Celebrate optimism toward 2021, despite Q4 setbacks
Express, the retail apparel company, reported its fourth-quarter financial results for 2020, showcasing a resilient performance amidst the ongoing pandemic.
The company narrowed its net loss significantly, with the figure for the fourth quarter falling from $141.6 million in 2019 to $53.3 million this year. Similarly, the operating loss for the same period narrowed from $189.9 million to $62.7 million, and the EBITDA loss reduced from $168.7 million to $45 million.
Despite the improvements, the gross margin contracted to 16.6% of sales from 29% a year ago, and higher inventory at the end of the year may lead to markdowns this quarter.
Express reported a 29% year-over-year decline in fourth-quarter net sales, reaching $430.3 million. Comps (store and online sales) for the quarter fell 28% year over year.
In a bid to adapt to the changing retail landscape, Express closed 100 stores as part of adjustments made over a year ago. The company is now focusing on the placement and size of physical stores, with a preference for those outside of malls. Express is also testing smaller "Express Edit" stores with localized merchandising, planning to open eight this year with short lease terms.
The more casual "Express Essentials" offering is expected to generate $125 million in sales this year. Express also plans positive EBITDA for the second half of 2021 and about $35 million in capital expenditures for the year.
Express is perceived as a potential beneficiary post-pandemic due to expected demand for social occasion dressing. However, the ongoing pandemic adds uncertainty to Express's outlook for 2021.
In a statement, Deborah Baxter, Express CEO, stated, "We continue to advance with clarity and purpose despite challenging circumstances." She further highlighted the company's achievements in 2020 as the reasons for mitigating pandemic dangers.
Despite the lack of specific data on Express's 2021 sales and gross margin expectations, the company remains optimistic about sequential comps and significant gross margin improvement throughout the year. However, further updates on this matter are expected in future financial reports.
- Express, guided by artificial intelligence, is strategizing to develop the "Express Essentials" offering, aiming for a targeted sales figure of $125 million in 2021.
- In an effort to navigate the pandemic-induced changes, Express has shut down 100 stores and is contemplating the setup of smaller "Express Edit" stores, planning to open eight such stores this year with short lease terms.
- The ongoing pandemic has resulted in significant loss in the fashion industry, with Express reporting a 29% decline in fourth-quarter net sales and a contracting gross margin of 16.6% in 2020.
- Amid the unfavorable conditions, Express is implementing cost-saving measures and expects to achieve positive EBITDA for the second half of 2021, while planning approximately $35 million in capital expenditures for the year.
