Express today reported strong growth in the fourth quarter ended January 29, when net sales increased 38% over 2020. Consolidated comparable sales increased 43% over 2020 and 4% over to 2019. The modern, multi-channel apparel and accessories brand whose raison d’être is to build confidence and inspire self-expression, forecast a robust first quarter and year 2022. For the first quarter, the company expects comparable store sales to grow 25% to 30%, and 7% to 9% for full year 2022.
The Columbus, Ohio-based retailer posted net income of $7.6 million, after posting a loss in the same period last year and earning 11 cents a share. The apparel and accessories chain posted revenue of $594.9 million during the period.
For the full year 2021, Express increased sales by 55% and comparable sales by 37% compared to 2020, thanks to exceptional consumer response to our product and dynamic retail channels and out.
Express saw strong fourth quarter growth in e-commerce demand of 33% over 2020 and 21% over 2019. The company is on track to reach a goal of $1 billion in commerce demand electronics by 2024. The retailer recorded increases in all key areas. metrics for the website and mobile app, including traffic, conversion, average order value, and average unit retail.
The retailer has scrapped promotions and begun the process of optimizing the fleet, and is renovating a number of stores. It also plans to open additional Express Edit units in its smaller concept, which features improved customer service and a curated assortment optimized for the location.
“In 2021, we achieved profitable growth in the second, third and fourth quarters, and generated positive operating income and free cash flow for the full year,” said Tim Baxter, CEO. “Comparable sales improved sequentially throughout the year, culminating in a positive offset of 4% in the fourth quarter compared to 2019. We had a strong holiday season and our momentum continued.
“Our transformation was driven by significant progress in each of the four fundamental pillars of the Expressway Forward strategy: an exceptional product, a relevant and compelling brand objective, a customer loyalty program driving higher engagement and strong execution. “, added Baxter. “The dynamism of our business is tangible proof that the strategy is working.”
“Each pillar has undergone a fairly active transformation,” said Sara Tervo, Chief Marketing Officer. “It took our collective Express team to fully focus on how we can truly achieve our mission. We’ve all worked really hard and worked together, and there’s a lot of momentum behind it.
Brian Seewald, senior vice president of e-commerce, said, “We’ve had more traffic, obviously as our demand has increased and our average order value has increased, which is usually a very difficult metric to move. That was driven by fewer promotions and higher average retail sales.
Significant product improvements drove the results, with the assortment revised to represent better quality and a robust fashion quotient. The Express loyalty program, which was relaunched in March 2021, is also working. “We transitioned from a banking-style loyalty program to a full-engagement loyalty program and ended the year with a record number of active loyalty members.”
Express also saw momentum from its brand campaigns, which were leveraged to raise awareness of the improved assortments. “We want to make sure we deliver,” Tervo said. “We know they want quality products, they want items that fit them, and they want fashion-forward items. So how do we make sure they know we listened, and that we have redesigned our product and are now delivering it.”
Express launched a campaign, RSVP Yes, in the fourth quarter with the idea that post-Covid 19 pandemic customers were gathering for the holidays, going to holiday parties and needing help dressing . The campaign, which highlighted the different occasions consumers might need clothes for, received more than 100 million impressions during the fourth quarter.
“It becomes this big cycle for us because these customers are very loyal,” Seewald said. “They download our mobile app, which is a major area of interest for us and since we’ve increased our loyalty numbers and these people have been involved, we’ve been able to see our app [engagement] grow by 70% year on year. These customers spend more with us. All of these things work together wonderfully.
Express launched a partnership with celebrity stylist Rachel Zoe during the quarter, working with her as style editor to direct style editors to the community commerce activity launched last year, which is essentially a social commerce platform where consumers sell Express products to their networks.
“We used it to spread awareness about the program,” Seewald said. “We also asked her to share her holiday picks and what she would recommend wearing on all holiday occasions. She also hosted a Facebook Live event where she talked about the product and shared her tips and tricks, so fashion is definitely resonating with our client, in terms of engagement, traffic and sales.
“Rachel Zoe has been a shot in the arm around the passion in our community,” Seewald said. “We see this as a critical part of continuing to grow not just our digital business, but our business in general, as we begin to send our style editors to our physical locations for real style events with our clients. If you think about it, any great traditional business starts with relationships and what we’re seeing is that our style editors are coming into our stores to work with customers which will also allow them to grow their business digitally.
The retailer launched a themed campaign, #ExpressYou, in February, tied to bright, bold colors with on-trend looks. “This has created a lot of momentum and we will continue to look for different ways to activate our community. Style editors are one component. We will be adding further enhancements to our e-commerce and app experiences with Edit stores, will continue the expansion and renovation of physical stores.
During the first quarter, Express will release a series of improvements to its checkout experience to make navigation easier and more intuitive for customers. Later this year, Express will improve the in-store pickup online shopping option to make it easier for customers to filter the website by store location and essentially shop wherever they are.
“That notion of really being where the customers are will bring that to life,” Tervo said. “We are going to take an already growing BOPIS business and grow it even faster. We also tested our way of buying directly. We’re really in test and learn mode right now and trying to figure out what works best for us. We stream them on express.com and Facebook Live. We try to be where our customers need us to be.
Gross margin rate in the first quarter is expected to increase by approximately 550 basis points, including approximately $7 million of expenses related to mitigating supply chain challenges. SG&A expense as a percentage of sales is expected to generate approximately 250 basis points with net interest expense of $4 million and an effective tax rate of approximately 50%.
For the whole of 2022, the gross margin rate should increase by around 100 basis points. SG&A spending as a percentage of sales will be roughly flat in 2022, including additional investment in technology, higher labor spending and general inflationary pressures, with net interest expense of $13 million and $50-55 million reserved for capital expenditures. Inventories will be high in the first half and closer to parity with sales growth in the second half, the company said.
Tervo said Express consumers don’t necessarily lean towards a specific age. “Through customer research, we have validated that our customer base spans ages, ethnicities and gender,” she said. “There are differences in the nuances and stages of life and how they consume content, as well as household incomes, but they are unified by the spirit of optimism and the desire for professional growth. They really appreciate fashion and believe that clothes can give them the confidence to take on the next step in their life.