Express Inc.’s chief executive officer Tim Baxter is preparing for the post-pandemic world.
After more than a year of lockdowns and lounging at home in sweatpants, consumers are set to make their post-quarantine debuts. And the occasion-based apparel company is ready to capitalize on the moment.
“I have said that we would see a recovery in our business when people resumed attending occasions and started to get back into a more normalized work environment. And that is exactly what happened,” Baxter told WWD.
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“In the first quarter, our performance in states that had lifted all coronavirus restrictions, including masks — states like Texas — our performance in states like that was 10 percentage points better than in states that still had restrictions in place,” the CEO said. “And we’re seeing that play out now in the second quarter as well, as more and more states are lifting restrictions. And that is not just in stores, but online as well.
“We’re at the very beginning of this surge in occasion-based product,” Baxter continued. “We have seen an inflection point in all the more occasion-based categories. So the customer is clearly telling us that they want to get dressed up again, particularly when they have occasions or events to attend. I think the momentum will absolutely continue. The caveat, the one thing I would say is, I do think people are going to continue to want to be comfortable. I don’t think that is going to go away. So what we have done is build comfort into every one of our categories.”
A look from Express. Courtesy Photo
The updated assortment consists of more comfortable occasion wear (think men’s knit suits), along with basics, such as t-shirts. Baxter has said in the past that the retailer would consider expanding into new categories. But for now, product expansion is by way of the Express Marketplace, the company’s selection of third-party brands.
“We’ve taken a very curated approach to putting those categories in the Express Marketplace,” he explained. “We have gone after categories like swim and active, beauty, that are not core categories to us, but are complementary to us and our assortment and are obviously categories that our customers shop.”
Baxter wouldn’t comment on how much of the current business is digital, versus its brick-and-mortar business, but did say that the first quarter’s digital revenues increased more than 40 percent, compared with a year earlier.
“And that has accelerated after we saw that inflection point [during Easter],” he said. “Quarter-to-date we’re driving digital demand at plus-70 percent, compared with last year. So our focus on digital is paying off and we’re on track to achieve our goal.”
Inside the Express Edit store in Southlake Town Square, just outside of Dallas. Courtesy Photo
Meanwhile, the retailer said at the beginning of 2020 that it would close 100 stores, of which 93 have since shuttered.
“We’ll close the remainder and we will make decisions going forward based on what we see in a post-pandemic world,” said Baxter. “That being said, I still believe very strongly in the power and strength of brick-and-mortar. Going forward, we’re now talking about fleet optimization, which is really more about the size and location of stores and the role that the physical store will play in a consumers’ life post-pandemic. And I don’t think we understand that clearly yet. So we have a lot to learn.”
Outside the Express Edit store in Southlake Town Square in Texas. Courtesy Photo
Express ended the quarter with about 500 stores in the U.S. and Puerto Rico. But the retailer has also begun to roll out its Express Edit stores, smaller off-mall locations — fewer than 4,500 square feet — that include a mix of regional products and brand staples. The company plans to have 10 Edit stores by the end of the year, in places like Nashville, Dallas, Westport, Conn., and Washington, D.C.
“We are just beginning to learn what the performance of our stores will be with new product, a completely different product strategy and new marketing to support the product. So we have a lot to learn about the performance of the stores,” Baxter said. “It will really be a great test for us to be able to understand holistically what coming into a market with multiple Express Edit locations could do for us.
“The fact that two-thirds of leases are actionable in the next three years does give us that flexibility,” he continued. “We may close additional stores; we may not. To be determined. But we’ll be able to make really informed decisions about what we learn with these test stores.”
The Express Style Trial Rental Program has also experienced success at a time when consumers are once again starting to feel comfortable renting apparel.
Express continues to grow its men’s business. Courtesy Photo
“The real strategy of the Style Trial is customer acquisition,” Baxter said. “We more than doubled our women’s membership in the first quarter of the year and we’re exceeding our expectations in men’s. And over the next 18 months we expect to at least double our current membership level. It’s a great opportunity for people to try our products, to have consistent newness in their closets without the commitment of ownership.
“We’ve continued to make incredible progress on building a more modern, versatile assortment,” he continued. “Now our quarter-to-date performance in the second quarter is actually exceeding 2019 levels on a comparable basis.”
But Wall Street might need some more convincing. Shares of Express plunged more than 21 percent during Thursday’s pre-market hours. Still, Baxter remains optimistic.
“There are macro-economic uncertainties that are potential headwinds. We are still in a very uncertain environment,” he said. “But I expect that our business will continue to improve throughout the balance of the year, both from a top- and bottom-line perspective, in spite of those potential headwinds.”
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