Earnings call transcript Q1 2023

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Operator

Good morning. My name is Rob, and I will be your conference operator today. I would like to welcome everyone to the Express, Inc Conference Call to discuss our First Quarter 2023 Earnings. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be question and answer session. Instructions] [Operator

like of call ahead. Investor now Johnson, to hand President Vice Relations. to would over the Greg I Please go

Greg Johnson

you, acquisition to and conference morning results Global. and our Rob. the of XXXX in Thank earnings the partnership completion EXPR WHP joint first welcome quarter call Bonobos the discuss to webcast the announcement of of and Good with

and earnings in items reminding quarter safe XXXX to release call archived our will may call Relations first can like found provisions. forward-looking and harbor available Our be you be statements. These Investor website. be I'd company's for our will presentation Today's contain of replay. the by open

constitute during except meaning facts, of Any the suggested containing risks and differ Litigation statements of to the call, conference statements Private those from number this may Act in future made results statements forward-looking Actual forward-looking due of Securities materially XXXX. within deemed those to Reform historical may uncertainties. be a

a refer posted description those website. statements, SEC, filings are the forward-looking the our Investor cause our issued uncertainties Form in described materially our could morning. please to this with that differ press These in release our and results risks earnings our from XXXX which XX-K further other For Relations and are on to risks of detailed that was

judgment of by or subject to otherwise, risks, to as are assumptions new law. current except events Express a and forward-looking update any obligation required our assumes statements uncertainties. information, represent no statements whether These and as future result

measures. non-GAAP we addition, In certain to refer may

in corresponding earnings amounts measures discussed presentation. reported release any and locate can under our in non-GAAP the You comments reconciliation in of to our GAAP a

corresponding our the in additional to the in be items. prior notes periods explanatory see of comparisons providing prepared XXXX, the the to financial definition And for details earnings We will today regarding otherwise unless Please refer also noted. to remarks certain periods. fiscal comparisons release

Executive Chief Chief Officer; will the Baxter, Officer. I Tim turn are today now Financial Tim. Judd, and me With Jason to over call

Tim Baxter

morning. transformative year, good company. and financially WHP Greg, a repositions Earlier you, Global entered into we with this Thank that strategically our and partnership

We as new EXPR guided chapter strategy. a be by corporate bold have begun that a new will

company We growth first, core our to omnichannel by: the WHP achieving business; our and our profitability shareholder profitable second, transform Express in growth through create value platform our third, partnership. accelerating Global will and optimizing

financial agile will advance redesigned strategy, will we our build flexible a this allow As that new the architecture rigorous dynamic company upon expense to corporate discipline framework completely be a us more a foundation create of environment. we of more financial and strong, to macroeconomic in

we expenses. additional Earlier time, million company-wide that initiative January, will this implemented XXXX. aggressively that reduce annualized of year, $XX reductions inflation. versus a impact realized of $XX began And a be million since XXXX disclosed million for prior In to in the to in we we an total expense have $XX

are the savings step. expense These first just

advisers reductions and began the half expansion we us have additional realize external already back implemented of potential we external XXXX. before that million opportunities. confident reductions assist We advisers $XX Having in their the in will and and to identifying implementing expense XXXX further full margin the expense analyzing, assessment, are year engaged significant

Forward our is of strategy, deliver delivered meaningful each against Despite growth brand, aspect cost our new of that the on to ExpressWay in are execution, to have and allow aggressive will profitable strategy X core foundational savings us first X pillars on achieve business. our not product, goal. customer Express These just how we our which of corporate yet the priority, progress

XX%. brand Express the for sales comparable negative QX were

in activity needed our were XXXX, across sensitivity continued not and consumer in that the discretionary and increased spending, the to on top categories promotional quarter impacted bottom began negatively of price be. and this results year line into where performance. heightened Our they the first Reduced industry

and action led our to consumer the need the keep with gains pace we each competitive business the X and We've to improvement landscape market taken through comparable across already of more to change to of than the share and trajectory greater promote in pillars sales move The expectations expect we margin anticipated. as trends erosion year.

Starting with product.

multiple the assortments of our began women's we out As quarter, dimensions. first were balance across

recalibrations improvement corrective take move the as we saw to sales these progressed. sequential continue These We address the in and through to year. assortment imbalances will quarter as actions continue

business QX delivered QX, men's which and While improved XXXX. was our volume a in in QX versus our women's in of record deceleration businesses, outlet it offset by

are which market share strengths, and per Moving lead gains. doubling units loyalty will expect increased category forward, we we transaction, down to on frequency, key

We and our additional secured for of are trends QX into in effectively products and categories. items best-selling chasing some

We in are half unit second in the year. costs of and those driving benefits to reductions our average expect realize the

XX years is and brand transformation a Turning a time. of perception landscape consumer fashion to has the brand. the the Express changing over part been a that for takes of most of component

brand brand brand style to We confidence customers, powered are we transforming with sales content includes the purpose, store a from influencers being creators, by create known styling Express community, which we self-expression partners. in inspire a our important purpose and a played a styling associates, in an building has editors, as mall role community. That

in features year. to We of had content. grew create organic our we that them over QX, social style some they over best-performing content we X,XXX content number the our The and increase XX% create the of a editors is QX in Express last

key for this We will activate our a XXXX amplify to styling as continue build, differentiator and Express. community in strategic and is

Turning due as We targets, in see did short of frequency. to but to the fell steady we sequential customer our in Spend quarter the through improvement increase acquisition quarter. held an moved per customer.

customers. engage strategies specific have existing, and new reengage We in attract place to lapsed

pillar fourth execution. is Our

E-commerce outpaced were in which online the significant outlet and our sales women's E-commerce business, a retail accounts by of improvement our driven stores. for share sales.

and corrected we Sales much, conversion. outlet slowdown in for was so the traffic significant too seeing men's our stores in decline that by assortments negatively impacted retail our and in edited the business. and a benefit. our are have We reduced performance

improvement the we line taken our have top in move of the drive will bottom expect that year, outlook. through in and reflected actions all is as we We that and the

The create second to to grow and new brands. shareholder value our component to integrated EXPR operate order strategy transform portfolio our is fashion operating of of in to fully optimize corporate omnichannel platform a

technology, We to this will strengths logistics, synergies HR portfolio. leverage and production sourcing, and across our estate, legal in finance, capabilities drive existing and efficiencies achieve and real

our increased to we direct. service management examples. Let of savings with the realize to cost XPL and certain will evolve to strengthen of In unit me few to our and order functionality cost sourcing strategy ratio In consolidate agent production and logistics, fulfillment. implement share advanced sourcing, a our apply reduce rebalance we scale will providers and relationships our

market technology, speed consistency. In will we systems enhance to brands integrate to and and expedite data within across our

exchange will and self-service data with trading and system will modern automated sophisticated our more routing we We have algorithms. a enable management partners with order

XX,XXX and GQ in stores the a our UpWest is than included terrific edition with of a up subscription X effectiveness a brand Nordstrom. opened XXXX portfolio subscribers. We already quarter, sales to proof native of in with last years. UpWest in and distributed the quarterly doubling relationship a and of products, of had summer is our brand the XX%, point which is EXPR as wholesale the established digitally since UpWest part a more today. XX have launched platform UpWest

Global is And is WHP component for team corporate announced of EXPR third Express. Global. value partnership to profitability our WHP we category our we new create to completed today, actively that Bonobos. joint international and strategy growth The transform the acquisition have with of opportunities The accelerate shareholder our to domestic and exploring through licensing

menswear $XXX quickly model. generated known fit Bonobos Bonobos years, and the an exceptional guide in in approximately shop X sales over for launched has the brand as innovative digitally and XXXX a XXXX. business retail strong sales million delivered of past became growth and native

We build additional omnichannel into loyalty, retail the in unlock Bonobos upon of strength our underpenetrated expertise Bonobos by product categories. leverage and and for intend brand e-commerce growth and and customer to marketing the extending

we through free positive scale licensing a XXXX. compelling fiscal expertise to WHP operating Bonobos international distribution. flow Global's accretive and income We in in to it be to addition also portfolio. expect and and plan very brand cash our drive is will

the quarter results first Now the to who take through our Jason, you our the will share over of details Bonobos on for let financial call me and XXXX. turn detail more outlook provide acquisition

Jason Judd

Thank you, Tim, and good morning.

that Let for and me begin our the we strategic Bonobos with Global acquisition WHP partner, today.

compelling brand very is important transformation a this EXPR portfolio. the in said, addition and Tim As to our step company's an

business for operating purchase assumed million. EXPR and for price of purchase purchase Walmart and of from we related price million. brand the WHP acquired Bonobos acquired the for price Global a Global and of $XX the million, the of $XX liabilities combined assets a WHP $XX acquired a jointly

WHP the EXPR operation the granting exclusive, of license in intellectual Global payment the exchange entered into for royalty and options, the use Bonobos Global WHP to with transaction, for renewal United acquired the Concurrent by in right the business of closing with States, of an the long-term property multiple we agreement a fee.

embarked have a company-wide initiative to we reduce efficiencies drive shared, expenses, growth. and EXPR on Tim As profitable long-term to return

the us assisting in review top-to-bottom comprehensive advisers this external business, I Our am of a are initiative. leading and

improved operating drive our in in of profitability. of corporate order substantial, be an they what part steps to strategy. just are are will in actions model change new generate to many plan first our the These and ongoing sustainable

our results. QX to Moving

expected sales low digits, comp. comparable we We of double posted XX a negative negative

decrease decrease We we basis points, approximately a expect basis of margin the saw gross XXX points. to X,XXX

XXX expenses deleverage expected actualized approximately We percent a at SG&A in basis sales. of of and points as

of adjusted per share an loss $X.XX loss share. diluted actualized expected We of to and a per $X.XX $X.XX at

balance Moving to sheet. the

inventory changes. our move sales sequentially to closer quarterly parity expected and We to with decline

improvement X%, from a X% which was in was inventory Our QX. meaningful increase down the

the of we year. includes at CARES expect to and half Our sheet Act receivable the quarter which receive before. end back mentioned million in $XX we balance this

cash revolver. million, we against quarter of the million at end and available equivalents hand million on had Borrowings facility lending $XX asset-based on cash were $XX $XXX and and our

the are performance implemented reductions see our in and beginning e-commerce for the We that already that in in have expected the have we impact $XX done XXXX. work rebalance Bonobos are assortment, results performance, Turning momentum included we considered million first seeing, we our our outlook. forecasted expense note financial Bonobos. are Please to to we of the quarter for to our outlook of the the business,

yet doing This reflect not are outlook with expense reduction work advisers. the our external does we

apparel our and the have challenges the softness those factors balanced the We retail trend of macroeconomic against in and environment. ongoing

approximately WHP the approximately rate Gross aggregate contraction in XXX For Bonobos. which decreased and diluted second transaction share from of basis XXXX points, of a to deleverage approximately to approximately sales. of to the Bonobos million $X.XX of per basis of $X.XX our the XXX to as percent of approximately Global the is outlook $XXX with $XX loss XXX consolidated XX% compared point net sales XXX expenses and from sales an million approximately $XXX points benefit approximately to point margin as million basis for by including points impact includes addition QX follows: to inventory XXX of grow XX% quarter Bonobos. basis SG&A basis Bonobos, from including of impact

billion of is the outlook including year approximately follows: sales $X.XX, $X.X in million million. to billion, to $X $XXX full $X.XX share approximately capital Our Net of diluted expenditures loss as $XXX million Bonobos sales, per for $XX of to approximately

transaction expenditures by our Bonobos This and the reflects to outlook $XX redeployment our reduced versus trends. of million. our million of capital business previous appropriately respond capital fund have to We the $XX

as EXPR discussed, our share timing events strategy will how realization be our later value operating more reduction to implemented, shareholder this of strategy. efficiency Tim more new our new organization will be scope and transforming and quarter, the investor detail create the information this corporate Added are agility held will a how about model. well of on more with about we As we improve to the expense we as of streamline

back now And turn call let me Tim. to the

Tim Baxter

a were new are leave and different you be months Jason. Thank just will it X company ago. than with you, corporate all we guided strategy. is If a we we X I message by that today,

EXPR with create in profitable our by: our growth to partnership We Express company's platform, and business; and our achieving accelerating growth our optimizing will profitability omnichannel third, shareholder Global. WHP transform first, value second, through

will And call to you. turn we I will your the and now Thank questions. the operator, take over

Operator

from comes question of Tracker. Shapiro first Retail Your line Instructions] the [Operator from Marni

is Your open. line

Marni Shapiro

dig it dig offline, we I'd like we just Express bit. Bonobos wanted buying a not bit -- men a could that little you do if quarter? buying on Just on what's or can Bonobos, start she on little a going bit because Could about store? sale. talk I at Congratulations -- little in the just dig little to into shop the was maybe a we bit. to women's in coming did to improve there? but only And business not in what Did said this was to

Tim Baxter

would quarter as back I hold. last did in we as of I began began Yes. in the part in to the move that -- make primarily driven that half see was our the take -- we year, latter through business year to That as women's said, last say improvements improvement e-commerce. of we recalibrations

have traffic Marni, as stores, X declines distorted stores. We the declines, in is seen know, men's those traffic business and you

deal traffic And conversion lower stores, for in that decline the was looking what as offset. with so certainly consumer a coupled the is was

in about tracked see men's in traffic declines against as deceleration higher we and did really back prices. women's improvement improvement outlet and pushed by the and that lower the consumer driven was with So women's we the actually both anticipated, while that in saw what conversion we

back you unit in our where the in began average we those our pushing that what call back on are the in to drove growth increases growth. of half retails increases mentioned look in year. the we When really average unit quarters the fourth customer the drove And X retails. this the back through in I quarter,

So on is in working both are by our worked retails into recalibration of in opening back some and categories. a we outlets, distorting of the women's and on bringing men's point unit have average price those down part that

Marni Shapiro

for it lot really a on it. I time . and you you have to always time is your website into your short -- time a very think a now, website, spend have just -- -- I trying your online, stores to look I When and nice of on you the stores, presentation can spent find, have coming lot new so of yes, example, very the trouser a Linen. of remember nice I And it's the powerful. I on right for it's in the Portofino Portofino really can shirt, name easy

nice online. a trouser you have really But

editor, have You a of food beautiful pant. cut type

the to right easy It online. sleeves outfit wardrobe have You online. very top a feels

I at -- but the feel how we're what shopping closer in make looking seeing connection. that I sometimes And stores, stores, to the it the same at replicates, team to, online? experience Is simplify comes so don't in guess, least

Tim Baxter

what the in in it our women's, experience consumer, And many has and we shopping saying are we the I icons. say Marty. store women's. into women's. say I back absolutely, merchandise rethinking store that, the our ease absolutely have would Yes, I as would of distort experience men's that aligned is way been ease for true shopping. with agree of you're we with In for of more online the particularly

our seeing So innovating icons. we are success great by

point, To And We easier are Portofino they're Boyfriend you highly just So have Portofino customer, Portofino can a shirt. you Portofino. launched mentioned launched a launched the our We online because your knows been franchise. search as that And actually successful. you Linen things know, find those shirt. short a shirt. We dress. Portofino to

depth We're we Gramercy reintroduced our also getting its in in back things cami, just top, form. OG in greater our like broad

So yes, items, thinking to to without and remerchandise to commodity-type it we're piles how the presentations to simpler make of going about also back stores exactly. huge shop

Marni Shapiro

fashion I much? well. store he's Or there? Men tend are was buying stores just side to it traffic we he's just I not buying is could the mean, up And he not I quickly? when . is in Is can online then and when as the know fall as also buying men as buying? the men's on men's to -- stores guy follow just -- your down.

Tim Baxter

Yes.

overall was that where last demand down it think in first has record the We year. the certainly delivered a come XXXX. of in from performance quarter men's I in

our And men's up against really we're so aggressive in increases comp business.

across driven significantly categories I some the and for for shirts. demand lower are us, come -- think overall and was what dress first by demand in men's which driven but certainly, key saw quarter And the suits by we board, the down. has

him categories performed that those our as categories at same men's, stores. total drive level those while are into And the about

So -- is and buys then when multiple stores, across he in he classifications.

in did driven a see the decrease we come in demand total down stores. by So traffic in

Marni Shapiro

rest to off I'll Bonobos, do I'll later. it but want . the offline guys. dig of because take in you with you I'll line I to talk

Operator

question your And Beder line next comes from of the Eric from Research. SCC

Your line open. is

Eric Beder

much Could been How or and to as costs the is drive coming a and not half talk opportunity, margins? going much the inventory in going you opportunity to bit are continuing freight and we've the caring little is It's be Bonobos about be added inventory materially. back higher costs apples-to-apples that now that of as there. that an down forward to shipping going

Jason Judd

it's Yes, Jason. Eric,

I think answer I'm going in reverse order. to those

are supply costing. as opportunity I seeing it to we're in at we overall and logistics be We're time chain finding seeing network, this seeing was We're last in think faster the than network look the opportunity. we opportunity year. time that also

to shipping agility to And plan cost-effective and to able having be more more distort routes.

so assist I the in that the and the year. have this into in and build in overall the It you been our in product, that, is discussed opportunity And back which past. we there of our half to -- costing that AUC we've will talking initiative an

say moving we fourth overall obviously, of with that that, underlying When the impactful inclusion of say than XX% sales. with now, see it inventory in parity just inventory, comes continue I'd the everything. our lead Bonobos quarter up outlook What that is the will would I more is in be view overall expressed third inventory, to to XX% to and times. given right

QX as build. ramp end up is definitely do, know, and We that. what then of during important towards for QX, made to We've an holiday progress you good starts start on the

be otherwise, will cyclicality we've same occur And the but along will been to. normal so path speaking it that that

Eric Beder

this been category? And involved going as how are see opportunities where you final question. like that that swimwear, a and a in last you've know I doing that out rolling . And categories been year, year women's you has forward? been haven't really men's there

Tim Baxter

we've been into our good, well. year, responding this it mentioned has and was of year, launched In performed that consumer distorted you very, we Actually, swim, and more to well very more last and product last it very year, that very swim. men's, product as has it delivered

well, very, where have relaunch In that with been In is swim. doing us. matching well for very men's, particularly performing women's, trunks swim this the sets we have matching has T-shirts, been of shirts, a

and We past, have have in for. that consumers carried the asked swim it's consistently something our us

the has response And in been positive women's. very also

So we believe in as us it particularly move we as that and forward for we'll the category that women's, powerful in we is a take We're mode be we move what forward. and learning can year, think year. coming learn category a this about obviously

that categories The to have mix, part continue we question, our second categories are introduce to other in yes, customers online. buying are opportunities especially your believe we those that into we explore will of from permission there and the play to people

things And those yes, so come. things are to are, what those mentioning without

Eric Beder

could of just for and plan you do stores Express And terms -- what storage. Edit in do for you to new UpWest

Tim Baxter

to Edit mall. our store Edit of our outside to So portfolio of us learn the continues is we portfolio stores, outside -- powerful continue a stores, that opportunity for very to the we believe Express it and diversify our Express continue from

lot start. we're Greenwich off locations X Edit know, very locations, Greenwich, a new is learning They're Boston, last a that just those back on in year. last Miami, week off you Connecticut Avenue from locations. to also We opened opened As powerful, in of in powerful to And the Express Manhattan, an strong Philadelphia. we -- half

Edit this to year. that have is we open planned store At the only time, this

as get these these through and and about we're learning stores customers they stores. We're a positive ZIP surrounding to very that stores. been seeing these digital the these the experience coming to stores. We're consumer I large As also new have we said, open sales continuing increased codes wildly penetration of e-commerce feedback has fairly from sales, significantly in the brand

the We're and come to Express proceed as we'll more now. So want with going XX exactly we XX year we when robust how learn a stick and about move confident to through with stores continue around that we're with to strategy. back have strategy we Edit

increasing true its to through surrounding new digital partnership with We're thing numbers do in UpWest primarily us digital around customers UpWest come sales large stores. to by of stores. wholesale well, UpWest business Nordstrom. very, seeing in continues strong UpWest and stores very the driven codes a and Same is ZIP

a close a there said, leases. being that were short-term and that will are UpWest few we this stores That year few

the to increase are few as marketing as customers vehicles use Our these codes. that year I there sales into ZIP opening this what to will well. brand, intent to And do was surrounding described, bring in the we exactly new be a

Operator

And -- Telsey. comes again, Telsey question the it your question and of line next is Dana from from a

Your line open. is

Dana Telsey

million I Certainly, at Let's see they talk bit. for you the XX% I all in that inventory, about, the guidance former range about million Bonobos $XXX million sales think a and little did numbers around gave was $XXX around to XX% 'XX, that you think, and when a to there to X gross months takes business? taking your overall, see sales how do the around to in $XXX puts margins business core given of you the XX% compared into fiscal over and XXXX the relative year it margin. you're or

Jason Judd

the The your Dana. again I'm question and the -- end at going start you, of move to beginning. Thank to

performance. QX, to be continue in do accretive talk flow business accretive accretive EXPR operating talk the this We the we the as cash see, did Bonobos Bonobos we As we margin to about that we year. did being announced overall will from around to when and margin impact

course, really stub from June to this Of January. point, year, is a period your through

a that the the for announcement comes continuing trajectory on performance, that very productive seen to we on have they horizon. trajectory they our a years growth. in have their in years, it continue sales -- disclosed of see where this to year. row there multiple see us to it When in double-digit we continue do presentation we X But good

we just we the our managing are to incorporating the with As investor conservative performance, earnings perspective them but we'll into more you end this have sort turn we as get event. are we we structured signaled our a it that our next would of in overall environment. as lot details from overall share quarters event remarks corner a as and into macro expect, get and to

Tim Baxter

to And addition all business I and portfolio, exciting UpWest Express say the very Dana. the obviously, back growth business now an would now, to substantial and driving the we Express actions have that focused to, the the growth. are It's to Bonobos. portfolio we taking on But we get core core need X brands in are

a So company having said, like we're on closed I different very today, Bonobos overnight.

Dana Telsey

terms then the of -- just should mindful first get we see the second how inventory. of there the be in initiatives any what cadence quarter And as you seasonality the you planning cadence in half timing is coming of quarter? with of of into the year did you're or and the first goods And in things the

Tim Baxter

through we first performance Dana. year we in we quarter, fairly last say the up a in comp the the XX% a consistent didn't -- would first important I to but against increase saw It's remarks, were comment quarter. Yes. prepared

is So first . positive our on X-year stack quarter. the quite still

real year, we had point at inflection Memorial Last a Day.

July is was that when so our we last and began saw about saw year, call, included business. point last deceleration inflection in week we that to talked June really and point where quarter a had May, but forecast. our decelerate, this in year the had still a where an actually, earnings of we inflection real So the we second strong We

in that the expect included comp see the the year. through we as That we is to of balance improvement move

So point. Day. it's where really week inflection that Memorial this It's saw we

Dana Telsey

that the you path balance And terms Tim, the assortment, corrections the the . wanted, in are timing of on path the of in and there? on women's you

Tim Baxter

very tops, course, right. would track. get seen the categories, our of certain and most we strong a like and the goods women's one we be. receive I improvement we have attacked in we'll assortment into be more we the the response of quarter, We very, for those we seen in it being would expect assortments like of to them are women's dramatic it yes, be were the -- we to -- categories line I'd important and have with of Well, But as will performance. quarter that us much recalibrate second in moving the where knew get third much that more where faster. on to architecture

that I'd the the move results expect -- of to as we back So into of again, year. as full see half the we

Operator

And there are no time. turn will at back further closing your Baxter, call I this the remarks. to for Mr. you over questions

Tim Baxter

for Thank a morning. holiday all good Have weekend. joining us you this

Operator

conference participation. Thank today's you concludes your call. This for

You may now disconnect.

Express (EXPRQ) 24 May 232023 Q1 Earnings call transcript