Express Earnings 2020-08-01

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

expr-20200801

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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 August 1, 2020


☐			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

Preferred Stock Purchase Rights

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 64,837,737 as of August 29, 2020.

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EXPRESS, INC.

INDEX TO FORM 10-Q

FORWARD-LOOKING STATEMENTS

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

Consolidated Balance Sheets

Consolidated Statements of Income and Comprehensive Income

Consolidated Statements of Changes in Stockholders' Equity

Consolidated Statements of Cash Flows

Notes to Unaudited Consolidated Financial Statements

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

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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,” 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:

External Risks such as:

•changes in consumer spending and general economic conditions;

•customer traffic at malls, shopping centers, and at our stores;

•the novel coronavirus outbreak, declared a pandemic by the World Health Organization, is adversely affecting and may continue to 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 cost of raw materials, labor, and freight;

•supply chain disruption and increased tariffs;

•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 such as:

•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 such as:

•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.

Financial Risks such as:

•our substantial lease obligations;

•restrictions imposed on us under the terms of our asset-based loan facility, including restrictions on our ability to repurchase shares of our common stock; and

•impairment charges on long-lived assets and our lease assets.

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Legal, Regulatory and Compliance Risks such as:

•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 that may cause fluctuations in our effective tax rate; and

•our failure to maintain adequate internal controls.

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 February 1, 2020 (“Annual Report”), filed with the Securities and Exchange Commission (“SEC”) on March 17, 2020. 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)


	August 1, 2020		February 1, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	192,894	$	207,139
Receivables, net	18,806		10,824
Income tax receivable	88,724		3,000
Inventories	232,302		220,303
Prepaid rent	6,829		6,850
Other	26,337		22,573
Total current assets	565,892		470,689



RIGHT OF USE ASSET, NET	902,211		1,010,216

PROPERTY AND EQUIPMENT	989,589		979,639
Less: accumulated depreciation	(773,972)		(731,309)
Property and equipment, net	215,617		248,330


DEFERRED TAX ASSETS	—		54,973
OTHER ASSETS	3,724		6,531
Total assets	$	1,687,444	$	1,790,739

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Short-term lease liability	$	207,672	$	226,174
Accounts payable	143,491		126,863
Deferred revenue	30,932		38,227

Accrued expenses	145,999		76,211
Total current liabilities	528,094		467,475

LONG-TERM LEASE LIABILITY	816,877		897,304
LONG-TERM DEBT	165,000		—

OTHER LONG-TERM LIABILITIES	28,597		19,658
Total liabilities	1,538,568		1,384,437

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 August 1, 2020 and February 1, 2020, respectively, and 64,830 shares and 63,922 shares outstanding at August 1, 2020 and February 1, 2020, respectively	936		936
Additional paid-in capital	217,828		215,207

Retained earnings	260,529		533,690
Treasury stock – at average cost; 28,802 shares and 29,710 shares at August 1, 2020 and February 1, 2020, respectively	(330,417)		(343,531)
Total stockholders’ equity	148,876		406,302
Total liabilities and stockholders’ equity	$	1,687,444	$	1,790,739

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						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)





COMPREHENSIVE 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

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, February 1, 2020	63,922	$	936	$	215,207	$	533,690	$	—	29,710	$	(343,531)	$	406,302
Net loss	—	—		—		(154,050)		—		—	—		(154,050)
Exercise of stock options and restricted stock	802	—		(1,609)		(7,659)		—		(802)	9,268		—
Share-based compensation	—	—		2,502		—		—		—	—		2,502
Repurchase of common stock	(268)	—		—		—		—		268	(540)		(540)
BALANCE, May 2, 2020	64,456	$	936	$	216,100	$	371,981	$	—	29,176	$	(334,803)	$	254,214
Net loss	—	—		—		(107,770)		—		—	—		(107,770)
Exercise of stock options and restricted stock	386	—		(732)		(3,682)		—		(386)	4,414		—
Share-based compensation	—	—		2,460		—		—		—	—		2,460
Repurchase of common stock	(12)	—		—		—		—		12	(28)		(28)
BALANCE, August 1, 2020	64,830	$	936	$	217,828	$	260,529	$	—	28,802	$	(330,417)	$	148,876


	Common Stock										Treasury Stock
	Shares Outstanding	Par Value		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Shares	At Average Cost		Total














BALANCE, February 2, 2019	67,424	$	936	$	211,981	$	713,864	$	—	26,208	$	(341,603)	$	585,178
Adoption of ASC Topic 842	—	—		—		(5,482)		—		—	—		(5,482)
Net loss	—	—		—		(9,934)		—		—	—		(9,934)
Exercise of stock options and restricted stock	1,024	—		(4,316)		(8,735)		—		(1,024)	13,051		—
Share-based compensation	—	—		2,372		—		—		—	—		2,372
Repurchase of common stock	(1,273)	—		—		—		—		1,273	(6,387)		(6,387)
BALANCE, May 4, 2019	67,175	$	936	$	210,037	$	689,713	$	—	26,457	$	(334,939)	$	565,747
Net loss	—	—		—		(9,703)		—		—	—		(9,703)
Exercise of stock options and restricted stock	93	—		(311)		(867)		—		(93)	1,178		—
Share-based compensation	—	—		2,424		—		—		—	—		2,424
Repurchase of common stock	(1)	—		—		—		—		1	(4)		(4)
BALANCE, August 3, 2019	67,267	$	936	$	212,150	$	679,143	$	—	26,365	$	(333,765)	$	558,464

See Notes to Unaudited Consolidated Financial Statements.

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EXPRESS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts 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

See Notes to Unaudited Consolidated Financial Statements.

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EXPRESS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

EXPRESS, INC. | Q2 2020 Form 10-Q | 9

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NOTE 1 | DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Business Description

Express, Inc., together with its subsidiaries (“Express” or the “Company”), 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 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 593 retail and factory outlet stores in the United States and Puerto Rico, as well as an online destination.

As of August 1, 2020, Express operated 378 primarily mall-based retail stores in the United States and Puerto Rico as well as 215 factory outlet stores. Additionally, as of August 1, 2020, the Company earned revenue from 7 franchise stores in Latin America. These franchise stores are operated by franchisees pursuant to franchise agreements. Under the franchise agreements, the franchisees operate stand-alone Express stores that sell Express-branded apparel and accessories purchased directly from the Company.

Fiscal Year

The Company’s fiscal year ends on the Saturday closest to January 31. Fiscal years are referred to by the calendar year in which the fiscal year commences. References herein to “2020” and “2019” represent the 52-week period ended January 30, 2021 and the 52-week period ended February 1, 2020, respectively. All references herein to “the second quarter of 2020” and “the second quarter of 2019” represent the thirteen weeks ended August 1, 2020 and August 3, 2019, respectively.

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and the U.S. Securities and Exchange Commission’s Article 10, Regulation S-X and therefore do not include all of the information or footnotes required for complete financial statements. In the opinion of management, the accompanying unaudited Consolidated Financial Statements reflect all adjustments (which are of a normal recurring nature) necessary to state fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for 2020. Therefore, these statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto for the year ended February 1, 2020, included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 17, 2020.

Principles of Consolidation

The unaudited Consolidated Financial Statements include the accounts of Express, Inc. and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Segment Reporting

The Company defines an operating segment on the same basis that it uses to evaluate performance internally. The Company has determined that, together, its Chief Executive Officer and its President and Chief Operating Officer are the Chief Operating Decision Maker, and that there is one operating segment. Therefore, the Company reports results as a single segment, which includes the operation of its Express brick-and-mortar retail and outlet stores, eCommerce operations, and franchise operations.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited Consolidated Financial Statements and the reported amounts of revenue and expense during the reporting period, as well as the related disclosure of contingent assets and liabilities as of the date of the unaudited Consolidated Financial Statements. Actual results may differ from those estimates. The Company revises its estimates and assumptions as new information becomes available.

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Impact of the COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of the novel strain of coronavirus ("COVID-19") a global pandemic and recommended containment and mitigation measures. Since then, extraordinary actions have been taken by international, federal, state, and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19. The pandemic has significantly impacted global economies, resulting in workforce and travel restrictions, supply chain and production disruptions and reduced demand and spending across many industries.

During March 2020, in response to the COVID-19 outbreak and business disruption resulting from quarantines, stay-at-home orders, and similar mandates, Express temporarily closed all its Company stores and offices, and as a result, all store associates and a number of home office employees were furloughed. For the remainder of the home office employees, remote work arrangements were put in place and were designed to allow for continued operation of the business, including financial reporting systems and internal controls. Express continued to be materially impacted by COVID-19 in the second quarter, as over 30% of Express stores were closed for more than half of the second quarter, and some stores in California and New York remained closed as of August 26, 2020. These continued closures and the potential that additional stores could be closed for a significant amount of time in the future could lead results and cash flows to be significantly different than the Company's forecasts.

The Company's website, www.express.com, remained open, supported by third-party logistics providers, and Company employees working remotely.

The Company has considered the impact of COVID-19 on our unaudited Consolidated Financial Statements and expects it to have future impacts, the extent of which is uncertain and largely subject to whether the severity of the pandemic worsens and/or its duration lengthens. These impacts could include but may not be limited to risks and uncertainty in the near to medium term related to federal, state, and local store closure requirements, customer demand, worker availability, the Company's ability to procure inventory, distribution facility closures, shifts in demand between sales channels, and market volatility in supply chain and store rents. Consequently, this may subject the Company to future risk of long-lived asset and lease right of use asset impairments, increased reserves for uncollectible accounts, and adjustments for inventory, including the lower of cost or net realizable value adjustment. The Company writes down inventory, the impact of which is reflected in cost of goods sold, buying and occupancy costs in the unaudited Consolidated Statements of Income and Comprehensive Income, if the cost of specific inventory items on hand exceeds the amount the Company expects to realize from the ultimate sale or disposal of the inventory. These estimates are based on management's judgment regarding future demand and market conditions and analysis of historical experience. The lower of cost or net realizable value adjustment to inventory as of August 1, 2020 and February 1, 2020 was $20.2 million and $10.4 million, respectively.

NOTE 2 | REVENUE RECOGNITION

The following is information regarding the Company’s major product categories and sales channels:


	Thirteen Weeks Ended						Twenty-Six Weeks Ended
	August 1, 2020		August 3, 2019		August 1, 2020		August 3, 2019
	(in thousands)
Apparel	$	207,421	$	408,305	$	387,004	$	797,195
Accessories and other	25,888		50,596		47,268		96,456
Other revenue	12,394		13,814		21,706		30,335
Total net sales	$	245,703	$	472,715	$	455,978	$	923,986

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	Thirteen Weeks Ended						Twenty-Six Weeks Ended
	August 1, 2020		August 3, 2019		August 1, 2020		August 3, 2019
	(in thousands)
Retail	$	164,745	$	337,606	$	324,282	$	665,945
Outlet	68,564		121,295		109,990		227,706
Other revenue	12,394		13,814		21,706		30,335
Total net sales	$	245,703	$	472,715	$	455,978	$	923,986

Other revenue consists primarily of revenue earned from our private label credit card agreement, shipping and handling revenue related to eCommerce activity, revenue from gift card breakage, sell-off revenue related to marked-out-of-stock inventory sales to third parties, and revenue from franchise agreements.

Revenue related to the Company’s international franchise operations was not material for any period presented and, therefore, are not reported separately from domestic revenue.

Revenue Recognition Policies

Merchandise Sales

The Company recognizes sales for in-store purchases at the point-of-sale. Revenue related to eCommerce transactions is recognized upon shipment based on the fact that control transfers to the customer at that time. The Company has made a policy election to treat shipping and handling as costs to fulfill the contract and as a result any amounts received from customers are included in the transaction price allocated to the performance obligation of providing goods with a corresponding amount accrued within cost of goods sold, buying and occupancy costs in the unaudited Consolidated Statements of Income and Comprehensive Income for amounts paid to applicable carriers. Associate discounts on merchandise purchases are classified as a reduction of net sales. Net sales excludes sales tax collected from customers and remitted to governmental authorities.

Loyalty Program

The Company maintains a customer loyalty program in which customers earn points toward rewards for qualifying purchases and other marketing activities. Upon reaching specified point values, customers are issued a reward, which they may redeem on merchandise purchases at the Company’s stores or on its website. Generally, rewards earned must be redeemed within 60 days from the date of issuance. The Company defers a portion of merchandise sales based on the estimated standalone selling price of the points earned. This deferred revenue is recognized as certificates that are redeemed or expire. To calculate this deferral, the Company makes assumptions related to card holder redemption rates based on historical experience. The loyalty liability is included in deferred revenue on the unaudited Consolidated Balance Sheets.


	Thirteen Weeks Ended						Twenty-Six Weeks Ended
	August 1, 2020		August 3, 2019		August 1, 2020		August 3, 2019
	(in thousands)
Beginning balance loyalty deferred revenue	$	9,585	$	14,716	$	14,063	$	15,319
Reduction in revenue/(revenue recognized)	284		50		(4,194)		(553)
Ending balance loyalty deferred revenue	$	9,869	$	14,766	$	9,869	$	14,766

Sales Returns Reserve

The Company reduces net sales and provides a reserve for projected merchandise returns based on prior experience. Merchandise returns are often resalable merchandise and are refunded by issuing the same payment tender as the original purchase. The sales returns reserve was $7.8 million and $9.1 million as of August 1, 2020 and February 1, 2020, respectively, and is included in accrued expenses on the unaudited Consolidated Balance Sheets. The asset related to projected returned merchandise is included in other assets on the unaudited Consolidated Balance Sheets.

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Table of Contents

Gift Cards

The Company sells gift cards in its stores, on its eCommerce website, and through third parties. These gift cards do not expire or lose value over periods of inactivity. The Company accounts for gift cards by recognizing a liability at the time a gift card is sold. The gift card liability balance was $20.9 million and $24.1 million, as of August 1, 2020 and February 1, 2020, respectively, and is included in deferred revenue on the unaudited Consolidated Balance Sheets. The Company recognizes revenue from gift cards when they are redeemed by the customer. The Company also recognizes income on unredeemed gift cards, referred to as “gift card breakage.” Gift card breakage is recognized proportionately using a time-based attribution method from issuance of the gift card to the time when it can be determined that the likelihood of the gift card being redeemed is remote and that there is no legal obligation to remit unredeemed gift cards to relevant jurisdictions. The gift card breakage rate is based on historical redemption patterns. Gift card breakage is included in net sales in the unaudited Consolidated Statements of Income and Comprehensive Income.


	Thirteen Weeks Ended						Twenty-Six Weeks Ended
	August 1, 2020		August 3, 2019		August 1, 2020		August 3, 2019
	(in thousands)
Beginning gift card liability	$	21,728	$	21,576	$	24,142	$	25,133
Issuances	4,353		7,956

Price	2.74	EPS	-0
Shares	67	P/E	-8
MCap	183	P/FCF	6
Net Debt	-168	EBIT	-27
TEV	15	TEV/EBIT	-1
TTM 2019-11-02, in MM, except price, ratios

10-Q	2020-08-01	Filed 2020-09-09
10-Q	2020-05-02	Filed 2020-06-09
10-K	2020-02-01	Filed 2020-03-17
10-Q	2019-11-02	Filed 2019-12-11
10-Q	2019-08-03	Filed 2019-09-10
10-Q	2019-05-04	Filed 2019-06-11
10-K	2019-02-02	Filed 2019-03-19
10-Q	2018-11-03	Filed 2018-12-12
10-Q	2018-08-04	Filed 2018-09-13
10-Q	2018-05-05	Filed 2018-06-13
10-K	2018-02-03	Filed 2018-04-04
10-Q	2017-10-28	Filed 2017-12-06
10-Q	2017-07-29	Filed 2017-09-06
10-Q	2017-04-29	Filed 2017-06-07
10-K	2017-01-28	Filed 2017-03-24
10-Q	2016-10-29	Filed 2016-12-07
10-Q	2016-07-30	Filed 2016-09-01
10-Q	2016-04-30	Filed 2016-06-08
10-K	2016-01-30	Filed 2016-03-30
10-Q	2015-10-31	Filed 2015-12-09
10-Q	2015-08-01	Filed 2015-09-03
10-Q	2015-05-02	Filed 2015-06-09
10-K	2015-01-31	Filed 2015-03-27
10-Q	2014-11-01	Filed 2014-12-10
10-Q	2014-08-02	Filed 2014-09-10
10-Q	2014-05-03	Filed 2014-06-11
10-K	2014-02-01	Filed 2014-04-01
10-Q	2013-08-03	Filed 2013-09-04
10-Q	2013-05-04	Filed 2013-06-06
10-K	2013-02-02	Filed 2013-04-02
10-Q	2012-10-27	Filed 2012-12-05
10-Q	2012-07-28	Filed 2012-08-30
10-Q	2012-04-28	Filed 2012-05-31
10-K	2012-01-28	Filed 2012-03-23
10-Q	2011-10-29	Filed 2011-12-06
10-Q	2011-07-30	Filed 2011-09-02
10-Q	2011-04-30	Filed 2011-06-03
10-K	2011-01-29	Filed 2011-03-22
10-Q	2010-10-30	Filed 2010-12-03
10-Q	2010-07-31	Filed 2010-09-10
10-Q	2010-05-01	Filed 2010-06-16

8-K	2020-08-26	Earnings, Regulation FD, Exhibits
8-K	2020-08-04	Earnings, Exhibits
8-K	2020-07-10	Regulation FD, Exhibits
8-K	2020-06-10
8-K	2020-06-03
8-K	2020-05-04
8-K	2020-04-20
8-K	2020-04-01
8-K	2020-03-27
8-K	2020-03-17
8-K	2020-03-11
8-K	2020-01-22
8-K	2019-12-05
8-K	2019-09-23
8-K	2019-09-06
8-K	2019-09-03
8-K	2019-08-28
8-K	2019-06-12
8-K	2019-05-30
8-K	2019-05-24
8-K	2019-05-21
8-K	2019-03-19
8-K	2019-03-13
8-K	2019-03-04
8-K	2019-02-19
8-K	2019-01-22
8-K	2019-01-15
8-K	2018-11-29
8-K	2018-08-29
8-K	2018-06-13
8-K	2018-05-31
8-K	2018-04-03
8-K	2018-03-14
8-K	2018-01-09

EX-31.1	exhibit311q22020-ceoce.htm
EX-31.2	exhibit312q22020-cfoce.htm
EX-32.1	exhibit321q22020-secti.htm


		Page
Note 1	Description of Business and Basis of Presentation	10
Note 2	Revenue Recognition	11
Note 3	Earnings Per Share	14
Note 4	Fair Value Measurements	14
Note 5	Income Taxes	15
Note 6	Leases	16
Note 7	Debt	17
Note 8	Share-Based Compensation	18
Note 9	Commitments and Contingencies	20
Note 10	Investment in Equity Interests	20
Note 11	Stockholders' Equity	21

EXPR 10Q Quarterly Report

Express Earnings 2020-08-01