Express, Inc. Reports Fourth Quarter And Full Year 2012 Results; Introduces First Quarter And Full Year 2013 Outlook

 Express, Inc. Reports Fourth Quarter And Full Year 2012 Results; Introduces
                   First Quarter And Full Year 2013 Outlook

- Fourth quarter comparable sales increase by 1.5%

- Fourth quarter diluted EPS of $0.75, exceeds upper end of increased guidance

- Inventory per square foot decreases 6.0%

- 15 international franchise locations at year end

PR Newswire

COLUMBUS, Ohio, March 13, 2013

COLUMBUS, Ohio, March 13, 2013 /PRNewswire/ --Express, Inc. (NYSE: EXPR), a
specialty retail apparel chain operating more than 620 stores, today announced
fourth quarter and full year 2012 financial results for the fourteen and
fifty-three week periods ended February 2, 2013. This compares to 2011, which
was a fifty-two week year that included thirteen weeks in the fourth quarter.
Comparable sales for the fourth quarter and full year 2012 were calculated
using the fourteen and fifty-three week periods ending February 4, 2012,
respectively.

Michael Weiss, Express, Inc.'s Chairman and Chief Executive Officer commented:
"We ended the year positively, with the initiatives we implemented in our
women's business driving improved results. These initiatives included:
re-balancing our sweater assortment, introducing entry price point fashion
items in key categories, especially cut-and- sew knitwear, and communicating
clearer pricing and promotional strategies. Our men's business continued its
positive momentum and, along with disciplined expense and inventory management
and the aforementioned women's initiatives, drove increased sales, positive
comparable sales, and net income per diluted share above the increased
guidance provided in the fourth quarter. We attribute our improved performance
over the third quarter to the strength of our products, specifically sweaters
and cut-and-sew knitwear, which we had previously identified as categories for
improvement. In addition, we generated our third consecutive year of double
digit e-commerce sales growth and achieved our store expansion goals. We were
also pleased with our international expansion that included the opening of 4
additional franchise stores in the Middle East and our first 4 franchise
locations in Latin America. Our balance sheet remained strong with cash and
cash equivalents totaling $256.3 million at year end, even after investing
$65.1 million to repurchase 4.0 million shares of common stock during the
year. As we begin 2013, we expect to advance each of our existing four
pillars of growth. In addition, we are also excited to pursue a new growth
opportunity in 2013 through the development of a new Express outlet
business."

Fourth Quarter Operating Results (the fourteen week period ended February 2,
2013 compared to the thirteen week period ended January 28, 2012):

  oNet sales increased 8% to $728.7 million from $673.2 million in the fourth
    quarter of 2011 and included $27.0 million related to the fourteenth week;
  oComparable sales, which compares the fourteen week period ended February
    2, 2013 to the fourteen week period ended February 4, 2012 and is
    inclusive of e-commerce sales, increased 1.5%, following a 5% increase in
    the fourth quarter of 2011;
  oGross margin was 35.1% of net sales compared to 37.2% in the fourth
    quarter of 2011;
  oSelling, general, and administrative (SG&A) expenses totaled $144.4
    million, or 19.8% of net sales, compared to $141.6 million, or 21.0% of
    net sales, in the fourth quarter of 2011, which included non-core
    operating costs before tax of $0.4 million related to the secondary
    offering completed in December 2011;
  oOperating income was $111.4 million, or 15.3% of net sales, compared to
    $108.9 million, or 16.2% of net sales, in the fourth quarter of 2011;
  oInterest expense totaled $5.2 million compared to $8.0 million in the
    fourth quarter of 2011, which included a $2.4 million loss on
    extinguishment of debt before tax related to the full prepayment of the
    $125 million Term Loan;
  oIncome tax expense was $42.1 million, at an effective tax rate of 39.7%,
    compared to $40.8 million, at an effective tax rate of 40.3%, in the
    fourth quarter of 2011; and
  oNet income was $63.9 million, or $0.75 per diluted share, with the
    fourteenth week contributing approximately $0.04 per diluted share. This
    compares to net income of $60.4 million, or $0.68 per diluted share in the
    fourth quarter of 2011, which included the following non-core operating
    costs after tax: (i) $0.3 million, or approximately $0.01 per diluted
    share, of costs related to the secondary offering completed in December
    2011; and (ii) a $1.5 million, or $0.01 per diluted share, loss on
    extinguishment of debt related to the full prepayment of the $125 million
    Term Loan. Net income in the fourth quarter of 2011, adjusted for
    non-core operating costs noted above, was $62.1 million, or $0.70 per
    diluted share. (See Schedule 4 for discussion of non-GAAP measures.)

Full Year Operating Results (the fifty-three week period ended February 2,
2013 compared to the fifty-two week period ended January, 28, 2012):

  oNet sales increased 4% and included $27.0 million related to the
    fifty-third week;
  oComparable sales, which compares the fifty-three week period ended
    February 2, 2013 to the fifty-three week period ended February 4, 2012 and
    is inclusive of e-commerce sales, were flat, following a 6% increase in
    2011;
  oGross margin was 34.6% of net sales compared to 36.4% in 2011;
  oSG&A expenses totaled $491.6 million, or 22.9% of net sales. This compares
    to $483.8 million, or 23.3% of net sales, in 2011, which included $1.0
    million of non-core operating costs before tax related to the secondary
    offerings completed in April 2011 and December 2011;
  oOperating income was $251.6 million, or 11.7% of net sales, compared to
    $270.9 million, or 13.1% of net sales, in 2011;
  oInterest expense totaled $19.6 million compared to $35.8 million in 2011,
    which included a $9.6 million loss on extinguishment of debt before tax
    related to the repurchases of $49.2 million of Senior Notes, the amendment
    of the $200 million Revolving Credit Facility, and the full prepayment of
    the $125 million Term Loan;
  oIncome tax expense was $92.7 million, at an effective tax rate of 40.0%,
    compared to $94.9 million, at an effective tax rate of 40.3%, in 2011; and
  oNet income was $139.3 million, or $1.60 per diluted share, with the
    fifty-third week contributing approximately $0.04 per diluted share. This
    compares to net income of $140.7 million, or $1.58 per diluted share, in
    2011, which included the following non-core operating costs after tax: (i)
    $0.6 million, or $0.01 per diluted share, of costs related to secondary
    offerings completed in April 2011 and December 2011; and (ii) a $5.8
    million, or $0.07 per diluted share, loss on extinguishment of debt
    related to the repurchases of $49.2 million of Senior Notes, the amendment
    of the $200 million Revolving Credit Facility, and the full prepayment of
    the $125 million Term Loan. Net income in 2011, adjusted for non-core
    operating costs noted above, was $147.1 million, or $1.66 per diluted
    share. (See Schedule 4 for discussion of non-GAAP measures).

2012 Balance Sheet Highlights:

  oCash and cash equivalents increased $103.9 million and totaled $256.3
    million compared to $152.4 million at the end of 2011.
  oInventories were $215.1 million, an increase of 1%, compared to $213.1
    million at the end of 2011. Inventory per square foot decreased 6.0%
    compared to 2011.

Real Estate:

During the fourth quarter of 2012, the Company opened 8 new stores, including
3 in Canada, and closed 1 store in the United States. For the full year 2012,
the Company opened 28 stores, including 5 in Canada, and closed 12 stores in
the United States to end the year with 625 locations and 5.4 million gross
square feet in operation. The Company's international franchisees opened 4
stores in the fourth quarter and 8 stores during the year, ending 2012 with 15
locations across the Middle East and Latin America.

2013 Guidance:

"While our guidance anticipates a softer start to the year, reflecting the
impact of reduced traffic levels and consumer spending in the month of
February, our spring merchandise has been received favorably by our customers,
resulting in an improvement in conversion, which we do consider to be a
leading indicator, early in the first quarter," commented Weiss.

First Quarter:

The Company expects first quarter of 2013 comparable sales, including
e-commerce, to range from flat to down low single digits compared to an
increase of 4% in the first quarter of 2012. The effective tax rate is
expected to be approximately 39.5%. Net income is expected in the range of
$29.5 million to $32.5 million, or $0.34 to $0.38 per diluted share on 85.5
million weighted average shares outstanding. This compares to net income of
$42.1 million, or $0.47 per diluted share, in the first quarter of 2012. This
guidance assumes some degradation of merchandise margin in addition to
approximately $4.0 million before tax of incremental expense related to
pre-opening rent for flagship locations and additional fulfillment costs
reflecting the expected increase in our e-commerce business. The Company
expects to open 3 new stores in the first quarter, including 1 store in
Canada, and close 8 stores in the United States to end the quarter with 620
locations and approximately 5.4 million gross square feet in operation.

Full Year:

The Company expects full year 2013 comparable sales, including e-commerce, to
increase low single digits compared to a flat performance in 2012. The
effective tax rate is expected to be between 39.3% and 39.8%. Net income is
expected in the range of $120 million to $132 million, or $1.40 to $1.54 per
diluted share on 85.9 million weighted average shares outstanding, and
includes approximately $8.0 million before tax of incremental expense related
to pre-opening rent for flagship locations. This compares to net income on a
fifty-two week basis of approximately $136.3 million, or $1.56 per diluted
share, in 2012. Net income as reported on a fifty-three week basis in 2012
was $139.3 million, or $1.60 per diluted share. Capital expenditures are
expected to be between $110 million and $115 million in 2013. The Company
expects to open 16 new stores in 2013, including 4 in Canada, and close 9
stores in the United States to end the year with 632 locations and
approximately 5.5 million gross square feet in operation. Consistent with
previous years, this guidance excludes any non-core operating items that may
occur, such as debt extinguishment costs as well as any costs associated with
the new outlet strategy.

Conference Call Information:

A conference call to discuss fourth quarter results is scheduled for March 13,
2013, at 9:00 a.m. Eastern Time (ET). Investors and analysts interested in
participating in the call are invited to dial (877) 705-6003 approximately ten
minutes prior to the start of the call. The conference call will also be
webcast live at: http://www.express.com/investor and remain available for 90
days. A telephone replay of this call will be available at 12:00 p.m. ET on
March 13, 2013 until 11:59 p.m. ET on March 20, 2013 and can be accessed by
dialing (877) 870-5176 and entering replay pin number 409411.

About Express:

Express is a specialty apparel and accessories retailer of women's and men's
merchandise, targeting the 20 to 30 year old customer. The Company has over 30
years of experience offering a distinct combination of fashion and quality for
multiple lifestyle occasions at an attractive value addressing fashion needs
across work, casual, jeanswear, and going-out occasions. The Company currently
operates over 620 retail stores, located primarily in high-traffic shopping
malls, lifestyle centers, and street locations across the United States, in
Canada, and in Puerto Rico. Express merchandise is also available at franchise
stores in the Middle East and Latin America. The Company also markets and
sells its products through the Company's e-commerce website, www.express.com.

Forward-Looking Statements:

Certain statements are "forward-looking statements" made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include any statement that does not directly relate
to any historical or current fact and may herein include, but are not limited
to, statements regarding expected comparable sales, effective tax rates, plans
to open and close stores, growth strategies, net income and earnings per
diluted share. Forward-looking statements are based on our current
expectations and assumptions, which may not prove to be accurate. These
statements are not guarantees and are subject to risks, uncertainties and
changes in circumstances that are difficult to predict. Many factors could
cause actual results to differ materially and adversely from these
forward-looking statements. Among these factors are (1) changes in consumer
spending and general economic conditions; (2) our ability to identify and
respond to new and changing fashion trends, customer preferences and other
related factors; (3) fluctuations in our sales and results of operations on a
seasonal basis and due to store events, promotions and a variety of other
factors; (4) increased competition from other retailers; (5) changes in
customer traffic at malls and shopping centers; (6) our dependence upon
independent third parties to manufacture all of our merchandise; (7) changes
in the cost of raw materials, labor, and freight; (8) supply chain disruption;
(9) our growth strategy, including our international expansion plan; (10) our
dependence on a strong brand image; (11) our dependence upon key executive
management; (12) our reliance on third parties to provide us with certain key
services for our business; and (13) our substantial indebtedness and lease
obligations. Additional information concerning these and other factors can be
found in Express, Inc.'s filings with the Securities and Exchange Commission.
We undertake no obligation to publicly update or revise any forward-looking
statement as a result of new information, future events or otherwise, except
as otherwise required by law.



Schedule 1


Express, Inc.

Consolidated Balance Sheets

(In thousands)

(Unaudited)
                                            February2, 2013  January28, 2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                   $   256,297       $   152,362
Receivables, net                            11,024            9,027
Inventories                                 215,082           213,075
Prepaid minimum rent                        25,166            23,461
Other                                       8,293             18,232
Total current assets                        515,862           416,157
PROPERTY AND EQUIPMENT                      625,344           521,860
Less: accumulated depreciation              (346,975)         (294,554)
Property and equipment, net                 278,369           227,306
TRADENAME/DOMAIN NAME                       197,719           197,509
DEFERRED TAX ASSETS                         16,808            12,462
OTHER ASSETS                                10,441            12,886
Total assets                                $   1,019,199     $   866,320
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable                            $   176,125       $   133,679
Deferred revenue                            27,851            27,684
Accrued bonus                               336               14,689
Accrued expenses                            108,464           113,282
Accounts payable and accrued expenses –     —                 5,997
related parties
Total current liabilities                   312,776           295,331
LONG-TERM DEBT                              198,843           198,539
OTHER LONG-TERM LIABILITIES                 136,418           91,303
Total liabilities                           648,037           585,173
COMMITMENTS AND CONTINGENCIES
Total stockholders' equity                  371,162           281,147
Total liabilities and stockholders' equity  $   1,019,199     $   866,320







Schedule 2


Express, Inc.

Consolidated Statements of Income and Comprehensive Income

(In thousands, except per share amounts)

(Unaudited)


                  Fourteen          Thirteen        Fifty-Three   Fifty-Two
                  Weeks Ended                       Weeks Ended
                                    Weeks Ended                   Weeks Ended
                  February2,       January 28,     February 2,   January 28,
                  2013              2012            2013          2012
NET SALES         $    728,711      $    673,153    $ 2,148,069   $ 2,073,355
COST OF GOODS
SOLD, BUYING AND  472,898           422,806         1,405,430     1,318,894

OCCUPANCY COSTS
Gross profit      255,813           250,347         742,639       754,461
OPERATING
EXPENSES:
Selling, general,
and
administrative    144,375           141,587         491,599       483,823

expenses (a)
Other operating
expense (income), 30                (142)           (523)         (308)
net
Total operating   144,405           141,445         491,076       483,515
expenses
OPERATING INCOME  111,408           108,902         251,563       270,946
INTEREST EXPENSE  5,217             7,961           19,555        35,804
(b)
INTEREST INCOME   (2)               (5)             (3)           (12)
OTHER EXPENSE     144               (263)           40            (411)
(INCOME), NET
INCOME BEFORE     106,049           101,209         231,971       235,565
INCOME TAXES
INCOME TAX        42,106            40,815          92,704        94,868
EXPENSE
NET INCOME        63,943            60,394          $ 139,267     $ 140,697
OTHER
COMPREHENSIVE
INCOME:
Foreign currency  33                (7)             (13)          (7)
translation
COMPREHENSIVE     63,976            60,387          139,254       140,690
INCOME
EARNINGS PER
SHARE:
Basic             $    0.75         $    0.68       $ 1.60        $ 1.59
Diluted           $    0.75         $    0.68       $ 1.60        $ 1.58
WEIGHTED AVERAGE
SHARES
OUTSTANDING:
Basic             84,944            88,688          86,852        88,596
Diluted           85,320            89,072          87,206        88,896
(a) Includes $0.4 million related to the secondary offering completed in
December 2011 for the thirteen weeks ended January 28, 2012 and $1.0 million
related to the secondary offerings completed in April 2011 and December 2011
for the fifty-two weeks ended January 28, 2012.
(b) Includes a $2.4 million loss on extinguishment of debt related to the
full prepayment of the $125 million Term Loan for the thirteen weeks ended
January 28, 2012 and a $9.6 million loss on extinguishment of debt related to
the repurchases of $49.2 million of Senior Notes, the amendment of the $200
million Revolving Credit Facility, and the full prepayment of the $125
million Term Loan for the fifty-two weeks ended January 28, 2012.





Schedule 3


Express, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


                                            2012        2011        2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                  $ 139,267   $ 140,697   $ 127,388
Adjustments to reconcile net income to net
cash provided by operating

activities:
Depreciation and amortization               67,727      68,102      68,557
Loss on disposal of property and equipment  124         164         1,996
Impairment charge                           6           55          459
Change in fair value of interest rate swap  —           —           (1,968)
Excess tax benefit from share-based         (422)       —           —
compensation
Share-based compensation                    16,308      10,089      5,296
Non-cash loss on extinguishment of debt     —           5,170       8,781
Deferred taxes                              3,937       (320)       (19,015)
Changes in operating assets and
liabilities:
Receivables, net                            (1,991)     884         (5,190)
Inventories                                 (1,997)     (27,862)    (13,505)
Accounts payable, deferred revenue, and
accrued                                     17,564      43          30,103

expenses
Other assets and liabilities                28,841      15,587      17,056
Net cash provided by operating activities   269,364     212,609     219,958
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures                        (99,674)    (77,176)    (54,843)
Purchase of intangible assets               (210)       (60)        —
Net cash used in investing activities       (99,884)    (77,236)    (54,843)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under Senior Notes               —           —           246,498
Net proceeds from equity offering           —           —           166,898
Repayments of long-term debt arrangements   —           (169,775)   (301,563)
Costs incurred in connection with debt      —           (1,192)     (12,211)
arrangements and Senior Notes
Payments on capital lease obligations       (55)        (14)        —
Costs incurred in connection with equity    —           —           (6,498)
offering
Excess tax benefit from share-based         422         —           —
compensation
Proceeds from share-based compensation      623         309         —
Repurchase of common stock                  (66,541)    (103)       —
Repayment of notes receivable               —           —           5,633
Distributions                               —           —           (261,000)
Dividends                                   —           —           (49,514)
Net cash used in financing activities       (65,551)    (170,775)   (211,757)
EFFECT OF EXCHANGE RATE ON CASH             6           2           —
NET INCREASE (DECREASE) IN CASH AND CASH    103,935     (35,400)    (46,642)
EQUIVALENTS
CASH AND CASH EQUIVALENTS, Beginning of     152,362     187,762     234,404
period
CASH AND CASH EQUIVALENTS, End of period    $ 256,297   $ 152,362   $ 187,762







Schedule 4
Supplemental Information - Consolidated Statements of Income and Comprehensive
Income
Reconciliation of GAAP to Non-GAAP Financial Measures
Adjusted Net Income and Adjusted Earnings Per Diluted Share
(In thousands, except per share amounts)
(Unaudited)



The Company supplements the reporting of their financial information
determined under United States generally accepted accounting principles (GAAP)
with certain non-GAAP financial measures: adjusted net income and adjusted
earnings per diluted share. The Company believes that these non-GAAP measures
provide meaningful information to assist stockholders in understanding its
financial results and assessing its prospects for future performance.
Management believes adjusted net income and adjusted earnings per diluted
share are important indicators of their operations because they exclude items
that may not be indicative of, or are unrelated to, their core operating
results and provide a better baseline for analyzing trends in their underlying
business. Because non-GAAP financial measures are not standardized, it may not
be possible to compare these financial measures with other companies' non-GAAP
financial measures having the same or similar names. These adjusted financial
measures should not be considered in isolation or as a substitute for net
income and earnings per diluted share. These non-GAAP financial measures
reflect an additional way of viewing an aspect of the Company's operations
that, when viewed with the GAAP results and reconciliations to the
corresponding GAAP financial measures below, provide a more complete
understanding of the Company's business. Management strongly encourages
investors and stockholders to review their financial statements and
publicly-filed reports in their entirety and to not rely on any single
financial measure.

The tables below reconcile the non-GAAP financial measures, adjusted net
income and adjusted earnings per diluted share, with the most directly
comparable GAAP financial measures, actual net income and actual earnings per
diluted share.





                     Thirteen Weeks Ended January 28, 2012
                                         Earnings per       Weighted Average
                     Net Income          Diluted Share      Diluted Shares
                                                            Outstanding
GAAP measure         $    60,394         $    0.68          89,072
Transaction costs    266              *  0.01
(a)
Interest expense (b) 1,468            *  0.01
Adjusted non-GAAP    $    62,128         $    0.70
measure
(a) Includes transaction costs related to the secondary offering completed in
December 2011.
(b) Includes accelerated amortization of debt issuance costs related to the
full prepayment of the $125 million Term Loan.
* Items were tax affected at the Company's statutory rate of approximately 39%
for the thirteen weeks ended January 28, 2012.



                   Fifty-Two Weeks Ended January 28, 2012
                                        Earnings per        Weighted Average
                   Net Income           Diluted Share       Diluted Shares
                                                            Outstanding
GAAP measure       $   140,697          $     1.58          88,896
Transaction costs  614              *   0.01
(a)
Interest expense   5,815            *   0.07
(b)
Adjusted non-GAAP  $   147,126          $     1.66
measure
(a) Includes transaction costs related to the secondary offerings completed in
April 2011 and December 2011.
(b) Includes premium paid and accelerated amortization of debt issuance costs
and debt discount related to the repurchases of $49.2 million of Senior Notes,
the amendment of the $200 million Revolving Credit Facility, and the full
prepayment of the $125 million Term Loan.
* Items were tax affected at the Company's statutory rate of approximately 39%
for the fifty-two weeks ended January 28, 2012.



SOURCE Express, Inc.

Website: http://www.express.com
Contact: Investor Contacts: Marisa Jacobs, Vice President Investor Relations,
Express, +1-614-474-4465; ICR, Inc., Allison Malkin / Anne Rakunas,
+1-203-682-8225 / +1-310-954-1113; Media Contact: Amy Hughes, Corporate
Communications & Events, Express, +1-614-474-4325
 
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