Express says its goal to generate $2.1 billion in sales by 2024 is on track—and denim is one of the main drivers.
During the Goldman Sachs Global Retailing Conference on Friday, CEO Tim Baxter pointed to evolving product categories, a strong digital focus and a revamped store strategy for a promising future. It reported second-quarter profits of $10.7 million on revenue of $457.6 million, fueling investor confidence.
“Our business in the second quarter in both our top and bottom line results are really strong indicators that the strategy is working,” Baxter said of the Expressway Forward initiative launched in January 2020, which focuses on four foundational pillars including product, brand, customer and execution.
A big part of the product focus, Baxter said, includes doubling down on its increasingly popular denim category. The brand saw a 21 percent increase in denim sales in the second quarter, and it has remained consistent. “Denim is an enormous opportunity for us,” he said. “It’s the foundation of any modern wardrobe. I expect us to continue to gain significant market share in this category.”
In response to the growing denim demand, Express launched focused promotions to land what it considers more dedicated customers—a notable change for the retailer, which would previous run sitewide and storewide sales.
“Denim is a very sticky category,” Baxter said. “We know based on consumer behavior that if consumers love our denim, they will come back time and time and time again.”
Beyond denim, women’s body contour pieces as well as men’s graphic T-shirts and polos are also driving success. “All of those categories that had not been powerful core categories for us previously were driving significantly positive comps throughout the quarter,” he added.
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Denim brands across the board have been reaping the benefits of a global shift to casualization. Levi’s, Guess, Wrangler and Lee have all had positive post-pandemic earnings as a result. Despite this shift, occasion wear continues to drive traffic for Express, a brand synonymous with workwear and party dresses. As offices open back up and people return to celebrating weddings and holiday parties, the category is seen further driving the retailer’s success, Baxter noted.
E-commerce is another area sparking optimism for Express, which it tied to a goal of driving $1 billion in digital demand by 2024, part of which will be powered by what he calls “style editors” who work their own virtual storefronts with special Express collections. And while Baxter said he won’t pin an exact dollar amount on the new initiative, he believes there could ultimately be “more style editors than we have associates in stores.”
To that point, Express’ brick-and-mortar strategy has evolved since the pandemic spurred the permanent closure of 93 stores—and that number could increase in the near future.
“We may close additional stores, but when we do, we’re going to make those decisions based on data,” he said. “It’s going to take us a while to get the data we need to make those decisions.”
Instead, Express will shift its sights to “fleet optimization,” or downsizing select stores—a strategy that has already proven successful in its Philadelphia-area King of Prussia store, which showed a 12 percent comp increase in the second quarter with 45 percent less space than it had in 2019. Express will also launch Express Edit concept stores, which are storefronts located in high-foot-traffic areas. Baxter said almost 50 percent of customers visiting these locations are brand new to the retailer.
Another factor bringing in new customers and retaining existing ones is the Express Insider Program, which it relaunched in the first quarter of 2021. Since then, it has added 1.1 million new members to its loyalty program, which it revamped to allow customers to earn rewards faster. Though the rewards are minimal—the first tier provides a $5 reward—the impact is much greater. Express has seen associated sales growing at a significantly faster rate than its total sales, and a decrease in the markdown rate associated with those sales.
“The loyalty program is going to be a very powerful tool for us to drive our customer strategy and get a much greater share of wallet from existing customers,” he said. “We’re really excited about the number of new people that are coming into the program.”