Express, which came close to being totally liquidated, is being rescued out of bankruptcy court.
A stalking horse bidder, composed of brand management firm WHP Global and three of the retailer’s key landlords — Simon Property Group, Brookfield Properties and Centennial Real Estate — got its offer for the online and store operations of the specialty retailer approved by Delaware bankruptcy court on Friday morning.
According to court papers, the total purchase price was approximately $174 million, consisting of $136 million in cash consideration and $38 million of assumed liabilities.
Friday was the deadline for Express to come up with a white knight/restructuring plan. If that deadline wasn’t met, a mass liquidation of the business would have ensued. Express filed a voluntary bankruptcy petition on April 22. The only other bidder was Hilco, which would have liquidated the business.
Once one of the nation’s hottest specialty chains, Express has been on a roller-coaster ride for two decades, beset by a swirl of management changes, mixed fashion messages and declining sales.
WHP already controlled Express’ intellectual property following a 2023 deal that put the brand into a joint venture. Simon and Brookfield have about 200 Express stores at their centers and have an interest in keeping the business viable.
After Express went bankrupt, RCS Real Estate Advisors quickly renegotiated more than 190 Express leases with landlords other than Simon and Brookfield, reducing rents to be more aligned with sales levels, altering expiration dates and reaching other terms. RCS represents retailers in restructurings, whether the business is bankrupt or not, and helps retailers negotiate new leases, renew leases and get out of leases.
Technically, an auction process was established but apparently no bidders other than Hilco and Phoenix emerged.
Aside from Simon, Centennial and Brookfield, other developers housing significant numbers of Express stores are Macerich, URW (Unibail-Rodamco-Westfield), CBL, Pyramid and Tanger.
Express is concentrated in shopping centers and does not have many street locations, but it did have one prominent location in New York’s Times Square. Express held a going-out-of-business sale and exited the location, along with many others. Reportedly, the Times Square store, among the specialty chain’s glitziest, never made a profit because of the rent in Times Square, which can run to $2,000 a square foot.
“It was a big day today,” Yehuda Shmidman, chairman and chief executive officer of WHP Global, told WWD. “The four of us came together and will own Express in a private setting. The four of us are putting in substantial resources, including cash, and a lot of work ensuring this new company has a fresh and clean start. We have been working with hundreds of stakeholders around the entity to create new parameters. There will be 450 stores going forward,” compared to about 600 before. About 150 poor-performing stores were liquidated. He said Express will emerge from bankruptcy with “a strong balance sheet, the right mix of stores and e-commerce, and with a volume exceeding $1.5 billion annually,” including the Bonobos brand, which the retailer bought with WHP last year.
“Our bid was a going concern, to keep the business operating,” Shmidman said. “It saves nearly 7,000 jobs and keeps hundreds of stores open. The company needed a reset for sure and we are able to give the company the reset it needed. It’s on strong footing going forward. We reset the balance sheet and the P&L.”
The deal is expected to close later this month, possibly next Friday. There could be changes in the management, but that remains to be seen.
Shmidman said much research was done on the Express brand. WHP controls the intellectual property and the brand, while the four partners in Phoenix each own a minority stake in the Express operations.
Based on the research, Shmidman said, “We found the brand is quite healthy. There are not a lot of fashion brands that do over $1 billion a year, and Express has a real loyal following.”
He acknowledged that during some periods the product was better than others and that operationally, there was a “miss” on liquidity as the business ran out of cash. He said Bonobos is a strong brand that needed an operational reset as well. Phoenix has been renegotiating with suppliers to be more competitive going forward.
WHP’s portfolio includes Toys “R” Us, Rag & Bone, G-Star Raw, Joe’s Jeans, Joseph Abboud and Anne Klein. According to Shmidman, the company generates more than $7.5 billion in 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.
Simon, Brookfield and Centennial are real estate investment trusts engaged in the ownership and management of properties, including shopping, dining, entertainment and mixed-use destinations.
