Express reveals new corporate strategy, to close 100 stores by 2022
Express Inc. revealed it plans to close approximately 100 stores by 2022, in a newly announced corporate strategy -- 'The Expressway Forward'.
The company said the closings will include nine stores that have already closed in 2019, 31 stores by the end of January 2020, and an additional 35 by the end of January 2021.
The company expects the net impact to sales to be a reduction of $90 million by 2022. Express said the reduction is offset by the elimination of the fixed operating costs of the closed stores and leveraging the remaining stores’ and online infrastructure for additional sales, which it expects to result in a $15 million annualized increase in EBITDA by 2022.
“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.
“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 announcement is the newest development from the company since it revealed its plans to restructure its corporate workforce earlier this month.
For its 2019 fourth quarter guidance, the company said its comparable sales are expected to be approximately down 3%, while adjusted net income is expected to be in the range of $11 to $12.5 million and adjusted diluted earnings per share to be in the range of $0.17 to $0.19.
The company further announced that it expects to have approximately $200 million in cash on hand by the end of fiscal 2019, and that it has identified $80 million in annualized cost reduction opportunities expected to be realized over the next three years. Some $25 million of the $80 million is expected to be driven by process improvements, inventory optimization and systems implementations associated with its go-to-market transformation.
As Express pursues a long-term goal to increase free cash flow from approximately $50 million in 2019 to $90 to $110 million by 2022, the company expects to spend between approximately $50 and $60 million in capital expenditures each year to fund technology investments, ongoing maintenance of technology platforms, enhance customer facing e-commerce capabilities, and refresh stores to ensure consistent representation of the brand across the entire fleet.
Express is expected to report fourth-quarter and full-year 2019 results during the week of March 9, 2020.
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