COLUMBUS, Ohio--(BUSINESS WIRE)-- Fashion apparel retailer Express, Inc. (NYSE: EXPR), announced its financial results for the third quarter of 2022. These results, which cover the thirteen weeks ended October 29, 2022, are compared to the thirteen weeks ended October 30, 2021.
"The third quarter was tougher than we anticipated and that is reflected in our results. The macroeconomic, consumer and competitive environments were extremely challenging, and became more acute as the quarter progressed," said Tim Baxter, Chief Executive Officer. "Our strategy to elevate our brand through higher average unit retails and reduced promotions, which has driven steady growth for the past five quarters, came up against the consumer's reduced spending in discretionary categories and increased appetite for deep discounts. At the same time, we had some misses in our women's business that further impacted our performance. We did, however, post our sixth consecutive quarter of positive comps in our men's business."
Third Quarter 2022 Results
"Despite these results, we remain confident in our ability to achieve our stated goal of long-term, profitable growth in the Express brand. We are in the midst of a large-scale transformation which we expect to be further accelerated by the strategic partnership with WHP Global that we announced today," Baxter concluded.
Third Quarter 2022 Operating Results |
Balance Sheet and Cash Flow Highlights |
Refinancing Transactions |
Subsequent to the third quarter, the Company completed the following transactions:
Full Year 2022 Outlook |
This outlook is based on our year-to-date performance and the advancements we have made in each of the four foundational pillars of our EXPRESSway Forward strategy (Product, Brand, Customer, Execution), balanced against the increasingly challenging macroeconomic and retail apparel environment, ongoing uncertainty of the supply chain and geopolitical events and other uncertainties that may impact our business.
The Company expects the following for the full year 2022 compared to the full year 2021:
Assumptions in the Company's outlook may be affected by the continued uncertainty of the pandemic and geopolitical events and their impacts throughout the supply chain.
This outlook does not reflect the expected benefits of the transaction or the strategic partnership with WHP Global announced today.
See Schedule 5 for a discussion of projected real estate activity.
Conference Call Information |
In a separate press release issued today, Express announced that it has entered into a strategic partnership with WHP Global. The press release is available at www.express.com/investor.
A conference call to discuss third quarter 2022 results is scheduled for December 8, 2022 at 8:00 a.m. Eastern Time (ET). Investors and analysts interested in participating in the earnings call are invited to dial (888) 550-5723 approximately ten minutes prior to the start of the call. The conference call will also be webcast live at www.express.com/investor. A telephone replay of this call will be available beginning at 12:00 p.m. ET on December 8, 2022, until 11:59 p.m. ET on December 15, 2022, and can be accessed by dialing (800) 770-2030 and entering the replay pin number 1790468. In addition, an investor presentation of third quarter 2022 results will be available at www.express.com/investor beginning at approximately 7:00 a.m. ET on December 8, 2022.
About Express, Inc. |
Express is a modern, multichannel apparel and accessories brand grounded in versatility, guided by its purpose - We Create Confidence. We Inspire Self-Expression. - and powered by a styling community. Launched in 1980 with the idea that style, quality and value should all be found in one place, Express has been a part of some of the most important and culture-defining fashion trends. The Express Edit design philosophy ensures that the brand is always ‘of the now’ so people can get dressed for every day and any occasion knowing that Express can help them look the way they want to look and feel the way they want to feel.
The Company operates over 550 retail and outlet stores in the United States and Puerto Rico, the express.com online store and the Express mobile app. Express, Inc. is comprised of the brands Express and UpWest, and is traded on the NYSE under the symbol EXPR. For more information, please visit www.express.com or www.upwest.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 and expectations, including statements regarding expected operating margins, comparable sales, effective tax rates, interest income, net income, diluted earnings per share, cash tax refunds, liquidity, EBITDA, free cash flow, eCommerce demand, and capital expenditures, (2) statements regarding expected store openings, store closures, store conversions, and gross square footage, and (3) statements regarding the Company's strategy, plans, and initiatives, including, but not limited to, results expected from such strategy, plans, and initiatives. You can identify these forward-looking statements by the use of words in the future tense and statements accompanied by words such as “outlook,” “indicator,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “scheduled,” “estimates,” “anticipates,” “opportunity,” “leads” or the negative version of these words or other comparable words. 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, and significant contingencies, many of which are beyond the Company's control. 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) the COVID-19 pandemic and its continued impact on our business operations, store traffic, employee availability, financial condition, liquidity and cash flow; (3) geopolitical risks, including impacts from the ongoing conflict between Russia and Ukraine and increased tensions between China and Taiwan; (4) our ability to operate our business efficiently, manage capital expenditures and costs, and obtain financing when required; (5) our ability to identify and respond to new and changing fashion trends, customer preferences, and other related factors; (6) 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, and inventory levels; (7) customer traffic at malls, shopping centers, and at our stores; (8) competition from other retailers; (9) our dependence on a strong brand image; (10) our ability to adapt to changing consumer behavior and develop and maintain a relevant and reliable omni-channel experience for our customers; (11) the failure or breach of information systems upon which we rely; (12) our ability to protect customer data from fraud and theft; (13) our dependence upon third parties to manufacture all of our merchandise; (14) changes in the cost of raw materials, labor, and freight; (15) supply chain or other business disruption, including as a result of the coronavirus; (16) our dependence upon key executive management; (17) our ability to execute our growth strategy, EXPRESSway Forward, including engaging our customers and acquiring new ones, executing with precision to accelerate sales and profitability, creating great product and reinvigorating our brand; (18) our substantial lease obligations; (19) our reliance on third parties to provide us with certain key services for our business; (20) impairment charges on long-lived assets; (21) claims made against us resulting in litigation or changes in laws and regulations applicable to our business; (22) our inability to protect our trademarks or other intellectual property rights which may preclude the use of our trademarks or other intellectual property around the world; (23) restrictions imposed on us under the terms of our asset-based loan facility, including restrictions on the ability to effect share repurchases; (24) changes in tax requirements, results of tax audits, and other factors that may cause fluctuations in our effective tax rate; (25) changes in tariff rates; (26) natural disasters, extreme weather, public health issues, including pandemics, fire, acts of terrorism or war and other events that cause business interruption, and (27) risks related to our partnership with WHP Global. These factors should not be construed as exhaustive and should be read in conjunction with the additional information concerning these and other factors 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 required by law.
Schedule 1 | |||||||||||
Express, Inc. | |||||||||||
Consolidated Balance Sheets | |||||||||||
(In thousands) | |||||||||||
(Unaudited) | |||||||||||
| October 29, 2022 |
| January 29, 2022 |
| October 30, 2021 | ||||||
ASSETS |
|
|
|
|
| ||||||
Current Assets: |
|
|
|
|
| ||||||
Cash and cash equivalents | $ | 24,592 |
|
| $ | 41,176 |
|
| $ | 36,795 |
|
Receivables, net |
| 16,669 |
|
|
| 11,744 |
|
|
| 14,033 |
|
Income tax receivable |
| 1,532 |
|
|
| 53,665 |
|
|
| 53,350 |
|
Inventories |
| 422,666 |
|
|
| 358,795 |
|
|
| 383,588 |
|
Prepaid rent |
| 5,964 |
|
|
| 5,602 |
|
|
| 4,309 |
|
Other |
| 26,100 |
|
|
| 19,755 |
|
|
| 19,464 |
|
Total current assets |
| 497,523 |
|
|
| 490,737 |
|
|
| 511,539 |
|
|
|
|
|
|
| ||||||
Right of Use Asset, Net |
| 533,506 |
|
|
| 615,462 |
|
|
| 656,995 |
|
|
|
|
|
|
| ||||||
Property and Equipment |
| 1,002,902 |
|
|
| 975,802 |
|
|
| 971,230 |
|
Less: accumulated depreciation |
| (869,910 | ) |
|
| (827,820 | ) |
|
| (820,728 | ) |
Property and equipment, net |
| 132,992 |
|
|
| 147,982 |
|
|
| 150,502 |
|
|
|
|
|
|
| ||||||
Non-Current Income Tax Receivable |
| 52,278 |
|
|
| — |
|
|
| — |
|
Other Assets |
| 4,672 |
|
|
| 5,273 |
|
|
| 5,092 |
|
TOTAL ASSETS | $ | 1,220,971 |
|
| $ | 1,259,454 |
|
| $ | 1,324,128 |
|
|
|
|
|
|
| ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
| ||||||
Current Liabilities: |
|
|
|
|
| ||||||
Short-term lease liability | $ | 190,874 |
|
| $ | 196,628 |
|
| $ | 204,827 |
|
Accounts payable |
| 229,661 |
|
|
| 231,974 |
|
|
| 252,752 |
|
Deferred revenue |
| 31,947 |
|
|
| 35,985 |
|
|
| 30,412 |
|
Short-term debt |
| 4,500 |
|
|
| 11,216 |
|
|
| 10,091 |
|
Accrued expenses |
| 118,984 |
|
|
| 110,850 |
|
|
| 126,151 |
|
Total current liabilities |
| 575,966 |
|
|
| 586,653 |
|
|
| 624,233 |
|
|
|
|
|
|
| ||||||
Long-Term Lease Liability |
| 437,091 |
|
|
| 536,905 |
|
|
| 579,117 |
|
Long-Term Debt |
| 230,861 |
|
|
| 117,581 |
|
|
| 108,394 |
|
Other Long-Term Liabilities |
| 9,454 |
|
|
| 17,007 |
|
|
| 20,553 |
|
Total Liabilities |
| 1,253,372 |
|
|
| 1,258,146 |
|
|
| 1,332,297 |
|
|
|
|
|
|
| ||||||
Commitments and Contingencies |
|
|
|
|
| ||||||
|
|
|
|
|
| ||||||
Total Stockholders’ (Deficit)/Equity |
| (32,401 | ) |
|
| 1,308 |
|
|
| (8,169 | ) |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,220,971 |
|
| $ | 1,259,454 |
|
| $ | 1,324,128 |
|
Schedule 2 | |||||||||||||||
Express, Inc. | |||||||||||||||
Consolidated Statements of Income | |||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
| Thirteen Weeks Ended |
| Thirty-Nine Weeks Ended | ||||||||||||
| October 29, 2022 |
| October 30, 2021 |
| October 29, 2022 |
| October 30, 2021 | ||||||||
Net Sales | $ | 434,145 |
|
| $ | 471,981 |
|
| $ | 1,349,849 |
|
| $ | 1,275,367 |
|
Cost of Goods Sold, Buying and Occupancy Costs |
| 313,528 |
|
|
| 315,173 |
|
|
| 944,031 |
|
|
| 890,448 |
|
GROSS PROFIT |
| 120,617 |
|
|
| 156,808 |
|
|
| 405,818 |
|
|
| 384,919 |
|
Operating Expenses: |
|
|
|
|
|
|
| ||||||||
Selling, general, and administrative expenses |
| 150,090 |
|
|
| 141,055 |
|
|
| 434,461 |
|
|
| 395,010 |
|
Other operating expense/(income), net |
| 36 |
|
|
| (501 | ) |
|
| (443 | ) |
|
| (565 | ) |
TOTAL OPERATING EXPENSES |
| 150,126 |
|
|
| 140,554 |
|
|
| 434,018 |
|
|
| 394,445 |
|
|
|
|
|
|
|
|
| ||||||||
OPERATING (LOSS)/INCOME |
| (29,509 | ) |
|
| 16,254 |
|
|
| (28,200 | ) |
|
| (9,526 | ) |
Interest Expense, Net |
| 4,668 |
|
|
| 2,879 |
|
|
| 11,962 |
|
|
| 12,246 |
|
Other Income, Net |
| (509 | ) |
|
| — |
|
|
| (1,385 | ) |
|
| — |
|
(LOSS)/INCOME BEFORE INCOME TAXES |
| (33,668 | ) |
|
| 13,375 |
|
|
| (38,777 | ) |
|
| (21,772 | ) |
Income Tax Expense |
| 780 |
|
|
| 289 |
|
|
| 549 |
|
|
| 227 |
|
NET (LOSS)/INCOME | $ | (34,448 | ) |
| $ | 13,086 |
|
| $ | (39,326 | ) |
| $ | (21,999 | ) |
|
|
|
|
|
|
|
| ||||||||
EARNINGS PER SHARE: |
|
|
|
|
|
|
| ||||||||
Basic | $ | (0.50 | ) |
| $ | 0.20 |
|
| $ | (0.58 | ) |
| $ | (0.33 | ) |
Diluted | $ | (0.50 | ) |
| $ | 0.19 |
|
| $ | (0.58 | ) |
| $ | (0.33 | ) |
|
|
|
|
|
|
|
| ||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING: |
|
|
|
|
|
|
| ||||||||
Basic |
| 68,272 |
|
|
| 67,006 |
|
|
| 67,878 |
|
|
| 66,244 |
|
Diluted |
| 68,272 |
|
|
| 69,856 |
|
|
| 67,878 |
|
|
| 66,244 |
|
Schedule 3 | |||||||
Express, Inc. | |||||||
Consolidated Statements of Cash Flows | |||||||
(In thousands) | |||||||
(Unaudited) | |||||||
| Thirty-Nine Weeks Ended | ||||||
| October 29, 2022 |
| October 30, 2021 | ||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
| ||||
Net loss | $ | (39,326 | ) |
| $ | (21,999 | ) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
|
|
| ||||
Depreciation and amortization |
| 45,076 |
|
|
| 51,964 |
|
Loss on disposal of property and equipment |
| 57 |
|
|
| 74 |
|
Share-based compensation |
| 7,617 |
|
|
| 7,856 |
|
Landlord allowance amortization |
| (310 | ) |
|
| (319 | ) |
Changes in operating assets and liabilities: |
|
|
| ||||
Receivables, net |
| (4,925 | ) |
|
| 523 |
|
Income tax receivable |
| (145 | ) |
|
| 57,992 |
|
Inventories |
| (63,871 | ) |
|
| (119,228 | ) |
Accounts payable, deferred revenue, and accrued expenses |
| (4,865 | ) |
|
| 95,621 |
|
Other assets and liabilities |
| (35,177 | ) |
|
| 5,800 |
|
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES |
| (95,869 | ) |
|
| 78,284 |
|
|
|
|
| ||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
| ||||
Capital expenditures |
| (24,340 | ) |
|
| (18,095 | ) |
NET CASH USED IN INVESTING ACTIVITIES |
| (24,340 | ) |
|
| (18,095 | ) |
|
|
|
| ||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
| ||||
Proceeds from borrowings under the revolving credit facility |
| 252,000 |
|
|
| 73,000 |
|
Repayment of borrowings under the revolving credit facility |
| (143,000 | ) |
|
| (154,050 | ) |
Proceeds from borrowings under the term loan facility |
| — |
|
|
| 50,000 |
|
Repayment of borrowings under the term loan facility |
| (3,375 | ) |
|
| (43,263 | ) |
Repayments of financing arrangements |
| — |
|
|
| (769 | ) |
Costs incurred in connection with debt arrangements |
| — |
|
|
| (471 | ) |
Repurchase of common stock for tax withholding obligations |
| (2,000 | ) |
|
| (3,715 | ) |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES |
| 103,625 |
|
|
| (79,268 | ) |
|
|
|
| ||||
NET DECREASE IN CASH AND CASH EQUIVALENTS |
| (16,584 | ) |
|
| (19,079 | ) |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
| 41,176 |
|
|
| 55,874 |
|
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 24,592 |
|
| $ | 36,795 |
|
Schedule 4 |
Express, Inc. |
Supplemental Information - Consolidated Statements of Income |
Reconciliation of GAAP to Non-GAAP Financial Measures |
(Unaudited) |
The Company supplements the reporting of its financial information determined under United States generally accepted accounting principles (GAAP) with certain non-GAAP financial measures such as EBITDA. Management strongly encourages investors and stockholders to review the Company's financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.
EBITDA |
EBITDA is defined as net (loss)/income before interest expense (net of interest income), income tax expense and depreciation and amortization expense.
How This Measure Is Useful
When used in conjunction with GAAP financial measures, EBITDA is a supplemental measure of operating performance that the Company believes is a useful measure to facilitate comparisons to historical performance. EBITDA is used as a performance measure in the Company's long-term executive compensation program for purposes of determining the number of equity awards that are ultimately earned and is also a metric used in our short-term cash incentive compensation plan.
Limitations of the Usefulness of This Measure
Because non-GAAP financial measures are not standardized, EBITDA may differ from similarly titled measures used by other companies due to different methods of calculation. Presentation of EBITDA is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. EBITDA excludes certain normal recurring expenses. Therefore, these measures may not provide a complete understanding of the Company's performance and should be reviewed in conjunction with the GAAP financial measures. A reconciliation of EBITDA to the most directly comparable GAAP measures, is set forth below:
| Thirteen Weeks Ended |
| Thirty-Nine Weeks Ended | |||||||||||
(in thousands) | October 29, 2022 |
| October 30, 2021 |
| October 29, 2022 |
| October 30, 2021 | |||||||
Net (loss)/income | $ | (34,448 | ) |
| $ | 13,086 |
| $ | (39,326 | ) |
| $ | (21,999 | ) |
Interest expense, net |
| 4,668 |
|
|
| 2,879 |
|
| 11,962 |
|
|
| 12,246 |
|
Income tax expense |
| 780 |
|
|
| 289 |
|
| 549 |
|
|
| 227 |
|
Depreciation and amortization |
| 14,550 |
|
|
| 15,662 |
|
| 43,763 |
|
|
| 48,418 |
|
EBITDA (Non-GAAP Measure) | $ | (14,450 | ) |
| $ | 31,916 |
| $ | 16,948 |
|
| $ | 38,892 |
|
|
| Schedule 5 | |||
Express, Inc. | |||||
Real Estate Activity | |||||
(Unaudited) | |||||
|
|
|
| ||
Third Quarter 2022 - Actual |
| October 29, 2022 - Actual | |||
Company-Operated Stores | Opened | Closed |
| Store Count | Gross Square Footage |
Retail Stores | — | (1) |
| 342 |
|
Outlet Stores | — | — |
| 202 |
|
Express Edit Stores | 4 | — |
| 9 |
|
UpWest Stores | 1 | (2) |
| 13 |
|
TOTAL | 5 | (3) |
| 566 | 4.7 million |
|
|
|
|
|
|
Fourth Quarter 2022 - Projected |
| January 28, 2023 - Projected | |||
Company-Operated Stores | Opened | Closed |
| Store Count | Gross Square Footage |
Retail Stores | — | (8) |
| 334 |
|
Outlet Stores | — | (2) |
| 200 |
|
Express Edit Stores | 2 | (1) |
| 10 |
|
UpWest Stores | 2 | (1) |
| 14 |
|
TOTAL | 4 | (12) |
| 558 | 4.6 million |
|
|
|
|
|
|
Full Year 2022 - Projected |
| January 28, 2023 - Projected | |||
Company-Operated Stores | Opened | Closed |
| Store Count | Gross Square Footage |
Retail Stores | — | (12) |
| 334 |
|
Outlet Stores | — | (3) |
| 200 |
|
Express Edit Stores | 7 | (2) |
| 10 |
|
UpWest Stores | 10 | (3) |
| 14 |
|
TOTAL | 17 | (20) |
| 558 | 4.6 million |
View source version on businesswire.com: https://www.businesswire.com/news/home/20221207005932/en/
INVESTOR CONTACT Greg Johnson VP, Investor Relations gjohnson@express.com (614) 474-4890
Source: Express, Inc.