Express Prepares for Debt Restructuring and Possible Bankruptcy Within Weeks
The apparel retailer has hired M3 and Kirkland & Ellis to advise it on discussions with lenders
Apparel retailer Express is preparing for a debt restructuring that could include filing for bankruptcy within weeks, according to people with knowledge of the matter.
The Ohio-based retailer known for its affordable office wear has hired restructuring adviser M3 and law firm Kirkland & Ellis to consider how to restructure nearly $280 million of debt amid declining sales, said the people.
Publicly traded Express is still trying to avoid filing for bankruptcy by restructuring debt outside of chapter 11, the people said. Whether that is successful will depend on its lenders agreeing to provide more liquidity or loosening repayment options, the people said.
Express’s ability to avoid bankruptcy also hinges on whether vendors are willing to keep shipping goods without tightening payment schedules, the people said.
A representative for M3 declined to comment. Representatives for Express and Kirkland & Ellis didn’t immediately respond to requests seeking comment.
Express, which operates more than 600 retail and outlet stores, has said the business has struggled because of higher interest rates, slower store traffic, lower consumer spending and increasing competition from other retailers selling similar clothing at a deep discount. Its inventory also isn’t in line with what customers demand, the company has said.
The company brought on new Chief Executive Stewart Glendinning in September to help turn around the business. Glendinning said on a recent earnings call that the company would try to improve liquidity by discounting merchandise.
The retailer also has been trying to stem its cash burn by closing stores. It shut down roughly 100 stores in 2022.
The retailer survived the Covid-19 pandemic by taking on a new loan and raising funds in the equity market during the meme stock mania of 2021.
Express recorded roughly $98 million in losses before interest, taxes, interest and depreciation for the first three quarters of 2023.
Express had $34.6 million in cash at the end of the third quarter, down from $65.6 million in January 2023, according to company filings. It had $21.7 million available under its revolving credit line at the third-quarter end.
The company earlier said it has hired advisers to help review its business model.