Express, Inc. Reports Third Quarter 2013 Results In Line With Guidance

    Express, Inc. Reports Third Quarter 2013 Results In Line With Guidance

-- Third quarter net sales rose 7% to $503 million; comparable sales rose 5%

-- Third quarter diluted EPS increased 15% to $0.23

-- Full year guidance updated

PR Newswire

COLUMBUS, Ohio, Dec. 4, 2013

COLUMBUS, Ohio, Dec. 4, 2013 /PRNewswire/ --Express, Inc. (NYSE: EXPR), a
specialty retail apparel chain operating approximately 630 stores, today
announced its financial results for the third quarter and first nine months of
2013. These results cover the 13 and 39 week periods ended November 2, 2013
and compare to the 13 and 39 week periods ended October 27, 2012.

Michael Weiss, the Company's Chairman and Chief Executive Officer, noted that,
"We delivered a solid third quarter, in line with our guidance and highlighted
by a 5% increase in comparable sales and 15% EPS growth. These results were
achieved against the backdrop of an extremely challenging and promotional
retail environment. Our carefully edited assortment, spanning our four end
uses, constituted a differentiated and compelling offering that resonated with
our customers."

Commenting on the fourth quarter, Mr. Weiss noted that, "Our current product
line consists of a well balanced mix of cold weather and spring merchandise,
with styles that tested well and are on-trend. Thanksgiving week sales
exceeded last year's, however results did not meet our expectations. We had
been planning for a promotional holiday season but we now expect the intensity
of those promotions to reach heightened levels and we are updating our full
year guidance accordingly. Our overarching goal is to continue presenting
Express as a premier fashion authority for our demographic, and we believe
that our current and go-forward assortments demonstrate that standing."

Third Quarter 2013 Operating Results:

  oNet sales increased 7% to $503.0 million from $468.5 million in the third
    quarter of 2012.
  oComparable sales increased 5%. In last year's third quarter, comparable
    sales declined by 5%. Both numbers include e-commerce sales, which
    increased 29% to $71.2 million in the third quarter of 2013. In last
    year's third quarter, e-commerce sales grew 21% to $55.1 million.
  oGross margin improved 60 basis points over last year's third quarter and
    represented 32.9% of net sales. Merchandise margin improved by 40 basis
    points. Despite the promotional environment, we were able to recover some
    of the margin lost in last year's third quarter by delivering a stronger
    product assortment, especially on the women's side of the business.
    Buying and occupancy costs as a percentage of sales improved by 20 basis
    points, primarily due to the leverage associated with our comparable sales
    growth.
  oSelling, general, and administrative (SG&A) expenses were $128.4 million
    versus $117.7 million in last year's third quarter. As a percentage of
    net sales, SG&A expenses rose by 40 basis points to 25.5% compared to
    25.1% in the same period last year, primarily reflecting payroll increases
    and an increase in marketing expense, which includes certain costs
    associated with our preparations to open the Times Square store.
  oOperating income was $36.7 million, or 7.3% of net sales, compared to
    $34.4 million, or 7.3% of net sales, in the third quarter of 2012.
  oThe effective tax rate was 39.2% compared to 41.4% in last year's third
    quarter. The effective rate was lower than the comparable prior year
    period primarily due to a discrete tax charge related to the rate applied
    to deferred tax balance sheet accounts incurred during the third quarter
    of 2012.
  oNet income was $19.3 million, or $0.23 per diluted share, compared to net
    income of $17.4 million, or $0.20 per diluted share, in the third quarter
    of 2012.
  oReal estate activity for the third quarter of 2013, which includes the
    opening of our Union Square flagship store in San Francisco, is detailed
    in Schedule 4.

Thirty-Nine Week Operating Results:

  oNet sales increased 6% to $1,497.7 million from $1,419.4 million in the
    prior year period.
  oComparable sales increased 3% while comparable sales in the prior year
    period were flat.
  oGross margin was 32.6% of net sales compared to 34.3% in the prior year
    period. Merchandise margin declined 90 basis points and buying and
    occupancy costs as a percentage of sales increased 80 basis points.
  oSG&A expenses were $360.2 million versus $347.2 million in the prior year
    period. As a percentage of net sales, SG&A expenses improved 50 basis
    points to 24.0% compared to 24.5% in the same period last year.
  oOperating income was $128.8 million, or 8.6% of net sales, compared to
    $140.2 million, or 9.9% of net sales, in the prior year period.
  oThe effective tax rate was 39.5% compared to 40.2% in the prior year
    period.
  oNet income was $68.6 million, or $0.81 per diluted share, compared to net
    income of $75.3 million, or $0.86 per diluted share, in the prior year
    period.
  oCapital expenditures totaled $78.8 million, compared to $73.4 million in
    the prior year period.

Third Quarter 2013 Balance Sheet:

  oCash and cash equivalents totaled $181.6 million versus $102.4 million at
    the end of the third quarter of 2012.
  oInventory rose to $343.0 million, an increase of 18.1%, compared to $290.4
    million at the end of the third quarter of 2012. The calendar shift due
    to last year's 53rd week accounted for approximately 36% of the increase.
    We also took receipt of certain holiday goods earlier than last year in an
    effort to improve the flow of goods through our distribution center during
    the holiday period. Inventory per square foot increased 9.8% compared to
    the same period in 2012.
  oLong-term debt was relatively unchanged at $199.1 million, with no
    borrowings outstanding under the Revolving Credit Facility.

2013 Guidance:

The table below compares the Company's projected results for the thirteen week
period ended February 1, 2014 to the actual results for the fourteen week
period ended February 2, 2013.

                                  Fourth Quarter 2013      Fourth Quarter 2012
                                  Guidance
                                                           Actual Results
Comparable Sales                  +Low single digits ^(1)  1.5%
Effective Tax Rate                Approximately 40%        39.7%
Interest Expense                  $4.9 million             $5.2 million
Net Income                        $56 - $60 million        $63.9 million ^(2)
Diluted EPS                       $0.66 - $0.71            $0.75 ^ ^(3)
Weighted Average Diluted Shares   84.8 million             85.3 million
Outstanding

^(1)   Compares the 13-week period ended February 1, 2014 to the 13-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.

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 single digits ^(1)        Flat
Effective Tax Rate               39.3% - 39.8%                  40%
Interest Expense                 $19.4 million                  $19.6 million
Net Income                       $124 - $128 million            $139.3 million
                                                                ^(2)
Diluted EPS                      $1.46 - $1.51                  $1.60 ^(3)
Weighted Average Diluted Shares  85.1 million                   87.2 million
Outstanding
Capital Expenditures             $108 - $113 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, December 4, 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 December 4, 2013 until 11:59 p.m. ET on
December 11, 2013 and can be accessed by dialing (877) 870-5176 and entering
replay pin number 13572522.

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 approximately 630 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 fourth quarter and full year 2013, including statements
regarding expected comparable sales, effective tax rates, interest expense,
net income, earnings per diluted share, and capital expenditures, and (2)
statements regarding expected store openings, store closures, and gross square
footage. 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)
                           November 2, 2013     February 2,     October 27,
                                                2013            2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents  $     181,553        $  256,297      $  102,438
Receivables, net           17,433               11,024          11,014
Inventories                343,020              215,082         290,368
Prepaid minimum rent       26,125               25,166          24,233
Other                      24,807               8,293           28,949
Total current assets       592,938              515,862         457,002
PROPERTY AND EQUIPMENT     730,157              625,344         614,145
Less: accumulated          (374,869)            (346,975)       (333,279)
depreciation
Property and equipment,    355,288              278,369         280,866
net
TRADENAME/DOMAIN NAME      197,812              197,719         197,719
DEFERRED TAX ASSETS        14,275               16,808          9,640
OTHER ASSETS               8,413                10,441          11,216
Total assets               $     1,168,726      $  1,019,199    $  956,443
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable           $     244,906        $  176,125      $  209,070
Deferred revenue           19,725               27,851          18,524
Accrued bonus              1,742                336             85
Accrued expenses           84,745               108,464         91,129
Total current liabilities  351,118              312,776         318,808
LONG-TERM DEBT             199,086              198,843         198,760
OTHER LONG-TERM            196,339              136,418         135,780
LIABILITIES
Total liabilities          746,543              648,037         653,348
COMMITMENTS AND
CONTINGENCIES
Total stockholders' equity 422,183              371,162         303,095
Total liabilities and      $     1,168,726      $  1,019,199    $  956,443
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        Thirty-Nine Weeks Ended
                         November 2,  October 27,  November 2,  October 27,
                         2013         2012         2013         2012
NET SALES                $  502,992   $  468,527   $ 1,497,674  $ 1,419,358
COST OF GOODS SOLD,
BUYING AND OCCUPANCY     337,727      316,989      1,009,085    932,532
COSTS
Gross profit             165,265      151,538      488,589      486,826
OPERATING EXPENSES:
Selling, general, and    128,366      117,722      360,165      347,224
administrative expenses
Other operating expense  169          (586)        (415)        (553)
(income), net
Total operating expenses 128,535      117,136      359,750      346,671
OPERATING INCOME         36,730       34,402       128,839      140,155
INTEREST EXPENSE, NET    4,876        4,782        14,457       14,337
OTHER EXPENSE (INCOME),  153          (116)        958          (104)
NET
INCOME BEFORE INCOME     31,701       29,736       113,424      125,922
TAXES
INCOME TAX EXPENSE       12,434       12,314       44,811       50,598
NET INCOME               $  19,267    $  17,422    $ 68,613     $ 75,324
OTHER COMPREHENSIVE
INCOME:
Foreign currency         26           (49)         242          (46)
translation gain (loss)
COMPREHENSIVE INCOME     $  19,293    $  17,373    $ 68,855     $ 75,278
EARNINGS PER SHARE:
Basic                    $  0.23      $  0.20      $ 0.81       $ 0.86
Diluted                  $  0.23      $  0.20      $ 0.81       $ 0.86
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic                    83,929       85,980       84,675       87,489
Diluted                  84,603       86,216       85,221       87,835



Schedule 3
Express, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                                          Thirty-Nine Weeks Ended
                                          November 2, 2013  October 27, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                $     68,613      $     75,324
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization             52,000            50,733
Loss on disposal of property and          636               67
equipment
Excess tax benefit from share-based       (201)             (409)
compensation
Share-based compensation                  16,016            12,207
Deferred taxes                            307               3,713
Changes in operating assets and
liabilities:
Receivables, net                          (6,420)           (1,977)
Inventories                               (128,334)         (77,270)
Accounts payable, deferred revenue, and   25,969            19,523
accrued expenses
Other assets and liabilities              9,054             7,231
Net cash provided by operating activities 37,640            89,142
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures                      (78,772)          (73,354)
Purchase of intangible assets             (69)              (210)
Net cash used in investing activities     (78,841)          (73,564)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on capital lease obligation      (45)              (41)
Excess tax benefit from share-based       201               409
compensation
Proceeds from share-based compensation    4,426             623
Repurchase of common stock                (37,905)          (66,534)
Net cash used in financing activities     (33,323)          (65,543)
EFFECT OF EXCHANGE RATE ON CASH           (220)             41
NET DECREASE IN CASH AND CASH EQUIVALENTS (74,744)          (49,924)
CASH AND CASH EQUIVALENTS, Beginning of   256,297           152,362
period
CASH AND CASH EQUIVALENTS, End of period  $     181,553     $     102,438
Note: Certain prior period amounts have been reclassified or adjusted to
conform to current year presentation.



Schedule 4
Express, Inc.

Real Estate Activity

(Unaudited)
Third Quarter 2013 - Actual            November 2, 2013 - Actual
Company-Operated Stores Opened Closed  Store Count    Gross Square
                                                      Footage
United States           5      —       614
Canada                  2      —       14
Total                   7      —       628            5.5 million
Fourth Quarter 2013 - Projected        February 1, 2014 - Projected
Company-Operated Stores Open   Close   Store Count    Gross Square
                                                      Footage
United States           3      —       617
Canada                  1      —       15
Total                   4      —       632            5.5 million



SOURCE Express, Inc.

Website: http://www.express.com
Contact: Investors: 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: Amy Hughes, Express, Inc., Corporate
Communications & Events, (614) 474-4325
 
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