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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Express Inc | NYSE:EXPR | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 2.29 | 0 | 01:00:00 |
Fashion apparel retailer Express, Inc. (NYSE:EXPR), announced its financial results for the first quarter of 2020. These results, which cover the thirteen weeks ended May 2, 2020, are compared to the thirteen weeks ended May 4, 2019.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20200603005219/en/
Express storefront at Easton Town Center in Columbus, Ohio. (Photo: Business Wire)
"The impact of the COVID-19 pandemic on our industry, economy, communities, associates, and customers over the last few months is unlike anything we have experienced before; and the protests and demonstrations across the country over the last week create even more uncertainty. As a Company, our efforts have been focused on protecting the safety of our associates and customers, and ensuring sufficient liquidity to continue the important work of our transformation,” said Tim Baxter, Chief Executive Officer.
“Response to product that reflects our new design & merchandising vision – The Express Edit – with its emphasis on versatility and value, has been positive, and the new ways in which we are communicating our brand positioning – Creating Confidence & Inspiring Self-Expression – are resonating with our customers,” Baxter continued. “Through the clear direction of our Executive team and the dedication of our associates, our organization did not miss a beat. The teams made a smooth transition to working from home, kept a sharp focus on our key initiatives and hit every milestone in our product development cycle and new Go to Market process. And as our stores reopened, I witnessed reunions between sales associates and customers that speak volumes about the strength of our brand, the relevance of our positioning and the importance of physical retail. I am so proud of all the ways our leaders and teams have kept moving on The EXPRESSway Forward. I am confident that with the decisive actions we have taken and the strategy we have implemented, we will achieve our long-term objectives.”
COVID-19 Impact Mitigation Actions:
As previously announced, the Company took a number of actions to support associates and maintain liquidity throughout the COVID-19 pandemic, which are as follows:
The total liquidity benefits from these actions in 2020 are expected to be approximately $385 million, of which $195 million was realized in the first quarter. These benefits are incremental to the previously announced cost savings associated with The EXPRESSway Forward strategy.
First Quarter 2020 Operating Results:
First Quarter 2020 Balance Sheet Highlights:
Store Reopening Plans:
As of June 3, 2020, the Company has opened 303 stores, in accordance with the latest federal and state guidelines. The Company is taking the following actions to provide a safe and comfortable environment for our associates and customers:
The Company is taking a phased approach to reopening stores, with the pace and staffing calibrated to mall traffic and consumer demand. Plans will be accelerated or modified based on the learnings as well as any updated associate and customer safety measures.
Open store locations and hours of operation are available at www.express.com. The Company’s website and mobile app remain available to customers.
Second Quarter 2020 Guidance:
Due to the uncertainty surrounding the current environment, the Company will not provide guidance for the second quarter or the year at this time, with the exception of capital expenditures, which are expected to be in the range of $20 million to $25 million for the full year 2020.
Conference Call Information:
A conference call to discuss first quarter 2020 results is scheduled for June 3, 2020 at 9:00 a.m. Eastern Time (ET). Investors and analysts interested in participating in the call are invited to dial (877) 683-0508 approximately ten minutes prior to the start of the call. The conference call will also be webcast live at http://www.express.com/investor and remain available for 90 days. A telephone replay of this call will be available at 12:00 p.m. ET on June 3, 2020 until 11:59 p.m. ET on June 10, 2020 and can be accessed by dialing (800) 585-8367 and entering the replay pin number 9374457*. In addition, an investor presentation of first quarter 2020 results will be available at http://www.express.com/investor at approximately 7:00 a.m. ET on June 3, 2020.
About Express, Inc.:
Express is a leading fashion brand for women and men. Since 1980, Express has provided the latest apparel and accessories to help customers build a wardrobe for every occasion, offering fashion and quality at an attractive value. The company operates retail and factory outlet stores in the United States and Puerto Rico, as well as an online destination. For more information, please visit www.express.com.
Forward-Looking Statements:
Certain statements are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include any statement that does not directly relate to any historical or current fact and include, but are not limited to (1) guidance and expectations, including statements regarding expected operating margins, comparable sales, effective tax rates, interest income, net income, diluted earnings per share, and capital expenditures, (2) statements regarding expected store openings, store closures, store conversions, and gross square footage, and (3) statements regarding the Company's strategy, plans, and initiatives, including, but not limited to, results expected from such strategy, plans, and initiatives. Forward-looking statements are based on our current expectations and assumptions, which may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict, and significant contingencies, many of which are beyond the Company's control. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are (1) changes in consumer spending and general economic conditions; (2) the COVID-19 impact and its continued impact on our business operations, store traffic, employee availability, financial condition, liquidity and cash flow; (3) our ability to identify and respond to new and changing fashion trends, customer preferences, and other related factors; (4) fluctuations in our sales, results of operations, and cash levels on a seasonal basis and due to a variety of other factors, including our product offerings relative to customer demand, the mix of merchandise we sell, promotions, and inventory levels; (5) customer traffic at malls, shopping centers, and at our stores; (6) competition from other retailers; (7) our dependence on a strong brand image; (8) our ability to adapt to changing consumer behavior and develop and maintain a relevant and reliable omni-channel experience for our customers; (9) the failure or breach of information systems upon which we rely; (10) our ability to protect customer data from fraud and theft; (11) our dependence upon third parties to manufacture all of our merchandise; (12) changes in the cost of raw materials, labor, and freight; (13) supply chain or other business disruption, including as a result of the coronavirus; (14) our dependence upon key executive management; (15) our ability to execute our growth strategy, EXPRESSway Forward, including engaging our customers and acquiring new ones, executing with precision to accelerate sales and profitability, creating great product and reinvigorating our brand; (16) our substantial lease obligations; (17) our reliance on third parties to provide us with certain key services for our business; (18) impairment charges on long-lived assets; (19) claims made against us resulting in litigation or changes in laws and regulations applicable to our business; (20) our inability to protect our trademarks or other intellectual property rights which may preclude the use of our trademarks or other intellectual property around the world; (21) restrictions imposed on us under the terms of our asset-based loan facility, including restrictions on the ability to effect share repurchases; (22) changes in tax requirements, results of tax audits, and other factors that may cause fluctuations in our effective tax rate; (23) changes in tariff rates; and (24) natural disasters, extreme weather, public health issues, including pandemics, fire, acts of terrorism or war and other events that cause business interruption. Additional information concerning these and other factors can be found in Express, Inc.'s filings with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events, or otherwise, except as required by law.
Schedule 1Express, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
May 2, 2020
February 1, 2020
May 4, 2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
236,185
$
207,139
$
144,233
Receivables, net
12,897
10,824
13,916
Inventories
268,787
220,303
285,641
Prepaid rent
330
6,850
6,212
Other
35,881
25,573
29,219
Total current assets
554,080
470,689
479,221
RIGHT OF USE ASSET, NET
963,142
1,010,216
1,149,360
PROPERTY AND EQUIPMENT
985,091
979,639
1,010,648
Less: accumulated depreciation
(754,414
)
(731,309
)
(723,400
)
Property and equipment, net
230,677
248,330
287,248
TRADENAME/DOMAIN NAMES/TRADEMARKS
—
—
197,618
DEFERRED TAX ASSETS
—
54,973
6,605
OTHER ASSETS
51,285
6,531
6,635
Total assets
$
1,799,184
$
1,790,739
$
2,126,687
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Short-term lease liability
$
225,383
$
226,174
$
228,212
Accounts payable
123,429
126,863
133,598
Deferred revenue
31,331
38,227
36,304
Accrued expenses
91,797
76,211
95,752
Total current liabilities
471,940
467,475
493,866
LONG-TERM LEASE LIABILITY
879,983
897,304
1,042,146
LONG-TERM DEBT
165,000
—
—
DEFERRED LEASE CREDITS
1,731
1,835
3,473
OTHER LONG-TERM LIABILITIES
26,316
17,823
21,455
Total liabilities
1,544,970
1,384,437
1,560,940
COMMITMENTS AND CONTINGENCIES
Total stockholders’ equity
254,214
406,302
565,747
Total liabilities and stockholders’ equity
$
1,799,184
$
1,790,739
$
2,126,687
Schedule 2
Express, Inc.
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
Thirteen Weeks Ended
May 2, 2020
May 4, 2019
NET SALES
$
210,275
$
451,271
COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS
256,482
328,768
Gross (loss)/profit
(46,207
)
122,503
OPERATING EXPENSES:
Selling, general, and administrative expenses
99,165
135,367
Other operating income, net
(93
)
(1,310
)
Total operating expenses
99,072
134,057
OPERATING LOSS
(145,279
)
(11,554
)
INTEREST EXPENSE/(INCOME), NET
56
(712
)
OTHER EXPENSE, NET
2,733
—
LOSS BEFORE INCOME TAXES
(148,068
)
(10,842
)
INCOME TAX EXPENSE/(BENEFIT)
5,982
(908
)
NET LOSS
$
(154,050
)
$
(9,934
)
EARNINGS PER SHARE:
Basic
$
(2.41
)
$
(0.15
)
Diluted
$
(2.41
)
$
(0.15
)
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic
64,030
66,845
Diluted
64,030
66,845
Schedule 3
Express, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Thirteen Weeks Ended
May 2, 2020
May 4, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$
(154,050
)
$
(9,934
)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
19,332
22,216
Loss on disposal of property and equipment
—
350
Impairment of property, equipment and lease assets
14,678
—
Equity method investment impairment
2,733
—
Share-based compensation
2,502
2,372
Deferred taxes
64,424
(14
)
Landlord allowance amortization
(104
)
(813
)
Changes in operating assets and liabilities:
Receivables, net
(2,073
)
3,453
Inventories
(48,485
)
(17,875
)
Accounts payable, deferred revenue, and accrued expenses
2,117
(10,819
)
Other assets and liabilities
(32,312
)
(5,881
)
Net cash used in operating activities
(131,238
)
(16,945
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(4,176
)
(4,078
)
Net cash used in investing activities
(4,176
)
(4,078
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from financing arrangements
165,000
—
Payments on lease financing obligations
—
(27
)
Repurchase of common stock under share repurchase program
—
(4,889
)
Repurchase of common stock for tax withholding obligations
(540
)
(1,498
)
Net cash provided by (used in) financing activities
164,460
(6,414
)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
29,046
(27,437
)
CASH AND CASH EQUIVALENTS, Beginning of period
207,139
171,670
CASH AND CASH EQUIVALENTS, End of period
$
236,185
$
144,233
Schedule 4
Express, Inc. Supplemental Information - Consolidated Statements of Income Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)
The Company supplements the reporting of its financial information determined under United States generally accepted accounting principles (GAAP) with certain non-GAAP financial measures: adjusted net loss, adjusted operating loss, and adjusted diluted earnings per share. The Company believes that these non-GAAP measures provide additional useful information to assist stockholders in understanding its financial results and assessing its prospects for future performance. Management believes adjusted net loss, adjusted operating loss, and adjusted diluted earnings per share are important indicators of the Company's business performance because they exclude items that may not be indicative of, or are unrelated to, the Company's underlying operating results, and may provide a better baseline for analyzing trends in the business. In addition, adjusted diluted earnings per share is used as a performance measure in the Company's long-term executive compensation program for purposes of determining the number of equity awards that are ultimately earned and adjusted operating loss is a metric used in our short-term cash incentive compensation plan. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. These adjusted financial measures should not be considered in isolation or as a substitute for reported net loss, operating loss, or diluted earnings per share. These non-GAAP financial measures reflect an additional way of viewing the Company's operations that, when viewed with the GAAP results and the below reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of the Company's business. Management strongly encourages investors and stockholders to review the Company's financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.
Thirteen Weeks Ended May 2, 2020
(in thousands, except per share amounts)
Operating Loss
Income Tax Impact
Net Loss
Diluted Earnings per Share
Weighted Average Diluted Shares Outstanding
Reported GAAP Measure
$
(145,279
)
$
(154,050
)
$
(2.41
)
64,030
Impairment of property, equipment and lease assets
14,678
(3,856
)
10,822
0.17
Equity method investment impairment (a)
—
(642
)
2,091
0.03
Valuation allowance on deferred taxes (b)
—
61,075
61,075
0.95
Tax impact of the CARES Act (c)
—
(19,473
)
(19,473
)
(0.30
)
Tax impact of executive departures (d)
—
111
111
—
Adjusted Non-GAAP Measure
$
(130,601
)
$
(99,424
)
$
(1.55
)
Schedule 5
Express, Inc.
Real Estate Activity
(Unaudited)
First Quarter 2020 - Actual
May 2, 2020 - Actual
Company-Operated Stores
Opened
Closed
Conversion
Store Count
Gross Square Footage
United States - Retail Stores
—
(1)
—
380
United States - Outlet Stores
—
—
—
214
Total
—
(1)
—
594
5.0 million
Second Quarter 2020 - Projected
August 1, 2020 - Projected
Company-Operated Stores
Opened
Closed
Conversion
Store Count
Gross Square Footage
United States - Retail Stores
—
—
—
380
United States - Outlet Stores
1
—
—
215
Total
1
—
—
595
5.0 million
Full Year 2020 - Projected
January 30, 2021 - Projected
Company-Operated Stores
Opened
Closed
Conversion
Store Count
Gross Square Footage
United States - Retail Stores
1
(26)
—
356
United States - Outlet Stores
1
(9)
—
206
Total
2
(35)
—
562
4.8 million
View source version on businesswire.com: https://www.businesswire.com/news/home/20200603005219/en/
Investors: Dan Aldridge VP, Investor Relations Express (614) 474-4890
Media: Alysa Spittle Director, Communications Express (614) 474-4745
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