Company also provides update on strength of Q2 2021 sales performance; store sales plus demand has exceeded 2019 levels quarter to date on a comparable basis
COLUMBUS, Ohio--(BUSINESS WIRE)-- Fashion apparel retailer Express, Inc. (NYSE: EXPR), announced its financial results for the first quarter of 2021. These results, which cover the thirteen weeks ended May 1, 2021, are compared to the thirteen weeks ended May 2, 2020.
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Express storefront at Easton Town Center in Columbus, Ohio. (Photo: Business Wire)
"First quarter results exceeded our expectations across all channels and drove a $130 million improvement in our operating cash flow," said Tim Baxter, Chief Executive Officer. "We are well positioned for the post pandemic world, we are on track to achieve our goal of $1.0 billion in eCommerce demand by 2024, and I expect that we will return to positive operating cash flow in the second quarter and positive EBITDA in the third quarter.”
"We experienced an inflection point in our business after Easter as more people were vaccinated and states began lifting restrictions," Baxter continued. "As some people resumed pre-pandemic routines and began attending occasions, we have also seen improved trends in our historically dominant occasion based and wear to work product categories, while continuing our momentum and growth in our ‘new core’ such as denim and Express Essentials. As a result, our store sales plus demand in the second quarter of 2021 to date are exceeding 2019 levels on a comparable basis."
“We have made significant progress against the EXPRESSway Forward strategy we launched early last year, our transformation is well underway, customer response to our product assortment and brand positioning has been very positive, and our performance has begun to reflect the strength of our strategy."
First Quarter 2021 Operating Results
Please note, comparable sales calculations are not consistent across all retailers. Our comparable sales exclude sales from stores that were closed for at least one full day, including during the pandemic, consistent with our historical policy.
Balance Sheet And Cash Flow Highlights
Full Year 2021 Outlook
At this time, the Company will only provide a high level outlook for 2021. The Company expects the following:
Assumptions in the Company outlook are dependent upon the duration and intensity of the COVID-19 pandemic.
See Schedule 5 for a discussion of projected real estate activity.
Conference Call Information
A conference call to discuss first quarter 2021 results is scheduled for June 3, 2021 at 9:00 a.m. ET. Investors and analysts interested in participating in the call are invited to dial (877) 683-0508 approximately ten minutes prior to the start of the call. The conference call will also be webcast live at 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 June 3, 2021 until 11:59 p.m. ET on June 10, 2021 and can be accessed by dialing (800) 585-8367 and entering the replay pin number 3565025*. In addition, an investor presentation of first quarter 2021 results will be available at www.express.com/investor at approximately 7:00 a.m. ET on June 3, 2021.
About Express, Inc.
Express is a modern, versatile, dual gender apparel and accessories brand that helps people get dressed for every day and any occasion. Launched in 1980 with the idea that style, quality and value should all be found in one place, Express has always been a brand of the now, offering some of the most important and enduring fashion trends. Express aims to Create Confidence & Inspire Self-Expression through a design & merchandising view that brings forward The Best of Now for Real Life Versatility.
The company operates over 500 retail and factory outlet stores in the United States and Puerto Rico, as well as an online store. Express, Inc. is traded on the NYSE under the symbol EXPR. For more information, please visit 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 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, 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. 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) our ability to operate our business efficiently, manage capital expenditures and costs, and obtain financing when required; (4) our ability to identify and respond to new and changing fashion trends, customer preferences, and other related factors; (5) 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; (6) customer traffic at malls, shopping centers, and at our stores; (7) competition from other retailers; (8) our dependence on a strong brand image; (9) our ability to adapt to changing consumer behavior and develop and maintain a relevant and reliable omni-channel experience for our customers; (10) the failure or breach of information systems upon which we rely; (11) our ability to protect customer data from fraud and theft; (12) our dependence upon third parties to manufacture all of our merchandise; (13) changes in the cost of raw materials, labor, and freight; (14) supply chain or other business disruption, including as a result of the coronavirus; (15) our dependence upon key executive management; (16) 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; (17) our substantial lease obligations; (18) our reliance on third parties to provide us with certain key services for our business; (19) impairment charges on long-lived assets; (20) claims made against us resulting in litigation or changes in laws and regulations applicable to our business; (21) 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; (22) restrictions imposed on us under the terms of our asset-based loan facility, including restrictions on the ability to effect share repurchases; (23) changes in tax requirements, results of tax audits, and other factors that may cause fluctuations in our effective tax rate; (24) changes in tariff rates; and (25) natural disasters, extreme weather, public health issues, including pandemics, fire, acts of terrorism or war and other events that cause business interruption. 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 required by law.
Schedule 1 | ||||||||||||
Express, Inc. | ||||||||||||
Consolidated Balance Sheets | ||||||||||||
(In thousands) | ||||||||||||
(Unaudited) | ||||||||||||
| May 1, 2021 |
| January 30, 2021 |
| May 2, 2020 | |||||||
ASSETS |
|
|
|
|
| |||||||
Current Assets: |
|
|
|
|
| |||||||
Cash and cash equivalents | $ | 84,072 |
|
| $ | 55,874 |
|
| $ | 236,185 |
| |
Receivables, net | 11,213 |
|
| 14,556 |
|
| 12,897 |
| ||||
Income tax receivable | 98,554 |
|
| 111,342 |
|
| 13,228 |
| ||||
Inventories | 264,488 |
|
| 264,360 |
|
| 268,787 |
| ||||
Prepaid rent | 4,683 |
|
| 7,883 |
|
| 330 |
| ||||
Other | 19,340 |
|
| 20,495 |
|
| 22,653 |
| ||||
Total current assets | 482,350 |
|
| 474,510 |
|
| 554,080 |
| ||||
|
|
|
|
|
| |||||||
Right of Use Asset, Net | 754,324 |
|
| 797,785 |
|
| 963,142 |
| ||||
|
|
|
|
|
| |||||||
Property and Equipment | 965,854 |
|
| 969,402 |
|
| 985,091 |
| ||||
Less: accumulated depreciation | (799,389 | ) |
| (789,204 | ) |
| (754,414 | ) | ||||
Property and equipment, net | 166,465 |
|
| 180,198 |
|
| 230,677 |
| ||||
|
|
|
|
|
| |||||||
Other Assets | 3,600 |
|
| 5,964 |
|
| 51,285 |
| ||||
TOTAL ASSETS | $ | 1,406,739 |
|
| $ | 1,458,457 |
|
| $ | 1,799,184 |
| |
|
|
|
|
|
| |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
| |||||||
Current Liabilities: |
|
|
|
|
| |||||||
Short-term lease liability | $ | 206,890 |
|
| $ | 203,441 |
|
| $ | 225,383 |
| |
Accounts payable | 159,013 |
|
| 150,230 |
|
| 123,429 |
| ||||
Deferred revenue | 29,861 |
|
| 32,430 |
|
| 31,331 |
| ||||
Short-term debt | 37,772 |
|
| — |
|
| — |
| ||||
Accrued expenses | 118,906 |
|
| 128,952 |
|
| 91,797 |
| ||||
Total current liabilities | 552,442 |
|
| 515,053 |
|
| 471,940 |
| ||||
|
|
|
|
|
| |||||||
Long-Term Lease Liability | 681,010 |
|
| 722,949 |
|
| 879,983 |
| ||||
Long-Term Debt | 190,025 |
|
| 192,032 |
|
| 165,000 |
| ||||
Other Long-Term Liabilities | 18,941 |
|
| 18,734 |
|
| 28,047 |
| ||||
Total Liabilities | 1,442,418 |
|
| 1,448,768 |
|
| 1,544,970 |
| ||||
|
|
|
|
|
| |||||||
Commitments and Contingencies |
|
|
|
|
| |||||||
|
|
|
|
|
| |||||||
Total Stockholders’ (Deficit)/Equity | (35,679 | ) |
| 9,689 |
|
| 254,214 |
| ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,406,739 |
|
| $ | 1,458,457 |
|
| $ | 1,799,184 |
|
Schedule 2 | ||||||||
Express, Inc. | ||||||||
Consolidated Statements of Income | ||||||||
(In thousands, except per share amounts) | ||||||||
(Unaudited) | ||||||||
| Thirteen Weeks Ended | |||||||
| May 1, 2021 |
| May 2, 2020 | |||||
Net Sales | $ | 345,759 |
|
| $ | 210,275 |
| |
Cost of Goods Sold, Buying and Occupancy Costs | 266,955 |
|
| 256,482 |
| |||
GROSS PROFIT/(LOSS) | 78,804 |
|
| (46,207 | ) | |||
Operating Expenses: |
|
|
| |||||
Selling, general, and administrative expenses | 119,393 |
|
| 99,165 |
| |||
Other operating income, net | (33 | ) |
| (93 | ) | |||
TOTAL OPERATING EXPENSES | 119,360 |
|
| 99,072 |
| |||
|
|
|
| |||||
OPERATING LOSS | (40,556 | ) |
| (145,279 | ) | |||
Interest Expense, Net | 5,252 |
|
| 56 |
| |||
Other Expense, Net | — |
|
| 2,733 |
| |||
LOSS BEFORE INCOME TAXES | (45,808 | ) |
| (148,068 | ) | |||
Income Tax (Benefit)/Expense | (84 | ) |
| 5,982 |
| |||
NET LOSS | $ | (45,724 | ) |
| $ | (154,050 | ) | |
|
|
|
| |||||
EARNINGS PER SHARE: |
|
|
| |||||
Basic | $ | (0.70 | ) |
| $ | (2.41 | ) | |
Diluted | $ | (0.70 | ) |
| $ | (2.41 | ) | |
|
|
|
| |||||
WEIGHTED AVERAGE SHARES OUTSTANDING: |
|
|
| |||||
Basic | 65,200 |
|
| 64,030 |
| |||
Diluted | 65,200 |
|
| 64,030 |
|
Schedule 3 | ||||||||
Express, Inc. | ||||||||
Consolidated Statements of Cash Flows | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
| Thirteen Weeks Ended | |||||||
| May 1, 2021 |
| May 2, 2020 | |||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
| |||||
Net loss | $ | (45,724 | ) |
| $ | (154,050 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
| |||||
Depreciation and amortization | 18,497 |
|
| 19,332 |
| |||
Impairment of property, equipment and lease assets | — |
|
| 14,678 |
| |||
Equity method investment impairment | — |
|
| 2,733 |
| |||
Share-based compensation | 2,523 |
|
| 2,502 |
| |||
Deferred taxes | — |
|
| 64,424 |
| |||
Landlord allowance amortization | (77 | ) |
| (104 | ) | |||
Changes in operating assets and liabilities: |
|
|
| |||||
Receivables, net | 3,343 |
|
| (2,073 | ) | |||
Income tax receivable | 12,788 |
|
| (10,228 | ) | |||
Inventories | (128 | ) |
| (48,485 | ) | |||
Accounts payable, deferred revenue, and accrued expenses | (3,426 | ) |
| 2,117 |
| |||
Other assets and liabilities | 10,624 |
|
| (22,084 | ) | |||
NET CASH USED IN OPERATING ACTIVITIES | (1,580 | ) |
| (131,238 | ) | |||
|
|
|
| |||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
| |||||
Capital expenditures | (3,562 | ) |
| (4,176 | ) | |||
NET CASH USED IN INVESTING ACTIVITIES | (3,562 | ) |
| (4,176 | ) | |||
|
|
|
| |||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
| |||||
Proceeds from borrowings under the revolving credit facility | 38,000 |
|
| 165,000 |
| |||
Repayment of borrowings under the revolving credit facility | (39,050 | ) |
| — |
| |||
Proceeds from borrowings under the term loan facility | 50,000 |
|
| — |
| |||
Repayment of borrowings under the term loan facility | (12,404 | ) |
| — |
| |||
Repayments of financing arrangements | (576 | ) |
| — |
| |||
Costs incurred in connection with debt arrangements | (463 | ) |
| — |
| |||
Repurchase of common stock for tax withholding obligations | (2,167 | ) |
| (540 | ) | |||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 33,340 |
|
| 164,460 |
| |||
|
|
|
| |||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 28,198 |
|
| 29,046 |
| |||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 55,874 |
|
| 207,139 |
| |||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 84,072 |
|
| $ | 236,185 |
|
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: adjusted net loss, adjusted operating loss, adjusted diluted earnings per share, and EBITDA.
How These Measures Are Useful
The Company believes that these non-GAAP measures provide additional useful information to assist stockholders in understanding its financial results and assessing its prospects for future performance. Management believes adjusted net loss, adjusted operating loss, adjusted diluted earnings per share, and EBITDA are important indicators of the Company's business performance because they exclude items that may not be indicative of, or are unrelated to, the Company's underlying operating results, and may provide a better baseline for analyzing trends in the business. In addition, adjusted diluted earnings per share and EBITDA are used as a performance measures in the Company's long-term executive compensation program for purposes of determining the number of equity awards that are ultimately earned and EBITDA is also a metric used in our short-term cash incentive compensation plan.
Limitations of the Usefulness of These Measures
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 reported net loss, operating loss, or diluted earnings per share. These non-GAAP financial measures reflect an additional way of viewing the Company's operations that, when viewed with the GAAP results and the below reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of the Company's business. 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.
| Thirteen Weeks Ended May 1, 2021 | |||||||||||||||||
(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 | $ | (40,556 | ) |
|
|
| $ | (45,724 | ) |
| $ | (0.70 | ) |
| 65,200 |
| ||
Valuation allowance on deferred taxes (a) | — |
|
| 9,977 |
|
| 9,977 |
|
| 0.15 |
|
|
| |||||
Adjusted Non-GAAP Measure | $ | (40,556 | ) |
|
|
| $ | (35,747 | ) |
| $ | (0.55 | ) |
|
|
| Thirteen Weeks Ended May 2, 2020 | |||||||||||||||||
(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 | $ | (145,279 | ) |
|
|
| $ | (154,050 | ) |
| $ | (2.41 | ) |
| 64,030 |
| ||
Impairment of property, equipment and lease assets | 14,678 |
|
| (3,856 | ) | (a) | 10,822 |
|
| 0.17 |
|
|
| |||||
Equity method investment impairment (b) | — |
|
| (642 | ) |
| 2,091 |
|
| 0.03 |
|
|
| |||||
Valuation allowance on deferred taxes (c) | — |
|
| 61,075 |
|
| 61,075 |
|
| 0.95 |
|
|
| |||||
Tax impact of the CARES Act (d) | — |
|
| (19,473 | ) |
| (19,473 | ) |
| (0.30 | ) |
|
| |||||
Tax impact of executive departures (e) | — |
|
| 111 |
|
| 111 |
|
| — |
|
|
| |||||
Adjusted Non-GAAP Measure | $ | (130,601 | ) |
|
|
| $ | (99,424 | ) |
| $ | (1.55 | ) |
|
|
| Thirteen Weeks Ended | |||||||
| May 1, 2021 |
| May 2, 2020 | |||||
Net loss | $ | (45,724 | ) |
| $ | (154,050 | ) | |
Interest expense, net | 5,252 |
|
| 56 |
| |||
Income tax (benefit)/expense | (84 | ) |
| 5,982 |
| |||
Depreciation and amortization | 16,754 |
|
| 19,272 |
| |||
EBITDA (Non-GAAP Measure) | $ | (23,802 | ) |
| $ | (128,740 | ) |
Schedule 5 | |||||||||
Express, Inc. | |||||||||
Real Estate Activity | |||||||||
(Unaudited) | |||||||||
|
|
|
| ||||||
First Quarter 2021 - Actual |
| May 1, 2021 - Actual | |||||||
Company-Operated Stores | Opened | Closed |
| Store Count | Gross Square Footage | ||||
Retail Stores | — |
| (5) |
|
| 354 |
|
| |
Outlet Stores | — |
| (4) |
|
| 206 |
|
| |
Express Edit Concept Stores1 | 1 |
| — |
|
| 2 |
|
| |
UpWest Stores | 1 |
| — |
|
| 1 |
|
| |
TOTAL | 2 |
| (9) |
|
| 563 |
| 4.8 million | |
|
|
|
|
|
| ||||
Second Quarter 2021 - Projected |
| July 31, 2021 - Projected | |||||||
Company-Operated Stores | Opened | Closed |
| Store Count | Gross Square Footage | ||||
Retail Stores | — |
| (2) |
|
| 352 |
|
| |
Outlet Stores | — |
| — |
|
| 206 |
|
| |
Express Edit Concept Stores1 | 4 |
| (1) |
|
| 5 |
|
| |
UpWest Stores | 4 |
| — |
|
| 5 |
|
| |
TOTAL | 8 |
| (3) |
|
| 568 |
| 4.8 million | |
|
|
|
|
|
| ||||
Full Year 2021 - Projected |
| January 29, 2022 - Projected | |||||||
Company-Operated Stores | Opened | Closed |
| Store Count | Gross Square Footage | ||||
Retail Stores | — |
| (20) |
|
| 339 |
|
| |
Outlet Stores | 1 |
| (5) |
|
| 206 |
|
| |
Express Edit Concept Stores1 | 9 |
| (1) |
|
| 9 |
|
| |
UpWest Stores | 5 |
| — |
|
| 5 |
|
| |
TOTAL | 15 |
| (26) |
|
| 559 |
| 4.7 million |
View source version on businesswire.com: https://www.businesswire.com/news/home/20210603005316/en/
INVESTOR CONTACT Dan Aldridge VP, Investor Relations daldridge@express.com (614) 474-4890
Source: Express, Inc.