Express has announced that it expects to close approximately 100 stores by 2022. This includes nine stores that have already closed in 2019, 31 by the end of January 2020, and an additional 35 by the end of January 2021.
The company says it expects the net impact on sales from these store closures to be a reduction of $90 million by 2022. This reduction is expected to be offset by the elimination of the fixed operating costs of the closed stores and leveraging the remaining stores’ and online infrastructure for additional sales.
Express has also identified $80 million in annualized cost reduction opportunities expected to be realized over the next three years. Of this, $25 million will be driven by process improvements, inventory optimization and systems implementations associated with its go-to-market transformation. The other $55 million of expense reductions will be driven mainly by a workforce restructuring.
The restructure impacts approximately 10 percent of the positions in the company’s Columbus, Ohio headquarters and its design studio in New York City. In addition, the field leadership team is also being reorganized to ensure the stores are operating in the most efficient manner while enhancing the level of service offered to Express customers. The company is providing impacted associates with severance pay and benefits continuation.
“Our expected results show the third consecutive quarter of sequential improvement in our comp sales trends. I am encouraged that the new initiatives we have put in place are resonating with our customers,” said Tim Baxter, chief executive officer at Express. “Today we are unveiling our new corporate strategy, called The EXPRESSway Forward, and we are focused on profitable growth. My expectation is that we will return to a mid-single-digit operating margin through a combination of low-single-digit comp sales growth, margin expansion, and cost reductions. This will, of course, take some time, but we have a clear path.”
The retailer’s new “EXPRESSway Forward” outlines key initiatives based on the company’s four foundational pillars of product, brand, customer, and execution, as represented by the company’s ticker symbol, EXPR.
Under this plan, the company proposes to relaunch its loyalty program and private label credit card in fall 2020, create operational efficiency across the organization, offer curated merchandise assortments through “The Express Edit”, and unveil a new brand purpose of “Dream Big. Dress Accordingly.”