Express' WHP Global Partnership Positions For Growth But Will Take Time, Says Analyst

Telsey Advisory Group analyst Dana Telsey initiated coverage of Express Inc EXPR with a High Risk rating and a $2 price target.
Express is an omni-channel fashion retail company expanding its reach and business model through a transformative partnership with WHP Global that supports licensing and brand acquisitions, said the analyst.
EXPRESSway Forward, the analyst said, is Express's strategy to deliver profitable growth, consisting of four foundational pillars product, brand, customer and execution.
While the pandemic and recent macro pressures disrupted initial expectations, the analyst believes continued focus on the pillars is the appropriate approach for the brand's turnaround.
The analyst thinks the company has a strong leadership team, led by CEO Tim Baxter, who is working to return the brand back to profitable growth.
The new partnership with WHP Global can be transformative for Express. In addition to strengthening the balance sheet by reducing debt, the partnership enables the company to expand its operating platform, said the analyst.
WHP and Express' acquisition of menswear brand Bonobos from Walmart Inc. WMT is a strong start to the partnership as both parties look to continue to acquire and integrate brands, noted the analyst.
The analyst believes the customer will continue to seek value given macro headwinds at least through 2023-end, though visibility into improving macro conditions remains uncertain.
While Express expects to receive approximately $20 million back in distribution payments, the analyst regards that the operating margin may be under pressure until EXPR and WHP Global have identified and ramped up licensing partnerships.
Price Action: EXPR shares are trading lower by 0.66% at $0.8667 on the last check Tuesday.

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