COLUMBUS, Ohio--(BUSINESS WIRE)-- Fashion apparel retailer Express, Inc. (NYSE: EXPR), announced its financial results for the second quarter of 2020. These results, which cover the thirteen weeks ended August 1, 2020, are compared to the thirteen weeks ended August 3, 2019.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20200826005200/en/
Express storefront at Easton Town Center in Columbus, Ohio. (Photo: Business Wire)
“When we began the transformation of Express, we certainly did not anticipate a global pandemic, and none of us could have imagined the duration or magnitude of its impact on the retail apparel industry”, said Tim Baxter, Chief Executive Officer. “And while we have taken decisive and appropriate action to protect the financial health of our Company over this extended period of time, we have also continued to advance each of the four foundational pillars of our corporate strategy. I am encouraged by the momentum in our eCommerce business, the strong response to our August fashion deliveries, and the increase in customer engagement with our brand messages. While mall traffic continues to be challenging, I would expect our results to improve as we move through the back half of the year.”
Second Quarter 2020 Operating Results:
Second Quarter 2020 Balance Sheet Highlights:
COVID-19 Impact Mitigation Actions:
The Company continued to aggressively pursue additional liquidity measures and now expects to realize $425 million of related benefits in 2020, which is an increase from the previously announced $385 million. These benefits are the result of a number of actions taken to maintain liquidity throughout the COVID-19 pandemic. Examples of these actions and steps taken to support associates include:
Liquidity benefits of $195 million were realized in the first quarter and $85 million were realized in the second quarter. These benefits are incremental to the previously announced cost savings associated with The EXPRESSway Forward strategy.
Store Reopening Progress:
The Company took a phased approach to reopening stores in the second quarter, with the pace and staffing calibrated to mall traffic and consumer demand. As of August 26, 2020, the Company has opened 538 stores, in accordance with the latest federal and state guidelines. The Company took a number of actions to provide a safe and comfortable environment for our associates and customers:
Third Quarter 2020 Guidance:
Due to the uncertainty of the current environment, the Company will not provide guidance for the third quarter or the year at this time, with the exception of capital expenditures, which are expected to be in the range of $20 million to $25 million for the full year 2020.
Conference Call Information:
A conference call to discuss second quarter 2020 results is scheduled for August 26, 2020 at 8:30 a.m. Eastern Time (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 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 August 26, 2020 until 11:59 p.m. ET on September 2, 2020 and can be accessed by dialing (800) 585-8367 and entering the replay pin number 8687438*. In addition, an investor presentation of second quarter 2020 results will be available at http://www.express.com/investor at approximately 7:00 a.m. ET on August 26, 2020.
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, 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 impact and its continued impact on our business operations, store traffic, employee availability, financial condition, liquidity and cash flow; (3) our ability to identify and respond to new and changing fashion trends, customer preferences, and other related factors; (4) 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; (5) customer traffic at malls, shopping centers, and at our stores; (6) competition from other retailers; (7) our dependence on a strong brand image; (8) our ability to adapt to changing consumer behavior and develop and maintain a relevant and reliable omni-channel experience for our customers; (9) the failure or breach of information systems upon which we rely; (10) our ability to protect customer data from fraud and theft; (11) our dependence upon third parties to manufacture all of our merchandise; (12) changes in the cost of raw materials, labor, and freight; (13) supply chain or other business disruption, including as a result of the coronavirus; (14) our dependence upon key executive management; (15) 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; (16) our substantial lease obligations; (17) our reliance on third parties to provide us with certain key services for our business; (18) impairment charges on long-lived assets; (19) claims made against us resulting in litigation or changes in laws and regulations applicable to our business; (20) 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; (21) restrictions imposed on us under the terms of our asset-based loan facility, including restrictions on the ability to effect share repurchases; (22) changes in tax requirements, results of tax audits, and other factors that may cause fluctuations in our effective tax rate; (23) changes in tariff rates; and (24) 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) | |||||||||||
| August 1, 2020 |
| February 1, 2020 |
| August 3, 2019 | ||||||
ASSETS |
|
|
|
|
| ||||||
CURRENT ASSETS: |
|
|
|
|
| ||||||
Cash and cash equivalents | $ | 192,894 |
|
| $ | 207,139 |
|
| $ | 153,959 |
|
Receivables, net | 18,806 |
|
| 10,824 |
|
| 12,527 |
| |||
Income tax receivable | 88,724 |
|
| 3,000 |
|
| 2,635 |
| |||
Inventories | 232,302 |
|
| 220,303 |
|
| 268,805 |
| |||
Prepaid rent | 6,829 |
|
| 6,850 |
|
| 7,456 |
| |||
Other | 26,337 |
|
| 22,573 |
|
| 27,363 |
| |||
Total current assets | 565,892 |
|
| 470,689 |
|
| 472,745 |
| |||
|
|
|
|
|
| ||||||
RIGHT OF USE ASSET, NET | 902,211 |
|
| 1,010,216 |
|
| 1,097,924 |
| |||
|
|
|
|
|
| ||||||
PROPERTY AND EQUIPMENT | 989,589 |
|
| 979,639 |
|
| 994,796 |
| |||
Less: accumulated depreciation | (773,972 | ) |
| (731,309 | ) |
| (723,979 | ) | |||
Property and equipment, net | 215,617 |
|
| 248,330 |
|
| 270,817 |
| |||
|
|
|
|
|
| ||||||
TRADENAME/DOMAIN NAMES/TRADEMARKS | — |
|
| — |
|
| 197,618 |
| |||
DEFERRED TAX ASSETS | — |
|
| 54,973 |
|
| 6,427 |
| |||
OTHER ASSETS | 3,724 |
|
| 6,531 |
|
| 7,076 |
| |||
Total assets | $ | 1,687,444 |
|
| $ | 1,790,739 |
|
| $ | 2,052,607 |
|
|
|
|
|
|
| ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
| ||||||
CURRENT LIABILITIES: |
|
|
|
|
| ||||||
Short-term lease liability | $ | 207,672 |
|
| $ | 226,174 |
|
| $ | 223,888 |
|
Accounts payable | 143,491 |
|
| 126,863 |
|
| 145,168 |
| |||
Deferred revenue | 30,932 |
|
| 38,227 |
|
| 34,836 |
| |||
Accrued expenses | 145,999 |
|
| 76,211 |
|
| 73,419 |
| |||
Total current liabilities | 528,094 |
|
| 467,475 |
|
| 477,311 |
| |||
|
|
|
|
|
| ||||||
LONG-TERM LEASE LIABILITY | 816,877 |
|
| 897,304 |
|
| 993,312 |
| |||
LONG-TERM DEBT | 165,000 |
|
| — |
|
| — |
| |||
OTHER LONG-TERM LIABILITIES | 28,597 |
|
| 19,658 |
|
| 23,520 |
| |||
Total liabilities | 1,538,568 |
|
| 1,384,437 |
|
| 1,494,143 |
| |||
|
|
|
|
|
| ||||||
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
| ||||||
|
|
|
|
|
| ||||||
Total stockholders’ equity | 148,876 |
|
| 406,302 |
|
| 558,464 |
| |||
Total liabilities and stockholders’ equity | $ | 1,687,444 |
|
| $ | 1,790,739 |
|
| $ | 2,052,607 |
|
Schedule 2 | |||||||||||||||
Express, Inc. | |||||||||||||||
Consolidated Statements of Income | |||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
| Thirteen Weeks Ended |
| Twenty-Six Weeks Ended | ||||||||||||
| August 1, 2020 |
| August 3, 2019 |
| August 1, 2020 |
| August 3, 2019 | ||||||||
NET SALES | $ | 245,703 |
|
| $ | 472,715 |
|
| $ | 455,978 |
|
| $ | 923,986 |
|
COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS | 289,760 |
|
| 346,217 |
|
| 546,242 |
|
| 674,985 |
| ||||
Gross (loss)/profit | (44,057 | ) |
| 126,498 |
|
| (90,264 | ) |
| 249,001 |
| ||||
OPERATING EXPENSES: |
|
|
|
|
|
|
| ||||||||
Selling, general, and administrative expenses | 92,805 |
|
| 135,723 |
|
| 191,970 |
|
| 271,090 |
| ||||
Other operating (income)/expense, net | (568 | ) |
| 535 |
|
| (661 | ) |
| (775 | ) | ||||
Total operating expenses | 92,237 |
|
| 136,258 |
|
| 191,309 |
|
| 270,315 |
| ||||
|
|
|
|
|
|
|
| ||||||||
OPERATING LOSS | (136,294 | ) |
| (9,760 | ) |
| (281,573 | ) |
| (21,314 | ) | ||||
|
|
|
|
|
|
|
| ||||||||
INTEREST EXPENSE/(INCOME), NET | 1,023 |
|
| (783 | ) |
| 1,079 |
|
| (1,495 | ) | ||||
OTHER EXPENSE, NET | — |
|
| — |
|
| 2,733 |
|
| — |
| ||||
LOSS BEFORE INCOME TAXES | (137,317 | ) |
| (8,977 | ) |
| (285,385 | ) |
| (19,819 | ) | ||||
INCOME TAX (BENEFIT)/EXPENSE | (29,547 | ) |
| 726 |
|
| (23,565 | ) |
| (182 | ) | ||||
NET LOSS | $ | (107,770 | ) |
| $ | (9,703 | ) |
| $ | (261,820 | ) |
| $ | (19,637 | ) |
|
|
|
|
|
|
|
| ||||||||
EARNINGS PER SHARE: |
|
|
|
|
|
|
| ||||||||
Basic | $ | (1.67 | ) |
| $ | (0.14 | ) |
| $ | (4.07 | ) |
| $ | (0.29 | ) |
Diluted | $ | (1.67 | ) |
| $ | (0.14 | ) |
| $ | (4.07 | ) |
| $ | (0.29 | ) |
|
|
|
|
|
|
|
| ||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING: |
|
|
|
|
|
|
| ||||||||
Basic | 64,645 |
|
| 67,253 |
|
| 64,338 |
|
| 67,049 |
| ||||
Diluted | 64,645 |
|
| 67,253 |
|
| 64,338 |
|
| 67,049 |
|
Schedule 3 | |||||||
Express, Inc. | |||||||
Consolidated Statements of Cash Flows | |||||||
(In thousands) | |||||||
(Unaudited) | |||||||
| Twenty-Six Weeks Ended | ||||||
| August 1, 2020 |
| August 3, 2019 | ||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
| ||||
Net loss | $ | (261,820 | ) |
| $ | (19,637 | ) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
|
|
| ||||
Depreciation and amortization | 37,323 |
|
| 43,243 |
| ||
Loss on disposal of property and equipment | 1 |
|
| 860 |
| ||
Impairment of property, equipment and lease assets | 21,483 |
|
| 2,281 |
| ||
Equity method investment impairment | 3,233 |
|
| 500 |
| ||
Share-based compensation | 4,962 |
|
| 4,796 |
| ||
Deferred taxes | 63,621 |
|
| 164 |
| ||
Landlord allowance amortization | (208 | ) |
| (1,181 | ) | ||
Other non-cash adjustments | (500 | ) |
| (500 | ) | ||
Changes in operating assets and liabilities: |
|
|
| ||||
Receivables, net | (7,982 | ) |
| 4,841 |
| ||
Income tax receivable | (85,724 | ) |
| (1,136 | ) | ||
Inventories | (11,999 | ) |
| (1,039 | ) | ||
Accounts payable, deferred revenue, and accrued expenses | 75,588 |
|
| (22,655 | ) | ||
Other assets and liabilities | (8,361 | ) |
| (8,809 | ) | ||
Net cash (used in) provided by operating activities | (170,383 | ) |
| 1,728 |
| ||
|
|
|
| ||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
| ||||
Capital expenditures | (10,130 | ) |
| (12,145 | ) | ||
Net cash used in investing activities | (10,130 | ) |
| (12,145 | ) | ||
|
|
|
| ||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
| ||||
Costs incurred in connection with debt arrangements | — |
|
| (849 | ) | ||
Proceeds from financing arrangements | 167,548 |
|
| — |
| ||
Payments on lease financing obligations | — |
|
| (54 | ) | ||
Repayments of financing arrangements | (712 | ) |
| — |
| ||
Repurchase of common stock under share repurchase program | — |
|
| (4,889 | ) | ||
Repurchase of common stock for tax withholding obligations | (568 | ) |
| (1,502 | ) | ||
Net cash provided by (used in) financing activities | 166,268 |
|
| (7,294 | ) | ||
|
|
|
| ||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (14,245 | ) |
| (17,711 | ) | ||
CASH AND CASH EQUIVALENTS, Beginning of period | 207,139 |
|
| 171,670 |
| ||
CASH AND CASH EQUIVALENTS, End of period | $ | 192,894 |
|
| $ | 153,959 |
|
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, and adjusted diluted earnings per share. 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, and adjusted diluted earnings per share 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 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 adjusted operating loss is a metric used in our short-term cash incentive compensation plan. 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 August 1, 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 | $ | (136,294 | ) |
|
|
| $ | (107,770 | ) |
| $ | (1.67 | ) |
| 64,645 |
| |
Impairment of property, equipment and lease assets | 6,805 |
|
| (1,830 | ) |
| 4,975 |
|
| 0.08 |
|
|
| ||||
Valuation allowance on deferred taxes (a) | — |
|
| 16,244 |
|
| 16,244 |
|
| 0.25 |
|
|
| ||||
Tax impact of the CARES Act (b) | — |
|
| (9,084 | ) |
| (9,084 | ) |
| (0.14 | ) |
|
| ||||
Adjusted Non-GAAP Measure | $ | (129,489 | ) |
|
|
| $ | (95,635 | ) |
| $ | (1.48 | ) |
|
|
| Twenty-Six Weeks Ended August 1, 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 | $ | (281,573 | ) |
|
|
| $ | (261,820 | ) |
| $ | (4.07 | ) |
| 64,338 |
| |
Impairment of property, equipment and lease assets | 21,483 |
|
| (5,686 | ) |
| 15,797 |
|
| 0.25 |
|
|
| ||||
Equity method investment impairment (a) | — |
|
| (642 | ) |
| 2,091 |
|
| 0.03 |
|
|
| ||||
Valuation allowance on deferred taxes (b) | — |
|
| 77,319 |
|
| 77,319 |
|
| 1.20 |
|
|
| ||||
Tax impact of the CARES Act (c) | — |
|
| (28,557 | ) |
| (28,557 | ) |
| (0.44 | ) |
|
| ||||
Tax impact of executive departures (d) | — |
|
| 111 |
|
| 111 |
|
| — |
|
|
| ||||
Adjusted Non-GAAP Measure | $ | (260,090 | ) |
|
|
| $ | (195,059 | ) |
| $ | (3.03 | ) |
|
|
| Thirteen Weeks Ended August 3, 2019 | ||||||||||||||||
(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 | $ | (9,760 | ) |
|
|
| $ | (9,703 | ) |
| $ | (0.14 | ) |
| 67,253 |
| |
Impairment of property, equipment and lease assets | 2,281 |
|
| (593 | ) |
| 1,688 |
|
| 0.03 |
|
|
| ||||
Impact of CEO departure | — |
|
| 822 |
| (a) | 822 |
|
| 0.01 |
|
|
| ||||
Adjusted Non-GAAP Measure | $ | (7,479 | ) |
|
|
| $ | (7,193 | ) |
| $ | (0.11 | ) |
|
|
| Twenty-Six Weeks Ended August 3, 2019 | ||||||||||||||||
(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 | $ | (21,314 | ) |
|
|
| $ | (19,637 | ) |
| $ | (0.29 | ) |
| 67,049 |
| |
Impairment of property, equipment and lease assets | 2,281 |
|
| (593 | ) |
| 1,688 |
|
| 0.03 |
|
|
| ||||
Impact of CEO departure | — |
|
| 822 |
| (a) | 822 |
|
| 0.01 |
|
|
| ||||
Adjusted Non-GAAP Measure | $ | (19,033 | ) |
|
|
| $ | (17,127 | ) |
| $ | (0.26 | ) |
|
|
Schedule 5 | ||||||||||
Express, Inc. | ||||||||||
Real Estate Activity | ||||||||||
(Unaudited) | ||||||||||
|
|
|
|
| ||||||
Second Quarter 2020 - Actual |
| August 1, 2020 - Actual | ||||||||
Company-Operated Stores |
| Opened |
| Closed |
| Conversion |
| Store Count |
| Gross Square Footage |
United States - Retail Stores | — |
| (2) |
| — |
| 378 |
| ||
United States - Outlet Stores | 1 |
| — |
| — |
| 215 |
| ||
Total | 1 |
| (2) |
| — |
| 593 | 5.0 million | ||
|
|
|
|
|
|
| ||||
Third Quarter 2020 - Projected |
| October 31, 2020 - Projected | ||||||||
Company-Operated Stores |
| Opened |
| Closed |
| Conversion |
| Store Count |
| Gross Square Footage |
United States - Retail Stores | 1 |
| (2) |
| — |
| 377 |
| ||
United States - Outlet Stores | — |
| (1) |
| — |
| 214 |
| ||
Total | 1 |
| (3) |
| — |
| 591 | 5.0 million | ||
|
|
|
|
|
|
| ||||
Full Year 2020 - Projected |
| January 30, 2021 - Projected | ||||||||
Company-Operated Stores |
| Opened |
| Closed |
| Conversion |
| Store Count |
| Gross Square Footage |
United States - Retail Stores | 1 |
| (26) |
| — |
| 356 |
| ||
United States - Outlet Stores | 1 |
| (9) |
| — |
| 206 |
| ||
Total | 2 |
| (35) |
| — |
| 562 | 4.8 million |
View source version on businesswire.com: https://www.businesswire.com/news/home/20200826005200/en/
Investor Contact: Dan Aldridge VP, Investor Relations Express (614) 474-4890
Media Contact: Alysa Spittle Director, Communications Express (614) 474-4745
Source: Express, Inc.