Express, Inc. Reports Second Quarter 2013 Results; Introduces Third Quarter Outlook And Raises Full Year Guidance

 Express, Inc. Reports Second Quarter 2013 Results; Introduces Third Quarter
                    Outlook And Raises Full Year Guidance

- Second quarter net sales rise 7%; comparable sales increase 6%

- Second quarter diluted EPS increases 11% to $0.20

- Full year guidance raised to reflect strong second quarter and positive
third quarter outlook

PR Newswire

COLUMBUS, Ohio, Aug. 28, 2013

COLUMBUS, Ohio, Aug. 28, 2013 /PRNewswire/ -- Express, Inc. (NYSE: EXPR), a
specialty retail apparel chain operating over 620 stores, today announced its
financial results for the second quarter and first six months of 2013. These
results cover the thirteen and twenty-six week periods ended August 3, 2013
and compare to the thirteen and twenty-six week periods ended July 28, 2012.

Michael Weiss, Express, Inc.'s Chairman and Chief Executive Officer commented,
"We delivered a very solid second quarter. Financial highlights include high
single digit sales growth, comparable sales that represent a return to
mid-single digit growth and earnings per share that came near the upper end of
our guidance. These results were driven by improved execution of our
Go-to-Market strategy and by our ability to react quickly as the competitive
environment evolved."

In terms of product offering, Mr. Weiss noted that, "Our customers are
responding enthusiastically to our assortments, which are trend-right,
differentiated and well-edited. We are seeing this reflected in improved
conversion rates. As we move into the second half of the year, we are
confident in our product and marketing strategies, and believe we are well
positioned for the fall and holiday seasons."

He went on to add that, "We made progress on each of our four growth pillars
during the second quarter. At the same time, we took concrete steps to
prepare for the launch of our outlet business in the second quarter of 2014,
which represents another opportunity to drive significant top and bottom line
growth."

Second Quarter 2013 Operating Results:

  oNet sales increased 7% to $486.2 million from $454.9 million in the second
    quarter of 2012.
  oComparable sales increased 6%, following a 1% comparable sales increase in
    last year's second quarter. This includes e-commerce sales, which
    increased 27% to $59.9 million. In last year's second quarter, e-commerce
    sales grew 24% to $47.2 million.
  oGross margin declined to 31.4% of net sales compared to 32.2% in the
    second quarter of 2012. Merchandise margin was down 40 basis points
    driven by increased promotional activity late in the second quarter in
    response to the competitive environment. Buying and occupancy costs as a
    percentage of sales increased 40 basis points, driven primarily by the
    incremental non-cash rent expense associated with the New York City and
    San Francisco flagship stores.
  oSelling, general, and administrative (SG&A) expenses were $119.2 million
    versus $115.3 million in last year's second quarter. As a percentage of
    net sales, SG&A expenses improved 80 basis points to 24.5% compared to
    25.3% in the same period last year. This improvement reflects continued
    discipline in managing these expenses.
  oOperating income was $33.4 million, or 6.9% of net sales, compared to
    $31.2 million, or 6.9% of net sales, in the second quarter of 2012.
  oThe effective tax rate was 39.7% compared to 39.6% in last year's second
    quarter.
  oNet income was $16.9 million, or $0.20 per diluted share, compared to net
    income of $15.8 million, or $0.18 per diluted share, in the second quarter
    of 2012.
  oReal estate activity for the second quarter of 2013 is detailed in
    Schedule 4.

Twenty-Six Week Operating Results:

  oNet sales increased 5% to $994.7 million from $950.8 million in the prior
    year period.
  oComparable sales increased 3%, following a 2% comparable sales increase in
    the prior year period. This includes e-commerce sales, which increased
    37% to $130.6 million. In the prior year period, e-commerce sales grew
    26% to $95.1 million.
  oGross margin declined to 32.5% of net sales compared to 35.3% in the prior
    year period. Merchandise margin declined 150 basis points and buying and
    occupancy costs as a percentage of sales increased 130 basis points.
  oSG&A expenses were $231.8 million versus $229.5 million in the prior year
    period. As a percentage of net sales, SG&A expenses improved 80 basis
    points to 23.3% compared to 24.1% in the same period last year.
  oOperating income was $92.1 million, or 9.3% of net sales, compared to
    $105.8 million, or 11.1% of net sales, in the prior year period.
  oThe effective tax rate declined to 39.6% compared to 39.8% in the prior
    year period.
  oNet income was $49.3 million, or $0.58 per diluted share, compared to net
    income of $57.9 million, or $0.65 per diluted share, in the prior year
    period.
  oCapital expenditures totaled $45.5 million, compared to $45.7 million in
    the prior year period.

Second Quarter 2013 Balance Sheet:

  oCash and cash equivalents totaled $234.3 million versus $130.2 million at
    the end of the second quarter of 2012.
  oAs expected, inventory rose to $241.9 million, an increase of 13.4%,
    compared to $213.3 million at the end of the second quarter of 2012. The
    calendar shift due to last year's 53rd week accounted for approximately 4%
    of the increase. Inventory per square foot increased 8.8% compared to the
    same period in 2012.
  oLong-term debt was relatively unchanged at $199.0 million, with no
    borrowings outstanding under the Revolving Credit Facility.
  oDuring the quarter the Company purchased approximately 0.6 million shares
    of its common stock at an aggregate cost of $13.9 million, to end the
    second quarter with approximately $21.1 million of its $100 million
    repurchase authorization still outstanding. Repurchases of an additional
    1.0 million shares during the third quarter have completed the repurchase
    program.

2013 Guidance:
The table below compares the Company's projected results for the thirteen week
period ended November 2, 2013 to the actual results for the thirteen week
period ended October 27, 2012. 

                                        Third Quarter 2013  Third Quarter 2012
                                        Guidance
                                                            Actual Results
Comparable Sales                        +Mid Single Digits  (5)%
Effective Tax Rate                      Approximately 40%   41.4%
Interest Expense                        $4.8 million        $4.8 million
Net Income                              $18 - $22 million   $17.4 million
Diluted EPS                             $0.21 - $0.26       $0.20
Weighted Average Diluted Shares         85.1 million        86.2 million
Outstanding



See Schedule 4 for projected real estate activity.

The table below compares the Company's projected results for the fifty-two
week period ended February 1, 2014 to the actual results for the fifty-three
week period ended February 2, 2013.

                                 Updated
                                                                Full Year 2012
                                 Full Year 2013
                                                                Actual Results
                                 Guidance
Comparable Sales                 +Low to mid single             Flat
                                 digits ^(1)
Effective Tax Rate               39.3% - 39.8%                  40%
Interest Expense                 $19.4 million                  $19.6 million
Net Income                       $130 - $137 million            $139.3 million
                                                                ^(2)
Diluted EPS                      $1.52 - $1.60                  $1.60 ^(3)
Weighted Average Diluted Shares  85.4 million                   87.2 million
Outstanding
Capital Expenditures             $110 - $115 million            $99.7 million
^(1) Compares the 52-week period ended February 1, 2014 to the
52-week period ended February 2, 2013.

^(2) Includes approximately $3.0 million related to the 53rd
week.

^(3) Includes approximately $0.04 related to the 53rd week.



See Schedule 4 for projected real estate activity.

Consistent with previous years, the quarterly and full year guidance excludes
any non-core operating items that may occur.

Conference Call Information:
A conference call to discuss second quarter results is scheduled for Wednesday
August 28, 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 from
12:00 p.m. ET on August 28, 2013 until 11:59 p.m. ET on September 4, 2013 and
can be accessed by dialing (877) 870-5176 and entering replay pin number
418777.

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 include, but are not limited to, (1)
guidance for the third quarter and full year 2013, including statements
regarding expected comparable sales, effective tax rates, interest expense,
net income and earnings per diluted share, (2) statements regarding expected
store openings, store closures, and gross square footage, and (3) statements
regarding growth strategies and plans. 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)
                               August3, 2013  February 2, 2013  July28, 2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents      $  234,250      $   256,297       $  130,174
Receivables, net               13,510          11,024            13,825
Inventories                    241,933         215,082           213,275
Prepaid minimum rent           26,030          25,166            23,543
Other                          32,172          8,293             24,978
Total current assets           547,895         515,862           405,795
PROPERTY AND EQUIPMENT         686,777         625,344           569,534
Less: accumulated depreciation (364,576)       (346,975)         (317,829)
Property and equipment, net    322,201         278,369           251,705
TRADENAME/DOMAIN NAME          197,787         197,719           197,694
DEFERRED TAX ASSETS            16,808          16,808            12,650
OTHER ASSETS                   9,100           10,441            11,970
Total assets                   $  1,093,791    $   1,019,199     $  879,814
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Accounts payable               $  197,050      $   176,125       $  163,325
Deferred revenue               19,459          27,851            19,188
Accrued bonus                  893             336               4,118
Accrued expenses               84,197          108,464           89,239
Accounts payable and accrued
expenses – related             —               —                 —
 parties
Total current liabilities      301,599         312,776           275,870
LONG-TERM DEBT                 199,003         198,843           198,685
OTHER LONG-TERM LIABILITIES    174,928         136,418           107,960
Total liabilities              675,530         648,037           582,515
COMMITMENTS AND CONTINGENCIES
Total stockholders' equity     418,261         371,162           297,299
Total liabilities and          $  1,093,791    $   1,019,199     $  879,814
stockholders' equity

Note: Certain prior period amounts have been reclassified or adjusted to
conform to current year presentation.



Schedule 2
Express, Inc.
Consolidated Statements of Income and Comprehensive Income
(In thousands, except per share amounts)
(Unaudited)
                  Thirteen Weeks Ended           Twenty-Six Weeks Ended
                  August3,2013  July28,2012  August3,2013  July28,2012
NET SALES         $   486,158     $  454,879     $   994,682     $  950,831
COST OF GOODS
SOLD, BUYING AND  333,611         308,358        671,358         615,543
OCCUPANCY
 COSTS
Gross profit      152,547         146,521        323,324         335,288
OPERATING
EXPENSES:
Selling, general,
and               119,176         115,307        231,799         229,502
administrative
expenses
Other operating
(income) expense, (44)            18             (584)           33
net
Total operating   119,132         115,325        231,215         229,535
expenses
OPERATING INCOME  33,415          31,196         92,109          105,753
INTEREST EXPENSE, 4,776           4,773          9,581           9,555
NET
OTHER EXPENSE,    576             220            805             12
NET
INCOME BEFORE     28,063          26,203         81,723          96,186
INCOME TAXES
INCOME TAX        11,154          10,374         32,377          38,284
EXPENSE
NET INCOME        $   16,909      $  15,829      $   49,346      $  57,902
OTHER
COMPREHENSIVE
INCOME:
Foreign currency  146             81             216             3
translation
COMPREHENSIVE     $   17,055      $  15,910      $   49,562      $  57,905
INCOME
EARNINGS PER
SHARE:
Basic             $   0.20        $  0.18        $   0.58        $  0.66
Diluted           $   0.20        $  0.18        $   0.58        $  0.65
WEIGHTED AVERAGE
SHARES
OUTSTANDING:
Basic             85,001          87,640         85,048          88,243
Diluted           85,572          87,979         85,531          88,645





Schedule 3
Express, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                                                 Twenty-Six Weeks Ended
                                                 August3, 2013  July28, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                       $   49,346      $  57,902
Adjustments to reconcile net income to net cash
provided by operating
 activities:
Depreciation and amortization                    34,754          33,937
Loss on disposal of property and equipment       286             35
Excess tax benefit from share-based compensation (64)            (277)
Share-based compensation                         10,837          8,856
Deferred taxes                                   —               (188)
Changes in operating assets and liabilities:
Receivables, net                                 (2,408)         (4,802)
Inventories                                      (27,103)        (204)
Accounts payable, deferred revenue, and accrued  (20,533)        (25,982)
expenses
Other assets and liabilities                     (8,582)         5,005
Net cash provided by operating activities        36,533          74,282
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures                             (45,538)        (45,661)
Purchase of intangible assets                    (69)            (185)
Net cash used in investing activities            (45,607)        (45,846)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on capital lease obligation             (29)            (27)
Excess tax benefit from share-based compensation 64              277
Proceeds from share-based compensation           2,828           623
Repurchase of common stock                       (15,756)        (51,497)
Net cash used in financing activities            (12,893)        (50,624)
EFFECT OF EXCHANGE RATE ON CASH                  (80)            —
NET DECREASE IN CASH AND CASH EQUIVALENTS        (22,047)        (22,188)
CASH AND CASH EQUIVALENTS, Beginning of period   256,297         152,362
CASH AND CASH EQUIVALENTS, End of period         $   234,250     $  130,174

Note: Certain prior period amounts have been reclassified or adjusted to
conform to current year presentation.



Schedule 4
Express, Inc.
Real Estate Activity
(Unaudited)
Second Quarter 2013 - Actual           August 3, 2013 - Actual
Company-Operated Stores Opened Closed  Store Count   Gross Square
                                                     Footage
United States           2      1       609
Canada                  —      —       12
Total                   2      1       621           5.4 million
Third Quarter 2013 - Projected         November 2, 2013 - Projected
Company-Operated Stores Open   Close   Store Count   Gross Square
                                                     Footage
United States           5      —       614
Canada                  2      —       14
Total                   7      —       628           5.5 million
Full Year 2013 - Projected             February 1, 2014 - Projected
Company-Operated Stores Open   Close   Store Count   Gross Square
                                                     Footage
United States           12     9       617
Canada                  4      —       15
Total                   16     9       632           5.5 million



SOURCE Express, Inc.

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