What Retailers Can Learn From Express’ Trip Through Bankruptcy
After a long decline and a quick trip through bankruptcy, Express is back on its feet.
The retailer closed on its deal to exit bankruptcy on Monday, ending a three-month stay in Chapter 11. The business is now owned by Phoenix Retail, a joint venture owned by brand management firm WHP Global, which already had a controlling stake in the brand name, and mall owners Simon Property Group and Brookfield Properties.
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When the $174 million deal was approved by the court this month, Yehuda Shmidman, chairman and chief executive officer of WHP Global, said it would save 7,000 jobs and 450 stores.
Ian Fredericks, president and chief operating officer of Hilco Consumer — Retail, had a front row seat to the often painful chapter that Express just ended, and said it offers lessons for other fashion companies navigating a tricky consumer landscape.
Hilco is perhaps best known for its business helping stores liquidate, but it offers a range of services that has it involved in the nitty gritty details that can make or break retail.
In 2017, Hilco was hired to wind down Express’ Canadian retail business, which included 15 to 20 stores.
Fredericks said the liquidation sales were “off the charts” successful.
“The Canadian consumer actually really liked Express,” he said. “They didn’t want Express to go away. The problem was they didn’t execute well, they didn’t treat that consumer appropriately in stores. Whatever they were doing, the consumer didn’t want to shop in their stores.”
On another assignment — focusing on Express’ clearance problem in Puerto Rico — Fredericks said the company’s “poor internal controls around allocation” were clear as the stores were stocking winter jackets, carrying the same mix as cold-weather stores.
“If you’re going to be successful in retail, you have to execute in your stores really well,” Fredericks said. “And what we proved over the years with Express was that they didn’t execute really well in their stores.”
Express isn’t alone.
Fredericks said that while e-commerce’s pandemic max had it accounting for only 25 percent of sales, retailers have had the investment equation backward and have funneled 75 percent of their investment dollars to the online business.
“They’ve overinvested in other areas [like e-commerce] and accessed the capital markets when they were frothy to invest in those other areas,” Fredericks said. “Now that they need to invest in stores, they don’t necessarily have the capital to do it.”