The contemporary retailer said it will close the 17 locations it operates through its Canadian subsidiary, Express Fashion Apparel Canada Inc.
Express Canada has also filed for protection under the Companies’ Creditors Arrangement Act with the Ontario Superior Court of Justice in Toronto.
“The challenging Canadian retail environment, coupled with unfavorable exchange rates prevented us from meeting the expectations we had when we entered the market in 2011,” said David Kornberg, Express, Inc. president and chief executive officer. “Our overriding focus remains to invest in and direct our resources towards those areas that can generate the greatest return, including growing our e-commerce business, relaunching our customer loyalty program, and continuing to build our omnichannel capabilities to allow our customers to engage with our brand and shop wherever, whenever and however they want.”
Kornberg also said the measures taken in Canada don’t foreshadow any actions for the U.S. stores, “which remain in a solid financial position.”
Store closing sales will begin in mid-May. And Canadian consumers will still be able to shop the brand online and via the company’s app.
The closures follow an 11 percent drop in net sales for the retailer for the quarter and a 7 percent drop for the year, ended Jan. 28. Comparable store sales plummeted 13 percent for the quarter, compared to a 4-percent increase in the prior year period.
For the fiscal year, Express Canada had net sales of approximately $34 million U.S. ($45 million Canadian) and contributed a net loss of roughly $6 million U.S. to Express, Inc.
The company anticipates that the closures will impact pre-tax profit in the range of $28 million to $34 million in 2017, with $6 million of that incurred in the first quarter. Express, Inc. expects a $14 million to $16 million tax benefit, $7 million of which will be in the first quarter. Overall, the move is expected to have an impact on net income in the $14 million to $18 million range in 2017.