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, inclusive of intangible 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 3, 2019
|
|
August 4, 2018
|
August 3, 2019
|
|
August 4, 2018
|
||||||||
NET SALES
|
$
|
472,715
|
|
|
$
|
493,605
|
|
$
|
923,986
|
|
|
$
|
972,957
|
|
COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS
|
346,217
|
|
|
353,202
|
|
674,985
|
|
|
689,392
|
|
||||
Gross profit
|
126,498
|
|
|
140,403
|
|
249,001
|
|
|
283,565
|
|
||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
||||||||
Selling, general, and administrative expenses
|
135,723
|
|
|
137,655
|
|
271,090
|
|
|
278,289
|
|
||||
Other operating expense/(income), net
|
535
|
|
|
71
|
|
(775
|
)
|
|
(176
|
)
|
||||
Total operating expenses
|
136,258
|
|
|
137,726
|
|
270,315
|
|
|
278,113
|
|
||||
|
|
|
|
|
|
|
||||||||
OPERATING (LOSS)/INCOME
|
(9,760
|
)
|
|
2,677
|
|
(21,314
|
)
|
|
5,452
|
|
||||
|
|
|
|
|
|
|
||||||||
INTEREST (INCOME)/EXPENSE, NET
|
(783
|
)
|
|
(38
|
)
|
(1,495
|
)
|
|
136
|
|
||||
OTHER INCOME, NET
|
—
|
|
|
(500
|
)
|
—
|
|
|
(500
|
)
|
||||
(LOSS)/INCOME BEFORE INCOME TAXES
|
(8,977
|
)
|
|
3,215
|
|
(19,819
|
)
|
|
5,816
|
|
||||
INCOME TAX EXPENSE/(BENEFIT)
|
726
|
|
|
981
|
|
(182
|
)
|
|
3,065
|
|
||||
NET (LOSS)/INCOME
|
$
|
(9,703
|
)
|
|
$
|
2,234
|
|
$
|
(19,637
|
)
|
|
$
|
2,751
|
|
|
|
|
|
|
|
|
||||||||
COMPREHENSIVE (LOSS)/INCOME
|
$
|
(9,703
|
)
|
|
$
|
2,234
|
|
$
|
(19,637
|
)
|
|
$
|
2,751
|
|
|
|
|
|
|
|
|
||||||||
EARNINGS PER SHARE:
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.14
|
)
|
|
$
|
0.03
|
|
$
|
(0.29
|
)
|
|
$
|
0.04
|
|
Diluted
|
$
|
(0.14
|
)
|
|
$
|
0.03
|
|
$
|
(0.29
|
)
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING:
|
|
|
|
|
|
|
||||||||
Basic
|
67,253
|
|
|
73,958
|
|
67,049
|
|
|
74,683
|
|
||||
Diluted
|
67,253
|
|
|
74,675
|
|
67,049
|
|
|
75,399
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
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
|
|
Net income
|
—
|
|
—
|
|
—
|
|
2,234
|
|
—
|
|
—
|
|
—
|
|
2,234
|
|
||||||
Exercise of stock options and restricted stock
|
131
|
|
1
|
|
(1
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Share-based compensation
|
—
|
|
—
|
|
3,452
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3,452
|
|
||||||
Repurchase of common stock
|
(1,809
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
1,809
|
|
(16,396
|
)
|
(16,396
|
)
|
||||||
BALANCE, August 4, 2018
|
73,381
|
|
$
|
936
|
|
$
|
206,355
|
|
$
|
707,146
|
|
$
|
—
|
|
20,251
|
|
$
|
(290,747
|
)
|
$
|
623,690
|
|
|
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
|
|
Net loss
|
—
|
|
—
|
|
—
|
|
(9,703
|
)
|
—
|
|
—
|
|
—
|
|
(9,703
|
)
|
||||||
Exercise of stock options and restricted stock
|
93
|
|
—
|
|
(311
|
)
|
(867
|
)
|
—
|
|
(93
|
)
|
1,178
|
|
—
|
|
||||||
Share-based compensation
|
—
|
|
—
|
|
2,424
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,424
|
|
||||||
Repurchase of common stock
|
(1
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
(4
|
)
|
(4
|
)
|
||||||
BALANCE, August 3, 2019
|
67,267
|
|
$
|
936
|
|
$
|
212,150
|
|
$
|
679,143
|
|
$
|
—
|
|
26,365
|
|
$
|
(333,765
|
)
|
$
|
558,464
|
|
|
Twenty-Six Weeks Ended
|
||||||
|
August 3, 2019
|
|
August 4, 2018
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net (loss)/income
|
$
|
(19,637
|
)
|
|
$
|
2,751
|
|
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
43,243
|
|
|
42,434
|
|
||
Loss on disposal of property and equipment
|
860
|
|
|
301
|
|
||
Impairment charge
|
2,281
|
|
|
—
|
|
||
Impairment of equity method investment
|
500
|
|
|
—
|
|
||
Share-based compensation
|
4,796
|
|
|
7,266
|
|
||
Deferred taxes
|
164
|
|
|
(25
|
)
|
||
Landlord allowance amortization
|
(1,181
|
)
|
|
(5,970
|
)
|
||
Other non-cash adjustments
|
(500
|
)
|
|
(500
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables, net
|
4,841
|
|
|
806
|
|
||
Inventories
|
(1,039
|
)
|
|
(9,717
|
)
|
||
Accounts payable, deferred revenue, and accrued expenses
|
(22,655
|
)
|
|
(30,379
|
)
|
||
Other assets and liabilities
|
(9,945
|
)
|
|
906
|
|
||
Net cash provided by operating activities
|
1,728
|
|
|
7,873
|
|
||
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Capital expenditures
|
(12,145
|
)
|
|
(17,389
|
)
|
||
Net cash used in investing activities
|
(12,145
|
)
|
|
(17,389
|
)
|
||
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Costs incurred in connection with debt arrangements
|
(849
|
)
|
|
—
|
|
||
Payments on lease financing obligations
|
(54
|
)
|
|
(916
|
)
|
||
Repayments of financing arrangements
|
—
|
|
|
(303
|
)
|
||
Repurchase of common stock under share repurchase program
|
(4,889
|
)
|
|
(32,000
|
)
|
||
Repurchase of common stock for tax withholding obligations
|
(1,502
|
)
|
|
(2,642
|
)
|
||
Net cash used in financing activities
|
(7,294
|
)
|
|
(35,861
|
)
|
||
|
|
|
|
|
|
||
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
(17,711
|
)
|
|
(45,377
|
)
|
||
CASH AND CASH EQUIVALENTS, Beginning of period
|
171,670
|
|
|
236,222
|
|
||
CASH AND CASH EQUIVALENTS, End of period
|
$
|
153,959
|
|
|
$
|
190,845
|
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
August 3, 2019
|
|
August 4, 2018
|
|
August 3, 2019
|
|
August 4, 2018
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Apparel
|
$
|
408,305
|
|
|
$
|
429,152
|
|
|
$
|
797,195
|
|
|
$
|
845,634
|
|
Accessories and other
|
50,596
|
|
|
51,845
|
|
|
96,456
|
|
|
100,147
|
|
||||
Other revenue
|
13,814
|
|
|
12,608
|
|
|
30,335
|
|
|
27,176
|
|
||||
Total net sales
|
$
|
472,715
|
|
|
$
|
493,605
|
|
|
$
|
923,986
|
|
|
$
|
972,957
|
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
August 3, 2019
|
|
August 4, 2018
|
|
August 3, 2019
|
|
August 4, 2018
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Retail
|
$
|
337,606
|
|
|
$
|
373,775
|
|
|
$
|
665,945
|
|
|
$
|
748,262
|
|
Outlet
|
121,295
|
|
|
107,222
|
|
|
227,706
|
|
|
197,519
|
|
||||
Other revenue
|
13,814
|
|
|
12,608
|
|
|
30,335
|
|
|
27,176
|
|
||||
Total net sales
|
$
|
472,715
|
|
|
$
|
493,605
|
|
|
$
|
923,986
|
|
|
$
|
972,957
|
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
August 3, 2019
|
|
August 4, 2018
|
|
August 3, 2019
|
|
August 4, 2018
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Beginning balance loyalty deferred revenue
|
$
|
14,716
|
|
|
$
|
15,073
|
|
|
$
|
15,319
|
|
|
$
|
14,186
|
|
Reduction in revenue/(revenue recognized)
|
50
|
|
|
3,240
|
|
|
(553
|
)
|
|
4,127
|
|
||||
Ending balance loyalty deferred revenue
|
$
|
14,766
|
|
|
$
|
18,313
|
|
|
$
|
14,766
|
|
|
$
|
18,313
|
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
August 3, 2019
|
|
August 4, 2018
|
|
August 3, 2019
|
|
August 4, 2018
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Beginning gift card liability
|
$
|
21,576
|
|
|
$
|
22,337
|
|
|
$
|
25,133
|
|
|
$
|
26,737
|
|
Issuances
|
7,956
|
|
|
8,598
|
|
|
15,669
|
|
|
16,983
|
|
||||
Redemptions
|
(8,799
|
)
|
|
(9,846
|
)
|
|
(18,918
|
)
|
|
(21,440
|
)
|
||||
Gift card breakage
|
(767
|
)
|
|
(754
|
)
|
|
(1,918
|
)
|
|
(1,945
|
)
|
||||
Ending gift card liability
|
$
|
19,966
|
|
|
$
|
20,335
|
|
|
$
|
19,966
|
|
|
$
|
20,335
|
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
August 3, 2019
|
|
August 4, 2018
|
|
August 3, 2019
|
|
August 4, 2018
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Beginning balance refundable payment liability
|
$
|
16,309
|
|
|
$
|
19,187
|
|
|
$
|
17,028
|
|
|
$
|
19,906
|
|
Recognized in revenue
|
(720
|
)
|
|
(720
|
)
|
|
(1,439
|
)
|
|
(1,439
|
)
|
||||
Ending balance refundable payment liability
|
$
|
15,589
|
|
|
$
|
18,467
|
|
|
$
|
15,589
|
|
|
$
|
18,467
|
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||
|
August 3, 2019
|
|
August 4, 2018
|
|
August 3, 2019
|
|
August 4, 2018
|
||||
|
(in thousands)
|
||||||||||
Weighted-average shares - basic
|
67,253
|
|
|
73,958
|
|
|
67,049
|
|
|
74,683
|
|
Dilutive effect of stock options and restricted stock units
|
—
|
|
|
717
|
|
|
—
|
|
|
716
|
|
Weighted-average shares - diluted
|
67,253
|
|
|
74,675
|
|
|
67,049
|
|
|
75,399
|
|
|
August 3, 2019
|
||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
|
(in thousands)
|
||||||||||
Money market funds
|
$
|
130,389
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
||||||||||
|
February 2, 2019
|
||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
|
(in thousands)
|
||||||||||
Money market funds
|
$
|
155,014
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
August 3, 2019
|
||||||||||
|
Cost
|
|
Accumulated
Amortization
|
|
Ending Net Balance
|
||||||
|
(in thousands)
|
||||||||||
Tradename/domain names/trademarks
|
$
|
197,618
|
|
|
$
|
—
|
|
|
$
|
197,618
|
|
Licensing arrangements
|
425
|
|
|
343
|
|
|
82
|
|
|||
|
$
|
198,043
|
|
|
$
|
343
|
|
|
$
|
197,700
|
|
|
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
|
|
|
Twenty-Six Weeks Ended
|
||
|
August 3, 2019
|
||
|
(in thousands)
|
||
Operating lease costs
|
$
|
138,006
|
|
Variable and short-term lease costs
|
35,511
|
|
|
Total lease costs
|
$
|
173,517
|
|
|
Twenty-Six Weeks Ended
|
||
|
August 3, 2019
|
||
|
(in thousands)
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows for operating leases
|
$
|
142,530
|
|
Right-of-use assets obtained in exchange for operating lease liabilities
|
$
|
8,448
|
|
|
Twenty-Six Weeks Ended
|
|
August 3, 2019
|
Operating leases:
|
|
Weighted average remaining lease term (in years)
|
6.0
|
Weighted average discount rate
|
4.8%
|
|
August 3, 2019
|
||
|
(in thousands)
|
||
2019 (remaining)
|
$
|
127,562
|
|
2020
|
269,419
|
|
|
2021
|
236,141
|
|
|
2022
|
218,047
|
|
|
2023
|
194,045
|
|
|
Thereafter
|
395,999
|
|
|
Total minimum lease payments
|
1,441,213
|
|
|
Less: amount of lease payments representing interest
|
224,013
|
|
|
Present value of future minimum lease payments
|
1,217,200
|
|
|
Less: current obligations under leases
|
223,888
|
|
|
Long-term lease obligations
|
$
|
993,312
|
|
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
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
August 3, 2019
|
|
August 4, 2018
|
|
August 3, 2019
|
|
August 4, 2018
|
||||||||
|
(in thousands)
|
||||||||||||||
Restricted stock units
|
$
|
2,119
|
|
|
$
|
2,933
|
|
|
$
|
4,329
|
|
|
$
|
6,332
|
|
Stock options
|
126
|
|
|
254
|
|
|
164
|
|
|
587
|
|
||||
Performance-based restricted stock units
|
179
|
|
|
265
|
|
|
303
|
|
|
347
|
|
||||
Total share-based compensation
|
$
|
2,424
|
|
|
$
|
3,452
|
|
|
$
|
4,796
|
|
|
$
|
7,266
|
|
|
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
|
3,386
|
|
$
|
3.80
|
|
Vested
|
(1,117
|
)
|
$
|
10.30
|
|
Forfeited
|
(497
|
)
|
$
|
7.22
|
|
Unvested, August 3, 2019
|
4,836
|
|
$
|
5.21
|
|
|
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
|
2,320
|
|
|
$
|
2.60
|
|
|
|
|
|
||
Exercised
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Forfeited or expired
|
(607
|
)
|
|
$
|
15.23
|
|
|
|
|
|
||
Outstanding, August 3, 2019
|
4,092
|
|
|
$
|
8.75
|
|
|
7.3
|
|
$
|
—
|
|
Expected to vest at August 3, 2019
|
2,020
|
|
|
$
|
3.27
|
|
|
9.8
|
|
$
|
—
|
|
Exercisable at August 3, 2019
|
1,607
|
|
|
$
|
17.39
|
|
|
3.4
|
|
$
|
—
|
|
|
Twenty-Six Weeks Ended
|
||
|
August 3, 2019
|
||
|
(in thousands, except per share amounts)
|
||
Weighted average grant date fair value of options granted (per share)
|
$
|
1.25
|
|
Total intrinsic value of options exercised
|
$
|
—
|
|
|
Twenty-Six Weeks Ended
|
|
|
August 3, 2019
|
|
Risk-free interest rate (1)
|
1.93
|
%
|
Price volatility (2)
|
47.27
|
%
|
Expected term (years) (3)
|
6.29
|
|
Dividend yield (4)
|
—
|
|
(1)
|
Represents the yield on U.S. Treasury securities with a term consistent with the expected term of the stock options.
|
(2)
|
Primarily based on the historical volatility of the Company's common stock over a period consistent with the expected term of the stock options.
|
(3)
|
Calculated using the midpoint scenario, which combines historical exercise data with hypothetical exercise data for outstanding options. The Company believes this data currently represents the best estimate of the expected term of granted employee stock options.
|
(4)
|
The Company does not currently plan on paying regular dividends.
|
Q2 2019 vs. Q2 2018
|
•
Net sales decreased 4.2% to $472.7 million
•
Comparable sales decreased 6%
•
Comparable retail sales (includes both retail stores and e-commerce sales) decreased 7%
•
Comparable outlet sales decreased 2%
•
Gross margin percentage decreased 160 basis points to 26.8%
•
Operating (loss)/income decreased $12.4 million to a loss of $9.8 million
•
Net (loss)/income decreased $11.9 million to a loss of $9.7 million
•
Diluted earnings per share (EPS) decreased $0.17 to a loss of $(0.14)
|
•
|
Women’s Tops. We’ve had too much depth in older key items and not enough breadth and style diversity. We are conducting tests to understand the impact of optimizing our tops assortment by adding different colors, fabrics, prints and silhouettes and will apply these learnings going forward.
|
•
|
Speed to market. In order to move faster and get more newness in our assortment, we have implemented a new InstaBuy process for both Women’s and Men’s. While the majority of our assortment will continue to be created by our internal design team, we also have the option to instantly buy product from our vendors that complete or enhance the assortment.
|
•
|
Product categorization. We are rethinking the brand’s traditional approach to categorizing our product into four lifestyles based on wearing occasions. Our floorsets now reflect a more modern approach and provide more inspiration for the customer as they build their wardrobe.
|
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 2019 were calculated using the 13-week period ended August 3, 2019 as compared to the 13-week period ended August 4, 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.
|
Financial Measures
|
Description
|
Discussion
|
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.
|
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 3, 2019
|
|
August 4, 2018
|
||||
Net sales (in thousands)
|
$
|
472,715
|
|
|
$
|
493,605
|
|
Comparable retail sales
|
(7
|
)%
|
|
1
|
%
|
||
Comparable outlet sales
|
(2
|
)%
|
|
2
|
%
|
||
Total comparable sales percentage change
|
(6
|
)%
|
|
1
|
%
|
||
Gross square footage at end of period (in thousands)
|
5,325
|
|
|
5,384
|
|
||
Number of:
|
|
|
|
||||
Stores open at beginning of period
|
629
|
|
|
631
|
|
||
New retail stores
|
—
|
|
|
—
|
|
||
New outlet stores
|
10
|
|
|
30
|
|
||
Retail stores converted to outlets
|
(9
|
)
|
|
(27
|
)
|
||
Closed stores
|
(4
|
)
|
|
(3
|
)
|
||
Stores open at end of period
|
626
|
|
|
631
|
|
|
Thirteen Weeks Ended
|
||||||
|
August 3, 2019
|
|
August 4, 2018
|
||||
|
(in thousands, except percentages)
|
||||||
Cost of goods sold, buying and occupancy costs
|
$
|
346,217
|
|
|
$
|
353,202
|
|
Gross profit
|
$
|
126,498
|
|
|
$
|
140,403
|
|
Gross margin percentage
|
26.8
|
%
|
|
28.4
|
%
|
|
Thirteen Weeks Ended
|
||||||
|
August 3, 2019
|
|
August 4, 2018
|
||||
|
(in thousands, except percentages)
|
||||||
Selling, general, and administrative expenses
|
$
|
135,723
|
|
|
$
|
137,655
|
|
Selling, general, and administrative expenses, as a percentage of net sales
|
28.7
|
%
|
|
27.9
|
%
|
|
Thirteen Weeks Ended
|
||||||
|
August 3, 2019
|
|
August 4, 2018
|
||||
|
(in thousands)
|
||||||
Income tax expense
|
$
|
726
|
|
|
$
|
981
|
|
|
Twenty-Six Weeks Ended
|
||||||
|
August 3, 2019
|
|
August 4, 2018
|
||||
Net sales (in thousands)
|
$
|
923,986
|
|
|
$
|
972,957
|
|
Comparable retail sales
|
(8
|
)%
|
|
1
|
%
|
||
Comparable outlet sales
|
(2
|
)%
|
|
2
|
%
|
||
Total comparable sales percentage change
|
(7
|
)%
|
|
1
|
%
|
||
Gross square footage at end of period (in thousands)
|
5,325
|
|
|
5,384
|
|
||
Number of:
|
|
|
|
||||
Stores open at beginning of period
|
631
|
|
|
635
|
|
||
New retail stores
|
—
|
|
|
—
|
|
||
New outlet stores
|
25
|
|
|
31
|
|
||
Retail stores converted to outlets
|
(24
|
)
|
|
(27
|
)
|
||
Closed stores
|
(6
|
)
|
|
(8
|
)
|
||
Stores open at end of period
|
626
|
|
|
631
|
|
|
Twenty-Six Weeks Ended
|
||||||
|
August 3, 2019
|
|
August 4, 2018
|
||||
|
(in thousands, except percentages)
|
||||||
Cost of goods sold, buying and occupancy costs
|
$
|
674,985
|
|
|
$
|
689,392
|
|
Gross profit
|
$
|
249,001
|
|
|
$
|
283,565
|
|
Gross margin percentage
|
26.9
|
%
|
|
29.1
|
%
|
|
Twenty-Six Weeks Ended
|
||||||
|
August 3, 2019
|
|
August 4, 2018
|
||||
|
(in thousands, except percentages)
|
||||||
Selling, general, and administrative expenses
|
$
|
271,090
|
|
|
$
|
278,289
|
|
Selling, general, and administrative expenses, as a percentage of net sales
|
29.3
|
%
|
|
28.6
|
%
|
|
Twenty-Six Weeks Ended
|
||||||
|
August 3, 2019
|
|
August 4, 2018
|
||||
|
(in thousands)
|
||||||
Income tax (benefit)/expense
|
$
|
(182
|
)
|
|
$
|
3,065
|
|
|
Thirteen Weeks Ended August 3, 2019
|
||||||||||||||||
(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
|
$
|
(9,760
|
)
|
|
|
|
$
|
(9,703
|
)
|
|
$
|
(0.14
|
)
|
|
67,253
|
|
|
Impact of CEO Departure
|
—
|
|
|
822
|
|
(a)
|
822
|
|
|
0.01
|
|
|
|
||||
Adjusted Non-GAAP Measure
|
$
|
(9,760
|
)
|
|
|
|
$
|
(8,881
|
)
|
|
$
|
(0.13
|
)
|
|
67,253
|
|
(a)
|
Represents the tax impact of the expiration of the former CEO's non-qualified stock options.
|
|
Twenty-Six Weeks Ended August 3, 2019
|
||||||||||||||||
(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
|
$
|
(21,314
|
)
|
|
|
|
$
|
(19,637
|
)
|
|
$
|
(0.29
|
)
|
|
67,049
|
|
|
Impact of CEO Departure
|
—
|
|
|
822
|
|
(a)
|
822
|
|
|
0.01
|
|
|
|
||||
Adjusted Non-GAAP Measure
|
$
|
(21,314
|
)
|
|
|
|
$
|
(18,815
|
)
|
|
$
|
(0.28
|
)
|
|
67,049
|
|
(a)
|
Represents the tax impact of the expiration of the former CEO's non-qualified stock options.
|
|
Twenty-Six Weeks Ended
|
||||||
August 3, 2019
|
|
August 4, 2018
|
|||||
|
(in thousands)
|
||||||
Provided by operating activities
|
$
|
1,728
|
|
|
$
|
7,873
|
|
Used in investing activities
|
(12,145
|
)
|
|
(17,389
|
)
|
||
Used in financing activities
|
(7,294
|
)
|
|
(35,861
|
)
|
||
Decrease in cash and cash equivalents
|
(17,711
|
)
|
|
(45,377
|
)
|
||
Cash and cash equivalents at end of period
|
$
|
153,959
|
|
|
$
|
190,845
|
|
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 5, 2019 - June 1, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
44,675
|
|
June 2, 2019 - July 6, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
44,675
|
|
July 7, 2019 - August 3, 2019
|
|
1,785
|
|
|
$
|
2.60
|
|
|
—
|
|
|
$
|
44,675
|
|
Total
|
|
1,785
|
|
|
|
|
—
|
|
|
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES.
|
Exhibit
Number
|
Exhibit Description
|
10.1*+
|
Form of Express, Inc. Employment Inducement Award Agreement of Non-qualified Stock Options.
|
10.2*+
|
Form of Express, Inc. Employment Inducement Award Agreement of Restricted Stock Units.
|
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 10, 2019
|
EXPRESS, INC.
|
|
|
|
|
|
|
|
By:
|
/s/ Periclis Pericleous
|
|
|
|
Periclis Pericleous
|
|
|
|
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
|
1.
|
Grant and Acceptance of Option and Agreement.
|
(a)
|
The Company hereby grants to Participant the Option as of the Grant Date. The Option constitutes the right of Participant to purchase the Number of Shares of Common Stock Purchasable at the Per Share Exercise Price, subject to the terms of this Agreement. No part of the Option is intended to qualify as an Incentive Stock Option. Except as otherwise specifically provided for in the Plan, nothing in this Agreement provides, or is intended to provide, Participant with any protection against potential future dilution of Participant’s interest in the Company for any reason. Participant shall not have any rights of a stockholder in respect of the shares purchasable under the Option until such shares are delivered to Participant upon the exercise of the Option, and no adjustments shall be made for dividends in cash or other property, distributions, or other rights in respect of any such shares, except as otherwise specifically provided for in the Plan.
|
(b)
|
Participant must accept the terms of this Agreement within sixty days after the Agreement is presented to Participant for review. Participant may not exercise any portion of the Option before the terms of this Agreement have been accepted. If Participant does not timely accept this Agreement, the Company shall automatically accept this Agreement on Participant’s behalf.
|
2.
|
Plan Terms.
|
(a)
|
This Agreement is subject in all respects to the terms of the Plan (including any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the Option), and all of the terms of the Plan are made a part of and incorporated into this Agreement as if they were each expressly set forth herein; provided, however, that any shares of Common Stock issued in connection with the Option shall not be issued under the Plan or any other stockholder-approved equity compensation plan of the Company and any such shares shall not impact the Plan’s or any other plan’s share pool in any way. Any capitalized terms not defined in this Agreement shall have the same meaning as is ascribed under the Plan.
|
(b)
|
Participant acknowledges receipt of a true copy of the Plan (which is also filed publicly) and a prospectus describing the material terms of the Plan. Participant has read the Plan carefully and fully understands its content, including the Committee’s broad authority to administer the Plan (as set forth under Article III of the Plan).
|
3.
|
[Exercisability (i.e., “Vesting”) and Forfeiture.
|
(a)
|
General. The Option shall become exercisable pursuant to the schedule set forth in the table below, provided Participant has not incurred a Termination before the applicable exercisability date. There shall be no proportionate or partial exercisability in the periods prior to each exercisability date.
|
Exercisability Date
|
|
Percentage of Option Exercisable
|
[_____]
[_____]
[_____]
[_____]
|
|
[_____]
[_____]
[_____]
[_____]
|
(b)
|
Death or Disability. Notwithstanding Section 3(b) above, if Participant incurs a Termination due to Participant’s death or Disability, then any portion of the Option not previously forfeited shall become fully exercisable and the Option shall remain exercisable for one year following Termination (or until the Scheduled Expiration Date, if earlier) and then be forfeited in its entirety for no additional consideration.
|
(c)
|
Retirement. Notwithstanding Section 3(b) above, if Participant incurs a Retirement (as defined below), (i) then the portion of the Option that is scheduled to become exercisable on the next exercisability date (to the extent not previously forfeited) shall become exercisable upon such Retirement and remain exercisable for ninety days following Retirement and (ii) any unexercisable portion of the Option shall be immediately forfeited in its entirety for no additional consideration. “Retirement” means any voluntary Termination by Participant, other than a Termination for Cause, death, or Disability, at or after the time Participant reaches age fifty-five and completes at least ten years of full-time continuous service with the Company or an Affiliate.
|
(d)
|
Cause. Notwithstanding anything in this Agreement, if Participant incurs a Termination for Cause, the entire Option, whether or not exercisable, shall be immediately forfeited in its entirety for no additional consideration.
|
(e)
|
Effect of Detrimental Activity. For the avoidance of doubt, Section 10.4 of the Plan, regarding Detrimental Activity, shall apply to the Option.
|
(f)
|
Recoupment. For the avoidance of doubt, Section 14.23 of the Plan, regarding recoupment and clawback of Awards under the Plan, shall apply to the Option.]
|
4.
|
Method of Exercise and Payment. Subject to Section 7 below, to the extent that the Option has become exercisable with respect to a number of shares of Common Stock as provided in the Agreement, such portion of the Option may thereafter be exercised by Participant, in whole or in part, at any time or from time to time prior to the forfeiture or expiration of that portion of the Option, including by the delivery of any form of exercise notice as may be required by the Committee and payment in full of the Per Share Exercise Price multiplied by the number of shares of Common Stock underlying the portion of the Option exercised.
|
5.
|
Non-transferability. Neither the Option nor any rights or interests with respect thereto shall be sold, exchanged, transferred, assigned, or otherwise disposed of in any way by Participant (or any beneficiary(ies) of Participant), other than by testamentary disposition by Participant or the laws of descent and distribution. Any attempt to sell, exchange, transfer, assign, pledge, encumber, or otherwise dispose of or hypothecate the Option in any way, or the levy of any execution, attachment, or similar legal process upon the Option contrary to the terms of this Agreement shall be null and void and without legal force or effect.
|
6.
|
Governing Law. All questions concerning the construction, validity, and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the choice of law principles thereof.
|
7.
|
Withholding of Tax. The Company shall have the power and the right to deduct or withhold, or require Participant to remit to the Company, an amount sufficient to satisfy any federal, state, local, and foreign taxes of any kind (including Participant’s FICA and SDI obligations) which the Company, in its sole discretion, deems necessary to be withheld or remitted to comply with the Code or any other applicable law, rule, or regulation with respect to the Option and, if Participant fails to do so, the Company may otherwise refuse to issue or transfer any shares of Common Stock otherwise required to be issued under this Agreement. Any statutorily required minimum withholding obligation with regard to Participant may, unless not permitted by the Committee, be satisfied by reducing the amount of cash or shares of Common Stock otherwise deliverable to Participant hereunder, and any additional tax withholding up to the maximum permissible withholding may be satisfied similarly provided such reduction or shares would not cause adverse accounting or tax consequences to the Company.
|
8.
|
Entire Agreement; Amendment. This Agreement, together with the Plan, contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter. The Committee shall have the right to modify or amend this Agreement from time to time in accordance with and as provided in the Plan. This Agreement may also be modified or amended by a writing signed by both the Company and Participant. The Company shall give written notice to Participant of any such modification or amendment of this Agreement as soon as practicable after the adoption thereof.
|
9.
|
Notices. Any notice hereunder by Participant shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the General Counsel of the Company. Any notice hereunder by the Company shall be given to Participant in writing and such notice shall be deemed duly given only upon receipt thereof at such address as Participant may have on file with the Company.
|
10.
|
No Right to Employment. Any questions as to whether and when there has been a Termination and the cause of such Termination shall be determined in the sole discretion of the Company. Nothing in this Agreement shall interfere with or limit in any way the right of the Company or its Affiliates to terminate Participant’s employment or service at any time, for any reason and with or without cause.
|
11.
|
Transfer of Personal Data. Participant authorizes, agrees, and unambiguously consents to the transmission by the Company (or any Affiliate) of any personal data information related to the Option for legitimate business purposes (including the administration of the Plan). This authorization and consent is freely given by Participant.
|
12.
|
Compliance with Laws. The grant of the Option and the issuance of any shares of Common Stock under the Option shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules, and regulations (including the Exchange Act and the Securities Act) and any other law or regulation applicable thereto. The Company shall not be obligated to grant the Option or issue any share of Common Stock under the Option if such grant or issuance would violate any such requirements.
|
13.
|
Section 409A. Notwithstanding anything herein or in the Plan to the contrary, the Option is intended to be exempt from the applicable requirements of Code Section 409A and shall be limited, construed, and interpreted in accordance with such intent.
|
14.
|
Binding Agreement; Assignment. This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns. Participant shall not assign (except as provided by Section 5 above) any part of this Agreement without the prior express written consent of the Company.
|
15.
|
Headings. The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.
|
16.
|
Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.
|
17.
|
Further Assurances. Participant shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments, and documents as the Company reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement.
|
18.
|
Severability; Waiver. The invalidity or unenforceability of any term of this Agreement in any jurisdiction shall not affect the validity, legality, or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality, or enforceability of any term of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law. The waiver by any party to this Agreement of a breach of any term of the Agreement shall not operate or be construed as a waiver of any other or subsequent breach.
|
19.
|
Acquired Rights. Participant acknowledges and agrees that: (a) the Company may terminate or amend the Plan at any time; (b) the grant of the Option is completely independent of any other award or grant and is made at the sole discretion of the Company; (c) no past grants or awards (including the Option) give Participant any right to any grants or awards in the future whatsoever; and (d) any benefits granted under this Agreement are not part of Participant’s ordinary salary, and shall not be considered as part of such salary in the event of severance, redundancy, or resignation.
|
20.
|
Electronic Delivery and Acceptance. The Company may deliver any documents related to current or future participation in the Plan by electronic means. Participant consents to receive those documents by electronic delivery and to participate in the Plan through any on-line or electronic system established and maintained by the Company or a third party designated by the Company.
|
PARTICIPANT
|
|
|
EXPRESS, INC.
|
|
|
|
|
|
|
|
|
Sign name:
|
|
|
Sign name:
|
|
|
|
|
|
|
|
|
Print name:
|
|
|
Print name:
|
|
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
1.
|
Grant and Acceptance of RSUs and Agreement.
|
(a)
|
The Company hereby grants to Participant the RSUs as of the Grant Date. Each RSU shall entitle Participant to receive one share of Common Stock at such future date or dates and subject to such terms as set forth in this Agreement. Except as otherwise specifically provided for in the Plan, nothing in this Agreement provides, or is intended to provide, Participant with any protection against potential future dilution of Participant’s interest in the Company for any reason. Except as set forth in Section 5 below, Participant shall not have any rights of a stockholder in respect of the shares underlying the RSUs until such shares are delivered to Participant in accordance with Section 4 below.
|
(b)
|
Participant must accept the terms of this Agreement within sixty days after the Agreement is presented to Participant for review. If Participant does not timely accept this Agreement, the Company shall automatically accept this Agreement on Participant’s behalf.
|
2.
|
Plan Terms.
|
(a)
|
This Agreement is subject in all respects to the terms of the Plan (including any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the RSUs), and all of the terms of the Plan are made a part of and incorporated into this Agreement as if they were each expressly set forth herein; provided, however, that any shares of Common Stock issued in connection with the RSUs shall not be issued under the Plan or any other stockholder-approved equity compensation plan of the Company and any such shares shall not impact the Plan’s or any other plan’s share pool in any way. Any capitalized terms not defined in this Agreement shall have the same meaning as is ascribed under the Plan.
|
(b)
|
Participant acknowledges receipt of a true copy of the Plan (which is also filed publicly) and a prospectus describing the material terms of the Plan. Participant has read the Plan carefully and fully understands its content, including the Committee’s broad authority to administer the Plan (as set forth under Article III of the Plan).
|
3.
|
[Vesting.
|
(a)
|
Vesting. The RSUs subject to this grant shall become vested pursuant to the schedule set forth in the table below, provided Participant has not incurred a Termination before the applicable vesting date. There shall be no proportionate or partial vesting in the periods prior to each vesting date.
|
Vesting Date
|
|
Cumulative Percentage of RSUs Vested
|
[_____]
[_____]
[_____]
[_____]
|
|
[______]
[______]
[______]
[______]
|
|
|
|
(b)
|
Forfeiture. Subject to Section 3(c) and Section 3(d) below, all unvested RSUs shall be immediately forfeited upon Participant’s Termination for any reason.
|
(c)
|
Death or Disability. Notwithstanding Section 3(a) above, if Participant incurs a Termination due to Participant’s death or Disability, then any unvested RSUs not previously forfeited shall become fully vested immediately.
|
(d)
|
Retirement. Notwithstanding Section 3(a) above, if Participant incurs a Retirement (as defined below), a pro rata amount of RSUs shall become vested upon such Retirement, with such amount to be determined by multiplying the number of unvested RSUs scheduled to vest on the vesting date immediately following the date of such Retirement by a fraction, the numerator of which is the number of days in which Participant was in service with the Company or its Affiliates for the period commencing on the vesting date immediately preceding the date of such Retirement and continuing through the date of such Retirement, and the denominator of which is the number of days in the period commencing on the vesting date immediately preceding the date of such Retirement and ending on the vesting date immediately following the date of such Retirement. Except as set forth in this paragraph, all unvested RSUs shall be immediately forfeited upon Participant’s Retirement. “Retirement” means any voluntary Termination by Participant, other than a Termination for Cause, death, or Disability, at or after the time Participant reaches age fifty-five and completes at least ten years of full-time continuous service with the Company or an Affiliate.
|
(e)
|
Effect of Detrimental Activity. For the avoidance of doubt, Section 10.4 of the Plan, regarding Detrimental Activity, shall apply to the RSUs.
|
(f)
|
Recoupment. For the avoidance of doubt, Section 14.23 of the Plan, regarding recoupment and clawback of Awards under the Plan, shall apply to the RSUs.]
|
4.
|
Delivery of Shares.
|
(a)
|
General. Subject to Section 4(b) below and the terms of the Plan, the Company shall deliver to Participant on the applicable vesting date the number of shares of Common Stock equal to the portion of the RSUs that vested on such date. In no event shall Participant be entitled to receive any shares with respect to any unvested or forfeited portion of the RSUs. For avoidance of doubt, in the event of a distribution in connection with Retirement, such distribution may be delayed pursuant to Section 14.16 of the Plan if Participant is a “specified employee” at the time of such Retirement.
|
(b)
|
Blackout Periods. If Participant is subject to any Company “blackout” policy or other trading restriction imposed by the Company on the date such distribution would otherwise be made pursuant to Section 4(a) above, such distribution shall be instead made on the earlier of (i) the date Participant is not subject to any such policy or restriction and (ii) the later of (A) the end of the calendar year in which such distribution would otherwise have been made and (B) a date that is immediately prior to 2.5 months following the date such distribution would otherwise have been made.
|
(c)
|
Fractional Shares. In lieu of delivering any fractional shares of Common Stock to Participant pursuant to this Agreement, the Company shall first aggregate any such fractional amounts due to be delivered to Participant at such time and then round down for fractional amounts less than one-half and round up for fractional amounts equal to or greater than one-half. No cash settlements shall be made with respect to fractional shares eliminated by rounding.
|
5.
|
Dividends and Other Distributions. Participant, as a holder of RSUs, shall be entitled to receive all dividends and other distributions paid with respect to the shares of Common Stock underlying the RSUs; provided, that, any such dividends or other distributions shall be subject to the same vesting requirements as the underlying RSUs and shall be paid at the time such RSUs become vested pursuant to Section 3 above; and, provided, further, that such dividends or distributions shall be accumulated and deemed reinvested in additional shares of Common Stock based on the Fair Market Value of the Common Stock at the time of the dividend or distribution and shall be paid only in shares of Common Stock. Any such shares shall be subject to the same restrictions on transferability and forfeitability as the RSUs with respect to which they were paid.
|
6.
|
Non-transferability. Neither the RSUs nor any rights or interests with respect thereto shall be sold, exchanged, transferred, assigned, or otherwise disposed of in any way by Participant (or any beneficiary(ies) of Participant), other than by testamentary disposition by Participant or the laws of descent and distribution. Any attempt to sell, exchange, transfer, assign, pledge, encumber, or otherwise dispose of or hypothecate the RSUs in any way, or the levy of any execution, attachment, or similar legal process upon the RSUs contrary to the terms of this Agreement shall be null and void and without legal force or effect.
|
7.
|
Governing Law. All questions concerning the construction, validity, and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the choice of law principles thereof.
|
8.
|
Withholding of Tax. The Company shall have the power and the right to deduct or withhold, or require Participant to remit to the Company, an amount sufficient to satisfy any federal, state, local, and foreign taxes of any kind (including Participant’s FICA and SDI obligations) which the Company, in its sole discretion, deems necessary to be withheld or remitted to comply with the Code or any other applicable law, rule, or regulation with respect to the RSUs and, if Participant fails to do so, the Company may otherwise refuse to issue or transfer any shares of Common Stock otherwise required to be issued under this Agreement. Any statutorily required minimum withholding obligation with regard to Participant may, unless not permitted by the Committee, be satisfied by reducing the amount of cash or shares of Common Stock otherwise deliverable to Participant hereunder, and any additional tax withholding up to the maximum permissible withholding may be satisfied similarly provided such reduction or shares would not cause adverse accounting or tax consequences to the Company.
|
9.
|
Entire Agreement; Amendment. This Agreement, together with the Plan, contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter. The Committee shall have the right to modify or amend this Agreement from time to time in accordance with and as provided in the Plan. This Agreement may also be modified or amended by a writing signed by both the Company and Participant. The Company shall give written notice to Participant of any such modification or amendment of this Agreement as soon as practicable after the adoption thereof.
|
10.
|
Notices. Any notice hereunder by Participant shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the General Counsel of the Company. Any notice hereunder by the Company shall be given to Participant in writing and such notice shall be deemed duly given only upon receipt thereof at such address as Participant may have on file with the Company.
|
11.
|
No Right to Employment. Any questions as to whether and when there has been a Termination and the cause of such Termination shall be determined in the sole discretion of the Company. Nothing in this Agreement shall interfere with or limit in any way the right of the Company or its Affiliates to terminate Participant’s employment or service at any time, for any reason, and with or without cause.
|
12.
|
Transfer of Personal Data. Participant authorizes, agrees, and unambiguously consents to the transmission by the Company (or any Affiliate) of any personal data information related to the RSUs for legitimate business purposes (including the administration of the Plan). This authorization and consent is freely given by Participant.
|
13.
|
Compliance with Laws. The grant of the RSUs and the issuance of any shares of Common Stock underlying the RSUs shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules, and regulations (including the Exchange Act and the Securities Act) and any other law or regulation applicable thereto. The Company shall not be obligated to grant the RSUs or issue any of share of Common Stock in connection with the RSUs if such grant or issuance would violate any such requirements.
|
14.
|
Binding Agreement; Assignment. This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns. Participant shall not assign (except as provided by Section 6 above) any part of this Agreement without the prior express written consent of the Company.
|
15.
|
Headings. The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.
|
16.
|
Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.
|
17.
|
Further Assurances. Participant shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments, and documents as the Company reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement.
|
18.
|
Severability; Waiver. The invalidity or unenforceability of any term of this Agreement in any jurisdiction shall not affect the validity, legality, or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality, or enforceability of any term of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law. The waiver by any party to this Agreement of a breach of any term of the Agreement shall not operate or be construed as a waiver of any other subsequent breach.
|
19.
|
Acquired Rights. Participant acknowledges and agrees that: (a) the Company may terminate or amend the Plan at any time; (b) the grant of the RSUs is completely independent of any other award or grant and is made at the sole discretion of the Company; (c) no past grants or awards (including the RSUs) give Participant any right to any grants or awards in the future whatsoever; and (d) any benefits granted under this Agreement are not part of Participant’s ordinary salary, and shall not be considered as part of such salary in the event of severance, redundancy, or resignation.
|
20.
|
Electronic Delivery. The Company may deliver any documents related to current or future participation in the Plan by electronic means. Participant consents to receive those documents by electronic delivery and to
|
PARTICIPANT
|
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EXPRESS, INC.
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Sign name:
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Sign name:
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Print name:
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Print name:
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Title:
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Express, Inc. for the quarter ended August 3, 2019;
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2.
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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;
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3.
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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;
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4.
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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:
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a.
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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;
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b.
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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;
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c.
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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
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d.
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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
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5.
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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):
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a.
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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
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b.
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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.
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Date:
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September 10, 2019
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By:
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/s/ Timothy Baxter
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Timothy Baxter
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Chief Executive Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Express, Inc. for the quarter ended August 3, 2019;
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2.
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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;
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3.
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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;
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4.
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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:
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a.
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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;
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b.
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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;
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c.
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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
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d.
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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
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5.
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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):
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a.
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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
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b.
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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.
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Date:
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September 10, 2019
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By:
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/s/ Periclis Pericleous
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Periclis Pericleous
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Senior Vice President, Chief Financial Officer and Treasurer
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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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.
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/s/ Timothy Baxter
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Timothy Baxter
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Chief Executive Officer
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/s/ Periclis Pericleous
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Periclis Pericleous
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Senior Vice President, Chief Financial Officer and Treasurer
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