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)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, $.01 par value
|
EXPR
|
The New York Stock Exchange
|
Large accelerated filer
|
o
|
Accelerated filer
|
x
|
|
|
|
|
Non-accelerated filer
|
o
|
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, extreme weather, public health issues, 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, which includes: improving profitability through sales growth, margin expansion, and expense leverage; providing an exceptional brand and customer experience; transforming and leveraging our systems and processes; and cultivating a strong company culture.
|
•
|
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; and
|
•
|
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
|
||||||
|
May 4, 2019
|
|
May 5, 2018
|
||||
NET SALES
|
$
|
451,271
|
|
|
$
|
479,352
|
|
COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS
|
328,768
|
|
|
336,190
|
|
||
Gross profit
|
122,503
|
|
|
143,162
|
|
||
OPERATING EXPENSES:
|
|
|
|
||||
Selling, general, and administrative expenses
|
135,367
|
|
|
140,634
|
|
||
Other operating income, net
|
(1,310
|
)
|
|
(247
|
)
|
||
Total operating expenses
|
134,057
|
|
|
140,387
|
|
||
|
|
|
|
||||
OPERATING (LOSS)/INCOME
|
(11,554
|
)
|
|
2,775
|
|
||
|
|
|
|
||||
INTEREST (INCOME)/EXPENSE, NET
|
(712
|
)
|
|
174
|
|
||
(LOSS)/INCOME BEFORE INCOME TAXES
|
(10,842
|
)
|
|
2,601
|
|
||
INCOME TAX (BENEFIT)/EXPENSE
|
(908
|
)
|
|
2,084
|
|
||
NET (LOSS)/INCOME
|
$
|
(9,934
|
)
|
|
$
|
517
|
|
|
|
|
|
||||
COMPREHENSIVE (LOSS)/INCOME
|
$
|
(9,934
|
)
|
|
$
|
517
|
|
|
|
|
|
||||
EARNINGS PER SHARE:
|
|
|
|
||||
Basic
|
$
|
(0.15
|
)
|
|
$
|
0.01
|
|
Diluted
|
$
|
(0.15
|
)
|
|
$
|
0.01
|
|
|
|
|
|
||||
WEIGHTED AVERAGE SHARES OUTSTANDING:
|
|
|
|
||||
Basic
|
66,845
|
|
|
75,407
|
|
||
Diluted
|
66,845
|
|
|
76,123
|
|
|
Common Stock
|
|
|
|
Treasury Stock
|
|
||||||||||||||||
|
Shares Outstanding
|
Par Value
|
Additional
Paid-in
Capital
|
Retained
Earnings
|
Accumulated Other Comprehensive Loss
|
Shares
|
At Average Cost
|
Total
|
||||||||||||||
BALANCE, February 3, 2018
|
76,724
|
|
$
|
926
|
|
$
|
199,099
|
|
$
|
704,395
|
|
$
|
—
|
|
15,923
|
|
$
|
(256,106
|
)
|
$
|
648,314
|
|
Net income
|
—
|
|
—
|
|
—
|
|
517
|
|
—
|
|
—
|
|
—
|
|
$
|
517
|
|
|||||
Exercise of stock options and restricted stock
|
854
|
|
9
|
|
(9
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
$
|
—
|
|
|||||
Share-based compensation
|
—
|
|
—
|
|
3,814
|
|
—
|
|
—
|
|
—
|
|
—
|
|
$
|
3,814
|
|
|||||
Repurchase of common stock
|
(2,519
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
2,519
|
|
(18,245
|
)
|
$
|
(18,245
|
)
|
|||||
BALANCE, May 5, 2018
|
75,059
|
|
$
|
935
|
|
$
|
202,904
|
|
$
|
704,912
|
|
$
|
—
|
|
18,442
|
|
$
|
(274,351
|
)
|
$
|
634,400
|
|
|
Common Stock
|
|
|
|
Treasury Stock
|
|
||||||||||||||||
|
Shares Outstanding
|
Par Value
|
Additional
Paid-in
Capital
|
Retained
Earnings
|
Accumulated Other Comprehensive Loss
|
Shares
|
At Average Cost
|
Total
|
||||||||||||||
BALANCE, February 2, 2019
|
67,424
|
|
$
|
936
|
|
$
|
211,981
|
|
$
|
713,864
|
|
—
|
|
26,208
|
|
$
|
(341,603
|
)
|
$
|
585,178
|
|
|
Adoption of ASC Topic 842
|
—
|
|
—
|
|
—
|
|
(5,482
|
)
|
—
|
|
—
|
|
—
|
|
$
|
(5,482
|
)
|
|||||
Net loss
|
—
|
|
—
|
|
—
|
|
(9,934
|
)
|
—
|
|
—
|
|
—
|
|
$
|
(9,934
|
)
|
|||||
Exercise of stock options and restricted stock
|
1,024
|
|
—
|
|
(4,316
|
)
|
(8,735
|
)
|
—
|
|
(1,024
|
)
|
13,051
|
|
$
|
—
|
|
|||||
Share-based compensation
|
—
|
|
—
|
|
2,372
|
|
—
|
|
—
|
|
—
|
|
—
|
|
$
|
2,372
|
|
|||||
Repurchase of common stock
|
(1,273
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
1,273
|
|
(6,387
|
)
|
$
|
(6,387
|
)
|
|||||
BALANCE, May 4, 2019
|
67,175
|
|
$
|
936
|
|
$
|
210,037
|
|
$
|
689,713
|
|
$
|
—
|
|
26,457
|
|
$
|
(334,939
|
)
|
$
|
565,747
|
|
|
Thirteen Weeks Ended
|
||||||
|
May 4, 2019
|
|
May 5, 2018
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net (loss)/income
|
$
|
(9,934
|
)
|
|
$
|
517
|
|
Adjustments to reconcile net (loss)/income to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
22,216
|
|
|
21,162
|
|
||
Loss on disposal of property and equipment
|
350
|
|
|
231
|
|
||
Share-based compensation
|
2,372
|
|
|
3,814
|
|
||
Deferred taxes
|
(14
|
)
|
|
(12
|
)
|
||
Landlord allowance amortization
|
(813
|
)
|
|
(2,973
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables, net
|
3,453
|
|
|
837
|
|
||
Inventories
|
(17,875
|
)
|
|
(16,785
|
)
|
||
Accounts payable, deferred revenue, and accrued expenses
|
(10,819
|
)
|
|
(29,530
|
)
|
||
Other assets and liabilities
|
(5,881
|
)
|
|
(2,040
|
)
|
||
Net cash used in operating activities
|
(16,945
|
)
|
|
(24,779
|
)
|
||
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Capital expenditures
|
(4,078
|
)
|
|
(7,920
|
)
|
||
Net cash used in investing activities
|
(4,078
|
)
|
|
(7,920
|
)
|
||
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Payments on lease financing obligations
|
(27
|
)
|
|
(454
|
)
|
||
Repayments of financing arrangements
|
—
|
|
|
(303
|
)
|
||
Repurchase of common stock under share repurchase program
|
(4,889
|
)
|
|
(15,638
|
)
|
||
Repurchase of common stock for tax withholding obligations
|
(1,498
|
)
|
|
(2,607
|
)
|
||
Net cash used in financing activities
|
(6,414
|
)
|
|
(19,002
|
)
|
||
|
|
|
|
|
|
||
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
(27,437
|
)
|
|
(51,701
|
)
|
||
CASH AND CASH EQUIVALENTS, Beginning of period
|
171,670
|
|
|
236,222
|
|
||
CASH AND CASH EQUIVALENTS, End of period
|
$
|
144,233
|
|
|
$
|
184,521
|
|
|
|
Thirteen Weeks Ended
|
||||||
|
|
May 4, 2019
|
|
May 5, 2018
|
||||
|
|
(in thousands)
|
||||||
Apparel
|
|
$
|
388,855
|
|
|
$
|
416,482
|
|
Accessories and other
|
|
45,895
|
|
|
48,302
|
|
||
Other revenue
|
|
16,521
|
|
|
14,568
|
|
||
Total net sales
|
|
$
|
451,271
|
|
|
$
|
479,352
|
|
|
|
Thirteen Weeks Ended
|
||||||
|
|
May 4, 2019
|
|
May 5, 2018
|
||||
|
|
(in thousands)
|
||||||
Beginning balance loyalty deferred revenue
|
|
$
|
15,319
|
|
|
$
|
14,186
|
|
Reduction in revenue/(revenue recognized)
|
|
(603
|
)
|
|
887
|
|
||
Ending balance loyalty deferred revenue
|
|
$
|
14,716
|
|
|
$
|
15,073
|
|
|
|
Thirteen Weeks Ended
|
||||||
|
|
May 4, 2019
|
|
May 5, 2018
|
||||
|
|
(in thousands)
|
||||||
Beginning gift card liability
|
|
$
|
25,133
|
|
|
$
|
26,737
|
|
Issuances
|
|
7,713
|
|
|
8,384
|
|
||
Redemptions
|
|
(10,119
|
)
|
|
(11,593
|
)
|
||
Gift card breakage
|
|
(1,151
|
)
|
|
(1,191
|
)
|
||
Ending gift card liability
|
|
$
|
21,576
|
|
|
$
|
22,337
|
|
|
|
Thirteen Weeks Ended
|
||||||
|
|
May 4, 2019
|
|
May 5, 2018
|
||||
|
|
(in thousands)
|
||||||
Beginning balance refundable payment liability
|
|
$
|
17,028
|
|
|
$
|
19,906
|
|
Recognized in revenue
|
|
(719
|
)
|
|
(719
|
)
|
||
Ending balance refundable payment liability
|
|
$
|
16,309
|
|
|
$
|
19,187
|
|
|
|
Thirteen Weeks Ended
|
||||
|
|
May 4, 2019
|
|
May 5, 2018
|
||
|
(in thousands)
|
|||||
Weighted-average shares - basic
|
|
66,845
|
|
|
75,407
|
|
Dilutive effect of stock options and restricted stock units
|
|
—
|
|
|
716
|
|
Weighted-average shares - diluted
|
|
66,845
|
|
|
76,123
|
|
|
May 4, 2019
|
||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
|
(in thousands)
|
||||||||||
Money market funds
|
$
|
121,104
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
||||||||||
|
February 2, 2019
|
||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
|
(in thousands)
|
||||||||||
Money market funds
|
$
|
155,014
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
May 4, 2019
|
||||||||||
|
Cost
|
|
Accumulated
Amortization
|
|
Ending Net Balance
|
||||||
|
(in thousands)
|
||||||||||
Tradename/domain names/trademarks
|
$
|
197,618
|
|
|
$
|
—
|
|
|
$
|
197,618
|
|
Licensing arrangements
|
425
|
|
|
331
|
|
|
94
|
|
|||
|
$
|
198,043
|
|
|
$
|
331
|
|
|
$
|
197,712
|
|
|
February 2, 2019
|
||||||||||
|
Cost
|
|
Accumulated
Amortization
|
|
Ending Net Balance
|
||||||
|
(in thousands)
|
||||||||||
Tradename/domain names/trademarks
|
$
|
197,618
|
|
|
$
|
—
|
|
|
$
|
197,618
|
|
Licensing arrangements
|
425
|
|
|
319
|
|
|
106
|
|
|||
|
$
|
198,043
|
|
|
$
|
319
|
|
|
$
|
197,724
|
|
|
Thirteen Weeks Ended
|
||
|
May 4, 2019
|
||
|
(in thousands)
|
||
Operating lease costs
|
$
|
68,842
|
|
Variable and short-term lease costs
|
17,633
|
|
|
Total lease costs
|
$
|
86,475
|
|
|
Thirteen Weeks Ended
|
|
May 4, 2019
|
Operating leases:
|
|
Weighted average remaining lease term (in years)
|
6.2
|
Weighted average discount rate
|
4.8%
|
|
May 4, 2019
|
||
|
(in thousands)
|
||
2019 (remaining)
|
$
|
184,005
|
|
2020
|
268,382
|
|
|
2021
|
235,311
|
|
|
2022
|
217,875
|
|
|
2023
|
193,933
|
|
|
Thereafter
|
394,009
|
|
|
Total minimum lease payments
|
1,493,515
|
|
|
Less: amount of lease payments representing interest
|
223,157
|
|
|
Present value of future minimum lease payments
|
1,270,358
|
|
|
Less: current obligations under leases
|
228,212
|
|
|
Long-term lease obligations
|
$
|
1,042,146
|
|
2019
|
$
|
221,816
|
|
2020
|
189,285
|
|
|
2021
|
163,748
|
|
|
2022
|
151,718
|
|
|
2023
|
135,345
|
|
|
Thereafter
|
290,790
|
|
|
Total
|
$
|
1,152,702
|
|
|
Thirteen Weeks Ended
|
|
||||||
|
May 4, 2019
|
|
May 5, 2018
|
|
||||
|
(in thousands)
|
|||||||
Restricted stock units
|
$
|
2,210
|
|
|
$
|
3,399
|
|
|
Stock options
|
38
|
|
|
333
|
|
|
||
Performance-based restricted stock units
|
124
|
|
|
82
|
|
|
||
Total share-based compensation
|
$
|
2,372
|
|
|
$
|
3,814
|
|
|
|
Number of
Shares
|
Grant Date
Weighted Average
Fair Value Per Share
|
|||
|
(in thousands, except per share amounts)
|
||||
Unvested, February 2, 2019
|
3,064
|
|
$
|
8.95
|
|
Granted
|
2,386
|
|
$
|
4.29
|
|
Vested
|
(1,024
|
)
|
$
|
10.27
|
|
Forfeited
|
(453
|
)
|
$
|
7.39
|
|
Unvested, May 4, 2019
|
3,973
|
|
$
|
6.00
|
|
|
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 2, 2019
|
2,379
|
|
|
$
|
16.40
|
|
|
|
|
|
||
Granted
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Exercised
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Forfeited or expired
|
(117
|
)
|
|
$
|
13.69
|
|
|
|
|
|
||
Outstanding, May 4, 2019
|
2,262
|
|
|
$
|
16.53
|
|
|
4.4
|
|
$
|
—
|
|
Expected to vest at May 4, 2019
|
161
|
|
|
$
|
11.20
|
|
|
7.7
|
|
$
|
—
|
|
Exercisable at May 4, 2019
|
2,095
|
|
|
$
|
16.97
|
|
|
4.1
|
|
$
|
—
|
|
Q1 2019 vs. Q1 2018
|
•
Net sales decreased 6% to $451.0 million
•
Comparable sales decreased 7%
•
Comparable retail sales (includes both full price retail stores and e-commerce sales) decreased 9%
•
Comparable outlet sales decreased 2%
•
Gross margin percentage decreased 280 basis points to 27.1%
•
Operating (loss)/income decreased $14.3 million to a loss of $11.6 million
•
Net (loss)/income decreased $10.5 million to a loss of $9.9 million
•
Diluted earnings per share (EPS) decreased $0.16 to $(0.15)
|
Product
|
|
Brand and Product Clarity
|
Customer Insights
. We made good progress against this initiative in the first quarter, but still have a significant amount of work to do to ingrain this into all buying and customer experience decisions.
Forward Season Merchandise.
We have been able to affect a number of receipts for late Spring, which should get us in a better position to react to results in Fall.
|
|
Clear and consistent messaging.
We have a cross functional team working on this initiative with the goal of having the new process in place by the end of the summer.
Optimizing our product portfolio.
It is important that all products we deliver fit within the Express brand and create a differentiated position for the customer. Where that is not the case, we need to exit these categories. As an example, we have made the decision to exit swim and watches.
Floorset execution.
We need to make it clear to customers what we believe in, both in our brand message and from a fashion stand point. This will first impact our July 2019 floorset.
|
Customer Acquisition and Retention
|
|
Progress Against our Other Initiatives
|
Customer acquisition. We launched a new marketing mix optimization tool in May and we expect to have actionable output from the model at the end of July, which we believe will drive higher returns on our marketing investment starting in the back half of 2019.
Customer retention. We launched a new first impressions initiative with the goal of reducing “one and done” customers. In addition, we remain focused on signing up more customers in our NEXT loyalty program.
Fashion influencers. During the quarter we introduced a collection designed with Rocky Barnes, a widely followed fashion model and influencer. We will further build on this in July by launching a limited-edition collection of apparel designed by Karla Welch, one of the industry’s most successful fashion stylists.
|
|
Cost Savings Initiatives.
In 2016, we announced cost savings opportunities of $44 to $54 million, which we expect to realize through 2019. We achieved our target of $40 million in costs savings through 2018 and are on track to deliver the $44 to $54 million dollars of annualized cost savings by 2019.
Store Fleet Optimization.
As of May 4, 2019, we operated 629 stores, including 199 factory outlet stores. During the first quarter of 2019, we closed 2 retail stores and converted 15 retail stores to factory outlet stores.
|
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).
|
Financial Measures
|
Description
|
Discussion
|
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 first quarter of 2019 were calculated using the 13-week period ended May 4, 2019 as compared to the 13-week period ended May 5, 2018.
Comparable retail sales includes:
•
Sales from retail stores that were open 12 months or more as of the end of the reporting period
•
E-commerce sales
Comparable outlet sales includes:
•
Sales from outlet stores that were open 12 months or more as of the end of the reporting period, including conversions
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.
|
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.
|
Financial Measures
|
Description
|
Discussion
|
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
|
||||||
|
May 4, 2019
|
|
May 5, 2018
|
||||
Net sales (in thousands)
|
$
|
451,271
|
|
|
$
|
479,352
|
|
Comparable retail sales
|
(9
|
)%
|
|
1
|
%
|
||
Comparable outlet sales
|
(2
|
)%
|
|
2
|
%
|
||
Total comparable sales percentage change
|
(7
|
)%
|
|
1
|
%
|
||
Gross square footage at end of period (in thousands)
|
5,349
|
|
|
5,387
|
|
||
Number of:
|
|
|
|
||||
Stores open at beginning of period
|
631
|
|
|
635
|
|
||
New retail stores
|
—
|
|
|
—
|
|
||
New outlet stores
|
15
|
|
|
1
|
|
||
Retail stores converted to outlets
|
(15
|
)
|
|
—
|
|
||
Closed stores
|
(2
|
)
|
|
(5
|
)
|
||
Stores open at end of period
|
629
|
|
|
631
|
|
|
Thirteen Weeks Ended
|
||||||
|
May 4, 2019
|
|
May 5, 2018
|
||||
|
(in thousands, except percentages)
|
||||||
Cost of goods sold, buying and occupancy costs
|
$
|
328,768
|
|
|
$
|
336,190
|
|
Gross profit
|
$
|
122,503
|
|
|
$
|
143,162
|
|
Gross margin percentage
|
27.1
|
%
|
|
29.9
|
%
|
|
Thirteen Weeks Ended
|
||||||
|
May 4, 2019
|
|
May 5, 2018
|
||||
|
(in thousands, except percentages)
|
||||||
Selling, general, and administrative expenses
|
$
|
135,367
|
|
|
$
|
140,634
|
|
Selling, general, and administrative expenses, as a percentage of net sales
|
30.0
|
%
|
|
29.3
|
%
|
|
Thirteen Weeks Ended
|
||||||
|
May 4, 2019
|
|
May 5, 2018
|
||||
|
(in thousands)
|
||||||
Income tax (benefit)/expense
|
$
|
(908
|
)
|
|
$
|
2,084
|
|
|
Thirteen Weeks Ended
|
||||||
May 4, 2019
|
|
May 5, 2018
|
|||||
|
(in thousands)
|
||||||
Used in operating activities
|
$
|
(16,945
|
)
|
|
$
|
(24,779
|
)
|
Used in investing activities
|
(4,078
|
)
|
|
(7,920
|
)
|
||
Used in financing activities
|
(6,414
|
)
|
|
(19,002
|
)
|
||
Decrease in cash and cash equivalents
|
(27,437
|
)
|
|
(51,701
|
)
|
||
Cash and cash equivalents at end of period
|
$
|
144,233
|
|
|
$
|
184,521
|
|
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)
|
||||||||||||
February 3, 2019 - March 2, 2019
|
|
921
|
|
|
$
|
5.32
|
|
|
919
|
|
|
$
|
44,675
|
|
March 3, 2019 - April 6, 2019
|
|
125
|
|
|
$
|
5.11
|
|
|
—
|
|
|
$
|
44,675
|
|
April 7, 2019 - May 4, 2019
|
|
227
|
|
|
$
|
3.77
|
|
|
—
|
|
|
$
|
44,675
|
|
Total
|
|
1,273
|
|
|
|
|
919
|
|
|
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES.
|
Exhibit
Number
|
Exhibit Description
|
10.33
*
|
Amendment to the Letter Agreement, dated as of January 28, 2019, between Express, Inc. and Matt Moellering.
|
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.
|
Date:
|
June 11, 2019
|
EXPRESS, INC.
|
|
|
|
|
|
|
|
By:
|
/s/ Periclis Pericleous
|
|
|
|
Periclis Pericleous
|
|
|
|
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
|
/s/Katie Maurer
|
Katie Maurer
|
Senior Vice President, Human Resources
|
|
/s/Matt Moellering
|
Matt Moellering
|
|
May 29, 2019
|
Date
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Express, Inc. for the quarter ended
May 4, 2019
;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
June 11, 2019
|
By:
|
/s/ Matthew Moellering
|
|
|
|
Matthew Moellering
|
|
|
|
Executive Vice President, Chief Operating Officer, and Interim President and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Express, Inc. for the quarter ended
May 4, 2019
;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
June 11, 2019
|
By:
|
/s/ Periclis Pericleous
|
|
|
|
Periclis Pericleous
|
|
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
|
2.
|
The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company and its subsidiaries.
|
|
/s/ Matthew Moellering
|
Matthew Moellering
|
Executive Vice President, Chief Operating Officer, and Interim President and Chief Executive Officer
|
|
/s/ Periclis Pericleous
|
Periclis Pericleous
|
Senior Vice President, Chief Financial Officer and Treasurer
|