- Capitalizes on Strength of EXPR as a Fully Integrated
Omnichannel Platform and WHP Expertise in Acquiring and Growing
Global Consumer Brands to Drive Growth
- WHP to Invest $25 Million to Acquire 5.4 Million Newly Issued
Shares of EXPR at $4.60 Per Share, Representing an Approximate 7.4%
Pro Forma Ownership
- EXPR and WHP Form Intellectual Property Joint Venture Valued at
Approximately $400 Million with WHP to Invest $235 Million for 60%
Ownership, EXPR to Own 40%
- EXPR Will Continue to Advance EXPRESSway Forward Strategy;
Partnership with WHP Will Scale Express Brand Through Category and
Global Licensing Expansion
Fashion apparel retailer Express, Inc. (NYSE: EXPR) ("EXPR") and
WHP Global ("WHP"), a leading global brand management firm, today
announced that they have entered into a mutually transformative
strategic partnership to advance an omnichannel platform which is
expected to drive accelerated, long-term growth through the
acquisition and operation of a portfolio of brands. EXPR and WHP
will also form an intellectual property joint venture intended to
scale the Express brand through new domestic category licensing and
international expansion opportunities.
"Our EXPRESSway Forward strategy has reinvigorated our brand and
rebuilt the foundation of our company, paving the way for this bold
next chapter in our transformation," said Tim Baxter, Chief
Executive Officer at EXPR. "Our partnership with WHP will drive
greater scale and profitability of the Express brand through their
category licensing and international expertise and strengthen our
balance sheet. We expect to accelerate our growth by acquiring
multiple brands in partnership with WHP and operating them on our
platform. Both of these are expected to drive shareholder
value."
This transaction is expected to provide the following
significant financial and operational benefits:
- Capitalizes on strength of EXPR as a fully integrated
omnichannel platform. EXPR will be ideally positioned to
participate in anticipated retail industry consolidation and pursue
acquisitions with WHP and is expected to expand its brand portfolio
to accelerate growth and profitability. Through synergistic
M&A, EXPR will leverage its platform to drive cost savings and
margin expansion.
- Scales existing multi-billion-dollar Express brand through
intellectual property joint venture. We expect this partnership
to accelerate growth for the Express brand through licensing in
non-core categories and international expansion by leveraging WHP’s
expertise.
- Strengthens EXPR balance sheet by providing capital to
acquire brands and reduce debt. EXPR will maintain its
disciplined approach to capital deployment and is working with WHP
to identify compelling, accretive brand acquisition
opportunities.
- Accelerates WHP growth. The strategic partnership is
expected to provide WHP with a best-in-class operating platform to
broaden its M&A pipeline.
"The global growth potential of the Express brand and the EXPR
omnichannel platform will give our company a distinct competitive
edge as we look to acquire more consumer brands," said Yehuda
Shmidman, WHP Global Chairman and Chief Executive Officer. "We are
excited to partner with Tim and his management team and view this
partnership as a huge win for both of our companies."
Baxter continued, "By scaling the Express brand and identifying
opportunities to expand our portfolio, we will leverage our
platform to accelerate growth, generate operating margin expansion
and drive profitability. We have found the right partner in WHP and
look forward to welcoming Yehuda to our Board of Directors."
Transaction Details
The partnership will be effectuated through a multifaceted
transaction. EXPR will form an intellectual property joint venture
with WHP, which will acquire certain intellectual property of EXPR.
Concurrently, EXPR will transform into an omnichannel platform
company, managed and run by its current leadership upon closing of
the transaction. All other aspects of the existing EXPR business
remain unchanged.
Under the terms of the transaction, WHP will also make a common
equity PIPE investment to acquire 5.4 million newly issued shares
of EXPR at $4.60 per share, representing an approximate pro forma
ownership of 7.4%.
The intellectual property joint venture implies a total value of
the Express brand’s intellectual property at approximately $400
million and will be 60% owned by WHP and 40% owned by the EXPR
platform company. WHP will invest $235 million for its stake in the
intellectual property joint venture and EXPR will contribute
certain of its intellectual property assets in exchange for cash
consideration. EXPR will enter into an exclusive long-term license
agreement with multiple renewal options with the intellectual
property joint venture to use the contributed intellectual property
for EXPR’s existing business and will pay a royalty fee to the
intellectual property joint venture. Cash earnings in the
intellectual property joint venture will be distributed quarterly
to both parties on a pro rata basis.
The transaction is expected to close in EXPR’s fourth fiscal
quarter of 2022, subject to lender consent, regulatory approvals
and customary closing conditions.
Management and Board of Directors
The existing Express, Inc. management team and Board of
Directors will continue to lead the company with Mr. Baxter serving
as a director and CEO and Mylle Mangum serving as Chairman of the
Express, Inc. Board of Directors. Upon completion of the
transaction, the Express, Inc. Board of Directors will be expanded
to include Mr. Shmidman.
Advisors
Moelis & Company LLC is serving as financial advisor and
Kirkland & Ellis LLP is serving as legal advisor to EXPR on
this transaction. Goodwin Procter LLP is serving as legal advisor
to WHP.
Express’ Third Quarter Financial Results
In a separate press release issued today, EXPR announced its
third quarter 2022 financial results. The press release is
available at www.express.com/investor.
Conference Call Information
A conference call to discuss the transaction and EXPR’s third
quarter 2022 results is scheduled for December 8, 2022 at 8:00 a.m.
Eastern Time (ET). Investors and analysts interested in
participating in the earnings call are invited to dial (888)
550-5723 approximately ten minutes prior to the start of the call.
The conference call will also be webcast live at
www.express.com/investor. A telephone replay of this call will be
available beginning at 12:00 p.m. ET on December 8, 2022 until
11:59 p.m. ET on December 15, 2022 and can be accessed by dialing
(800) 770-2030 and entering the replay pin number 1790468. In
addition, an investor presentation and infographic of the
transaction, and an investor presentation of EXPR’s third quarter
2022 results will be available at www.express.com/investor
beginning at approximately 7:00 a.m. ET on December 8, 2022.
About Express, Inc.
Express is a modern, multichannel apparel and accessories brand
grounded in versatility, guided by its purpose - We Create
Confidence. We Inspire Self-Expression. - and powered by a styling
community. Launched in 1980 with the idea that style, quality and
value should all be found in one place, Express has been a part of
some of the most important and culture-defining fashion trends. The
Express Edit design philosophy ensures that the brand is always ‘of
the now’ so people can get dressed for every day and any occasion
knowing that Express can help them look the way they want to look
and feel the way they want to feel.
The Company operates over 550 retail and outlet stores in the
United States and Puerto Rico, the express.com online store and the
Express mobile app. Express, Inc. is comprised of the brands
Express and UpWest, and is traded on the NYSE under the symbol
EXPR. For more information, please visit www.express.com or
www.upwest.com.
About WHP Global
WHP Global is a leading New York based firm that acquires global
consumer brands and invests in high-growth distribution channels
including digital commerce platforms and global expansion. WHP owns
ANNE KLEIN®, JOSEPH ABBOUD®, JOE'S JEANS®, WILLIAM RAST®, ISAAC
MIZRAHI®, LOTTO®, TOYS"R"US®, and BABIES"R"US®. Collectively the
brands generate over USD$4.5 billion in global retail sales. The
company also owns WHP+, a turnkey direct to consumer digital
e-commerce platform and WHP SOLUTIONS, a sourcing agency based in
Asia. For more information, please visit www.whp-global.com.
Forward-Looking Statements
Certain statements are "forward-looking statements" made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include
any statement that does not directly relate to any historical or
current fact and include, but are not limited to (1) guidance and
expectations, including statements regarding expected operating
margins, comparable sales, effective tax rates, interest income,
net income, diluted earnings per share, cash tax refunds,
liquidity, EBITDA, free cash flow, eCommerce demand, and capital
expenditures, (2) statements regarding expected store openings,
store closures, store conversions, and gross square footage, and
(3) statements regarding Express, Inc.’s (the "Company", "we",
"our" or "us") strategy, plans, and initiatives, including, but not
limited to, results expected from such strategy, plans, and
initiatives. You can identify these forward-looking statements by
the use of words in the future tense and statements accompanied by
words such as "outlook," "indicator," "believes," "expects,"
"potential," "continues," "may," "will," "should," "seeks,"
"approximately," "predicts," "intends," "plans," "scheduled,"
"estimates," "anticipates," "opportunity," "leads" or the negative
version of these words or other comparable words. Forward-looking
statements are based on our current expectations and assumptions,
which may not prove to be accurate. These statements are not
guarantees and are subject to risks, uncertainties, and changes in
circumstances that are difficult to predict, and significant
contingencies, many of which are beyond the Company's control. Many
factors could cause actual results to differ materially and
adversely from these forward-looking statements. Among these
factors are (1) changes in consumer spending and general economic
conditions; (2) the COVID-19 pandemic and its continued impact on
our business operations, store traffic, employee availability,
financial condition, liquidity and cash flow; (3) geopolitical
risks, including impacts from the ongoing conflict between Russia
and Ukraine and increased tensions between China and Taiwan; (4)
our ability to operate our business efficiently, manage capital
expenditures and costs, and obtain financing when required; (5) our
ability to identify and respond to new and changing fashion trends,
customer preferences, and other related factors; (6) fluctuations
in our sales, results of operations, and cash levels on a seasonal
basis and due to a variety of other factors, including our product
offerings relative to customer demand, the mix of merchandise we
sell, promotions, and inventory levels; (7) customer traffic at
malls, shopping centers, and at our stores; (8) competition from
other retailers; (9) our dependence on a strong brand image; (10)
our ability to adapt to changing consumer behavior and develop and
maintain a relevant and reliable omnichannel experience for our
customers; (11) the failure or breach of information systems upon
which we rely; (12) our ability to protect customer data from fraud
and theft; (13) our dependence upon third parties to manufacture
all of our merchandise; (14) changes in the cost of raw materials,
labor, and freight; (15) supply chain or other business disruption,
including as a result of the coronavirus; (16) our dependence upon
key executive management; (17) our ability to execute our growth
strategy, EXPRESSway Forward, including engaging our customers and
acquiring new ones, executing with precision to accelerate sales
and profitability, creating great product and reinvigorating our
brand; (18) our substantial lease obligations; (19) our reliance on
third parties to provide us with certain key services for our
business; (20) impairment charges on long-lived assets; (21) claims
made against us resulting in litigation or changes in laws and
regulations applicable to our business; (22) our inability to
protect our trademarks or other intellectual property rights which
may preclude the use of our trademarks or other intellectual
property around the world; (23) restrictions imposed on us under
the terms of our asset-based loan facility, including restrictions
on the ability to effect share repurchases; (24) changes in tax
requirements, results of tax audits, and other factors that may
cause fluctuations in our effective tax rate; (25) changes in
tariff rates; and (26) natural disasters, extreme weather, public
health issues, including pandemics, fire, acts of terrorism or war
and other events that cause business interruption. These factors
should not be construed as exhaustive and should be read in
conjunction with the additional information concerning these and
other factors in the Company’s filings with the Securities and
Exchange Commission. We undertake no obligation to publicly update
or revise any forward-looking statement as a result of new
information, future events, or otherwise, except as required by
law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221207005985/en/
Express Contacts
Investors Greg Johnson gjohnson@express.com 614-474-4890
Media Jamie Moser / Caroline Lipe Joele Frank, Wilkinson
Brimmer Katcher 212-355-4449
WHP Global Contacts
Media Jaime Cassavechia EJ Media Group 212-518-4771 x108
jaime@ejmediagroup.com
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