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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 |
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
26-2828128
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
1 Express Drive
Columbus, Ohio
|
|
43230
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
|
o
|
Accelerated filer
|
x
|
|
|
|
|
Non-accelerated filer
|
o
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
o
|
|
|
|
|
|
|
Emerging growth company
|
o
|
•
|
changes in consumer spending and general economic conditions;
|
•
|
customer traffic at malls, shopping centers, and at our stores;
|
•
|
competition from other retailers;
|
•
|
our dependence upon independent third parties to manufacture all of our merchandise;
|
•
|
changes in the cost of raw materials, labor, and freight;
|
•
|
supply chain disruption and increased tariffs;
|
•
|
difficulties associated with our distribution facilities;
|
•
|
natural disasters, fire, and other events that cause business interruption; and
|
•
|
our reliance on third parties to provide us with certain key services for our business.
|
•
|
our ability to identify and respond to new and changing fashion trends, customer preferences, and other related factors;
|
•
|
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, inventory levels, and sales mix between stores and e-commerce;
|
•
|
our dependence on a strong brand image;
|
•
|
our ability to adapt to changes in consumer behavior and develop and maintain a relevant and reliable omni-channel experience for our customers;
|
•
|
our dependence upon key executive management; and
|
•
|
our ability to execute our growth strategy, including improving profitability, providing an exceptional brand and customer experience, transforming and leveraging our systems and processes, and cultivating a strong company culture, and achieving our strategic objectives, including delivering compelling merchandise at an attractive value, investing in growing brand awareness and retaining and acquiring new customers to the Express brand, growing e-commerce sales and expanding our omni-channel capabilities, optimizing our store footprint, and managing our overall cost structure.
|
•
|
the failure or breach of information systems upon which we rely; and
|
•
|
our ability to protect our customer data from fraud and theft.
|
•
|
our substantial lease obligations;
|
•
|
restrictions imposed on us under the terms of our asset-based loan facility, including restrictions on our ability to repurchase shares of our common stock;
|
•
|
impairment charges on long-lived assets;
|
•
|
claims made against us resulting in litigation or changes in laws and regulations applicable to our business;
|
•
|
our inability to protect our trademarks or other intellectual property rights that may preclude the use of our trademarks or other intellectual property around the world;
|
•
|
changes in tax requirements, results of tax audits, and other factors that may cause fluctuations in our effective tax rate; and
|
•
|
our failure to maintain adequate internal controls.
|
|
|
|
PART I
|
||
|
|
|
ITEM 1.
|
||
|
|
|
ITEM 2.
|
||
|
|
|
ITEM 3.
|
||
|
|
|
ITEM 4.
|
||
|
|
|
PART II
|
||
|
|
|
ITEM 1.
|
||
|
|
|
ITEM 1A.
|
||
|
|
|
ITEM 2.
|
||
|
|
|
ITEM 3.
|
||
|
|
|
ITEM 4.
|
||
|
|
|
ITEM 5.
|
||
|
|
|
ITEM 6.
|
ITEM 1.
|
FINANCIAL STATEMENTS.
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
August 4, 2018
|
|
July 29, 2017
|
|
August 4, 2018
|
|
July 29, 2017
|
||||||||
NET SALES
|
$
|
493,605
|
|
|
$
|
481,209
|
|
|
$
|
972,957
|
|
|
$
|
955,401
|
|
COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS
|
353,202
|
|
|
347,452
|
|
|
689,392
|
|
|
689,363
|
|
||||
Gross profit
|
140,403
|
|
|
133,757
|
|
|
283,565
|
|
|
266,038
|
|
||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
||||||||
Selling, general, and administrative expenses
|
137,655
|
|
|
134,169
|
|
|
278,289
|
|
|
266,508
|
|
||||
Restructuring costs
|
—
|
|
|
16,340
|
|
|
—
|
|
|
22,611
|
|
||||
Other operating (income) expense, net
|
71
|
|
|
(724
|
)
|
|
(176
|
)
|
|
(323
|
)
|
||||
Total operating expenses
|
137,726
|
|
|
149,785
|
|
|
278,113
|
|
|
288,796
|
|
||||
|
|
|
|
|
|
|
|
||||||||
OPERATING INCOME/(LOSS)
|
2,677
|
|
|
(16,028
|
)
|
|
5,452
|
|
|
(22,758
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
INTEREST (INCOME)/EXPENSE, NET
|
(38
|
)
|
|
696
|
|
|
136
|
|
|
1,493
|
|
||||
OTHER INCOME, NET
|
(500
|
)
|
|
(525
|
)
|
|
(500
|
)
|
|
(537
|
)
|
||||
INCOME/(LOSS) BEFORE INCOME TAXES
|
3,215
|
|
|
(16,199
|
)
|
|
5,816
|
|
|
(23,714
|
)
|
||||
INCOME TAX EXPENSE/(BENEFIT)
|
981
|
|
|
(4,308
|
)
|
|
3,065
|
|
|
(9,155
|
)
|
||||
NET INCOME/(LOSS)
|
$
|
2,234
|
|
|
$
|
(11,891
|
)
|
|
$
|
2,751
|
|
|
$
|
(14,559
|
)
|
|
|
|
|
|
|
|
|
||||||||
OTHER COMPREHENSIVE INCOME:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation gain
|
$
|
—
|
|
|
$
|
4,172
|
|
|
$
|
—
|
|
|
$
|
3,803
|
|
Other Comprehensive Income
|
$
|
—
|
|
|
$
|
4,172
|
|
|
$
|
—
|
|
|
$
|
3,803
|
|
COMPREHENSIVE INCOME/(LOSS)
|
$
|
2,234
|
|
|
$
|
(7,719
|
)
|
|
$
|
2,751
|
|
|
$
|
(10,756
|
)
|
|
|
|
|
|
|
|
|
||||||||
EARNINGS PER SHARE:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.03
|
|
|
$
|
(0.15
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.19
|
)
|
Diluted
|
$
|
0.03
|
|
|
$
|
(0.15
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.19
|
)
|
|
|
|
|
|
|
|
|
||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
||||||||
Basic
|
73,958
|
|
|
78,786
|
|
|
74,683
|
|
|
78,616
|
|
||||
Diluted
|
74,675
|
|
|
78,786
|
|
|
75,399
|
|
|
78,616
|
|
|
Twenty-Six Weeks Ended
|
||||||
|
August 4, 2018
|
|
July 29, 2017
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income/(loss)
|
$
|
2,751
|
|
|
$
|
(14,559
|
)
|
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
42,434
|
|
|
45,258
|
|
||
Loss on disposal of property and equipment
|
301
|
|
|
1,256
|
|
||
Impairment charge
|
—
|
|
|
5,479
|
|
||
Loss on deconsolidation of Canada
|
—
|
|
|
10,672
|
|
||
Share-based compensation
|
7,266
|
|
|
7,460
|
|
||
Deferred taxes
|
(25
|
)
|
|
2,264
|
|
||
Landlord allowance amortization
|
(5,970
|
)
|
|
(6,537
|
)
|
||
Other non-cash adjustments
|
(500
|
)
|
|
(500
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables, net
|
806
|
|
|
415
|
|
||
Inventories
|
(9,717
|
)
|
|
(23,549
|
)
|
||
Accounts payable, deferred revenue, and accrued expenses
|
(30,379
|
)
|
|
(8,560
|
)
|
||
Other assets and liabilities
|
906
|
|
|
(8,898
|
)
|
||
Net cash provided by operating activities
|
7,873
|
|
|
10,201
|
|
||
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Capital expenditures
|
(17,389
|
)
|
|
(30,154
|
)
|
||
Decrease in cash and cash equivalents resulting from deconsolidation of Canada
|
—
|
|
|
(9,232
|
)
|
||
Net cash used in investing activities
|
(17,389
|
)
|
|
(39,386
|
)
|
||
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Payments on lease financing obligations
|
(916
|
)
|
|
(835
|
)
|
||
Repayments of financing arrangements
|
(303
|
)
|
|
(2,040
|
)
|
||
Repurchase of common stock under share repurchase program
|
(32,000
|
)
|
|
—
|
|
||
Repurchase of common stock for tax withholding obligations
|
(2,642
|
)
|
|
(1,562
|
)
|
||
Net cash used in financing activities
|
(35,861
|
)
|
|
(4,437
|
)
|
||
|
|
|
|
|
|
||
EFFECT OF EXCHANGE RATE ON CASH
|
—
|
|
|
(437
|
)
|
||
|
|
|
|
|
|
||
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
(45,377
|
)
|
|
(34,059
|
)
|
||
CASH AND CASH EQUIVALENTS, Beginning of period
|
236,222
|
|
|
207,373
|
|
||
CASH AND CASH EQUIVALENTS, End of period
|
$
|
190,845
|
|
|
$
|
173,314
|
|
CONSOLIDATED STATEMENTS OF INCOME
|
Thirteen Weeks Ended July 29, 2017
|
||||||||||
(unaudited, in thousands, except per share amounts)
|
As Reported
|
|
Adjustments for adoption of ASC 606
|
|
As Adjusted
|
||||||
NET SALES
|
$
|
478,536
|
|
|
$
|
2,673
|
|
|
$
|
481,209
|
|
COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS
|
347,066
|
|
|
386
|
|
|
347,452
|
|
|||
Gross profit
|
131,470
|
|
|
2,287
|
|
|
133,757
|
|
|||
OPERATING EXPENSES:
|
|
|
|
|
|
||||||
Selling, general and administrative expenses
|
131,736
|
|
|
2,433
|
|
|
134,169
|
|
|||
Restructuring costs
|
16,340
|
|
|
—
|
|
|
16,340
|
|
|||
Other operating expense, net
|
(724
|
)
|
|
—
|
|
|
(724
|
)
|
|||
Total operating expenses
|
147,352
|
|
|
2,433
|
|
|
149,785
|
|
|||
|
|
|
|
|
|
||||||
OPERATING INCOME
|
(15,882
|
)
|
|
(146
|
)
|
|
(16,028
|
)
|
|||
|
|
|
|
|
|
||||||
INTEREST EXPENSE, NET
|
696
|
|
|
—
|
|
|
696
|
|
|||
INTEREST INCOME
|
|
|
|
|
|
||||||
OTHER INCOME, NET
|
(525
|
)
|
|
—
|
|
|
(525
|
)
|
|||
(LOSS) INCOME BEFORE INCOME TAXES
|
(16,053
|
)
|
|
(146
|
)
|
|
(16,199
|
)
|
|||
INCOME TAX (BENEFIT) EXPENSE
|
(4,251
|
)
|
|
(57
|
)
|
|
(4,308
|
)
|
|||
NET INCOME (LOSS)
|
$
|
(11,802
|
)
|
|
$
|
(89
|
)
|
|
$
|
(11,891
|
)
|
|
|
|
|
|
|
||||||
EARNINGS PER SHARE:
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.15
|
)
|
|
$
|
—
|
|
|
$
|
(0.15
|
)
|
Diluted
|
$
|
(0.15
|
)
|
|
$
|
—
|
|
|
$
|
(0.15
|
)
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF INCOME
|
Twenty-Six Weeks Ended July 29, 2017
|
||||||||||
(unaudited, in thousands, except per share amounts)
|
As Reported
|
|
Adjustments for adoption of ASC 606
|
|
As Adjusted
|
||||||
NET SALES
|
$
|
945,565
|
|
|
$
|
9,836
|
|
|
$
|
955,401
|
|
COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS
|
687,097
|
|
|
2,266
|
|
|
689,363
|
|
|||
Gross profit
|
258,468
|
|
|
7,570
|
|
|
266,038
|
|
|||
OPERATING EXPENSES:
|
|
|
|
|
|
||||||
Selling, general and administrative expenses
|
261,808
|
|
|
4,700
|
|
|
266,508
|
|
|||
Restructuring costs
|
22,611
|
|
|
—
|
|
|
22,611
|
|
|||
Other operating expense, net
|
(323
|
)
|
|
—
|
|
|
(323
|
)
|
|||
Total operating expenses
|
284,096
|
|
|
4,700
|
|
|
288,796
|
|
|||
|
|
|
|
|
|
||||||
OPERATING INCOME
|
(25,628
|
)
|
|
2,870
|
|
|
(22,758
|
)
|
|||
|
|
|
|
|
|
||||||
INTEREST EXPENSE, NET
|
1,493
|
|
|
—
|
|
|
1,493
|
|
|||
INTEREST INCOME
|
|
|
|
|
|
||||||
OTHER INCOME, NET
|
(537
|
)
|
|
—
|
|
|
(537
|
)
|
|||
(LOSS) INCOME BEFORE INCOME TAXES
|
(26,584
|
)
|
|
2,870
|
|
|
(23,714
|
)
|
|||
INCOME TAX (BENEFIT) EXPENSE
|
(10,251
|
)
|
|
1,096
|
|
|
(9,155
|
)
|
|||
NET INCOME (LOSS)
|
$
|
(16,333
|
)
|
|
$
|
1,774
|
|
|
$
|
(14,559
|
)
|
|
|
|
|
|
|
||||||
EARNINGS PER SHARE:
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.21
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.19
|
)
|
Diluted
|
$
|
(0.21
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.19
|
)
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF CASH FLOWS
|
Twenty-Six Weeks Ended July 29, 2017
|
||||||||||
(unaudited, in thousands)
|
As Reported
|
|
Adjustments for adoption of ASC 606
|
|
As Adjusted
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net (loss)/income
|
$
|
(16,333
|
)
|
|
$
|
1,774
|
|
|
$
|
(14,559
|
)
|
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
45,258
|
|
|
—
|
|
|
45,258
|
|
|||
Loss on disposal of property and equipment
|
1,256
|
|
|
—
|
|
|
1,256
|
|
|||
Impairment charge
|
5,479
|
|
|
—
|
|
|
5,479
|
|
|||
Loss on deconsolidation of Canada
|
10,672
|
|
|
—
|
|
|
10,672
|
|
|||
Share-based compensation
|
7,460
|
|
|
—
|
|
|
7,460
|
|
|||
Deferred taxes
|
1,168
|
|
|
1,096
|
|
|
2,264
|
|
|||
Landlord allowance amortization
|
(6,537
|
)
|
|
—
|
|
|
(6,537
|
)
|
|||
Other non-cash adjustments
|
(500
|
)
|
|
—
|
|
|
(500
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|||||
Receivables, net
|
415
|
|
|
—
|
|
|
415
|
|
|||
Inventories
|
(23,905
|
)
|
|
356
|
|
|
(23,549
|
)
|
|||
Accounts payable, deferred revenue, and accrued expenses
|
(5,178
|
)
|
|
(3,382
|
)
|
|
(8,560
|
)
|
|||
Other assets and liabilities
|
(9,054
|
)
|
|
156
|
|
|
(8,898
|
)
|
|||
Net cash provided by operating activities
|
10,201
|
|
|
—
|
|
|
10,201
|
|
|||
|
|
|
|
|
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Capital expenditures
|
(30,154
|
)
|
|
—
|
|
|
(30,154
|
)
|
|||
Decrease in cash and cash equivalents resulting from deconsolidation of Canada
|
(9,232
|
)
|
|
—
|
|
|
(9,232
|
)
|
|||
Net cash used in investing activities
|
(39,386
|
)
|
|
—
|
|
|
(39,386
|
)
|
|||
|
|
|
|
|
|
||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Payments on lease financing obligations
|
(835
|
)
|
|
—
|
|
|
(835
|
)
|
|||
Repayments of financing arrangements
|
(2,040
|
)
|
|
—
|
|
|
(2,040
|
)
|
|||
Repurchase of common stock under share repurchase program
|
—
|
|
|
—
|
|
|
—
|
|
|||
Repurchase of common stock for tax withholding obligations
|
(1,562
|
)
|
|
—
|
|
|
(1,562
|
)
|
|||
Net cash used in financing activities
|
(4,437
|
)
|
|
—
|
|
|
(4,437
|
)
|
|||
|
|
|
|
|
|
|
|||||
EFFECT OF EXCHANGE RATE ON CASH
|
(437
|
)
|
|
—
|
|
|
(437
|
)
|
|||
|
|
|
|
|
|
|
|||||
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
(34,059
|
)
|
|
—
|
|
|
(34,059
|
)
|
|||
CASH AND CASH EQUIVALENTS, Beginning of period
|
207,373
|
|
|
—
|
|
|
207,373
|
|
|||
CASH AND CASH EQUIVALENTS, End of period
|
$
|
173,314
|
|
|
$
|
—
|
|
|
$
|
173,314
|
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
August 4, 2018
|
|
July 29, 2017
|
|
August 4, 2018
|
|
July 29, 2017
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Apparel
|
$
|
429,152
|
|
|
$
|
421,595
|
|
|
$
|
845,634
|
|
|
$
|
834,570
|
|
Accessories and other
|
51,845
|
|
|
50,972
|
|
|
100,147
|
|
|
98,249
|
|
||||
Other revenue
|
12,608
|
|
|
8,642
|
|
|
27,176
|
|
|
22,582
|
|
||||
Total net sales
|
$
|
493,605
|
|
|
$
|
481,209
|
|
|
$
|
972,957
|
|
|
$
|
955,401
|
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
August 4, 2018
|
|
July 29, 2017
|
|
August 4, 2018
|
|
July 29, 2017
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Stores
|
$
|
357,113
|
|
|
$
|
382,329
|
|
|
$
|
689,263
|
|
|
$
|
744,251
|
|
E-commerce
|
123,884
|
|
|
90,238
|
|
|
256,518
|
|
|
188,568
|
|
||||
Other revenue
|
12,608
|
|
|
8,642
|
|
|
27,176
|
|
|
22,582
|
|
||||
Total net sales
|
$
|
493,605
|
|
|
$
|
481,209
|
|
|
$
|
972,957
|
|
|
$
|
955,401
|
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
August 4, 2018
|
|
July 29, 2017
|
|
August 4, 2018
|
|
July 29, 2017
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Beginning balance loyalty deferred revenue
|
$
|
15,073
|
|
|
$
|
11,520
|
|
|
$
|
14,186
|
|
|
$
|
15,662
|
|
Reduction in revenue/(revenue recognized)
|
3,240
|
|
|
48
|
|
|
4,127
|
|
|
(4,094
|
)
|
||||
Ending balance loyalty deferred revenue
|
$
|
18,313
|
|
|
$
|
11,568
|
|
|
$
|
18,313
|
|
|
$
|
11,568
|
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
August 4, 2018
|
|
July 29, 2017
|
|
August 4, 2018
|
|
July 29, 2017
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Beginning gift card liability
|
$
|
22,337
|
|
|
$
|
22,550
|
|
|
$
|
26,737
|
|
|
$
|
27,498
|
|
Issuances
|
8,598
|
|
|
7,085
|
|
|
16,983
|
|
|
15,313
|
|
||||
Redemptions
|
(9,846
|
)
|
|
(8,924
|
)
|
|
(21,440
|
)
|
|
(20,970
|
)
|
||||
Gift card breakage
|
(754
|
)
|
|
(697
|
)
|
|
(1,945
|
)
|
|
(1,827
|
)
|
||||
Ending gift card liability
|
$
|
20,335
|
|
|
$
|
20,014
|
|
|
$
|
20,335
|
|
|
$
|
20,014
|
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
August 4, 2018
|
|
July 29, 2017
|
|
August 4, 2018
|
|
July 29, 2017
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Beginning balance refundable payment liability
|
$
|
19,187
|
|
|
$
|
—
|
|
|
$
|
19,906
|
|
|
$
|
—
|
|
Recognized in revenue
|
(720
|
)
|
|
—
|
|
|
(1,439
|
)
|
|
—
|
|
||||
Ending balance refundable payment liability
|
$
|
18,467
|
|
|
$
|
—
|
|
|
$
|
18,467
|
|
|
$
|
—
|
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||
|
August 4, 2018
|
|
July 29, 2017
|
|
August 4, 2018
|
|
July 29, 2017
|
||||
|
(in thousands)
|
||||||||||
Weighted-average shares - basic
|
73,958
|
|
|
78,786
|
|
|
74,683
|
|
|
78,616
|
|
Dilutive effect of stock options and restricted stock units
|
717
|
|
|
—
|
|
|
716
|
|
|
—
|
|
Weighted-average shares - diluted
|
74,675
|
|
|
78,786
|
|
|
75,399
|
|
|
78,616
|
|
|
August 4, 2018
|
||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
|
(in thousands)
|
||||||||||
Money market funds
|
$
|
171,123
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
||||||||||
|
February 3, 2018
|
||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
|
(in thousands)
|
||||||||||
Money market funds
|
$
|
139,920
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commercial paper
|
—
|
|
|
79,908
|
|
|
—
|
|
|||
|
$
|
139,920
|
|
|
$
|
79,908
|
|
|
$
|
—
|
|
|
August 4, 2018
|
||||||||||
|
Cost
|
|
Accumulated
Amortization
|
|
Ending Net Balance
|
||||||
|
(in thousands)
|
||||||||||
Tradename/domain names/trademarks
|
$
|
197,618
|
|
|
$
|
—
|
|
|
$
|
197,618
|
|
Licensing arrangements
|
425
|
|
|
294
|
|
|
131
|
|
|||
|
$
|
198,043
|
|
|
$
|
294
|
|
|
$
|
197,749
|
|
|
February 3, 2018
|
||||||||||
|
Cost
|
|
Accumulated
Amortization
|
|
Ending Net Balance
|
||||||
|
(in thousands)
|
||||||||||
Tradename/domain names/trademarks
|
$
|
197,618
|
|
|
$
|
—
|
|
|
$
|
197,618
|
|
Licensing arrangements
|
425
|
|
|
270
|
|
|
155
|
|
|||
|
$
|
198,043
|
|
|
$
|
270
|
|
|
$
|
197,773
|
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
August 4, 2018
|
|
July 29, 2017
|
|
August 4, 2018
|
|
July 29, 2017
|
||||||||
|
(in thousands)
|
||||||||||||||
Restricted stock units
|
$
|
2,933
|
|
|
$
|
3,051
|
|
|
$
|
6,332
|
|
|
$
|
6,206
|
|
Stock options
|
254
|
|
|
391
|
|
|
587
|
|
|
1,254
|
|
||||
Performance-based restricted stock units
|
265
|
|
|
—
|
|
|
347
|
|
|
—
|
|
||||
Total share-based compensation
|
$
|
3,452
|
|
|
$
|
3,442
|
|
|
$
|
7,266
|
|
|
$
|
7,460
|
|
|
Number of
Shares
|
Grant Date
Weighted Average
Fair Value Per Share
|
|||
|
(in thousands, except per share amounts)
|
||||
Unvested, February 3, 2018
|
2,902
|
|
$
|
11.06
|
|
Granted
|
2,018
|
|
$
|
7.06
|
|
Vested
|
(985
|
)
|
$
|
13.70
|
|
Forfeited
|
(125
|
)
|
$
|
11.44
|
|
Unvested, August 4, 2018
|
3,810
|
|
$
|
9.09
|
|
|
Number of
Shares
|
|
Grant Date
Weighted Average
Exercise Price Per Share
|
|
Weighted-Average Remaining Contractual Life (in years)
|
|
Aggregate Intrinsic Value
|
|||||
|
(in thousands, except per share amounts and years)
|
|||||||||||
Outstanding, February 3, 2018
|
2,609
|
|
|
$
|
16.43
|
|
|
|
|
|
||
Granted
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Exercised
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Forfeited or expired
|
(127
|
)
|
|
$
|
17.05
|
|
|
|
|
|
||
Outstanding, August 4, 2018
|
2,482
|
|
|
$
|
16.39
|
|
|
5.1
|
|
$
|
220
|
|
Expected to vest at August 4, 2018
|
488
|
|
|
$
|
12.36
|
|
|
8.2
|
|
$
|
163
|
|
Exercisable at August 4, 2018
|
1,971
|
|
|
$
|
17.46
|
|
|
4.3
|
|
$
|
44
|
|
Q2 2018 vs. Q2 2017
|
•
Net sales increased 3% to $493.6 million
•
Comparable sales increased 1%
•
Comparable sales (excluding e-commerce sales) decreased 7%
•
E-commerce sales increased 37% to $123.9 million
•
Gross margin percentage increased 60 basis points, to 28.4%
•
Operating income increased $18.7 million to $2.7 million
•
Net income increased $14.1 million to $2.2 million
•
Diluted earnings per share (EPS) increased $0.18 to $0.03
|
Second quarter 2018 update
|
|
Store Productivity
In the second quarter of 2018, comparable sales (excluding e-commerce sales) decreased 7%. We believe this decrease was primarily driven by the following:
•
Decreased traffic at our stores as a result of shifting consumer shopping patterns which are leading to continued traffic challenges in malls; and
•
A decrease in average dollar sales per transaction.
|
Store Fleet Optimization
As of August 4, 2018, we operated 631 stores, including 176 factory outlet stores.
Second quarter of 2018 store openings and closures:
•
Opened 3 new factory outlet stores in the U.S.
•
Closed 3 retail stores in the U.S.
•
Converted 27 retail stores to factory outlet stores
|
E-Commerce
In the second quarter of 2018, our e-commerce sales increased 37% compared to the second quarter of 2017. We believe the increase was primarily driven by:
•
The shift in customer shopping patterns towards e-commerce and mobile;
•
Expanded assortment online;
•
Increased online conversion; and
•
Omni-channel capabilities delivering incremental sales.
E-commerce sales represented 25% of our total net sales in the second quarter of 2018 compared to 19% in the second quarter of 2017.
|
Other Business Achievements
Product
•
Saw improved performance in our men’s business and improving trends in our women’s business.
•
Launched extended sizing in stores in the second quarter of 2018.
Customer Experience
•
Began to realize benefits from our omni-channel capabilities, primarily through ship from stores; and
•
Expanded our test of buy online pick up in stores.
Brand
•
Launched “Express Your Rules” campaign in support of extended sizing; and
•
Further grew our NEXT loyalty program.
Other
•
Repurchased 1.8 million shares for $16.4 million at an average price of $9.06.
|
Financial Measures
|
Description
|
Discussion
|
Net Sales
|
Revenue from the sale of merchandise, less returns and discounts, as well as shipping and handling revenue related to e-commerce, revenue from the rental of our LED sign in Times Square, gift card breakage, revenue earned from our private label credit card agreement, and revenue earned from our franchise agreements.
|
Our business is seasonal, and we have historically realized a higher portion of our net sales in the third and fourth quarters due primarily to the impact of the holiday season. Generally, approximately 45% of our annual net sales occur in the Spring season (first and second quarters) and 55% occur in the Fall season (third and fourth quarters).
|
Comparable Sales
|
Comparable sales is a measure of the amount of sales generated in a period relative to the amount of sales generated in the comparable prior year period. Comparable sales for the second quarter of 2018 were calculated using the 13-week period ended August 4, 2018 as compared to the 13-week period ended August 5, 2017.
Comparable sales includes:
•
Sales from stores that were open 12 months or more as of the end of the reporting period, including conversions
•
E-commerce sales
Comparable sales excludes:
•
Sales from stores where the square footage has changed by more than 20% due to remodel or relocation activity
•
Sales from stores in a phased remodel where a portion of the store is under construction and therefore not productive selling space
•
Sales from stores where the store cannot open due to weather damage or other catastrophe
|
Our business and our comparable sales are subject, at certain times, to calendar shifts, which may occur during key selling periods close to holidays such as Easter, Thanksgiving, and Christmas, and regional fluctuations for events such as sales tax holidays.
|
Cost of goods sold, buying and occupancy costs
|
Includes the following:
•
Direct cost of purchased merchandise
•
Inventory shrink and other adjustments
•
Inbound and outbound freight
•
Merchandising, design, planning and allocation, and manufacturing/production costs
•
Occupancy costs related to store operations (such as rent and common area maintenance, utilities, and depreciation on assets)
•
Logistics costs associated with our e-commerce business
|
Our cost of goods sold typically increases in higher volume quarters because the direct cost of purchased merchandise is tied to sales.
The primary drivers of the costs of individual goods are raw materials, labor in the countries where our merchandise is sourced, and logistics costs associated with transporting our merchandise.
Buying and occupancy costs related to stores are largely fixed and do not necessarily increase as volume increases.
Changes in the mix of products sold by type of product or by channel may also impact our overall cost of goods sold, buying and occupancy costs.
|
Financial Measures
|
Description
|
Discussion
|
Gross Profit/Gross Margin
|
Gross profit is net sales minus cost of goods sold, buying and occupancy costs. Gross margin measures gross profit as a percentage of net sales.
|
Gross profit/gross margin is impacted by the price at which we are able to sell our merchandise and the cost of our product.
We review our inventory levels on an on-going basis in order to identify slow-moving merchandise and generally use markdowns to clear such merchandise. The timing and level of markdowns are driven primarily by seasonality and customer acceptance of our merchandise and have a direct effect on our gross margin.
Any marked down merchandise that is not sold is marked-out-of-stock. We use third-party vendors to dispose of this marked-out-of-stock merchandise.
|
Selling, General, and Administrative Expenses
|
Includes operating costs not included in cost of goods sold, buying and occupancy costs such as:
•
Payroll and other expenses related to operations at our corporate offices
•
Store expenses other than occupancy costs
•
Marketing expenses, including production, mailing, print, and digital advertising costs, among other things
|
With the exception of store payroll, certain marketing expenses, and incentive compensation, selling, general, and administrative expenses generally do not vary proportionally with net sales. As a result, selling, general, and administrative expenses as a percentage of net sales are usually higher in lower volume quarters and lower in higher volume quarters.
|
|
Thirteen Weeks Ended
|
||||||
|
August 4, 2018
|
|
July 29, 2017
|
||||
Net sales (in thousands)
|
$
|
493,605
|
|
|
$
|
481,209
|
|
Comparable sales percentage change
|
1
|
%
|
|
(4
|
)%
|
||
Comparable sales percentage change (excluding e-commerce sales)
|
(7
|
)%
|
|
(10
|
)%
|
||
Gross square footage at end of period (in thousands)
|
5,384
|
|
|
5,441
|
|
||
Number of:
|
|
|
|
||||
Stores open at beginning of period
|
631
|
|
|
652
|
|
||
New retail stores
|
—
|
|
|
—
|
|
||
New outlet stores
|
30
|
|
|
23
|
|
||
Retail stores converted to outlets
|
(27
|
)
|
|
(19
|
)
|
||
Closed stores
|
(3
|
)
|
|
(21
|
)
|
||
Stores open at end of period
|
631
|
|
|
635
|
|
|
Thirteen Weeks Ended
|
||||||
|
August 4, 2018
|
|
July 29, 2017
|
||||
|
(in thousands, except percentages)
|
||||||
Cost of goods sold, buying and occupancy costs
|
$
|
353,202
|
|
|
$
|
347,452
|
|
Gross profit
|
$
|
140,403
|
|
|
$
|
133,757
|
|
Gross margin percentage
|
28.4
|
%
|
|
27.8
|
%
|
|
Thirteen Weeks Ended
|
||||||
|
August 4, 2018
|
|
July 29, 2017
|
||||
|
(in thousands, except percentages)
|
||||||
Selling, general, and administrative expenses
|
$
|
137,655
|
|
|
$
|
134,169
|
|
Selling, general, and administrative expenses, as a percentage of net sales
|
27.9
|
%
|
|
27.9
|
%
|
|
Thirteen Weeks Ended
|
||||||
|
August 4, 2018
|
|
July 29, 2017
|
||||
|
(in thousands)
|
||||||
Restructuring costs
|
$
|
—
|
|
|
$
|
16,340
|
|
|
Thirteen Weeks Ended
|
||||||
|
August 4, 2018
|
|
July 29, 2017
|
||||
|
(in thousands)
|
||||||
Income tax expense
|
$
|
981
|
|
|
$
|
(4,308
|
)
|
|
Twenty-Six Weeks Ended
|
||||||
|
August 4, 2018
|
|
July 29, 2017
|
||||
Net sales (in thousands)
|
$
|
972,957
|
|
|
$
|
955,401
|
|
Comparable sales percentage change
|
1
|
%
|
|
(7
|
)%
|
||
Comparable sales percentage change (excluding e-commerce sales)
|
(8
|
)%
|
|
(13
|
)%
|
||
Gross square footage at end of period (in thousands)
|
5,384
|
|
|
5,441
|
|
||
Number of:
|
|
|
|
||||
Stores open at beginning of period
|
635
|
|
|
656
|
|
||
New retail stores
|
—
|
|
|
—
|
|
||
New outlet stores
|
31
|
|
|
28
|
|
||
Retail stores converted to outlets
|
(27
|
)
|
|
(19
|
)
|
||
Closed stores
|
(8
|
)
|
|
(30
|
)
|
||
Stores open at end of period
|
631
|
|
|
635
|
|
|
Twenty-Six Weeks Ended
|
||||||
|
August 4, 2018
|
|
July 29, 2017
|
||||
|
(in thousands, except percentages)
|
||||||
Cost of goods sold, buying and occupancy costs
|
$
|
689,392
|
|
|
$
|
689,363
|
|
Gross profit
|
$
|
283,565
|
|
|
$
|
266,038
|
|
Gross margin percentage
|
29.1
|
%
|
|
27.8
|
%
|
|
Twenty-Six Weeks Ended
|
||||||
|
August 4, 2018
|
|
July 29, 2017
|
||||
|
(in thousands, except percentages)
|
||||||
Selling, general, and administrative expenses
|
$
|
278,289
|
|
|
$
|
266,508
|
|
Selling, general, and administrative expenses, as a percentage of net sales
|
28.6
|
%
|
|
27.9
|
%
|
|
Twenty-Six Weeks Ended
|
||||||
|
August 4, 2018
|
|
July 29, 2017
|
||||
|
(in thousands)
|
||||||
Restructuring costs
|
$
|
—
|
|
|
$
|
22,611
|
|
|
Twenty-Six Weeks Ended
|
||||||
|
August 4, 2018
|
|
July 29, 2017
|
||||
|
(in thousands)
|
||||||
Income tax expense
|
$
|
3,065
|
|
|
$
|
(9,155
|
)
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
|
||||||||||||
|
August 4, 2018
|
|
July 29, 2017
|
|
August 4, 2018
|
|
July 29, 2017
|
|
||||||||
|
(in thousands, except per share amounts)
|
|
(in thousands, except per share amounts)
|
|
||||||||||||
Operating Income/(Loss)
|
$
|
2,677
|
|
|
$
|
(16,028
|
)
|
|
$
|
5,452
|
|
|
$
|
(22,758
|
)
|
|
Adjusted Operating Income/(Loss)
|
$
|
2,677
|
|
*
|
$
|
1,594
|
|
|
$
|
5,452
|
|
*
|
$
|
1,135
|
|
|
Net Income/(Loss)
|
$
|
2,234
|
|
|
$
|
(11,891
|
)
|
|
$
|
2,751
|
|
|
$
|
(14,559
|
)
|
|
Adjusted Net Income/(Loss)
|
$
|
2,234
|
|
*
|
$
|
657
|
|
|
$
|
2,751
|
|
*
|
$
|
(3,037
|
)
|
|
Diluted Earnings Per Share
|
$
|
0.03
|
|
|
$
|
(0.15
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.19
|
)
|
|
Adjusted Diluted Earnings Per Share
|
$
|
0.03
|
|
*
|
$
|
0.01
|
|
|
$
|
0.04
|
|
*
|
$
|
(0.04
|
)
|
|
|
Thirteen Weeks Ended July 29, 2017
|
||||||
(in thousands, except per share amounts)
|
Operating Loss
|
|
Net Loss
|
|
Diluted Earnings per Share
|
|
Weighted Average Diluted Shares Outstanding
|
Reported GAAP Measure
|
$(16,028)
|
|
$(11,891)
|
|
$(0.15)
|
|
78,786
|
Impact of Canadian Exit
|
17,622
|
|
17,622
|
|
0.22
|
|
|
Income Tax Benefit - Canadian Exit
|
—
|
|
(5,074)
|
|
(0.06)
|
|
|
Adjusted Non-GAAP Measure
|
$1,594
|
|
$657
|
|
$0.01
|
|
|
|
Twenty-Six Weeks Ended July 29, 2017
|
||||||
(in thousands, except per share amounts)
|
Operating Loss
|
|
Net Loss
|
|
Diluted Earnings per Share
|
|
Weighted Average Diluted Shares Outstanding
|
Reported GAAP Measure
|
$(22,758)
|
|
$(14,559)
|
|
$(0.19)
|
|
78,616
|
Impact of Canadian Exit
|
23,893
|
|
23,893
|
|
0.30
|
|
|
Income Tax Benefit - Canadian Exit
|
—
|
|
(12,371)
|
|
(0.16)
|
|
|
Adjusted Non-GAAP Measure
|
$1,135
|
|
$(3,037)
|
|
$(0.04)
|
|
|
|
Twenty-Six Weeks Ended
|
||||||
August 4, 2018
|
|
July 29, 2017
|
|||||
|
(in thousands)
|
||||||
Provided by operating activities
|
$
|
7,873
|
|
|
$
|
10,201
|
|
Used in investing activities
|
(17,389
|
)
|
|
(39,386
|
)
|
||
Used in financing activities
|
(35,861
|
)
|
|
(4,437
|
)
|
||
Decrease in cash and cash equivalents
|
(45,377
|
)
|
|
(34,059
|
)
|
||
Cash and cash equivalents at end of period
|
$
|
190,845
|
|
|
$
|
173,314
|
|
ITEM 1A.
|
RISK FACTORS.
|
Month
|
|
Total Number of Shares Purchased
(1)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs
(2)
|
||||||
|
|
(in thousands, except per share amounts)
|
||||||||||||
May 6, 2018 - June 2, 2018
|
|
656
|
|
|
$
|
8.14
|
|
|
656
|
|
|
$
|
111,851
|
|
June 3, 2018 - July 7, 2018
|
|
1,150
|
|
|
$
|
9.59
|
|
|
1,150
|
|
|
$
|
100,841
|
|
July 8, 2018 - August 5, 2018
|
|
3
|
|
|
$
|
9.38
|
|
|
—
|
|
|
$
|
100,841
|
|
Total
|
|
1,809
|
|
|
|
|
1,806
|
|
|
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES.
|
Exhibit
Number
|
Exhibit Description
|
10.1
+
|
Form of Restricted Stock Unit Agreement for Directors (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 14, 2018).
|
10.2
+
|
Express, Inc. 2018 Incentive Compensation Plan (incorporated by reference from Exhibit 10.1 to the Company’s Registration Statement on Form S-8 filed with the SEC on June 13, 2018).
|
31.1
*
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
*
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
*
|
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS*
|
XBRL Instance Document.
|
101.SCH*
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
* Filed herewith.
|
|
+ Indicates a management contract or compensatory plan or arrangement
|
Date:
|
September 13, 2018
|
EXPRESS, INC.
|
|
|
|
|
|
|
|
By:
|
/s/ Periclis Pericleous
|
|
|
|
Periclis Pericleous
|
|
|
|
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
|
1 Year Express Chart |
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