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For Express, its fiscal second-quarter performance fell well short of its expectations, due in large part to a strategic oversight that contributed to a decline in store traffic.
During the company’s earnings call on Wednesday, Express CEO David Kornberg talked about the reasons behind the store traffic decline.
“We also attribute our performance to a lack of clarity in our assortment caused by too many choices and this was compounded by skewing too young in our projection, especially in the latter part of the quarter,” he explained. “In an effort to acquire younger customers to our brand, we expanded our merchandizing reach and shifted our marketing projection. While our fashion attracted more customers at the lower end of our target demographic age group, this was more than offset by a decline at the upper end.”
Going forward, Kornberg noted that there will be an increased focus on the Express Next loyalty program.
As it relates to choice count based on the company’s 2015 spring results, Kornberg further explained what happened during the second quarter.
“We proactively increased choices in higher productivity malls to spring this year to further drive sales at these doors,” he said. “We found, however, that the increase in choice count resulted in a lack of clarity across the store, particularly in women and, ultimately, led to lower sales and added markdown pressure. We believe we will be in a better position in terms of choice count as we enter the fourth quarter and closer to optimal choice count at the start of next year. We’ve corrected this balance and believe our assortment and marketing will appropriately reflect our target demographic as we move further into fall.”
Brad Marg, COO at Clutch, offered Loyalty360 his assessment of the situation at Express.
“Express’ miss can be a lesson for other apparel retailers,” Marg said. “Understanding client preferences, expectations, needs, as well as key demographic details, will help plan for seasonal merchandise across the client segments. It would be easy to not only see the segments are buying specific categories, but also understand their preferences for the upcoming season. Loyalty programs enable this dialogue between brand and consumer and it’s of great value when well executed.”
Second-quarter same-store sales fell 8% at Express.
From a merchandise perspective, Kornberg said Express officials have “rationalized our choice count so that we clearly identify, curate, and communicate the important trends. This will be reflected in Q4 receipts and should be optimized by the beginning of 2017. Beginning with the fall season, we’ve adjusted the merchandizing and marketing projection of the brand to be more closely aligned with our target customer demographic. Going forward, we will continue to deliver frequent newness, but will tell fewer stories to ensure our offerings are clear and cohesive across lifestyle. And while we expect traffic to remain a headwind, we anticipate our brand building and customer experience initiatives will gain traction throughout the balance of the year and help improve our trend, increase the speed with which we operate and, most importantly, move our sales and profit trends upward.”
Stellar Loyalty CMO Narina Sippy offered her thoughts about Express.
“The pain Express and many other retailers are experiencing today is rooted in a lack of good, segmented, and actionable data about their most loyal and profitable customers,” Sippy explained to Loyalty360. “Express has made some smart moves in integrating mobile with its Express Next loyalty and credit card programs, but the key to making those advancements pay off is first understanding who their most loyal customers are, being able to model look-a-likes to attract more loyal customers, and offering personalized experiences exclusively for those customers to increase per customer profitability. Doing this right increases both frequency and spend, enabling the brand to set optimum price points based on increased brand value.”
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