Fashion retailer Express Inc. has hired investment bank Lazard Frères & Co. to help raise enough financing to carry the company through the Covid-19 pandemic, CEO Timothy Baxter said.
The Columbus, Ohio-based workwear retailer is looking to solidify its finances, Mr. Baxter said. He said Express isn’t considering bankruptcy “and continues to take decisive and appropriate action to manage liquidity throughout this prolonged pandemic.”
With so many Americans working from home, the pandemic has dealt a harsh blow to Express and other retailers focused on apparel designed for the office. The company is looking to add to its cash reserves to stay afloat until enough of the U.S. population is vaccinated against the coronavirus to allow for a resumption of in-person shopping and office work, according to people familiar with the matter. Without the additional financing, which could come in the form of a first-in-last-out facility, the company could face a cash crunch, the people said.
Mr. Baxter said Express “has several possible options to enhance liquidity as it moves into 2021.” Earlier this month, the company reported a 30% decline in comparable sales last quarter and said it would cut 10% of its corporate staff to help conserve cash.
Stuck-at-home consumers are spending more of their money on leisure and workout clothes, said Burt Flickinger, managing director of Strategic Resources Group, a consulting firm focused on retail and consumer companies.
“Express hasn’t really connected with the consumer in terms of athleisure and denim,” Mr. Flickinger said. “While their competitors are also down, they are already stabilizing and rebounding.”
A number of retailers focused on workwear have filed for bankruptcy in recent months. Brooks Brothers Group Inc., Men’s Wearhouse and Jos. A Bank owner Tailored Brands Inc., and Ann Taylor parent Ascena Retail Group Inc. all filed for bankruptcy after pandemic restrictions curtailed office work.
Express, which has seen its sales erode for years, launched a turnaround plan in January, just before the pandemic forced most nonessential retailers to close down temporarily. The company said at the time it intended to close about 100 of its more than 600 stores by 2022.
Even with a number of cost-cutting measures in place, the company has said its cash balance declined to just above $100 million at the end of October from more than $270 million in early May.
The chain reported $322 million in net sales during the third quarter of this year, a 34% decline compared with the same period in 2019. During the quarter, net losses widened to $90 million from a loss of more than $3 million for the same period last year.
Write to Soma Biswas at [email protected]
