Express Inc.’s stock was up 29% on Thursday, but was still down 38% on the week, amid concerns that the troubled clothing retailer may be close to filing for bankruptcy.
Express has hired M3 and law firm Kirkland & Ellis to advise it on the restructuring of nearly $280 million of debt that has become challenging to cover amid declining sales, the Wall Street Journal reported earlier this week.
The stock
EXPR,
of the Ohio-based company has been volatile and closed at a record low of $2.04 on Wednesday. It has fallen 67.5% in the year to date, while the S&P 500
SPX
has gained 5%.
Express enjoyed meme-stock status during the pandemic, and survived that period by issuing stock, betting that the investors who were caught up in the trading frenzy around stocks including AMC Entertainment Inc.
AMC,
and GameStop Corp.
GME,
would be willing to look past its debt burden and operating losses.
The company has posted sales misses for the past six quarters and posted losses for the last three, which it has blamed on a slew of factors from high interest rates to slowing store traffic, and competition from other retailers that are selling their wares at deep discounts.
Stewart Glendinning, the chief executive brought in last September from Tyson Foods Inc.
TSN,
to attempt a turnaround, moved to reassure employees on Wednesday in a memo obtained by trade publication Women’s Wear Daily.
“Headlines rarely tell the full story, and I want you to be armed with the facts,” he wrote, adding that the company is “proactively preserving our liquidity.”
Express is also waiting for a government payment under a COVID-19 relief program that is expected to total $52 million, according to Mark Sill, interim finance head on the company’s November earnings call. The payment is expected to come in two parts, starting with a $43 million payout.
“We are actively engaged with the IRS to move this claim forward, given the importance of this receivable to our liquidity,” Sill told analysts.
The company lost $154.3 million in the first nine months of 2023 as sales fell 5.3% to $1.3 billion.
It ended the third quarter with $34.6 million in cash and $274.7 million in debt. It has $21.7 million available for borrowing under a revolving credit agreement and asset-based loan credit agreement and asset-based term loan agreement.
In August of 2023, the company executive a 1-for-20 reverse stock split to
Express has bout 530 Express stores and factory outlets in the U.S., about 60 Bonobos Guideshop locations and 12 UpWest retail stores, along with e-commerce sites.
This story originally appeared on Marketwatch
