expr-20220430

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended April 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ______ TO ______

Commission File Number 001-34742

EXPRESS, INC.

(Exact name of registrant as specified in its charter)


Delaware						26-2828128
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1 Express Drive Columbus, Ohio						43230
(Address of principal executive offices)						(Zip Code)

Telephone: (614) 474-4001

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $.01 par value

EXPR

The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of outstanding shares of the registrant’s common stock was 68,069,896 as of May 28, 2022.

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EXPRESS, INC.

INDEX TO FORM 10-Q



FORWARD-LOOKING STATEMENTS			3


PART I		FINANCIAL INFORMATION	5
	Item 1.	Financial Statements (Unaudited)	5
		Consolidated Balance Sheets	5
		Consolidated Statements of Income and Comprehensive Income	6
		Consolidated Statements of Changes in Stockholders' Equity	7
		Consolidated Statements of Cash Flows	8
		Notes to Unaudited Consolidated Financial Statements	9
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
	Item 4.	Controls and Procedures	35


PART II		OTHER INFORMATION	35
	Item 1.	Legal Proceedings	35
	Item 1A.	Risk Factors	35
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
	Item 3.	Defaults Upon Senior Securities	36
	Item 4.	Mine Safety Disclosures	36
	Item 5.	Other Information	36
	Item 6.	Exhibits	37


SIGNATURES			38

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements within the “safe harbor” provisions of the Private Securities Reform Act of 1995 that are subject to risks and uncertainties. All statements other than statements of historical fact included in this Quarterly Report are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance, and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “potential,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely,” "continue to," and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated and projected costs, expenditures, cash flows, and financial results, our plans and objectives for future operations, growth, initiatives, or strategies, plans to repurchase shares of our common stock, or the expected outcome or impact of pending or threatened litigation are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including:


Operational and Industry Risks

▪general economic conditions and changes in consumer spending, including as a result of recent inflationary pressures;
▪customer traffic at malls, shopping centers, and at our stores;
▪the COVID-19 pandemic has previously and may again adversely affect our business operations, store traffic, employee availability, financial condition, liquidity and cash flow;
▪competition from other retailers;
▪our dependence upon independent third parties to manufacture all of our merchandise;
▪changes in the availability and cost of raw materials, labor, and freight;
▪labor shortages;
▪supply chain disruption and increased tariffs;
▪geopolitical risks, including impacts from the ongoing conflict between Russia and Ukraine and increased tensions between China and Taiwan;
▪difficulties associated with our distribution facilities;
▪natural disasters, extreme weather, public health issues, including pandemics, fire, and other events that cause business interruption; and
▪our reliance on third parties to provide us with certain key services for our business.


Strategic Risks

▪our ability to identify and respond to new and changing fashion trends, customer preferences, and other related factors;
▪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, inventory levels, and sales mix between stores and eCommerce;
▪our dependence on a strong brand image;
▪our ability to adapt to changes in consumer behavior and develop and maintain a relevant and reliable omnichannel experience for our customers;
▪our dependence upon key executive management; and
▪our ability to execute our growth strategy, including but not limited to, engaging our customers and acquiring new ones, executing with precision to accelerate sales and profitability, putting product first, and reinvigorating our brand.


Information Technology Risks

▪the failure or breach of information systems upon which we rely;
▪the increase of our employees working remotely and use of technology for work functions; and
▪our ability to protect our customer data from fraud and theft.

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Financial Risks

▪our substantial lease obligations;
▪restrictions imposed on us under the terms of our current credit facilities, including asset based requirements related to inventory levels, ability to make additional borrowings, and restrictions on our ability to repurchase shares of our common stock;
▪our inability to maintain compliance with covenants in our current credit facilities; and
▪impairment charges on property and equipment and our right of use assets.


Legal, Regulatory and Compliance Risks

▪claims made against us resulting in litigation or changes in laws and regulations applicable to our business;
▪our inability to protect our trademarks or other intellectual property rights that may preclude the use of our trademarks or other intellectual property around the world;
▪changes in tax requirements, results of tax audits, and other factors including timing of tax refund receipts, that may cause fluctuations in our effective tax rate and operating results; and
▪our failure to maintain adequate internal controls.


Stock Ownership Risk Factors

▪our inability to pay dividends and repurchase shares;
▪our charter documents and applicable law may discourage or delay acquisition attempts;
▪our shares of common stock may experience extreme volatility and purchases of our common stock could incur substantial losses;
▪our stock price may incur rapid and substantial increases or decreases that may not coincide in timing with the disclosure of news or developments affecting us;
▪potential short squeezes related to our common stock have led to, and could again lead to, extreme price volatility in shares of our common stock; and
▪information available in public media that is published by third parties, including blogs, articles, message boards and social and other media may include statements not attributable to us and may not be reliable or accurate.

We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. For a discussion of these risks and other risks and uncertainties that could cause actual results to differ materially from those contained in our forward-looking statements, please refer to “Item 1A. Risk Factors” included elsewhere in this Quarterly Report and in our Annual Report on Form 10-K for the year ended January 29, 2022 (“Annual Report”), filed with the Securities and Exchange Commission (“SEC”) on March 24, 2022. The forward-looking statements included in this Quarterly Report are made only as of the date hereof. 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.

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PART I – FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS.

EXPRESS, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in Thousands, Except Per Share Amounts) (Unaudited)


	April 30, 2022		January 29, 2022
ASSETS
Current Assets:
Cash and cash equivalents	$	37,140	$	41,176
Receivables, net	9,331		11,744
Income tax receivable	1,850		53,665
Inventories	371,249		358,795
Prepaid rent	5,701		5,602
Other	23,383		19,755
Total current assets	448,654		490,737



Right of Use Asset, Net	586,596		615,462

Property and Equipment	979,377		975,802
Less: accumulated depreciation	(841,137)		(827,820)
Property and equipment, net	138,240		147,982


Non-Current Income Tax Receivable	52,278		—
Other Assets	4,816		5,273
TOTAL ASSETS	$	1,230,584	$	1,259,454

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Short-term lease liability	$	195,343	$	196,628
Accounts payable	181,318		231,974
Deferred revenue	32,833		35,985
Short-term debt	4,500		11,216
Accrued expenses	111,248		110,850
Total current liabilities	525,242		586,653

Long-Term Lease Liability	500,855		536,905
Long-Term Debt	203,483		117,581

Other Long-Term Liabilities	11,107		17,007
Total Liabilities	1,240,687		1,258,146

Commitments and Contingencies (Note 9)

Stockholders’ Equity:
Preferred stock – $0.01 par value; 10,000 shares authorized; no shares issued or outstanding	—		—
Common stock – $0.01 par value; 500,000 shares authorized; 93,632 shares and 93,632 shares issued at April 30, 2022 and January 29, 2022, respectively, and 68,022 shares and 67,072 shares outstanding at April 30, 2022 and January 29, 2022, respectively	936		936
Additional paid-in capital	217,433		220,078

Retained earnings	53,244		77,093
Treasury stock – at average cost; 25,610 shares and 26,560 shares at April 30, 2022 and January 29, 2022, respectively	(281,716)		(296,799)
Total stockholders’ (deficit)/equity	(10,103)		1,308
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,230,584	$	1,259,454

See Notes to Unaudited Consolidated Financial Statements.

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EXPRESS, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Amounts in Thousands, Except Per Share Amounts) (Unaudited)


	Thirteen Weeks Ended
		April 30, 2022		May 1, 2021
Net Sales		$	450,785	$	345,759
Cost of Goods Sold, Buying and Occupancy Costs		319,285		266,955
GROSS PROFIT		131,500		78,804
Operating Expenses:
Selling, general, and administrative expenses		141,093		119,393

Other operating income, net		(490)		(33)
TOTAL OPERATING EXPENSES		140,603		119,360

OPERATING LOSS		(9,103)		(40,556)


Interest Expense, Net		3,494		5,252
Other Income, Net		(200)		—
LOSS BEFORE INCOME TAXES		(12,397)		(45,808)
Income Tax Benefit		(483)		(84)
NET LOSS		$	(11,914)	$	(45,724)





COMPREHENSIVE LOSS		$	(11,914)	$	(45,724)

EARNINGS PER SHARE:
Basic		$	(0.18)	$	(0.70)
Diluted		$	(0.18)	$	(0.70)

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		67,211		65,200
Diluted		67,211		65,200

See Notes to Unaudited Consolidated Financial Statements.

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EXPRESS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Amounts in Thousands) (Unaudited)



	Common Stock									Treasury Stock
	Shares Outstanding	Par Value		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Shares	At Average Cost		Total
BALANCE, January 29, 2022	67,072	$	936	$	220,078	$	77,093	$	—	26,560	$	(296,799)	$	1,308
Net loss	—	—		—		(11,914)		—		—	—		(11,914)
Exercise of stock options and restricted stock	1,520	—		(5,038)		(11,935)		—		(1,520)	16,973		—
Share-based compensation	—	—		2,393		—		—		—	—		2,393
Repurchase of common stock	(570)	—		—		—		—		570	(1,890)		(1,890)
BALANCE, April 30, 2022	68,022	$	936	$	217,433	$	53,244	$	—	25,610	$	(281,716)	$	(10,103)


	Common Stock									Treasury Stock
	Shares Outstanding	Par Value		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Shares	At Average Cost		Total
BALANCE, January 30, 2021	64,971	$	936	$	222,141	$	114,732	$	—	28,661	$	(328,120)	$	9,689
Net loss	—	—		—		(45,724)		—		—	—		(45,724)
Exercise of stock options and restricted stock	1,934	—		(6,477)		(15,659)		—		(1,934)	22,136		—
Share-based compensation	—	—		2,523		—		—		—	—		2,523
Repurchase of common stock	(647)	—		—		—		—		647	(2,167)		(2,167)
BALANCE, May 1, 2021	66,258	$	936	$	218,187	$	53,349	$	—	27,374	$	(308,151)	$	(35,679)

See Notes to Unaudited Consolidated Financial Statements.

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EXPRESS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in Thousands) (Unaudited)


	Thirteen Weeks Ended
	April 30, 2022		May 1, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(11,914)	$	(45,724)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	15,172		18,497
Loss on disposal of property and equipment	10		—


Share-based compensation	2,393		2,523

Landlord allowance amortization	(157)		(77)

Changes in operating assets and liabilities:
Receivables, net	2,413		3,343
Income tax receivable	(463)		12,788
Inventories	(12,454)		(128)
Accounts payable, deferred revenue, and accrued expenses	(53,989)		(3,426)
Other assets and liabilities	(16,890)		10,624
NET CASH USED IN OPERATING ACTIVITIES	(75,879)		(1,580)

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(5,142)		(3,562)
NET CASH USED IN INVESTING ACTIVITIES	(5,142)		(3,562)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under the revolving credit facility	117,000		38,000
Repayment of borrowings under the revolving credit facility	(37,000)		(39,050)
Proceeds from borrowings under the term loan facility	—		50,000
Repayment of borrowings under the term loan facility	(1,125)		(12,404)

Repayments of financing arrangements	—		(576)
Costs incurred in connection with debt arrangements	—		(463)


Repurchase of common stock for tax withholding obligations	(1,890)		(2,167)
NET CASH PROVIDED BY FINANCING ACTIVITIES	76,985		33,340



NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS	(4,036)		28,198
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	41,176		55,874
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	37,140	$	84,072

See Notes to Unaudited Consolidated Financial Statements.

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EXPRESS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


		Page
Note 1	Description of Business and Basis of Presentation	10
Note 2	Revenue Recognition	11
Note 3	Earnings Per Share	13
Note 4	Fair Value Measurements	13
Note 5	Income Taxes	14
Note 6	Leases	15
Note 7	Debt	16
Note 8	Long-Term Incentive Compensation	19
Note 9	Commitments and Contingencies	21

SEC Form 10-Q filed by Express Inc.