Express reported that Q4 net sales rose 38% year over year to $594.9 million, as comps (stores plus e-commerce) rose 43% from 2020 and 4% from 2019. E-commerce grew 33% year over year and 21% from 2019, on track to reach $1 billion by 2024, per a company press release.
Gross margin expanded 220 basis points compared to 2019, despite a $15 million expense associated with supply chain challenges. The apparel retailer swung to black, reaching net income of $7.6 million, from 2020's $53.3 million loss.
Its relaunched loyalty program gained 2.7 million new customers and reactivated 2.2 million lapsed ones, most at stores, CEO Tim Baxter said. In 2022 more smaller Express Edit stores are planned, and the new UpWest brand, which grew by 41%, will open nine more stores.
Before the pandemic, Express, once part of the L Brands stable, was tilting toward bankruptcy, but Baxter has been plotting the apparel retailer's comeback since he arrived in 2019.
At first that meant cutting its workforce and shrinking its footprint by 100 underperforming stores. But the company has also introduced smaller, more curated Express Edit stores in high-traffic locations, with product assortments tailored to those markets and neighborhoods. "They are acquiring new customers and reactivating lapsed customers at higher rates than the balance of our fleet and driving higher digital sales in the surrounding ZIP codes," Baxter told analysts this week.
Last year Express also launched a network of fashion influencers and micro-influencers, naming Rachel Zoe its lead style editor. The program "has the potential to improve relevance at Express and make it more experiential (perhaps most similar to Revolve)," according to a Wednesday research note from MKM Partners Managing Director Roxanne Meyer.
The pre-pandemic adjustments to its operations have prepared the company well as consumers have begun buying apparel again. Its sustainability-oriented UpWest line, which sells casual, comfortable and active clothing, was originally conceived as a DTC brand, but has since opened seven stores, begun a wholesale business and is considering international expansion, Baxter said.
Overall, the company is now aiming for a mid-single-digit operating margin and over $100 million in operating profit by 2024, he also said. The apparel retailer is poised to gain market share, but still has work to do, according to MKM Partners. "Despite this list of positives, the reality is that [Express] is still in a very early inning of improving results, as we now expect [it] to achieve a 1% operating margin this year, putting it at the lower end of retail performance," Meyer said in emailed comments.
Despite its hefty e-commerce goals and recent store closures, Express values its brick-and-mortar channel. "I certainly don't want the takeaway to be that we're not bringing in a large number of new customers online because we are," Baxter told analysts. "It's just that the vast majority of the new customers come in through our stores."