Express CEO Seeks to Calm Bankruptcy Worries Following Report
Stewart Glendinning, chief executive officer of Express Inc., is trying to calm some jittery nerves after a media report about a possible debt restructuring and bankruptcy sent shares of the retailer reeling.
“Headlines rarely tell the full story, and I want you to be armed with the facts,” Glendinning told employees on Wednesday in an internal memo obtained by WWD.
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“We have made tremendous progress in our transformation over the past several months: We implemented a series of cost-saving initiatives, made changes to our workforce and streamlined our processes to enhance the efficiency of our operations,” the CEO said. “We have acted with urgency and accomplished a lot in a short period of time, and I am grateful for your efforts. I also recognize that all of this change was not easy, but it was necessary to position our organization for the future.”
He said the company is “proactively preserving our liquidity” while it waits for a government payment under the Coronavirus Aid, Relief and Economic Security Act.
“We are actively engaged with the IRS to move our claim forward, and it is only a matter of time until we receive those funds,” Glendinning said. “In the meantime, we continue to implement a range of alternatives to create short-term liquidity for the business.”
Mark Sill, interim chief financial officer, told analysts on a conference call in November that the company was pursuing a $52 million CARES receivable in two pieces to try to speed up the payment.
“The first piece is for $43 million, which is agreed upon. And the second piece is for $9 million, which is still under review,” Sill said. “We expect to receive $48 million, which is comprised of the $43 million in cash related to the CARES Act receivable, and a $5 million reduction in our income taxes payable for 2022….We are actively engaged with the IRS to move this claim forward, given the importance of this receivable to our liquidity.”
For the nine months ended Oct. 28, Express logged net losses of $154.3 million as sales fell 5.7 percent to $1.3 billion.
The company ended the period with cash and cash equivalents of $34.6 million and total debt of $274.7 million.
The Wall Street Journal reported late Monday that Express had hired restructuring adviser M3 and law firm Kirkland & Ellis to consider a debt restructuring that could include a bankruptcy filing within weeks.
That sent shares of the company down from $3.75 on Monday to $2.04 on Wednesday, a drop of 45.6 percent.
However, a source said Express has not had any discussions with lenders regarding a potential debt restructuring and that it has worked with Kirkland since 2010. M3 is said to have been hired at the request of lenders when a loan was established.
Neither Kirkland or M3 had any immediate comment on Wednesday.
Glendinning told employees, “Our day-to-day business operations and strategic priorities remain the same, and it is business as usual for all of us.”
But at least right now, business as usual at Express involves some belt tightening and hopes that the IRS is going to come through — and soon.
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