stock Price Data by YCharts Burning Cash Express has been burning cash this year, and it could become a very serious problem if the economy stays in a prolonged and deep recession. They used $75.879 million cash for operations in 1Q 2022, which was financed by a net $80 million increase borrowing under the revolving credit facility. A key metric I look at in retail is the percent of inventories financed by accounts payables. A decrease in this percent figure often indicates that vendors are becoming stricter in their financing terms because they view that customer as being at higher risk for non-payment. Using their April 30, 2022 balance sheet, 48.8% of their inventories were financed by accounts payables, which is down from 66.0% on January 29, 2022 and down from 60.0% on May 1, 2021. This, in my opinion, is a yellow flag that some of their 70 primary vendors are being stricter in their financing terms. I would expect that since the economic outlook has worsened over the last few months that there could be even more inventory financing problems going forward. If vendors do not finance, then Express may have to borrow additional cash to pay for inventories, which will have a negative impact on earnings and cash flow because of increased interest expenses. Or they could just have less merchandise to sell. Their much higher level of inventories compared to the same period last year might be great for Express or they could become a serious negative. Their inventories were up 40% in dollars and up 25% in the number of units at the end of their latest quarter. The positive is that you need more merchandise to sell to generate higher revenue. The downside is that if the economy drops sharply, they may get stuck with a huge amount of unsold inventory that would have to be deeply discounted to liquidate. I am not sure why they did not sell additional shares to raise needed cash when the stock price was bid up by meme traders. They had April 6, 2021 and June 3, 2021 filings with the SEC for an ATM selling of 15 million shares. Express needs additional cash to survive the recession, in my opinion. Express, Inc.'s Balance Sheet Express Balance Sheets (sec.gov) CARES Act Receivable Another problem that seems to be ignored by analysts during the quarterly conference calls is a $52 million receivable from the federal government under the CARES Act. In December 2020 management stated that they expected to receive $95 million from the CARES Act in 2Q 2021. They received about $60 million in 2021 ($43.3 million and $13.7 million related to 2020 and 2019 income tax returns, respectively, and $3.0 million related to the employee retention credit), but they have since carried $52 million as an income tax receivable. During their March 9, 2022 conference call, management stated they expected to receive the $52 million cash in 3Q 2022. The latest comment, however, from management is they now expect to receive the $52 million in 2023, and now they do not even show the receivable as a current asset on their balance sheet - it is carried under long-term assets. I am not sure if the problem of receiving the cash is because of the complexity of the CARES Act or because the IRS is interrupting the Act differently than the way Express is figuring the amount they are owed. What is bothersome is that according to a statement in their 10-K: "The Company is currently under audit for refund claims related to the carryback of U.S. federal net operating losses as a result of CARES Act". Express needs the $52 million cash to survive a recession, in my opinion. Very Risky Operating Model The problem with Express is that it is not part of some deep-pocket organization because their retail business model is very risky and it is not able to depend on being helped when their operating model is negatively impacted. Their target customers are thin, woke, middle-income 20-30 males (43% of apparel sales) and females (57% of apparel sales). (I actually think it is 18-30, but that is beyond the scope of this article.) Many of their items for males are "extra slim" or "slim" and they do also offer some "classic" fit, but nothing for those males with a few "extra" pounds. On the female side, in order to be "politically correct", they do offer some items for women who do have some "extra" pounds, but most items are for females who are very careful with their weight. Their pricing versus quality is about right. I think the biggest issue is that too many items are too fashion/trendy oriented and are too often not something that can be worn frequently. Just how often can a guy wear a burgundy or pink suit? (I expect some readers will think - never.) The clothes are designed by Express and made overseas. This means that they are always slightly behind any new dynamic fashion change because of the long time lag between designing and the stores actually receiving the item. Revenue from Express was $1.339 billion in 2021, and revenue from Express Outlet was $482 million. I feel there is a real risk that consumers could at some point consider Express just some discount/outlet brand because over 35% of their stores are just outlets (342 Express and 202 Outlet stores). This would have a negative impact on their brand's image. Besides having a limited body type and age group target market, Express is very social media and woke-focused. They frequently mention their fashion influencers and social media discussions about Express as part of their marketing model. I consider that there is a credible risk that social media ends up effectively controlling too much of their business model and not management/board of directors making rational business decisions. Management has to be careful to continuously conform to the current "woke" social media culture or risk being "cancelled", in my opinion, because their business model relies so heavily on fashion influencers with very large followings. Express may consider these influencers as assets, but the reality is there is a potential downside. In addition, their current business model risks further alienating a larger number of potential customers by integrating their social/political opinions in their business model. There are many thin young potential customers who have more traditional/conservative values who can afford to buy some of their more traditional styled/colored apparel. Latest Results As can be seen from the latest income statement below, Express had a stronger 1Q, but still reported a loss of $11.9 million. I assume that this improvement was partially from customers buying some business and business casual apparel as more workers return to their offices. Some may not have bought much business apparel since before the pandemic and now realize that they need fresh new trendy clothes to wear to work. For example, men's suit sales were up 78% for the quarter.Analysis Article • Jun 01
At US$2.97, Is It Time To Put Express, Inc. (NYSE:EXPR) On Your Watch List?
Express, Inc. ( NYSE:EXPR ), might not be a large cap stock, but it led the NYSE gainers with a relatively large price...Seeking Alpha • Apr 06
Express: The Ecommerce Business Model Could Make The Stock Price Spike Up
Express presents its business as a multichannel apparel and accessories brand. In my opinion, with new good designs, more stores promised, and better omnichannel customer experience, future free cash flow should trend north. With much more inventory than in January 2021, once management sells the accumulated inventory, we may see a small increase in revenue.Analysis Article • Apr 06
These 4 Measures Indicate That Express (NYSE:EXPR) Is Using Debt Extensively
Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it seems the smart money knows that...CEO Compensation Analysis
| Date | Total Compensation | Salary | Company Earnings |
|---|---|---|---|
| Feb 03 2024 | n/a | n/a | -US$209m |
Compensation vs Market: Stewart's total compensation ($USD2.86M) is above average for companies of similar size in the US market ($USD649.25K).
Compensation vs Earnings: Insufficient data to compare Stewart's compensation with company performance.
CEO
Stewart Glendinning (59 yo)
1.3yrs
Tenure
US$2,860,593
Compensation
Mr. Stewart F. Glendinning is Chief Executive Officer and Director of Express, Inc. from September 15, 2023. He has been an Independent Director at The North West Company Inc. since November 7, 2014. Mr. G...
Leadership Team
| Name | Position | Tenure | Compensation | Ownership |
|---|---|---|---|---|
| CEO & Director | 1.3yrs | US$2.86m | no data | |
| CFO, Treasurer and Senior VP of Brand Finance | 1.2yrs | US$2.02m | 0.071% $ 0.5 | |
| Executive VP & Chief Marketing Officer | 5.3yrs | US$941.60k | 0.23% $ 1.7 | |
| Director of Communications | no data | no data | no data | |
| Senior VP & Chief Human Resources Officer | 4.8yrs | no data | no data |
3.0yrs
Average Tenure
48yo
Average Age
Experienced Management: EXPR.Q's management team is considered experienced (3 years average tenure).
Board Members
| Name | Position | Tenure | Compensation | Ownership |
|---|---|---|---|---|
| CEO & Director | 1.3yrs | US$2.86m | no data | |
| Director | less than a year | no data | no data | |
| Independent Director | 8.2yrs | US$110.00k | 0.20% $ 1.5 | |
| Independent Chairman | 14.4yrs | US$200.00k | 0.32% $ 2.4 | |
| Independent Director | 13yrs | US$110.00k | 0.24% $ 1.8 | |
| Independent Director | 12.9yrs | US$90.00k | 0.24% $ 1.8 | |
| Independent Director | 8.4yrs | US$90.00k | 0.21% $ 1.5 | |
| Independent Director | 2.1yrs | US$90.00k | 0.013% $ 0.1 |
8.3yrs
Average Tenure
64.5yo
Average Age
Experienced Board: EXPR.Q's board of directors are considered experienced (8.3 years average tenure).
Company Analysis and Financial Data Status
| Data | Last Updated (UTC time) |
|---|---|
| Company Analysis | 2025/01/02 15:07 |
| End of Day Share Price | 2024/12/31 00:00 |
| Earnings | 2024/02/03 |
| Annual Earnings | 2024/02/03 |
Data Sources
The data used in our company analysis is from S&P Global Market Intelligence LLC. The following data is used in our analysis model to generate this report. Data is normalised which can introduce a delay from the source being available.
| Package | Data | Timeframe | Example US Source * |
|---|---|---|---|
| Company Financials | 10 years |
| |
| Analyst Consensus Estimates | +3 years |
|
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| Market Prices | 30 years |
| |
| Ownership | 10 years |
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| Management | 10 years |
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| Key Developments | 10 years |
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* Example for US securities, for non-US equivalent regulatory forms and sources are used.
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more.
Analysis Model and Snowflake
Details of the analysis model used to generate this report is available on our Github page, we also have guides on how to use our reports and tutorials on Youtube.
Learn about the world class team who designed and built the Simply Wall St analysis model.
Industry and Sector Metrics
Our industry and section metrics are calculated every 6 hours by Simply Wall St, details of our process are available on Github.
Analyst Sources
Express, Inc. is covered by 25 analysts. 0 of those analysts submitted the estimates of revenue or earnings used as inputs to our report. Analysts submissions are updated throughout the day.
| Analyst | Institution |
|---|---|
| Stacy Pak | Barclays |
| John Morris | BMO Capital Markets Equity Research |
| Lorraine Corrine Hutchinson | BofA Global Research |