Express’s transformation story continues.
The men’s and women’s apparel and accessories retailer, which includes the Express and UpWest brands, revealed quarterly and full-year earnings Wednesday before the market opened, improving on top-line sales and narrowing losses thanks to strength across every category and channel. The firm raised its full-year outlook as a result.
“We are winning across the board,” Tim Baxter, chief executive officer at Express, told WWD in an exclusive interview. “I attribute that success to the power of our Express Way Forward strategy and our intense focus on our four foundational pillars — product, brand, customer and execution — and, our incredible team of people. The styling community has also played a really key role in advancing our strategy.”
Broken down, total sales increased 30 percent to more than $450 million during the three-month period ending April 30, up from roughly $346 million during 2021’s first quarter.
Total comparable retail sales, which includes both Express stores and its related e-commerce businesses, grew 31 percent during the quarter, year-over-year. Comparable outlet store sales increased 30 percent during the quarter, year-over-year. Baxter added that there was double-digit comp growth in every major category and channel during the quarter.
Some examples include men’s suits (up 78 percent in the last three months, year-over-year), women’s jackets (which surged 117 percent), and men’s essentials, such as knit polos (an increase of 78 percent during the quarter.)
“Modern tailoring in both men’s and women’s has seen an incredible resurgence,” Baxter said. “Those are categories that we have long been known for and we’re experiencing incredible success there.
“But we’re also winning in categories like denim,” he added. Comp sales in both men’s and women’s denim rose 23 percent during the quarter, while Express’ Body Contour category had its biggest quarter to date with $23 million in sales.
“We’re delivering incredible product that is both versatile and trend right at incredibly compelling values,” Baxter explained. “And by value, I don’t mean promotional. Our average unit retail was once again up over 20 percent.”
By channel, performance improved both online and in stores. In the latter, sales in retail increased 45 percent during the February-through-April timeframe, while outlet locations rose 31 percent.
“Obviously that growth was outsized in our retail stores and the outlets in the first quarter as we were lapping sort of the tail end of closures and COVID[-19] restrictions last year in the first quarter,” the CEO said. “We will see that growth moderate as we move through the back half of the year.”
Meanwhile, e-commerce demand (which the company defines as gross sales from the online and app businesses, excluding products returned to stores) also grew during the quarter, up 21 percent, year-over-year. Baxter said the firm is still on track to achieve its goal of $1 billion in revenues in the e-commerce channel by 2024.
Express narrowed its losses to $11.9 million, down from $45.7 million a year ago, as a result.
“The incredible results that we achieved in the first quarter and the momentum of the business in the second quarter has given me the confidence to actually increase our outlook for the year,” Baxter said.
The retailer anticipates current quarter comparable sales will increase in the mid-single-digit range, compared with last year’s second quarter. The company is now also expecting comparable sales for the full 2022 fiscal year to increase between 8 percent and 10 percent, up from previous estimates of 7 percent to 9 percent.
“That’s a significant departure from what we’ve seen in the last week from many of our competitors,” Baxter said. “We are clearly facing the same challenges that all of our competitors are facing: inflationary pressures, labor shortages, supply chain challenges. But we have been able to mitigate those challenges as well.
“Part of my confidence comes in how well we as an organization have been able to respond to those challenges. How well we have been able to advance our shipments, to be sure we had the product when we needed it and where we needed it and we have continued to do that,” he continued. “I am very confident that we have mitigated the vast majority of those challenges for the balance of the year and that we’re going to continue to be very well positioned to capitalize on consumer demand. And we did that while incurring significantly less expense than many of our peers. We had said that we would incur about $7 million of expense in the first quarter — related to the ongoing supply chain challenges — and we came in at about $6 million.”
Baxter did acknowledge, however, inventory levels (currently up 40 percent, year-over-year) as a headwind.
“That is primarily a function of pulling forward our receipts, to ensure that we would have them in time,” he explained. “As we move through the year, our inventory levels will come down to be in much greater parity with our sales trend.”
The news of Express’ better-than-expected results come just a day after Abercrombie & Fitch revealed massive losses thanks to rising costs, causing company shares to plunge 30 percent during Tuesday’s trading session. Shares of mass-channel merchants Target and Walmart also took a hit earlier this month after similar headwinds — such as rising gas prices, excessive inventory and higher prices along the supply chain — ate into their bottom-line profits. Express’ own shares fell 19.66 percent Tuesday to $2.37 apiece.
But Baxter said the nosedive was more a reflection of the overall retail industry than Express’ own quarterly performance.
“We’ll be able to continue to mitigate inflationary pressure, because we will be able to significantly drive higher average unit retails, because of the quality of the product, the trend-right nature of our product and the fact that we sell fashion and consumers have an emotional connection to fashion,” Baxter said. “And the value in our product — even at increased ticket prices — the value of our product is still incredibly competitive in the market.”
Express ended the quarter with more than $37 million in cash and cash equivalents and more than $203 million in long-term debt. The retailer also has 561 brick-and-mortar stores, a combination of Express, Outlet, Express Edit and UpWest locations. Express’ stock is down approximately 40 percent, year-over-year.
FOR MORE FROM WWD.COM ON EXPRESS, SEE:
Express Narrows Losses, Grows E-commerce Business
Express CEO Tim Baxter Talks $13 Million Quarter and Navigating the Path Forward