Thursday, May 13, 2021

Will Express, Inc. (EXPR) Stock Prices Trend Upwards as Company Addresses its Liquidity Woes?

Express, Inc. (EXPR) stock prices are up a marginal 1.9% as of market close on April 26th 2021, bringing the price per share up to USD$3.21 at the end of the trading day. EXPR stock was up 2.80% in after-market trading.


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Financial Reports Ravaged by Pandemic

In the announcement of their financial reports for the year 2020, EXPR indicated a 29% decrease in Q4 2020 consolidated net sales of USD$430.3 million as compared to the same time period of the previous year. The company also saw a 28% decrease in comparable retail sales from both their physical and online establishments in Q4 2020 as compared to Q4 2019. Gross margin came out to 16.6% of net sales, down from the 27% reported in Q4 2019. The suffering of sales can largely be attributed to the effect of the pandemic and consequent government health regulations and restrictions.

Illiquidity Concerns


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The severe reduction in cash and cash equivalents reported at the end of 2020 at USD$55.9 million from the USD$207.1 million at the end of 2019 is largely attributable to limitations imposed by the terms of the company’s credit facilities. EXPR reported USD$192 million in long-term debt at the end of 2020.

Financing Options for EXPR

EXPR announced its entering into a definitive loan agreement with Sycamore Partners, Wells Fargo, and Bank of America Merrill Lynch on January 14th, 2021. With Sycamore Partner as the lead lenders, EXPR will consolidate its liquidity position by USD$140 million as a result of the agreement. Of the total amount, USD$90 million will be in the form of a FILO Term Loan with May 24th, 2024 being the agreed-upon maturation date, while the other USD$50 million will be a Delayed Draw Term.

Poised to Leverage Extensive Generated Capital

In conjunction with the existing USD$250 million revolving credit facility, EXPR finds itself striving for liquidity to sustain itself over the course of 2021. Of the USD$250 million, the company took out a tranche of USD$106.1 million at the end of the fiscal year 2020. As of January 30th, 2021, the company’s net outstanding amount was USD$196.1 million under the company’s credit facilities. An additional USD$35.6 was available from the revolving credit facility.

Other Measure to Improve Liquidity

As the devastating effects of the onset of the pandemic took hold and tightened their grip over time, EXPR managed to improve its liquidity by negotiating USD$50 million in rent abatements, USD$25 million in rent reductions, and USD$10 million in rent deferrals. The pandemic has seen the company push towards e-commerce as online platforms increasingly become consumers’ outlet of choice, with details of their transitionary strategy expected in Q2 2021.

Future Outlook for EXPR

The pandemic has severely affected EXPR’s financials over the course of the year, but the company is taking the steps to ensure it can adapt as government mandated restrictions loosen up. The generation of capital in tandem with reductions in overhead costs could signal an era of growth ahead of the company, especially in light of its transition to e-commerce. Investors hope the promising liquidity position will provide the company with the leverage to succeed in the e-commerce space, thus increasing shareholder value.

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