Express Enters ‘Mutually Transformative Partnership’ with Toys ‘R’ Us Owner WHP

WHP Global has invested in Express to license the brand and pursue joint acquisitions.

Express has entered a broad-reaching partnership with brand management firm WHP Global, owner of the Toys ‘R’ Us, Babies ‘R’ US and Anne Klein brands, among others. The deal includes plans to acquire “multiple” fashion brands as well as the expanded monetization of the Express brand through global licensing partnerships.

Under the multi-faceted deal, WHP is making a total $260 million investment in Express, Inc (EXPR), which currently encompasses the Express and UpWest brands. Of that total, $25 million will come in the form of common equity PIPE (private investment in a public entity) investment from WHP to acquire 5.4 million newly issued shares of EXPR, giving WHP an approximate 7.4% stake in EXPR.

Separately, EXPR and WHP also will form an intellectual property (IP) joint venture in which WHP will acquire certain EXPR IP — namely the Express brand. WHP will invest $235 million for a 60% stake in the joint venture, with the other 40% owned by EXPR in a deal that values the Express brand IP at $400 million.

EXPR will then enter into an exclusive long-term license agreement with the IP joint venture to use the contributed EXPR intellectual property for its existing business, paying a royalty fee for use of the IP. Essentially, EXPR will pay the joint venture for the rights to use the Express IP for its existing U.S. operations, while the joint venture works to expand the brand into new categories and geographies through licensing deals. 


The deal marks a significant shift for EXPR into an “omnichannel platform company” that will eventually have a multi-brand portfolio. Importantly, EXPR will continue to be run by its current leadership team and all other aspects of the business will “remain unchanged.” Upon completion of the transaction, which is expected to close in EXPR’s Q4 2022, WHP Global Chairman and CEO Yehuda Shmidman will join the EXPR Board.

Express has followed the now familiar trajectory of many mall-based brands: years of declines both in terms of revenue and customer sentiment. The company introduced a transformation strategy in 2020 — dubbed “EXPRESSway Forward” — focused on fleet optimization, including a swath of store closures, as well as workforce restructuring, a redesigned loyalty program and a new smaller format store concept called Express Edit.

“Our EXPRESSway Forward [transformation] 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, CEO of EXPR in a statement. “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. 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.”

Taking Advantage of Retail Consolidation

Becoming a “fully integrated omnichannel platform” is all part of Baxter’s vision to transition Express away from its mall-based past. To do this EXPR, together with WHP, plans to “take advantage of retail industry consolidation” by acquiring, operating and growing “multiple fashion brands.”

As to which brands he’ll be looking to acquire, Baxter is focused on the financials: “We’re going to be very, very focused on those opportunities that we believe will provide us with the most top- and bottom-line growth,” he said on the company’s Q3 earnings call. “Those are the two most important criteria — will this be accretive to our top and bottom line, and can we drive growth through these acquisitions?”

The structure of those acquisitions will be determined on an individual basis, but Baxter did say that future brands would likely have license agreements within the IP joint venture that operate much like the one for the Express brand.

Unlocking the Untapped Potential of Express

While Express’ U.S. operations will remain unchanged, the brand is seeking to scale by entering non-core categories and new markets via licensing, under the purview of the new IP joint venture.

Today the awareness and profile of the Express brand are larger than its category and geographic footprints,” said Baxter on the earnings call. “Now with the partnership, expertise and reach of WHP, the intellectual property [joint venture] can help to unlock its untapped potential.

Shmidman, who has built a career bringing beleaguered brands back to life through licensing, sees similar potential for this brand: “We believe that Express is an incredible brand with a powerful brand purpose and meaningful, untapped growth potential, especially in major regions outside the U.S.,” he said on the earnings call.

Before he launched WHP Global, Shmidman spent his career leading some of the largest brand management firms in the business, including as COO of Iconix Brand Group (Bongo, Candie’s, Starter, Mossimo), then as CEO of Sequential Brands Group (which filed for bankruptcy in 2021, long after Shmidman’s tenure, but previously owned brands like Jessica Simpson and Joe’s Jeans).

Now Shmidman is the man behind the curtain of the Toys ‘R’ Us comeback, which after a number of false starts has made a triumphant debut at every Macy’s store in the country just in time for the holidays.

Economic Headwinds Affect Express’ Financials

In EXPR’s third quarter, covering the 13 weeks ending Oct. 29, 2022, consolidated net sales decreased 8% to $434.1 million from $472.0 million in Q3 2021. For the full year 2022, the company said it expects comparable sales to be flat to up 1% over full year 2021.

“The third quarter was tougher than we anticipated and that is reflected in our results,” said Baxter on the earnings call. “The macroeconomic, consumer and competitive environments were extremely challenging, and became more acute as the quarter progressed. Our strategy to elevate our brand through higher average unit retails and reduced promotions, which has driven steady growth for the past five quarters, came up against the consumer’s reduced spending in discretionary categories and increased appetite for deep discounts. Despite these results, we remain confident in our ability to achieve our stated goal of long-term, profitable growth in the Express brand.”

Express is now looking to the partnership with WHP for some of that long-term growth. WHP meanwhile hopes to broaden its M&A pipeline through the deal while at the same time add another banner IP to its licensing roster. “I believe strongly that [this partnership] truly will be transformational for both of our companies,” said Shmidman on the earnings call.

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