Express's New Look: An IPO

Posted Feb 16th 2010 12:30PM by Tom Taulli
Filed under: Private Equity, Limited Brands (LTD), Initial Public Offerings

Even thought its more than 30 years old, Express continues to be a relevant specialty fashion retailer. In fact, it is ranked the number six player in the U.S., with 573 stores.

So this week, Express filed to go public. The company expects to raise $200 million.

Express focuses on a tough demographic; that is, women and men between the ages of 20 and 30. Yes, this is part of the so-called Gen Y crowd, which can be fickle. But it is also a large market and will continue to grow.

Once a part of Limited Brands (LTD), Express was spun-off in 2007 and has since made some key changes to its strategy. For example, the company revamped its compensation structure, hired key people, and converted its stores to a dual-gender format. There was also the launch of Express.com (sales are still only about 5% of net sales).

For the year, Express posted net sales of $1.7 billion and adjusted EBITDA of $137.2 million, up 60% over the past two years. And there is much room for growth. According to NPD Group, the size of the upscale apparel market for Express' demographic is roughly $20 billion.

Also, Express is backed by private equity investor, Golden Gate Private Equity. So the IPO will also help provide liquidity to the firm.

The lead underwriters on the deal include BofA Merrill Lynch (BAC) and Goldman Sachs (GS).

Tom Taulli advises on business tax preparation and resolving tax problems. He is also the author of a variety of books, including The Complete M&A Handbook. His website is at Taulli.com.

Tags: BAC, Express, GS, inthenews, IPO, Limited Brands, LTD

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Reader Comments (Page 1 of 1)

3-20-2010 @ 1:47AM

lukasaltar said...

Stock market IPO question?
ok i know that when a company goes public they hire an underwriting firm to decide when and how many shares to issue at what price, so my question is this, why wouldnt a company offer there shares at a low price and have the majority shareholder ( who most likely started and runs the company ) have a couple million shares at so that when they offer the shares on a public exchange and people by them and the price of the shares goes up the majority shareholder's shares are worth more? maybe i am way off base here, i am sure there is alot of stuff that i am missing can someone please explain how this stuff works? thanks!