EXPR

Full Year 2022 GAAP diluted EPS of $4.25 which reflects the gain on the transaction with WHP Global; adjusted diluted loss per share of $1.21

Fashion apparel retailer Express, Inc. (NYSE: EXPR), announced its financial results for the fourth quarter and full year 2022. These results, which cover the thirteen and fifty-two weeks ended January 28, 2023, are compared to the thirteen and fifty-two weeks ended January 29, 2022.

"We delivered full year 2022 diluted earnings per share of $4.25 which reflects the after tax impact of the gain of $409 million recognized upon completing the transaction with WHP Global. This transformative strategic partnership begins a bold, new chapter for our Company," said Tim Baxter, Chief Executive Officer. "As part of the transaction, we received proceeds of $260 million which repositioned our Company financially, and we are now beginning to reposition our Company strategically. In addition to our focus on achieving profitable growth in our core Express business, we will also focus on optimizing our omnichannel platform across a portfolio of brands and accelerating our growth and profitability in partnership with WHP Global. We will accomplish this by operating with consistent, rigorous, sustainable financial discipline, and we are fully committed to creating long-term shareholder value."

"Our comparable sales were flat for the year with negative comps in the back half of 2022 offsetting gains we had made in the first half. Our strategy to elevate our brand with higher average unit retails and reduced promotions - which had driven steady growth for five consecutive quarters through the second quarter of 2022 - bumped up against reduced consumer spending and increased price sensitivity in discretionary categories. Our Women's business further impacted our performance in the second half of the year. We recalibrated with urgency to address imbalances in the assortment architecture late in the third quarter of 2022, improve the composition of our inventory and advance product deliveries. Our outlook for 2023 reflects improved sales trends as we move through the year," continued Baxter.

"While we expect the margin pressure and recessionary environment we experienced in the back half of the year to continue, we have identified and begun to realize $40 million in annualized expense savings in early 2023 and are working to identify additional expense savings opportunities in 2023 and beyond. We remain confident in our ability to achieve our stated goal of long-term, profitable growth for the Express brand," Baxter concluded.

Fourth Quarter 2022 Operating Results

• Consolidated net sales decreased 14% to $514.3 million from $594.9 million in the fourth quarter of 2021, with consolidated comparable sales down 13%
  • Comparable retail sales, which includes both Express stores and eCommerce, were down 15% compared to the fourth quarter of 2021. Retail stores comparable sales decreased 11% while eCommerce declined 19%
  • Comparable outlet sales decreased 7% compared to the fourth quarter of 2021
• Gross margin was 23.9% of net sales compared to 29.2% in last year's fourth quarter, a decrease of approximately 530 basis points
  • Merchandise margin contracted by 280 basis points primarily driven by the challenging macroeconomic and highly promotional retail environment
  • Buying and occupancy expenses deleveraged approximately 250 basis points due to the decline in comparable sales and a $2.2 million impairment charge taken against certain long-lived store related assets and right of use assets
• Selling, general, and administrative (SG&A) expenses were $162.2 million, 31.5% of net sales, versus $163.2 million, 27.4% of net sales, in last year's fourth quarter. The deleverage in the SG&A expense rate was driven by an increase in labor expenses and by the decline in comparable sales
• Operating loss was $39.3 million compared to operating income of $10.3 million in the fourth quarter of 2021
• Income tax expense was $19.9 million at an effective tax rate of 5.6% driven by the tax expense related to the gain on the transaction with WHP Global. Income tax expense was $0.1 million at an effective tax rate of 1.2% during the fourth quarter of 2021
• Net income was $333.2 million, or $4.82 per diluted share, which included the after tax impact of the $409.5 million gain on the transaction with WHP Global, compared to net income of $7.6 million, $0.11 per diluted share, in the fourth quarter of 2021. On an adjusted basis, net loss was $43.1 million, or a loss of $0.63 per diluted share, for the fourth quarter of 2022
• Earnings before interest, taxes, depreciation, and amortization (EBITDA) was $385.8 million, which included the $409.5 million gain on the transaction with WHP Global, compared to $25.8 million in the fourth quarter of 2021. Adjusted EBITDA was negative $10.1 million in the fourth quarter of 2022

Adjusted net income (loss), EBITDA and Adjusted EBITDA are non-GAAP financial measures. Please see Schedule 4 – Supplemental Information and the reconciliations contained therein for additional information concerning these non-GAAP financial measures.

Full Year 2022 Operating Results

• Consolidated net sales decreased to $1,864 million from $1,870 million in 2021, with consolidated comparable sales flat
  • Comparable retail sales, which includes both Express stores and eCommerce, decreased 2% compared to 2021. Retail stores increased 5%
  • Comparable outlet sales increased 4% versus 2021
• Gross margin was 28.4% of net sales compared to 29.9% in last year's fourth quarter, a decrease of approximately 150 basis points
  • Merchandise margin contracted by 160 basis points primarily driven by the highly promotional retail environment
  • Buying and occupancy expenses leveraged approximately 10 basis points driven by a decrease in compensation expense offset by a $2.2 million impairment charge taken against certain long-lived store related assets and right of use assets
• SG&A expenses were $596.7 million, 32.0% of net sales, versus $558.2 million, 29.8% of net sales, in last year's fourth quarter. The deleverage in the SG&A expense rate was driven by an increase in labor expenses
• Operating loss was $67.5 million compared to operating income of $0.8 million in 2021
• Income tax expense was $20.5 million at an effective tax rate of 6.5% driven by the tax expense related to the gain on the transaction with WHP Global. Income tax expense was $0.3 million at an effective tax rate of (2.2)% during the fourth quarter of 2021
• Net income was $293.8 million, or $4.25 per diluted share, which included the after tax impact of the $409.5 million gain on the transaction with WHP Global, compared to a net loss of $14.4 million, or $0.22 per diluted share, in 2021. On an adjusted basis, net loss was $82.4 million, or $1.21 per diluted share in 2022
• EBITDA was $402.7 million, which included the $409.5 million gain on the transaction with WHP Global, compared to EBITDA of $64.7 million in 2021. Adjusted EBITDA was $6.8 million in 2022

Adjusted net income (loss), EBITDA and Adjusted EBITDA are non-GAAP financial measures. Please see Schedule 4 – Supplemental Information and the reconciliations contained therein for additional information concerning these non-GAAP financial measures.

Balance Sheet and Cash Flow Highlights

• Cash and cash equivalents totaled $65.6 million at the end of 2022 versus $41.2 million at the end of 2021
• Inventory was $365.6 million at the end of 2022, up 2% compared to $358.8 million at the end of 2021
• Long-term debt was $122.0 million at the end of 2022 compared to short-term debt of $11.2 million and long-term debt of $117.6 million at the end of 2021
• At the end of 2022, $148.4 million remained available for borrowing under the revolving credit facility
• Net cash used in operations was $157.1 million for the full year ended January 28, 2023, compared to net cash provided by operations of $89.4 million for the full year ended January 29, 2022
• Capital expenditures totaled $47.4 million for the full year ended January 28, 2023, compared to $34.8 million for the full year ended January 29, 2022

2023 Outlook

This outlook is based on our 2022 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 persistently challenging macroeconomic and retail apparel environments.

First Quarter 2023

The Company expects the following for the first quarter of 2023 compared to the first quarter of 2022:

• Comparable sales of negative low-double digits
• Gross margin rate to decrease approximately 850 basis points
• SG&A expenses as a percent of sales to deleverage approximately 500 basis points
• Net interest expense of $3 million
• Effective tax rate of essentially zero percent
• Diluted loss per share of $0.70 to $0.80
• Inventory to move closer to parity with sales trends as the year progresses

Full Year 2023

The Company expects the following for the full year 2023, which includes the impact of a 53rd week, compared to the full year 2022:

• Comparable sales of positive low-single digits
• Net interest expense of $10 million
• Effective tax rate of essentially zero percent
• Diluted loss per share of $0.85 to $1.05
• Capital expenditures of approximately $55 million

See Schedule 5 for a discussion of projected real estate activity.

Conference Call Information

A conference call to discuss fourth quarter and full year 2022 results is scheduled for March 24, 2023 at 9:00 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 March 24, 2023 until 11:59 p.m. ET on March 31, 2023, and can be accessed by dialing (800) 770-2030 and entering the replay pin number 1790468. In addition, an investor presentation of fourth quarter and full year 2022 results will be available at www.express.com/investor at approximately 7:00 a.m. ET on March 24, 2023.

About EXPR

EXPR is a fashion retail company whose business includes an omnichannel operating platform, physical and online stores, and a multi-brand portfolio that includes Express and UpWest. The Express brand launched in 1980 with the idea that style, quality and value should all be found in one place. Today, Express is a brand with a purpose - We Create Confidence. We Inspire Self-Expression. - powered by a styling community. UpWest launched in 2019 with a purpose to Provide Comfort for People & Planet.

The Company has approximately 540 Express retail and Express Factory Outlet stores in the United States and Puerto Rico, the express.com online store and the Express mobile app; and 13 UpWest retail stores and the UpWest.com online store. EXPR is traded on the NYSE under the symbol EXPR. For more information about our Company, please visit www.express.com/investors and for more information about our brands, 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 any future 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, including our efforts to optimize our omni-channel platform through our partnership with WHP Global; (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)

 

 

January 28, 2023

 

January 29, 2022

ASSETS

 

 

 

Current Assets:

 

 

 

Cash and cash equivalents

$

65,612

 

 

$

41,176

 

Receivables, net

 

12,374

 

 

 

11,744

 

Income tax receivable

 

1,462

 

 

 

53,665

 

Inventories

 

365,649

 

 

 

358,795

 

Prepaid royalty

 

59,565

 

 

 

—

 

Prepaid rent

 

7,744

 

 

 

5,602

 

Other

 

21,998

 

 

 

19,755

 

Total current assets

 

534,404

 

 

 

490,737

 

 

 

 

 

Right of Use Asset, Net

 

505,350

 

 

 

615,462

 

 

 

 

 

Property and Equipment

 

1,019,577

 

 

 

975,802

 

Less: accumulated depreciation

 

(886,193

)

 

 

(827,820

)

Property and equipment, net

 

133,384

 

 

 

147,982

 

 

 

 

 

Non-Current Income Tax Receivable

 

52,278

 

 

 

—

 

Equity Method Investment

 

166,106

 

 

 

—

 

Other Assets

 

6,803

 

 

 

5,273

 

TOTAL ASSETS

$

1,398,325

 

 

$

1,259,454

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current Liabilities:

 

 

 

Short-term lease liability

$

189,006

 

 

$

196,628

 

Accounts payable

 

191,386

 

 

 

231,974

 

Deferred royalty income

 

19,852

 

 

 

—

 

Deferred revenue

 

35,543

 

 

 

35,985

 

Short-term debt

 

—

 

 

 

11,216

 

Accrued expenses

 

105,803

 

 

 

110,850

 

Total current liabilities

 

541,590

 

 

 

586,653

 

 

 

 

 

Long-Term Lease Liability

 

406,448

 

 

 

536,905

 

Long-Term Debt

 

122,000

 

 

 

117,581

 

Other Long-Term Liabilities

 

20,718

 

 

 

17,007

 

Total Liabilities

 

1,090,756

 

 

 

1,258,146

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

Total Stockholders’ Equity

 

307,569

 

 

 

1,308

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

1,398,325

 

 

$

1,259,454

 

 Schedule 2

Express, Inc.

Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)

 

 

Thirteen Weeks Ended

 

Fifty-Two Weeks Ended

 

January 28, 2023

 

January 29, 2022

 

January 28, 2023

 

January 29, 2022

Net Sales

$

514,333

 

 

$

594,929

 

 

$

1,864,182

 

 

$

1,870,296

 

Cost of Goods Sold, Buying and Occupancy Costs

 

391,557

 

 

 

421,381

 

 

 

1,335,588

 

 

 

1,311,829

 

GROSS PROFIT

 

122,776

 

 

 

173,548

 

 

 

528,594

 

 

 

558,467

 

Operating Expenses:

 

 

 

 

 

 

 

Selling, general, and administrative expenses

 

162,210

 

 

 

163,177

 

 

 

596,671

 

 

 

558,187

 

Other operating (income)/expense, net

 

(147

)

 

 

66

 

 

 

(590

)

 

 

(499

)

TOTAL OPERATING EXPENSES

 

162,063

 

 

 

163,243

 

 

 

596,081

 

 

 

557,688

 

 

 

 

 

 

 

 

 

OPERATING (LOSS)/INCOME

 

(39,287

)

 

 

10,305

 

 

 

(67,487

)

 

 

779

 

Interest Expense, Net

 

17,141

 

 

 

2,952

 

 

 

29,103

 

 

 

15,198

 

Gain on Transaction with WHP

 

(409,493

)

 

 

—

 

 

 

(409,493

)

 

 

—

 

Other Expense/(Income), Net

 

1

 

 

 

(298

)

 

 

(1,384

)

 

 

(298

)

INCOME/(LOSS) BEFORE INCOME TAXES

 

353,064

 

 

 

7,651

 

 

 

314,287

 

 

 

(14,121

)

Income Tax Expense

 

19,904

 

 

 

88

 

 

 

20,453

 

 

 

315

 

NET INCOME/(LOSS)

$

333,160

 

 

$

7,563

 

 

$

293,834

 

 

$

(14,436

)

 

 

 

 

 

 

 

 

EARNINGS PER SHARE:

 

 

 

 

 

 

 

Basic

$

4.86

 

 

$

0.11

 

 

$

4.32

 

 

$

(0.22

)

Diluted

$

4.82

 

 

$

0.11

 

 

$

4.25

 

 

$

(0.22

)

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING:

 

 

 

 

 

 

 

Basic

 

68,551

 

 

 

67,060

 

 

 

68,046

 

 

 

66,448

 

Diluted

 

69,155

 

 

 

69,243

 

 

 

69,058

 

 

 

66,448

 

 Schedule 3

Express, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

Fifty-Two Weeks Ended

 

January 28, 2023

 

January 29, 2022

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net income/(loss)

$

293,834

 

 

$

(14,436

)

Adjustments to reconcile net income/(loss) to net cash (used in) provided by operating activities:

 

 

 

Depreciation and amortization

 

62,169

 

 

 

67,622

 

Gain on transaction with WHP

 

(409,493

)

 

 

—

 

Loss on extinguishment of debt

 

4,500

 

 

 

—

 

Loss on disposal of property and equipment

 

57

 

 

 

140

 

Impairment of property, equipment and lease assets

 

2,150

 

 

 

—

 

Share-based compensation

 

7,540

 

 

 

9,809

 

Deferred taxes

 

10,868

 

 

 

—

 

Landlord allowance amortization

 

(387

)

 

 

(496

)

Changes in operating assets and liabilities:

 

 

 

Receivables, net

 

(630

)

 

 

2,812

 

Income tax receivable

 

(75

)

 

 

57,677

 

Prepaid royalty

 

(59,565

)

 

 

—

 

Inventories

 

(6,854

)

 

 

(94,435

)

Deferred royalty income

 

19,852

 

 

 

—

 

Accounts payable, deferred revenue, and accrued expenses

 

(46,367

)

 

 

68,304

 

Other assets and liabilities

 

(34,679

)

 

 

(7,617

)

NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES

 

(157,080

)

 

 

89,380

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Capital expenditures

 

(47,375

)

 

 

(34,771

)

Proceeds from WHP transaction

 

243,387

 

 

 

—

 

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

 

196,012

 

 

 

(34,771

)

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Proceeds from borrowings under the revolving credit facility

 

350,470

 

 

 

148,000

 

Repayment of borrowings under the revolving credit facility

 

(263,470

)

 

 

(219,050

)

Proceeds from borrowings under the term loan facility

 

—

 

 

 

50,000

 

Repayment of borrowings under the term loan facility

 

(96,737

)

 

 

(43,263

)

Repayments of financing arrangements

 

—

 

 

 

(769

)

Costs incurred in connection with debt arrangements

 

(9,646

)

 

 

(471

)

Proceeds on issuance of common stock

 

6,899

 

 

 

—

 

Repurchase of common stock for tax withholding obligations

 

(2,012

)

 

 

(3,754

)

NET CASH USED IN FINANCING ACTIVITIES

 

(14,496

)

 

 

(69,307

)

 

 

 

 

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS

 

24,436

 

 

 

(14,698

)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

41,176

 

 

 

55,874

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

$

65,612

 

 

$

41,176

 

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 operating income (loss), adjusted net income (loss), adjusted diluted earnings per share, EBITDA and adjusted 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.

Adjusted Operating Income (Loss), Adjusted Net Income (Loss) and Adjusted Diluted Earnings Per Share

Adjusted operating income (loss), adjusted net income (loss), and adjusted diluted earnings per share exclude the impact of certain items that the Company does not believe are directly related to its underlying operations.

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 operating income (loss), adjusted net income (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.

Limitations of the Usefulness of These Measures

Because non-GAAP financial measures are not standardized, adjusted operating income (loss), adjusted net income (loss), and adjusted diluted earnings per share may differ from similarly titled measures used by other companies due to different methods of calculation. These adjusted financial measures should not be considered in isolation or as a substitute for reported operating loss, net income, or diluted earnings per share. These non-GAAP financial measures reflect an additional way of viewing the Company's operations that, when viewed together with the GAAP results, provide a more complete understanding of the Company's business. A reconciliation of adjusted operating income (loss), adjusted net income (loss) and adjusted diluted earnings per share to the most directly comparable GAAP measure is set forth below:

 

Thirteen Weeks Ended January 28, 2023

 

(in thousands, except per share amounts)

Operating Loss

 

Income Tax Impact(b)

 

Net Income/(Loss)

 

Diluted Earnings per Share

Weighted Average Diluted Shares Outstanding

 

Reported GAAP Measure

$

(39,287

)

 

 

 

$

333,160

 

 

$

4.82

 

69,155

(d)

Gain on transaction with WHP(a)

 

—

 

 

23,147

 

 

 

(386,346

)

 

 

(5.64

)

 

 

Debt termination costs(c)

 

—

 

 

(2,966

)

 

 

8,473

 

 

 

0.12

 

 

 

Impairment of property, equipment and lease assets

 

2,150

 

 

(558

)

 

 

1,592

 

 

 

0.02

 

 

 

Adjusted Non-GAAP Measure

$

(37,137

)

 

 

 

$

(43,121

)

 

$

(0.63

)

68,551

(e)

a.

 

Gain on transaction with WHP before tax was $409.5 million and was recorded separately as Gain on Transaction with WHP.

b.

 

Items tax effected at the applicable deferred or statutory rate.

c.

 

Debt termination costs before tax were $11.4 million and were recorded in interest expense, net.

d.

 

Weighted average diluted shares outstanding for purpose of calculating diluted earnings per share includes the dilutive effect of share-based awards as determined under the treasury stock method.

e.

 

Weighted average shares outstanding for purpose of calculating adjusted loss per share excludes the dilutive effect of share-based awards as determined under the treasury stock method.

 

Fifty-Two Weeks Ended January 28, 2023

 

(in thousands, except per share amounts)

Operating Loss

 

Income Tax Impact(b)

 

Net Income/(Loss)

 

Diluted Earnings per Share

Weighted Average Diluted Shares Outstanding

 

Reported GAAP Measure

$

(67,487

)

 

 

 

$

293,834

 

 

$

4.25

 

69,058

(d)

Gain on transaction with WHP(a)

 

—

 

 

23,147

 

 

 

(386,346

)

 

 

(5.68

)

 

 

Debt termination costs(c)

 

—

 

 

(2,966

)

 

 

8,473

 

 

 

0.12

 

 

 

Impairment of property, equipment and lease assets

 

2,150

 

 

(558

)

 

 

1,592

 

 

 

0.02

 

 

 

Adjusted Non-GAAP Measure

$

(65,337

)

 

 

 

$

(82,447

)

 

$

(1.21

)

68,046

(e)

a.

 

Gain on transaction with WHP before tax was $409.5 million and was recorded separately as Gain on Transaction with WHP

b.

 

Items tax effected at the applicable deferred or statutory rate.

c.

 

Debt termination costs before tax were $11.4 million and were recorded in interest expense, net.

d.

 

Weighted average diluted shares outstanding for purpose of calculating diluted earnings per share includes the dilutive effect of share-based awards as determined under the treasury stock method.

e.

 

Weighted average shares outstanding for purpose of calculating adjusted loss per share excludes the dilutive effect of share-based awards as determined under the treasury stock method.

EBITDA and Adjusted EBITDA

EBITDA is defined as net income (loss) before interest expense (net of interest income), income tax expense and depreciation and amortization expense. Adjusted EBITDA is calculated the same as EBITDA further excluding the after tax impacts of the gain that resulted from the WHP transaction, as well as debt termination costs and impairment charges that the Company does not believe are directly related to its underlying operations.

How This Measure Is Useful

When used in conjunction with GAAP financial measures, EBITDA and adjusted EBITDA are supplemental measures of operating performance that the Company believes are useful measures 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. The Company uses adjusted EBITDA, among other measures, to monitor business performance.

Limitations of the Usefulness of This Measure

Because non-GAAP financial measures are not standardized, EBITDA and adjusted EBITDA may differ from similarly titled measures used by other companies due to different methods of calculation. Presentation of EBITDA and adjusted EBITDA are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Adjusted EBITDA excludes the after tax impacts of the gain that resulted from the WHP transaction, as well as debt termination costs and impairment charges. 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 and adjusted EBITDA to the most directly comparable GAAP measures, is set forth below:

 

Thirteen Weeks Ended

 

Fifty-Two Weeks Ended

(in thousands)

January 28, 2023

 

January 29, 2022

 

January 28, 2023

 

January 29, 2022

Net income/(loss)

$

333,160

 

 

$

7,563

 

$

293,834

 

 

$

(14,436

)

Interest expense, net

 

17,141

 

 

 

2,952

 

 

29,103

 

 

 

15,198

 

Income tax expense

 

19,904

 

 

 

88

 

 

20,453

 

 

 

315

 

Depreciation and amortization

 

15,566

 

 

 

15,222

 

 

59,329

 

 

 

63,640

 

EBITDA (Non-GAAP Measure)

$

385,771

 

 

$

25,825

 

$

402,719

 

 

$

64,717

 

Gain on transaction with WHP

 

(409,493

)

 

 

—

 

 

(409,493

)

 

 

—

 

Debt termination costs

 

11,439

 

 

 

—

 

 

11,439

 

 

 

—

 

Impairment of property, equipment and lease assets

 

2,150

 

 

 

—

 

 

2,150

 

 

 

—

 

Adjusted EBITDA (Non-GAAP Measure)

$

(10,133

)

 

$

25,825

 

$

6,815

 

 

$

64,717

 

 Schedule 5

Express, Inc.

Real Estate Activity

(Unaudited)

 

 

 

 

 

Fourth Quarter 2022 - Actual

 

January 28, 2023 - Actual

Company-Operated Stores

Opened

Closed

 

Store Count

Gross Square Footage

Retail Stores

—

(10)

 

332

 

Outlet Stores

—

(4)

 

198

 

Express Edit Stores

2

(1)

 

10

 

UpWest Stores

2

(2)

 

13

 

TOTAL

4

(17)

 

553

4.6 million

 

 

 

 

 

 

First Quarter 2023 - Projected

 

April 29, 2023 - Projected

Company-Operated Stores

Opened

Closed

 

Store Count

Gross Square Footage

Retail Stores

—

(4)

 

328

 

Outlet Stores

—

(3)

 

195

 

Express Edit Stores

—

—

 

10

 

UpWest Stores

—

—

 

13

 

TOTAL

—

(7)

 

546

4.5 million

 

 

 

 

 

 

Full Year 2023 - Projected

 

February 3, 2024 - Projected

Company-Operated Stores

Opened

Closed

 

Store Count

Gross Square Footage

Retail Stores

2

(9)

 

325

 

Outlet Stores

1

(3)

 

196

 

Express Edit Stores

4

—

 

14

 

UpWest Stores

7

(2)

 

18

 

TOTAL

14

(14)

 

553

4.5 million

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230323005700/en/

INVESTOR CONTACT Greg Johnson VP, Investor Relations gjohnson@express.com (614) 474-4890