2021 Annual Report
Tim Baxter, Chief Executive Officer
Dear Fellow Shareholders,
2021 was a year of momentum for our
Company. We delivered three
consecutive quarters of positive
comparable sales versus 2019 and
positive operating income for the full
year. Our business performance is
tangible evidence of the strength of our
EXPRESSway Forward strategy and the
excellence of our team, and we are well
on our way from being known as a store
in the mall to a brand with a purpose,
powered by a styling community.
The transformation of Express is being
driven by significant progress against
each of the four foundational pillars of our
strategy — Product, Brand, Customer,
and Execution.
We completely reimagined our Product,
bringing more style, more versatility and
more newness across our Women’s and
Men’s assortments, getting our outlets
fully onto the Express Edit design and
merchandising viewpoint, and gained
market share in some of the most
significant, volume-driving categories.
We reinvigorated and differentiated our Brand by applying our brand purpose to
every campaign, activation and partnership, and drove increases in tracking
measures, social media engagement and positive customer feedback.
We attracted, retained and engaged Customers through the relaunch of our
Express Insider loyalty program, and ended the year with the highest number of
active members in the Company’s history.
We optimized our operating processes through improved Execution and
effectively navigated ongoing pandemic-related supply chain challenges.
We held a virtual investor event in August where we stated our goals to deliver a
mid-single digit operating margin and over $100M in operating profit by 2024. A
key driver will be achieving $1.0B in eCommerce demand by 2024 — and we
ended 2021 on track to do so.
We launched an innovative Community Commerce program and invited fashion
enthusiasts and brand fans to apply their style to our product, earn commission
and amplify Express to their social media followers. We accelerated our Dream Big
Project through a partnership with Big Brothers Big Sisters of America and have
already raised $1.0M to support their Big Futures mentorship program.
We launched our ESG mission — Express Together — to guide and set clear
goals for the ongoing advancement of our Diversity, Equity & Inclusion; Giving &
Mentoring; and Conscious Sourcing & Product initiatives.
We expanded our Success@Express program with the introduction of the Express
Core Competencies — Accountable, Collaborative, Courageous, Results-Driven —
which represent the attributes we expect associates at all levels and across every
function to demonstrate. We added a new dimension to our hybrid work model —
Flex@Express — with the addition of Flex PTO and the launch of a designated
Work from Away period for Corporate associates this Summer. We are engaged in
the dialogue around the future of work and have developed our approach to ensure
that we continue to attract and retain top talent.
“OUR EXPRESSWAY
FORWARD STRATEGY HAS
EFFECTIVELY GALVANIZED
OUR ORGANIZATION,
ADVANCED OUR BRAND,
AND ACCELERATED OUR
BUSINESS.”
Our EXPRESSway Forward strategy has
effectively galvanized our organization,
advanced our brand, and accelerated our
business, and we are well positioned to
continue our momentum. In 2021, we
rebuilt the foundation of our business and
have emerged as a stronger organization.
We are aligned around our brand purpose
— We Create Confidence. We Inspire
Self-Expression. — and are realizing our
vision of the Express Styling Community.
I am confident that the versatility of our product, the power of our brand purpose,
the reach of our physical and digital stores, and the incredible potential of our
styling community will fuel our momentum in 2022. We will continue to restore the
vitality of the Express brand and business, while also beginning to explore other
avenues of growth for our Company, including expanding our UpWest business.
Thank you for investing in our Company. This is an exciting time for Express, Inc.
and I look forward to our bright and profitable future.
Tim Baxter
Chief Executive Officer
April 29, 2022
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 29, 2022
OR
☐
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
(Address of principal executive offices)
43230
(Zip Code)
Registrant's telephone number, including area code: (614) 474-4001
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
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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
Non-accelerated filer
☐
☐
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
Aggregate market value of the registrant's common stock held by non-affiliates of the registrant as of July 31, 2021: $304,341,668.
The number of outstanding shares of the registrant's common stock was 67,076,537 as of February 26, 2022.
DOCUMENT INCORPORATED BY REFERENCE:
Certain portions of the registrant's definitive Proxy Statement for its 2022 Annual Meeting of Stockholders, which is expected to be filed with the Commission
within 120 days after the end of the registrant's 2021 fiscal year ("Proxy Statement for our 2022 Annual Meeting of Stockholders"), to be held on June 8, 2022,
are incorporated by reference into Part III of this Annual Report on Form 10-K.
EXPRESS, INC. | 2021 Form 10-K | 1
TABLE OF CONTENTS
FORWARD-LOOKING STATEMENTS
RISK FACTOR SUMMARY
Part I
Business
Item 1.
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Item 3.
Item 4.
Properties
Legal Proceedings
Mine Safety Disclosures
Part II
Item 5.
Item 6.
Item 7.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Removed and Reserved
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Item 8.
Consolidated Balance Sheets
Consolidated Statements of Income and Comprehensive Income
Consolidated Statements of Changes in Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Item 9.
Changes In and Disagreements with Accountants on Accounting and Financial
Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11.
Item 12.
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14.
Principal Accounting Fees and Services
Part IV
Item 15.
Item 16.
Exhibits, Financial Statement Schedules
Form 10-K Summary
SIGNATURES
EXPRESS, INC. | 2021 Form 10-K | 2
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FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements that are subject to risks and uncertainties.
All statements other than statements of historical fact included in this Annual Report on Form 10-K 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, objectives, strategies, and initiatives for future operations or growth; the expected outcome of such plans,
objectives, strategies, and initiatives; or 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, but not limited to those under the heading "Risk
Factors" in Part I, Item 1A in this Annual Report on Form 10-K. Those factors should not be construed as
exhaustive and should be read in conjunction with the other cautionary statements included in this Annual Report on
Form 10-K. We caution you not to place undue reliance on these forward-looking statements. We do not undertake
any obligation to make any revisions to these forward-looking statements to reflect events or circumstances after
the date of this Annual Report on Form 10-K or to reflect the occurrence of unanticipated events, except as required
by law, including the securities laws of the United States and rules and regulations of the Securities and Exchange
Commission ("SEC").
RISK FACTOR SUMMARY
Below is a summary of the principal factors that make an investment in our common stock speculative or risky. This
summary does not address all of the risks that we face. Additional discussion of the risks summarized in this risk
factor summary, and other risks that we face, can be found under the heading “Risk Factors” in Part I, Item 1A in
this Annual Report on Form 10-K:
Operational and Industry Risks
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
changes in consumer spending and general economic conditions;
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;
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.
EXPRESS, INC. | 2021 Form 10-K | 3
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.
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 long-lived assets and our lease 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.
EXPRESS, INC. | 2021 Form 10-K | 4
ITEM 1. BUSINESS.
PART I
In this section, "Express", "we", "us", "the Company", and "our" refer to Express,
Inc. and its consolidated
subsidiaries as a combined entity. Our 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. All references herein to the Company's fiscal
years are as follows:
Fiscal Year
2021
2020
2019
GENERAL
Year Ended
January 29, 2022
January 30, 2021
February 1, 2020
Number of Weeks
52
52
52
Grounded in versatility and powered by a styling community, Express is a modern, multichannel apparel and
accessories brand whose purpose is to Create Confidence & Inspire Self-Expression. Launched in 1980 with the
idea that style, quality and value should all be found in one place, Express has been a part of some of the most
important and culture-defining fashion trends. The Express Edit design philosophy ensures that the brand is always
"of the now" so people can get dressed for every day and any occasion knowing that Express can help them look
the way they want to look and feel the way they want to feel.
As of January 29, 2022, we operated 561 stores across the United States and in Puerto Rico, including 203 factory
outlet stores. Our stores are located primarily in high-traffic shopping malls, lifestyle centers, outlet centers, and
street locations, and average approximately 8,400 gross square feet. We also sell our products through our online
store, www.express.com, our mobile app, as well as through franchisees who operate Express locations in Latin
America pursuant to franchise agreements. Our 2021 merchandise sales were comprised of 91% apparel and 9%
accessories and other and 57% women's and 43% men's.
COMPETITION AND COMPETITIVE STRENGTHS
The apparel retail market is highly competitive. We compete with other omni-channel retailers that engage in the
retail sale of women's and men's apparel, accessories, and similar merchandise. We compete on the basis of a
combination of factors, including, among others, style, breadth, quality, and price of merchandise offered, in-store
and online customer experience, and brand image.
We believe we differentiate ourselves from our competitors as follows:
• Established Lifestyle Brand
With more than 40 years of heritage, we are a fashion-forward apparel brand and style community whose
purpose is to create confidence and inspire self-expression. From wardrobe essentials to the latest trends,
we outfit doers, makers, movers and shakers with clothing designed for real-life versatility. At Express, we
believe that everyone should dream big and dress accordingly. Our clothing is an edit of the top trends to
create a modern, flexible wardrobe. The Express brand differentiates itself by offering terrific value, great
fits, premium fabrics and impeccable details, with each style designed to help you express your style.
• Reengineered Go To Market Processes
We implemented our new go to market process in the Spring of 2020 and our teams have been better
aligned, our products speed to market has increased, and we have better cross functional coordination in
the field and at
the home office. This transformed process began with a unified brand presentation
increasing our speed to market, streamlining our calendars, and ensuring better integration across all of our
marketing touchpoints. We have achieved our goal of being more efficient, more effective, and more
EXPRESS, INC. | 2021 Form 10-K | 5
connected across functions and faster to market at a reduced cost. We have also worked more closely with
our suppliers to achieve better alignment on the aesthetics, fit and quality our customers want. All of these
efforts continue to help us bring more newness in our assortment more often and mitigate the supply chain
challenges facing us today.
• Strong and Experienced Team
Our existing team, at and below the leadership level, has extensive experience in the retail apparel industry,
including depth in the areas of fashion design and merchandising, supply chain management, marketing,
customer experience, eCommerce, store operations, technology, planning and allocation, and real estate,
as well as other diverse business experiences that we believe are valuable to us as we continue to execute
our growth strategy. Experience within Express extends deep into our organization, including district and
store managers.
OUR PRODUCTS
The majority of our apparel designs are created by our in-house design team. We believe every day is an occasion
and we want to help our customers dress for it. We established a design and merchandising philosophy called the
Express Edit that supports our brand promise: “to edit the best of now for real life versatility”. We are designing best-
in-class, modern product at incredible value. Below are the four ideas that define the Express Edit:
•
•
•
•
Versatility Adds Value
◦
Create modern-day dressing experience with multiple ways to wear at work, at play, during the day
and during the night
New & Now
◦ Meet our customers’ desire for newness by understanding where fashion is now and looking ahead
to where it's going through monthly deliveries in key categories that continue to update a seasonal
wardrobe
Drive Denim
◦
Denim is the foundation of every modern wardrobe. We completely reinvented our assortments and
are delivering premium jeans under $100
Add an Accessory
◦
Accessories are a fashion entry point and an add-on to an outfit at an opening price point
We plan our product assortments and display them in our stores and online in a coordinated manner to encourage
our customers to purchase items that can be worn in multiple ways for multiple wearing occasions. We believe this
allows us to better meet our customers' shopping objectives while differentiating our product offerings from
competitors. On average, our customers purchase two to three items per transaction.
OMNICHANNEL CUSTOMER EXPERIENCE
We are committed to enhancing our omnichannel customer experience that offers a seamless shopping experience
whether the customer is shopping in a store or online through a desktop, tablet, or mobile device. We believe the
lines between our store and eCommerce channels are disappearing as customers increasingly interact with us both
in-store and online and often through mobile devices while in stores. As a result, we are focused on leveraging the
best of both channels to create an exceptional omnichannel shopping experience.
We design our stores to create a distinctive and engaging shopping environment and project our image of Express
as a fashion authority. Our stores feature a vibrant and youthful look, bright signage, and popular music. Our stores
are constructed and finished to allow us to efficiently shift merchandise displays throughout the year as seasons
dictate. To further enhance our customers' experience, we seek to attract enthusiastic store associates who are
committed to offering a high level of customer service. We believe our managers and associates are well equipped
to assist and inspire our customers as a result of education and training we provide, the culture of accountability we
foster, the incentives we offer, and the decision-making authority we grant to store managers. On average, our store
managers have been with Express for approximately six years.
EXPRESS, INC. | 2021 Form 10-K | 6
Similar to our stores, our eCommerce capabilities focus on creating an engaging and easy shopping experience that
supports a vibrant fashion consumer, whether on a mobile device, tablet, or desktop, with a particular focus on the
mobile experience. We recognize the growing preference for online shopping and continue to make enhancements
to the online customer experience through improved search, site navigation and checkout capabilities, and targeted
customer messaging, making shopping easier
for customers. During 2021, we focused on advancing our
eCommerce and omnichannel experience, particularly as the impacts of the COVID-19 pandemic resulted in more
of our customers continuing to shop online. We did this with enhanced and expanded buy-online-pick-up-in-store
and ship-from-store functionalities, both of which contribute to more efficient, and effective inventory management.
Additionally, we enhanced the way we engage and service our customers in the digital channel. We expanded our
Digital Stylist program by increasing the resources available, to provide more real-time, virtual assistance to
express.com customers. We plan to optimize our online product assortment through product extensions, and
expand and grow our Marketplace / Labels we Love business with the addition of new categories such as active,
swimwear, and intimates.
MARKETING
We use a variety of marketing vehicles designed to acquire new customers, engage with existing customers,
increase customer traffic in-store and online, and build brand loyalty. We seek to optimize our customer relationship
management ("CRM") through a number of tactics, such as test and learn programs, circulation and offer models,
and greater use of digital marketing.
We use a proprietary customer database, together with data analytics, to customize our communications and make
targeted offers to customers in an effort to increase customer traffic in-store and online and to increase conversion.
During the first quarter of 2021, we rebranded and relaunched our Express Insider loyalty program. We brought in
2.7 million new customers and reactivated 2.2 million lapsed customers since the relaunch. We ended the year with
the highest number of active loyalty members in the Company's history.
We implemented new participation tiers and earnings structure, new benefits, a digital wallet feature, and made it
easier for customers to earn, track, and redeem their benefits. Our Express Insider members have tremendous
lifetime value to Express. This program is a critical factor in gaining additional share of existing customers' spend
and bringing new customers into the brand. We also offer a private-label credit card through an agreement (the
"Card Agreement") with Comenity Bank (the “Bank”) under which the Bank owns the credit card accounts and
Alliance Data Systems Corporation provides services to our private-label credit card customers. All of our
proprietary credit cards carry the Express logo.
TECHNOLOGY
We rely on information technology to operate our business. Our information technology provides a full range of
business process support and information to our store, eCommerce, merchandising, financial, and real estate
teams. We utilize a combination of customized and industry standard software systems to provide various functions
related to point-of-sale, inventory management, design, planning and allocation, and financial reporting. During
2021, we launched multiple systems, including a re-platform of our loyalty program and the introduction of our social
commerce interface. In addition, we continued to enhance and upgrade our online experience through both the web
and our mobile app. We believe these systems and enhancements will continue to increase our ability to acquire
and retain customers and ultimately accelerate our transformation from a store in the mall to a brand with a purpose
powered by a styling community.
SOURCING
Our Sourcing Methods
We utilize a broad base of manufacturers located throughout the world that we believe produce goods at the level of
quality that our customers desire and can supply products to us on a timely basis at competitive prices. We do not
own or operate any manufacturing facilities and, as a result, contract with third-party vendors for the production of
all of our merchandise. We purchase both apparel and accessories through buying agents and directly from
vendors. In exchange for a commission, our buying agents identify suitable vendors and coordinate our purchasing
requirements with vendors by placing orders for merchandise on our behalf, facilitating the timely delivery of goods
EXPRESS, INC. | 2021 Form 10-K | 7
to us, obtaining samples of merchandise produced in factories, inspecting finished merchandise, and carrying out
vendor compliance monitoring and administrative communications on our behalf.
We purchase the majority of our merchandise outside of
the United States through arrangements with
approximately 70 vendors utilizing approximately 270 manufacturing facilities located in approximately 20 countries
throughout the world, primarily in Asia. The top five countries from which we sourced our merchandise in 2021 were
Vietnam, China, Indonesia, Bangladesh and the Philippines, based on total cost of merchandise purchased. The top
10 manufacturing facilities, based on cost, supplied approximately 29% of our merchandise in 2021. We purchase
merchandise using purchase orders, and therefore are not subject to long-term production contracts with any
vendors, manufacturers, or buying agents.
Quality Assurance and Compliance Monitoring
Each supplier, factory, and subcontractor that manufactures our merchandise is required to adhere to our Code of
Vendor Conduct and certain other purchasing terms and conditions, including those related to product quality. This
is designed to ensure that each of our suppliers' operations are conducted in a legal, ethical, and responsible
manner. Our Code of Vendor Conduct requires that each of our suppliers provides minimum wages and benefits,
limits working hours, complies with all laws, including environmental laws, and provides a safe and healthy work
environment. It also forbids the use of child labor or forced labor, and prohibits unauthorized subcontracting. We
monitor compliance through third parties who conduct regular factory audits on our behalf as well as through our
buying agents.
DISTRIBUTION
We utilize two facilities for the distribution of our product, both of which are owned and operated by third parties.
Virtually all of the merchandise sold in our stores and on our website is first received and processed at a central
distribution facility in Columbus, Ohio. From there, merchandise allocated to be sold in stores is shipped to our
stores and merchandise to be sold online direct-to-consumer is shipped to a distribution facility in Richwood,
Kentucky (the "Richwood Facility"). Merchandise is typically shipped to such stores and to the Richwood Facility via
third-party delivery services multiple times per week, thereby providing them with a steady flow of inventory. The
third party who operates the Richwood Facility is responsible for fulfilling the majority of the orders placed through
our website and shipping the merchandise directly to customers or to stores for pickup, via third-party delivery
services. In addition, approximately 323 retail stores have the ability to ship select online merchandise directly to our
customers.
EXPRESS, INC. | 2021 Form 10-K | 8
STORES
As of January 29, 2022, we operated a total of 5611,2 stores in 46 states across the United States, as well as in the
District of Columbia and Puerto Rico.
The following list shows the number of stores we operated in the United States and Puerto Rico as of January 29,
2022:
Location
Count
Location
Count
Location
Count
Alabama
Arizona
Arkansas
California2
Colorado2
Connecticut1
District of Columbia1
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois2
Indiana
Iowa
Kansas
4
8
2
68
12
9
2
2
49
15
1
1
28
13
6
4
Kentucky
Louisiana
Maine
Maryland
Massachusetts1
Michigan
Minnesota
Mississippi
Missouri
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
4
7
3
14
14
16
10
2
8
3
9
4
26
3
35
16
North Dakota
Ohio2
Oklahoma
Oregon2
Pennsylvania
Puerto Rico
Rhode Island
South Carolina
South Dakota
Tennessee
Texas1
Utah
Virginia
Washington
West Virginia
Wisconsin
Total
1
18
5
4
24
3
2
6
1
8
53
4
14
9
1
10
561
1.
2.
Store count includes Express Edit stores
Store count includes UpWest stores
The following list shows the number of stores operated by our franchisees by country as of January 29, 2022:
Location
Costa Rica
Panama
El Salvador
Guatemala
Total
Count
2
2
1
1
6
INTELLECTUAL PROPERTY
The Express trademark and certain variations thereon, such as Express World Brand, are registered or are subject
to pending trademark applications with the United States Patent and Trademark Office and/or with the registries of
many foreign countries. In addition, we own domain names for many of our trademarks, including express.com, and
we vigorously protect them against infringement.
REGULATION AND LEGISLATION
We are subject to labor and employment laws and regulations, including minimum wage requirements; intellectual
property laws; consumer protection laws and regulations, including those governing advertising and promotions,
privacy, and product safety; laws and regulations with respect to the operation of our stores and business generally,
EXPRESS, INC. | 2021 Form 10-K | 9
including the Foreign Corrupt Practices Act; and laws that apply as a result of being a public company. In addition,
we are subject to United States customs laws and similar laws of other countries associated with the import and
export of merchandise.
HUMAN CAPITAL RESOURCES
At Express our brand purpose is to create confidence and inspire self-expression, and our associates are essential
to fulfilling that purpose. In order to compete and succeed in a highly competitive and rapidly evolving market, we
must continue to attract and retain talented and experienced employees. To do this, we begin with a
comprehensive, Company-wide program called Success@Express that guides our approach to associate
performance, potential and succession, and rewards. Success@Express also ensures that each associate’s goals
and objectives are aligned with the EXPRESSway Forward strategy.
Associates
We currently employ approximately 10,000 associates. Approximately 800 associates are based at our corporate
locations in either Columbus or New York City, approximately 40 are field-based regional and district managers,
approximately 1,000 are in-store managers and assistant managers, and approximately 8,000 are in-store sales
associates. Approximately 30% of our associates are full-time and the remaining 70% are part-time. We employ
temporary, seasonal associates at times, primarily during peak holiday selling periods. None of our associates are
represented by a union. We believe our relations with our associates are good.
Compensation and Benefits
The compensation and benefits component of the Success@Express program is designed to attract and reward
individuals who demonstrate the skills necessary to support our business objectives, assist in the achievement of
our strategic goals and create long-term value for our shareholders. We provide associates with compensation
packages that include base salary and may also include annual
incentive bonuses and/or long-term incentive
awards depending upon the associate’s level. We believe that a compensation program with both short-term and
long-term awards provides fair and competitive compensation and aligns associate and stockholder interests. In
addition to cash and equity compensation, we also offer eligible associates benefits such as life and health
(medical, dental and vision) insurance, paid time off, paid parental leave, and a 401(k) plan, of which we match
4.0% of contributions.
We offer Flex@Express which empowers associates to work with their leaders to create flexible work arrangements
that best balance their personal and professional commitments.
Board Oversight
Human capital management is incorporated into discussions of our Board of Directors throughout the year. The
Compensation and Governance Committee reviews our corporate responsibility program, and any related policies
and practices, at least annually and makes recommendations to the Board of Directors regarding plans and
progress against key initiatives. Generally, we consider our commitment to corporate and social responsibility to
include, among other things, respect for human rights, ethical and sustainable sourcing, environmental and climate
change initiatives, evaluating the impact of our practices on the communities in which we operate and our
associates, and charitable giving.
SEASONALITY
Our business is seasonal. We define our seasons as Spring, which includes the first and second quarters, and Fall,
which includes the third and fourth quarters. Historically, we have realized a higher portion of our net sales and net
income in the Fall season due primarily to the impact of the holiday season. Generally, approximately 45% of our
annual net sales occur in the Spring season and 55% occur in the Fall season. Cash needs are typically higher in
the third quarter due to inventory-related working capital requirements for early Fall and holiday selling periods. Our
business is also subject, at certain times, to calendar shifts, which may occur during key selling periods close to
holidays such as Easter, Thanksgiving, and Christmas.
EXPRESS, INC. | 2021 Form 10-K | 10
AVAILABLE INFORMATION
We make available free of charge on our website, www.express.com, copies of our Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to these reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act of 1934"), as soon as reasonably practicable after filing such material electronically with, or otherwise furnishing
it to, the SEC. The SEC maintains a website that contains electronic filings at www.sec.gov. References to our
website address do not constitute incorporation by reference of the information contained on the website, and such
information is not part of this Annual Report on Form 10-K.
EXPRESS, INC. | 2021 Form 10-K | 11
ITEM 1A. RISK FACTORS.
Our business faces a variety of risks. The risks described below are the items of most concern to us, however these
are not all of the risks we face. Additional risks and uncertainties not presently known to us, that apply to similar
businesses more generally, or that we currently consider immaterial may also impair our business operations. If any
of these risks occur, our business prospects, reputation, financial condition or results of operations could materially
suffer, and the market price of our common stock could decline.
OPERATIONAL AND INDUSTRY RISK FACTORS
Our business is sensitive to consumer spending and general economic conditions. Recessionary, slow
growth, or other difficult economic conditions could adversely affect our financial performance.
Consumer purchases of discretionary items, including our merchandise, generally decline during recessionary
periods and other periods where disposable income is adversely affected. Our business is impacted by factors that
affect domestic and worldwide economic conditions and disposable income, particularly those that affect our target
demographic, including recent inflationary pressures, unemployment levels, levels of consumer debt, availability of
consumer credit, levels of student debt, healthcare costs, prices of non-discretionary consumer goods, reductions in
net worth based on declines in the financial, residential real estate and mortgage markets, tax rates, fuel and energy
prices, interest rates, consumer confidence and perceptions of personal well-being and security, the value of the
United States dollar versus foreign currencies, political and regulatory uncertainty, and other macroeconomic
factors. Uncertain or deteriorating economic conditions may reduce the level of consumer spending and inhibit
consumers' use of credit, which may adversely affect our revenues, profits, liquidity and capital resources. In
recessionary periods or periods of slow growth, we may have to increase the number of promotional sales or
otherwise dispose of inventory, including fabric, for which we have previously paid to manufacture or committed to
purchase and/or increase our marketing and promotional expenses in response to lower than anticipated levels of
demand for our products, which could adversely affect our profitability. Our financial performance may be
particularly susceptible to economic and other conditions in regions or states where we have a significant number of
stores.
In addition, difficult economic conditions may exacerbate some of the other risks described in this Item 1A. Risk
Factors, including those risks associated with increased competition, decreases in mall traffic, brand reputation, our
ability to develop and maintain a reliable omnichannel customer experience, our ability to execute our corporate
strategy and achieve our strategic objectives, the interruption of the production and flow of merchandise, and
leasing substantial amounts of space. The risks could be exacerbated individually or collectively.
Our ability to attract customers to our stores that are located in malls or other shopping centers depends
heavily on the success of these malls and shopping centers, and continued decreases in customer traffic in
these malls or shopping centers, whether due to the growing preference for online shopping or otherwise,
could cause our net sales and our profitability to be less than expected.
A significant number of our stores are located in malls and other shopping centers and many of these malls and
shopping centers have been experiencing declines in customer traffic. Our sales at these stores are dependent, to a
significant degree, upon the volume of traffic in those shopping centers and the surrounding area; however, our
costs associated with these stores are essentially fixed. In times of declining traffic and sales, our ability to leverage
these costs and our profitability are negatively impacted. Our sales volume and traffic has been - and we expect that
it will continue to be - adversely affected by, among other things, the decrease in popularity of malls or other
shopping centers in which our stores are located, the closing of anchor stores important to our business, and
declines in popularity of other stores in the malls or shopping centers in which our stores are located. Furthermore,
a deterioration in the financial condition of shopping center operators or developers could, for example, limit their
ability to invest in improvements and finance tenant improvements for us and other retailers and lead consumers to
view these locations as less desirable. Further reduction in consumer traffic as a result of these or any other factors
could have a material adverse effect on us.
EXPRESS, INC. | 2021 Form 10-K | 12
The COVID-19 pandemic could continue to adversely affect our business operations, store traffic, employee
availability, financial condition, liquidity and cash flow.
The COVID-19 pandemic and preventative measures taken to contain or mitigate the virus have caused, and are
continuing to cause, business slowdown or shutdown in affected areas and significant disruption in the financial
markets both globally and in the United States. This has led to a decline in discretionary spending by consumers,
which has materially impacted our business, sales, financial condition and results of operations. The impacts
include, but are not limited to:
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retail and outlet store closures or reduced operating hours and/or decreased traffic;
disruption to our distribution centers and our third-party manufacturing partners and other vendors, including
the effects of facility closures, reductions in operating hours, labor shortages, vessel, container and other
transportation shortages, port congestion globally and real-time changes in operating procedures, including
for additional cleaning and disinfection procedures, which could, among other things, make it difficult or
impossible to operate our eCommerce business;
our ability to attract, retain and manage our associates; and
significant disruption of global financial markets, which could have a negative impact on our ability to access
capital in the future.
The further spread of COVID-19, and the requirements to take action to help limit the spread of the illness, will
impact our ability to carry out our business as usual and may materially adversely impact global economic
conditions, our business, results of operations, cash flows and financial condition. The extent of the impact of
COVID-19 on our business and financial results will depend on future developments, including the duration and
spread of the outbreak within the markets in which we operate, the related impact on consumer confidence and
spending, the effect of governmental regulations imposed in response to the pandemic, whether there are additional
outbreaks, mutations or related strains of the virus in locations where we operate, the availability of, and prevalence
of access to, effective medical treatments and vaccines for COVID-19, and the pace of recovery when the pandemic
subsides, all of which are highly uncertain and cannot be predicted. The sweeping nature of the COVID-19
pandemic makes it extremely difficult to predict how our business and operations will be affected in the long run.
However, the likely overall economic impact of the pandemic is viewed as highly negative to the general economy.
Any of the foregoing factors, or other cascading effects of the COVID-19 pandemic, could materially increase our
costs, negatively impact our sales and damage our results of operations and liquidity, possibly to a significant
degree. While we currently believe liquidity will be sufficient to fund our lease obligations, capital expenditures, and
working capital for the next 12 months and the foreseeable future, the duration of any such impacts cannot be
predicted.
We face significant competition that could adversely affect our ability to generate higher net sales and
margins and attract and retain talent.
We face substantial competition in the specialty retail apparel and accessories industry, including from individual
and chain specialty apparel retailers, local, regional, national and international department stores, and eCommerce
the direct-to-consumer channel has encouraged the entry of many new
businesses. Recent proliferation of
competitors and an increase in competition from established companies. Some of our competitors have competitive
advantages relative to us, including greater financial, marketing, and other resources, lower prices, higher wages,
greater eCommerce presence, more desirable store locations and faster speed-to-market. Further, our larger
competitors may be better equipped to changing conditions that affect the competitive market and newer entrants
may be viewed as more desirable by fashion-conscious consumers. In addition, disruptive innovation, by existing or
new competitors, could alter the competitive landscape by improving the customer experience and heightening
customer expectations,
technologies and
artificial intelligence and enhancing management decision-making through use of data analytics to develop new
consumer insights. Many of our competitors sell their products in stores that are located in the same shopping malls
or lifestyle centers as our stores and many also sell their products online either exclusively or in addition to brick-
and-mortar stores. We expect the retail environment for apparel to remain highly competitive, which may result in
lower prices, more promotions, and lower product margins. In addition to competing for sales, we compete for
favorable site locations and lease terms in shopping malls and lifestyle centers, and our competitors may be able to
secure more favorable locations than us as a result of their relationships with, or appeal to, landlords or their
willingness and ability to pay more for leased space. We also compete with other retailers and service-based
businesses for personnel. The competition for retail talent is increasing. We have experienced increases in labor
transforming supply chain and corporate operations through digital
EXPRESS, INC. | 2021 Form 10-K | 13
costs and may need to continue to increase wages to attract and retain talent. Even still, we may not be able to
attract, retain and develop the sufficient number of qualified individuals we need to operate our stores. We cannot
assure you that we will be able to compete successfully against existing or future competitors or maintain our
product margins, and our inability to do so could have a material adverse effect on us.
We do not own or operate any manufacturing facilities and therefore depend upon third parties for the
manufacture of all of our merchandise. The inability of a manufacturer to ship goods on-time to our
specifications or to operate in compliance with our Vendor Code of Conduct or applicable laws could
negatively impact our business.
We do not own or operate any manufacturing facilities. As a result, we are dependent upon the timely receipt of
quality merchandise from third-party vendors. A manufacturer's inability to ship orders to us in a timely manner or
meet our quality standards could cause inventory shortages or high levels of out-of-season inventory and negatively
affect consumer confidence in the quality and value of our brand and our competitive position. As there are a finite
number of skilled manufacturers that meet our requirements, it could take significant time to identify and qualify
suitable alternatives, which could, for example, result in our missing retailing seasons. In addition, if manufacturing
costs were to rise significantly, our product margins and results of operations could be negatively affected. Any of
these issues could have a material adverse effect on our financial condition and results of operations.
If any of our manufacturers fail to comply with applicable laws or our Vendor Code of Conduct, or engage in any
socially unacceptable business practices such as poor working conditions, child labor, disregard for environmental
standards, or otherwise, our brand reputation could be negatively impacted and our results of operations could in
turn be materially adversely affected.
The raw materials used to manufacture our products and our transportation and labor costs are subject to
availability constraints, price volatility and related inflationary pressures, which could result in increased
costs.
The raw materials used to manufacture our merchandise are subject to availability constraints and price volatility
caused by demand for cotton, petroleum-based synthetic textiles, and other fabrics, weather conditions, supply
conditions, government regulations, including those associated with global climate change, economic climate,
recent inflationary pressures, and other unpredictable factors. In addition, our transportation and labor costs are
subject to price volatility caused by the price of energy, supply of labor, governmental regulations, higher minimum
wages, economic climate, recent inflationary pressures, and other unpredictable factors. In addition, the cost of
labor at many of our manufacturers has been increasing significantly, and as the middle class in developing
countries continues to grow, it is unlikely that such cost pressure will abate.
Changes in the demand for, or the price, availability or quality of, raw materials used to manufacture our
merchandise and increases in transportation and labor costs could each have a material adverse effect on our cost
of sales or our ability to meet our customers' needs. We may not be able to pass all or a material portion of such
increased costs on to our customers, which could negatively impact our profitability.
The interruption of the flow of merchandise from international manufacturers or increased tariffs or other
trade restrictions could disrupt our supply chain.
the United States through arrangements with
We purchase the majority of our merchandise outside of
the world,
approximately 70 vendors, utilizing approximately 270 manufacturing facilities located throughout
primarily in Asia and Central and South America. Political, social, or economic instability in Asia, Central, or South
America, or
including
exports. Other events that could also cause disruptions to our supply chain include:
regions where our products are made, could cause disruptions in trade,
in other
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the imposition of additional trade law provisions or regulations;
the imposition of additional duties, tariffs, and other charges on imports and exports;
quotas imposed by bilateral textile agreements;
foreign currency fluctuations;
raw material shortages, natural disasters and theft;
economic crises, international disputes and wars, such as the conflict between Russia and Ukraine and the
related response by other countries, including additional conflicts, sanctions or other restrictive actions;
EXPRESS, INC. | 2021 Form 10-K | 14
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public health issues, such as the COVID-19 pandemic, and social or political unrest;
restrictions on the transfer of funds;
the financial instability or bankruptcy of manufacturers;
significant labor disputes;
the inability of our vendors to source raw materials due to factories that are shut down temporarily due to
illness or otherwise; and
delays at ports, including as a result of shipping backlogs, availability of vessels or capacity constraints.
Political uncertainty in the United States may result in significant changes to U.S. trade policies, treaties and tariffs.
These developments, or the perception that any of them could occur, may have a material adverse effect on global
economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in
particular, trade between these nations and the United States. Any of these factors could depress economic activity,
restrict our sourcing from suppliers and have a material adverse effect on our business, financial condition and
results of operations. We cannot predict whether the countries in which our merchandise is manufactured, or may
be manufactured in the future, will be subject to new or additional trade restrictions imposed by the United States or
other foreign governments, including the likelihood, type, or effect of any such restrictions. Trade restrictions,
including new or increased tariffs or quotas, embargoes, safeguards, and customs restrictions against apparel
items, as well as labor strikes and work stoppages, slowdowns or boycotts, and temporary closures of facilities or
shipping ports caused by public health issues, such as the COVID-19 pandemic, could increase the cost or reduce
or delay the supply of apparel available to us. As a result, we may be unable to meet our customers’ demands or
pass on price increases to our customers. In addition, if imported merchandise becomes unavailable or more
expensive, the transition to alternative sources may not occur in time to meet demand. The occurrence of any of
these or other risks could adversely affect our business, financial condition, or results of operations.
If we experience significant supply chain disruptions, including as a result of any bans on travel, commercial or other
similar restrictions or any delays in production or distribution operations at any or all of our suppliers' facilities due to
the ongoing COVID-19 pandemic, we may not be able to develop alternate sourcing quickly on favorable terms, if at
all, which could result in increased costs, loss of sales and a loss of customers, and adversely impact our financial
condition and results of operations.
If we encounter difficulties associated with distribution facilities or if they were to shut down for any
reason, we could face shortages of inventory in our stores, delayed shipments to our online customers, and
harm to our reputation.
Our distribution facilities are operated by third parties. Our Columbus facility operates as our central distribution
facility and supports our entire North American business. All of our merchandise is shipped to the central distribution
facility from our vendors and is then packaged and shipped to our stores or the Richwood Facility for further
distribution to our online customers. The success of our stores and the satisfaction of our online customers depend
on their timely receipt of merchandise. The efficient flow of our merchandise requires that the third parties who
operate the distribution facilities have adequate capacity and labor to support our current level of operations and
any anticipated increased levels that may follow from the growth of our business or during peak seasons.
If we encounter labor and capacity constraints, difficulties with the distribution facilities or in our relationships with
the third parties who operate the facilities, or if either facility were to shut down for any reason, including as a result
of fire or other natural disaster, software malfunctions, economic conditions, government shutdowns, accidents,
shipping problems, or employee matters, such as work stoppages, we could face shortages of inventory, resulting in
“out of stock” conditions in our stores, incur significantly higher costs and longer lead times associated with
distributing our products to both our stores and online customers, and experience dissatisfaction from our
customers. Any of these issues could have a material adverse effect on our business and harm our reputation.
Natural disasters, fire, pandemic disease and other events beyond our control may cause business
disruption and result in unexpected adverse operating results.
Our corporate offices and other facilities on which we rely, including those of our third party vendors, are vulnerable
to damage and/or disruption from extreme weather, natural disasters, fire, pandemic disease, acts of terrorism or
war, and other unexpected events which could cause us to experience significant disruption in our business,
resulting in lost sales and productivity, and causing us to incur significant expense to repair our facilities, any of
which could have a material adverse effect on our business. In addition, there can be no assurance that our
EXPRESS, INC. | 2021 Form 10-K | 15
property insurance will be sufficient, or that insurance proceeds will be paid timely to us in the event that any of our
facilities are damaged or shut down for any reason.
Extreme or unseasonable weather conditions could have an adverse impact on our sales, inventory levels
and operating results.
Our operations have historically been seasonal, with a significant amount of net sales and operating income
occurring in the third and fourth quarters. Unseasonable weather may reduce demand for our seasonal
merchandise and severe weather conditions or changes in weather patterns may also influence consumer
preferences and fashion trends, consumer traffic and shopping habits. Any of these factors could reduce sales and
profitability and could have a material adverse effect on our financial condition and results of operations.
third-party transportation providers for substantially all of our product
We rely upon independent
shipments and are subject to increased shipping costs as well as the potential inability of our third-party
transportation providers to deliver on a timely basis.
trade policy changes or restrictions, military conflicts, acts of
We currently rely upon independent
third-party transportation providers for substantially all of our product
shipments, including shipments to and from all of our stores and to our customers. Our utilization of these delivery
services for shipments is subject to risks which may impact a shipping company’s ability to provide delivery services
that adequately meet our shipping needs, including risks related to employee strikes, labor and capacity constraints,
port security considerations,
terrorism or war,
accidents, natural disasters and inclement weather. Any interruption in service provided by our shipping companies
could cause temporary disruptions in our business, a loss of sales and profits, and other material adverse effects. In
addition, we are subject to increased shipping costs when fuel prices increase, when we use expedited means of
transportation such as air freight, and due to other economic factors affecting supply and demand within the
transportation industry, including recent inflationary pressures. If we change the shipping companies we use, we
could face logistical difficulties that could adversely affect deliveries, and we would incur costs and expend
resources in connection with such change. Moreover, we may not be able to obtain terms as favorable as those
received from our current independent third-party transportation providers which, in turn, would increase our costs.
We rely on third parties to provide us with certain key services for our business. If any of these third parties
fails to perform their obligations to us or declines to provide services to us in the future, we may suffer a
disruption to our business. Furthermore, we may be unable to provide these services or implement
substitute arrangements on a timely basis with terms favorable to us.
We rely on many different third parties to provide us with key services. For example, we rely on a third party to
operate our central distribution facility in Columbus, Ohio and to provide certain inbound and outbound
transportation and delivery services, distribution services, and customs services. We also rely on another third party
to provide us with logistics and other services related to our eCommerce operations and another third party to
provide telephone and online support to our customers. In connection with our sourcing activities, we rely on
approximately 70 buying agents and vendors to help us source products from approximately 270 manufacturing
facilities, and in connection with our marketing activities, we rely on third parties to administer our customer
database, our loyalty program, our private label credit card program, and our gift cards. We also rely on third-party
technology providers to provide us with various technology services and we rely on a third party to administer
certain aspects of our payroll. If any of these third parties fails to perform their obligations to us, increases their
prices, or declines to provide services to us in the future, we may suffer a disruption to our business, increased
costs, harm to our brand, and loss of customers, which could have a material adverse effect on our business,
results of operations, and financial position. Furthermore, we may be unable to provide these services or implement
substitute arrangements on a timely and cost-effective basis on terms favorable to us.
STRATEGIC RISK FACTORS
Our business is highly dependent upon our ability to identify and respond to new and changing fashion
trends, customer preferences, and other related factors. Our inability to identify and respond to these new
trends may lead to inventory markdowns and write-offs, which could adversely affect us and our brand
image.
Our focus on fashion-conscious young women and men means that we have a target market of customers whose
preferences cannot be predicted with certainty and are subject to frequent change. Our success depends in large
EXPRESS, INC. | 2021 Form 10-K | 16
part upon our ability to effectively identify and respond to changing fashion trends and consumer demands and to
translate market trends into desired product offerings. Our failure to identify and react appropriately to new and
changing fashion trends or tastes, to accurately forecast demand for certain product offerings, or to effectively
market or merchandise our products could lead to, among other things, excess or insufficient amounts of inventory,
markdowns, write-offs, and lower product margins, any of which could materially adversely affect our business.
Because our success depends significantly on our brand image, damage to our brand image as a result of our
failure to identify and respond to changing fashion trends could have a material negative impact on us.
We often place orders for the manufacture and purchase of merchandise, including fabric, well ahead of the season
in which that merchandise will be sold. Therefore, we are vulnerable to changes in consumer preference and
demand, and pricing shifts, between the time we design and order our merchandise and the season in which this
merchandise will be sold. There can be no assurance that we will be able to adequately and timely respond to the
preferences of our customers. The failure of any of our product offerings to appeal to our customers could have a
material adverse effect on our business, results of operations, and financial condition.
Our sales, profitability, and cash levels fluctuate on a seasonal basis and are affected by a variety of
including consumer demand, our product offerings relative to customer demand, the mix of
factors,
merchandise we offer, promotions, inventory levels, and our sales mix between stores and eCommerce.
Our sales and results of operations are affected on a seasonal basis by a variety of factors, including consumer
demand, our product offerings relative to customer demand, changes in our merchandise mix, the timing, number,
and types of promotions we offer, actions of our competitors or mall anchor tenants, the ratio of online sales to store
sales, the effectiveness of our inventory management, holiday and seasonal periods, changes in general economic
conditions and consumer spending patterns, customer traffic, and weather conditions. As a result, our results of
operations fluctuate on a quarterly basis and relative to corresponding periods in prior years, and any of these
factors could adversely affect our business and could cause our financial results to decline. For example, our third
and fourth quarter net sales are impacted by early Fall shopping trends and the holiday season. Any significant
decrease in net sales during the early Fall selling period or the holiday season would have a material adverse effect
on us. In addition, in order to prepare for these seasons, we must order and keep in stock significantly more
merchandise than we carry during other parts of the year. This inventory build-up may require us to expend cash
faster than we generate it by our operations during this period. Any unanticipated decrease in demand for our
products during these peak shopping seasons could require us to sell excess inventory at a substantial markdown.
Our profitability is negatively impacted by the shift of sales from stores, which have higher fixed costs,
to
eCommerce, which has higher variable costs. A continued shift in sales away from stores to eCommerce, which has
been accelerated as a result of the COVID-19 pandemic, could have a material adverse effect on our business,
results of operations, and financial condition.
Our business depends in part on a strong brand image. If we are unable to maintain and enhance our brand,
or our brand reputation is damaged for any reason, we may fail to attract customers and suffer a significant
decline in sales.
Our ability to maintain our reputation and meet the expectations of our customers is critical to our brand image. Our
to maintain high standards for merchandise quality and customer
reputation could be jeopardized if we fail
experience, fail to maintain high ethical, social, and environmental standards for all of our operations and activities,
or we fail to appropriately respond to concerns associated with any of the foregoing or any other concerns from our
customers. Failure to comply with local laws and regulations, to maintain an effective system of internal controls, to
protect our customer data, or to provide accurate and timely financial statement information could also hurt our
reputation. Our position or perceived lack of position on environmental, social, governance, public policy or other
similar issues,
including any actions we have taken in response to COVID-19, and any perceived lack of
transparency about those matters could also harm our reputation with consumers or investors. We also rely on
franchisees to help us maintain our brand image and any failure to do so could have a negative impact on us.
In addition, in recent years there has been increase in social media platforms and our use of social media platforms
is an important element of our omnichannel marketing efforts, which became increasingly more important during the
COVID-19 pandemic in order to stay connected to our customers. For example, we maintain various social media
accounts. Actions taken by individuals that we partner with, such as brand representatives, influencers or our
associates, that fail to represent our brand in a manner consistent with our brand image or act in a way that harms
their reputation, whether through our social media platforms or their own, could harm our brand reputation and
materially impact our business. Social media also allows for anyone to provide public feedback that could influence
perceptions of our brand and reduce demand for our merchandise.
EXPRESS, INC. | 2021 Form 10-K | 17
Damage to our reputation or loss of consumer confidence for any of these reasons, may reduce demand for our
products and have a material adverse effect on our business, financial condition, and results of operations, as well
as require additional resources to rebuild our reputation.
Consumer behavior is rapidly changing, and if we are unable to successfully adapt to consumer shopping
preferences and develop and maintain a relevant and reliable omnichannel experience for our customers,
our financial performance and brand image could be adversely affected.
Our business continues to evolve from a largely brick-and-mortar retail business to an omnichannel retail business.
While historically we interacted with our customers largely through our in-store experience, the traditional mall retail
landscape is changing and increasingly we interact with our customers across a variety of different channels,
including in-store, online at www.express.com, through mobile technologies, including the Express mobile app, and
social media. Our customers are increasingly using tablets and mobile phones to make purchases online and to
help them in making purchasing decisions when in our stores. Our customers also engage with us online, including
through social media, by providing feedback and public commentary about all aspects of our business. Consumer
shopping patterns are rapidly changing and our success depends on our ability to anticipate and implement
innovations in customer experience and logistics in order to appeal to customers who increasingly rely on multiple
channels to meet their shopping needs. If for any reason we are unable to implement our omnichannel initiatives,
provide a convenient and consistent experience for our customers across all channels, or provide our customers the
products they want, when and where they want
then our financial
performance and brand image could be adversely affected.
them at a compelling value proposition,
We depend on key executive management and may not be able to retain or replace these individuals or
recruit additional personnel, which could harm our business.
We depend on the leadership and experience of our key executive management. The loss of the services of any of
our key executives could have a material adverse effect on our business and prospects, as we may not be able to
find suitable individuals to replace them on a timely basis or without incurring increased costs, or at all. We believe
that our future success will depend greatly on our continued ability to attract and retain highly skilled and qualified
personnel. There is a high level of competition for experienced, successful talent in the retail industry. Our inability to
meet our talent requirements in the future could impair our growth and harm our business.
Our corporate strategy includes: engaging our customers and acquiring new ones, executing with precision
to accelerate sales and profitability, putting product first, and reinvigorating our brand. Failure in any of
these areas could have a material negative effect on the value of the Company.
Our ability to improve the profitability of the Company is dependent on our ability to deliver compelling new
merchandise at an attractive value, retain and acquire new customers, grow our retail business, expand our
omnichannel capabilities, provide an exceptional customer experience, optimize our store footprint, and manage our
overall cost structure. The success of these initiatives is dependent on a number of factors. For example, our ability
to deliver compelling new merchandise at an attractive value is dependent on our ability to accurately forecast
fashion trends and customer demand for products. Also, given the rapid pace of change, our ability to execute with
precision, put product first, reinvigorate our brand, and engage current customers and acquire new customers may
require significant financial investments that may not provide a return in the near term or at all.
Our ability to close stores, convert retail stores to outlet stores, or make other changes to our store fleet is limited by
the terms of our existing leases. We are also reliant upon our ability to obtain desirable store locations, negotiate
acceptable leases, and open stores on budget and in a timely manner. We historically have received landlord
allowances related to store build outs which offset certain capital expenditures we must make to open a new store.
If landlord allowances cease to be available to us in the future or are decreased, opening new stores would require
more capital outlay.
Implementing any strategic initiative presents significant potential risk that may impair our ability to achieve
anticipated operating improvements and cost reductions. These risks include, among others, higher than anticipated
costs in implementing our corporate strategy, inability to achieve expected cost savings opportunities, management
distraction from ongoing business activities, failure to maintain adequate controls and procedures while executing
our corporate strategy, inability to execute our fleet rationalization plans, competition, prolonged ramp up time,
challenges to product differentiation, damage to our reputation and brand image, workforce attrition beyond planned
levels, and our inability to gather accurate and relevant data or effectively use that data, which may impact our
strategic planning, marketing and overall decision making. Furthermore, our efforts to reduce expenses may have
EXPRESS, INC. | 2021 Form 10-K | 18
an adverse impact on our ability to achieve our strategic objectives by limiting the funding necessary to achieve
such objectives or may impact product quality or in-store customer experience as we seek to reduce costs in our
supply chain. Successful execution of our corporate strategy is dependent on our ability to achieve our strategic
objectives. Failure to achieve any of our strategic objectives could have a material adverse effect on our business
and results of operations and there can be no guarantee that we will achieve our strategic objectives or that our
corporate strategy will result in improved operating results or an increase in the value of the business.
INFORMATION TECHNOLOGY RISK FACTORS
We rely significantly on information systems and any failure, inadequacy, interruption, or security failure of
those systems could harm our ability to effectively operate our business, cause a decrease in our net sales,
increase our expenses, and harm our reputation.
Our ability to effectively manage and maintain our inventory, ship products to our stores and our customers on a
timely basis, communicate with our customers, conduct customer transactions, and otherwise operate our business
depends significantly on our information systems. The failure of our information systems to operate effectively,
problems with transitioning to upgraded or replacement systems, or a breach in security of these systems could
adversely impact our merchandise distribution, transaction processing, financial accounting and reporting, the
efficiency of our operations, and our ability to properly forecast earnings and cash requirements. We could be
required to make significant additional expenditures to remediate any such failure, problem, or breach, and may be
subject to legal claims as a result of such failure. To effectively carry out our growth strategy, we will need to
continue to invest
issues during such
funds in order
implementations may have a material adverse effect on us.
to maintain and improve our systems. Delays or
We sell merchandise through our website, www.express.com. Our online sales may be adversely affected by
interruptions in our ability to conduct sales through our website, due to failure of computer systems, failure of third-
party technology and service providers on which we rely, telecommunications failures, security breaches, denial of
service attacks, sabotage, or similar disruptions. Furthermore, functionality on our website may be limited or
interrupted to the extent technology we use becomes the subject of a patent or other intellectual property dispute
and we are unable to secure a license to use such technology or develop alternative functionality.
In addition, we may be the target of attempted cybersecurity attacks, computer viruses, malicious code, phishing
attacks, denial of service attacks and other information security threats. The risk of such information security threats
has been heightened by the substantial increase in the number of our employees who have been and continue to
work from home due to internal policies put in place in response to the COVID-19 pandemic. Additionally, external
events, like the conflict between Russia and Ukraine, can increase the likelihood of cybersecurity attacks. To date,
cybersecurity attacks have not had a material impact on our financial condition, results or business; however, we
could suffer material financial or other losses in the future and we are not able to predict the severity of these
attacks. Our risk and exposure to these matters remains heightened because of, among other things, the evolving
nature of these threats, the current global economic and political environment, our prominent size and scale, the
outsourcing of some of our business operations,
the ongoing market shortage of qualified cybersecurity
professionals, and the interconnectivity and interdependence of third parties to our systems. The techniques and
sophistication used to conduct cybersecurity attacks and breaches, as well as the sources and targets of these
attacks, change frequently and are often not recognized until such attacks are launched or have been in place for a
period of time. Accordingly, our expenditures to prevent future cybersecurity attacks or breaches may not be
successful.
The occurrence of a cybersecurity attack, breach, unauthorized access, misuse, computer virus, or other malicious
code or other cybersecurity event could jeopardize or result in the unauthorized disclosure, gathering, monitoring,
misuse, corruption, loss, or destruction of confidential and other information that belongs to us, our employees, our
customers, our counterparties, or third-party service providers that is processed and stored in, and transmitted
through, our computer systems and networks. The occurrence of such an event could also result in damage to our
software, computers or systems, or otherwise cause interruptions or malfunctions in our counterparties’ or third
parties’ operations. This could result in significant losses, loss of customers and business opportunities, reputational
damage, litigation, regulatory fines, penalties or intervention, reimbursement or other compensatory costs, or
otherwise adversely affect our business, financial condition or results of operations. Employee error, malfeasance,
or other errors in the storage, use, or transmission of any such information could result in a disclosure of confidential
information to third parties outside of our network. Any of these events could result in litigation and legal liability,
EXPRESS, INC. | 2021 Form 10-K | 19
harm to our reputation, loss of confidence in our ability to protect sensitive information, a distraction to our business,
and the need to divert resources to remedy the issues, any of which could have a material adverse effect on our
business.
We may be exposed to risks and costs associated with the loss of customer information that would cause
us to incur unexpected expenses, loss of revenues, and reputational harm.
We collect customer data, including encrypted and tokenized credit card information, in our stores and online. For
our sales channels to function successfully, we and third parties involved in processing customer transactions for us
must be able to transmit confidential information, including credit card information, securely over public networks.
While we have measures in place designed to prevent a breach or unauthorized use or disclosure of customer data
and other sensitive personal information, we cannot guarantee that any of our security measures or the security
measures of third parties with whom we work will effectively prevent others from obtaining unauthorized access to
our customers’ information or other personally identifiable information. Further, the standards for systems currently
used for transmission and approval of electronic payment transactions, and the technology utilized in electronic
payment themselves, all of which can put electronic payment data at risk, are determined and controlled by the
payment card industry, not by us. If someone is able to circumvent our data security measures or that of third
parties with whom we do business, including our franchisees, he or she could destroy or steal valuable information
or disrupt our operations. If such a breach were to occur, customers could lose confidence in our ability to secure
their information and choose not to purchase from us. Any unauthorized use of or access to customer information
could expose us to data loss or manipulation, litigation and legal liability, and could seriously disrupt operations,
negatively impact our marketing capabilities, cause us to incur significant expenses to notify customers of the
breach and for other remediation activities, and harm our reputation and brand, any of which could adversely affect
our financial condition and results of operations.
In addition, state, federal, and foreign governments are increasingly enacting laws and regulations to protect
consumers against identity theft and consumer privacy. Many of these laws and regulations are subject to uncertain
application, interpretation or enforcement standards that could result in claims, changes to our business practices,
data processing and security systems, penalties, increased operation costs or other impacts on our business. These
likely increase the costs of doing business, and if we fail to implement appropriate
laws and regulations will
procedures, security measures, or detect and provide prompt notice of unauthorized access as required by some of
these laws and regulations, we could be subject to potential claims for damages and other remedies, government
enforcement actions, liability for monetary damages, fines and/or criminal prosecution, all of which could adversely
affect our business and results of operations.
FINANCIAL RISK FACTORS
We have, and will continue to have, significant lease obligations. We are subject to risks associated with
leasing substantial amounts of space, including future increases in occupancy costs and the need to
generate significant cash flow to meet our lease obligations.
We have, and will continue to have, significant lease obligations. We lease all of our store locations, our corporate
offices, and our central distribution facility. We typically occupy our stores under operating leases with options to
renew for additional multi-year periods. In the future, we may not be able to negotiate favorable lease terms for the
most desired store locations. Our inability to do so may cause our occupancy costs to be higher in future years or
may force us to close stores in desirable locations.
Some of our leases have early cancellation clauses, which permit the lease to be terminated by us or the landlord if
certain sales levels are not met in specific periods or if the center does not meet specified occupancy standards. In
addition to future minimum lease payments, some of our store leases provide for additional rental payments based
on a percentage of net sales, or “percentage rent,” if sales at the respective stores exceed specified levels, as well
as the payment of common area maintenance charges, real property insurance, energy costs, and real estate taxes.
Many of our lease agreements have defined escalating rent provisions over the initial term and any extensions.
We depend on cash flow from operations to pay our lease expenses. If our business does not generate sufficient
cash flow from operating activities to fund these expenses, due to continued decreases in mall traffic, the highly
competitive retail environment, or other factors, we may not be able to service our lease expenses, which could
materially harm our business. Furthermore, the significant cash flow required to satisfy our obligations under the
leases increases our vulnerability to adverse changes in general economic, industry, and competitive conditions,
EXPRESS, INC. | 2021 Form 10-K | 20
and could limit our ability to fund working capital, incur indebtedness, and make capital expenditures or other
investments in our business.
If an existing or future store is not profitable, and we decide to close it, we may nonetheless be committed to
perform our obligations under the applicable lease including, among other things, paying the base rent for the
balance of the lease term. Moreover, even if a lease has an early cancellation clause, we may not satisfy the
contractual requirements for early cancellation under that lease. As of January 29, 2022, our minimum annual rental
obligations under long-term lease arrangements for 2022 and 2023 were $222.7 million and $209.4 million,
respectively. Our inability to enter into new leases or renew existing leases on terms acceptable to us or be released
from our obligations under leases for stores that we close could materially adversely affect us.
The terms of our Amended Revolving Credit Facility and Term Loan Facility may restrict our current and
future operations, which could adversely affect our ability to respond to changes in our business and to
manage our operations.
We are party to an Asset Based Loan Credit Agreement ("Amended Revolving Credit Facility") that allows us to
borrow up to $250.0 million, subject to certain terms and conditions contained in the agreement. As of January 29,
2022, we had $145.8 million available for borrowing under our Amended Revolving Credit Facility. In addition, we
are party to an Asset-Based Term Loan Agreement ("Term Loan Facility") that provides for a “first in, last out” term
loan in an amount equal to $90.0 million (the “FILO Term Loan”) and a delayed draw term loan facility in an amount
equal to $50.0 million (the “DDTL”). As of January 29, 2022, the Company had $90.0 million in borrowings
outstanding under the Term Loan Facility and $6.7 million in borrowings outstanding under the DDTL. The Term
Loan Facility is a senior secured obligation that ranks equally with the Loan Parties’ other senior secured
obligations.
The terms of the Amended Revolving Credit Facility and Term Loan Facility contain, and any agreements governing
any future indebtedness may contain, financial restrictions on us and our ability to, among other things:
•
place liens on our assets;
• make investments other than permitted investments;
•
•
incur additional indebtedness;
prepay certain indebtedness;
• merge, consolidate or dissolve;
•
•
•
•
•
sell assets;
engage in transactions with affiliates;
change the nature of our business;
hold cash above certain limits;
change our fiscal year or organizational documents; and
• make other restricted payments, including share repurchases and dividends.
In addition, we are required to maintain, certain levels of Excess Availability as calculated in accordance with the
Amended Revolving Credit Facility.
A failure by us to comply with the covenants or to maintain the required financial ratios contained in the Amended
Revolving Credit Facility or the Term Loan Facility could result in an event of default under such indebtedness,
which could adversely affect our ability to respond to changes in our business and manage our operations. Upon
the occurrence of an event of default, the lenders under our Amended Revolving Credit Facility or Term Loan
Facility could elect to declare all amounts outstanding to be due and payable and exercise other remedies as set
forth in the agreements. There could be potentially significant negative consequences on our financial condition and
results of operations as a result of our debt, including limitations on our ability to obtain additional debt or equity
financing for working capital, capital expenditures, service line development, acquisitions and general corporate or
other purposes, as well as limitations on our ability to execute business development and other activities to support
our corporate strategies. See Note 6 to our Consolidated Financial Statements included elsewhere in this Annual
Report on Form 10-K for further information relating to our indebtedness.
EXPRESS, INC. | 2021 Form 10-K | 21
If we are unable to maintain compliance with the covenants contained in our current credit facilities or our
inventory levels are reduced significantly, we may be unable to make additional borrowings on any
undrawn amounts and may be required to repay our then outstanding debt under the facilities. In addition,
global economic conditions may make it more difficult to access new credit facilities.
Our liquidity position is, in part, dependent upon our ability to borrow under our Amended Revolving Credit Facility
and Term Loan Facility. The amount we are able to borrow is dependent on our inventory and receivable position.
On March 17, 2020, we drew down $165.0 million under the Amended Revolving Credit Facility. In addition, in
January 2021, we borrowed $90.0 million under our Term Loan Facility and repaid $59.0 million of our Amended
Revolving Credit Facility. During 2021, we borrowed $50.0 million on the DDTL and repaid $43.3 million upon
receipt of portion of our Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") receivable. We also
repaid a net additional $71.1 million on the Amended Revolving Credit Facility. Decreases in our inventory position
or receivable balances could limit the amount we are able to borrow or could also cause us to violate our minimum
excess availability covenant, in addition to other customary affirmative and negative covenants, including those
which (subject
incur liens; make
investments; engage in mergers, consolidations, liquidations or acquisitions; dispose of assets; make distributions
on or repurchase equity securities; hold cash over certain limits; engage in transactions with affiliates; and prohibit
us, with certain exceptions, from engaging in any line of business not related to our current line of business. A failure
to comply with the financial covenants under our credit facility would give rise to an event of default under the terms
of the credit facility, allowing the lenders to refuse to lend additional available amounts to us and giving them the
right to terminate the facility and accelerate repayment of any outstanding debt under the credit agreements.
to certain exceptions and dollar thresholds) limit our ability to incur debt;
We may recognize impairment on long-lived assets.
Our long-lived assets, primarily store assets and right of use assets, are subject to periodic testing for impairment.
Store assets are reviewed using factors including, but not limited to, our future operating plans, current rental rates
and projected future cash flows. Failure to achieve our future operating plans, our cost savings initiatives or
generate sufficient levels of cash flow at our stores, in addition to significant negative industry or general economic
trends and declining market rents, could result in impairment charges on long-lived assets, which could have a
material adverse effect on our financial condition or results of operations.
REGULATORY AND LEGAL RISK FACTORS
There are claims made against us from time to time that can result in litigation or regulatory proceedings
which could distract management from our business activities and result in significant liability.
We face the risk of litigation and other claims against us. Litigation and other claims arise in the ordinary course of
our business and include commercial disputes, employment related claims, including wage and hour claims,
intellectual property disputes, such as trademark, copyright, and patent infringement disputes, consumer protection
and privacy matters, product-related allegations, and premises liability claims. See Note 11 to our Consolidated
Financial Statements included elsewhere in this Annual Report on Form 10-K. The Company has been named as a
defendant in four separate representative actions in the State of California – one of which has since settled –
alleging violations of the California state wage and hour statutes and other labor standards.
Any claims could result in litigation against us and could also result in regulatory proceedings being brought against
us by various federal and state agencies that regulate our business, including the United States Equal Employment
Opportunity Commission, the Federal Trade Commission, or the Consumer Product Safety Commission. Often
these cases raise complex factual and legal issues, which are subject to risks and uncertainties and could require
significant management time and divert management attention away from our business operations. Litigation and
liability, and
other claims and regulatory proceedings against us could result
injunctions against us or restrictions placed upon us, which could disrupt our operations, preclude us from selling
products, or otherwise have a material adverse effect on our operations, financial results, and reputation.
in unexpected expenses,
legal
Changes in laws, including employment laws and laws related to our merchandise, could make conducting
our business more expensive or otherwise change the way we do business.
We are subject to numerous laws and regulations, including labor and employment, product safety, customs,
consumer protection, privacy, zoning laws and ordinances, intellectual property laws, and other laws that regulate
retailers generally or govern the import and export of goods, advertising and promotions, the sale of merchandise,
EXPRESS, INC. | 2021 Form 10-K | 22
product content, and the operation of stores, our website, and warehouse facilities. If these regulations were to
change or were violated by our management, employees, vendors, or buying agents, the costs of certain goods
could increase, or we could experience delays in shipments of our goods, be subject to damages, fines or penalties,
or suffer reputational harm, which could reduce demand for our merchandise and hurt our business and results of
operations.
In addition to increased regulatory compliance requirements, changes in laws could make ordinary conduct of our
business more expensive or require us to change the way we do business. For example, changes in federal and
state minimum wage laws could continue to raise the wage requirements for certain of our employees. Other laws
related to employee benefits and treatment of employees, including laws related to limitations on employee hours,
work scheduling, supervisory status, leaves of absence, mandated health benefits, or overtime pay, could also
negatively impact us, by increasing administrative compensation and benefits costs.
Additionally, concern over climate change may result in new or additional legislative and regulatory requirements to
reduce or mitigate the effects of climate change on the environment, which could result in future tax, transportation,
inventory and utility increases, which could have a material adverse effect our business. Moreover, changes in
product safety or other consumer protection laws, privacy laws, environmental laws, and other regulations, could
lead to increased compliance costs. It is often difficult for us to plan and prepare for potential changes to applicable
laws and future compliance costs related to such changes could be material to us.
We may be unable to protect our trademarks or other intellectual property rights, may be precluded from
using trademarks in certain countries, and may face claims from third parties for intellectual property
infringement, any of which could harm our business.
We rely on certain trademark registrations and common law trademark rights to protect the distinctiveness of our
brand. However, there can be no assurance that the actions we have taken to establish and protect our trademarks
will be adequate to prevent imitation of our trademarks by others or to prevent others from claiming that sales of our
products infringe, dilute, or otherwise violate third-party trademarks or other proprietary rights that could block sales
of our products.
The laws of certain foreign countries may not protect the use of unregistered trademarks to the same extent as do
the laws of the United States. As a result, international protection of our brand may be limited, and our right to use
our trademarks outside the United States could be impaired. Other persons or entities may have rights to
trademarks that contain portions of our marks or may have registered similar or competing marks for apparel and/or
accessories in foreign countries. There may also be other prior registrations of trademarks identical or similar to our
trademarks in other foreign countries. Accordingly, it may be possible for others to prevent the sale or manufacture
of our branded goods or the operation of Express brick-and-mortar or online stores in certain foreign countries. Our
inability to register our trademarks or purchase or license the right to use the relevant trademarks in these
jurisdictions could limit our ability to penetrate new markets in jurisdictions outside the United States.
Litigation may be necessary to protect and enforce our trademarks and other intellectual property rights, or to
defend against claims by third parties alleging that we infringe, dilute, or otherwise violate third-party trademarks or
other intellectual property rights. Any litigation or claims brought by or against us, whether with or without merit, and
whether successful or not, could result in substantial costs and diversion of our resources, which could have a
material adverse effect on our business, financial condition, results of operations, or cash flows. Any intellectual
property litigation or claims against us could result in the loss or compromise of our intellectual property rights, could
subject us to significant liabilities, require us to seek licenses on unfavorable terms, if available at all, prevent us
from manufacturing or selling certain products, limit our ability to market or sell to our customers using certain
methods or technologies, and/or require us to redesign or re-label our products or rename our brand, any of which
could have a material adverse effect on our business, financial condition, results of operations, or cash flows.
Changes in tax law, tax requirements, results of tax audits, and other factors, including timing of tax refund
receipts, may cause fluctuations in our effective tax rate and operating results.
We are subject to income tax in local, national, and international
jurisdictions and we currently have significant
income tax refunds that are receivable from the U.S. government based on provisions in the CARES Act. Any
legislative changes to the CARES Act or significant delays in receiving our tax refund could adversely impact our
financial position and results. In addition, our tax returns and other tax matters are subject to examination by the
Internal Revenue Service ("IRS") and other tax authorities and governmental bodies. These examinations may
challenge certain of our tax positions, such as the timing and amount of deductions and allocations of taxable
EXPRESS, INC. | 2021 Form 10-K | 23
income to various jurisdictions. The results of any tax audits could adversely affect our financial results.
Furthermore, our effective tax rate in a given period may be materially impacted by changes in the mix and level of
earnings by taxing jurisdiction and deductibility of stock based compensation.
Our products are subject to import and excise duties and/or sales or value-added taxes in many jurisdictions. Major
changes in tax law, policy or trade relations, including but not limited to the foregoing, as well as the imposition of
unilateral tariffs on imported products, could have a material adverse effect on our business, results of operations
and liquidity.
If we fail to establish and maintain adequate internal controls over financial reporting, we may not be able to
report our financial results in a timely and reliable manner, which could harm our business and impact the
value of our securities.
We depend on our ability to produce accurate and timely financial statements in order to run our business. If we fail
to do so, our business could be negatively affected and our independent registered public accounting firm may be
unable to attest to the fair presentation of our Consolidated Financial Statements included elsewhere in this Annual
Report on Form 10-K in accordance with U.S. generally accepted accounting principles (“GAAP”) and the
effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley
Act. Effective internal controls are necessary for us to provide reliable financial reports and to effectively prevent
fraud. If we cannot provide reliable financial reports and effectively prevent fraud, our reputation and operating
results could be harmed. Even effective internal controls have inherent limitations, including the possibility of human
error, the circumvention or overriding of controls, or fraud. Therefore, even effective internal controls can provide
only reasonable assurance with respect to the preparation and fair presentation of financial statements. In addition,
projections of any evaluation of effectiveness of internal control over financial reporting in future periods are subject
to the risk that the control may become inadequate because of changes in conditions or a deterioration in the
degree of compliance with the policies or procedures.
If we fail to maintain adequate internal controls, including any failure to implement new or improved controls, or if we
experience difficulties in their execution, we could fail to meet our reporting obligations, and there could be a
material adverse effect on our business and financial results. In the event that our current control practices
deteriorate, we may be unable to accurately report our financial results or prevent fraud, and investor confidence
and the market price of our stock may be adversely affected.
STOCK OWNERSHIP RISK FACTORS
Our ability to pay dividends and repurchase shares is subject to restrictions in our Amended Revolving
Credit Facility, Term Loan Facility, results of operations, and capital requirements.
Any determination to pay dividends or repurchase additional shares in the future will be at the discretion of our
Board of Directors and will depend upon our results of operations, our financial condition, restrictions imposed by
applicable law, and other factors our Board of Directors deems relevant. Our ability to pay dividends on or
repurchase our common stock is limited by the terms of the Amended Revolving Credit Facility and Term Loan
Facility and may be further restricted by the terms of any future debt or preferred securities. Additionally, because
we are a holding company, our ability to pay dividends on our common stock or repurchase shares is limited by
restrictions on the ability of our subsidiaries to pay dividends or make distributions to us, including restrictions under
the terms of the Amended Revolving Credit Facility and Term Loan Facility.
Anti-takeover provisions in our charter documents and Delaware law may discourage or delay acquisition
attempts for us that our stockholders might consider favorable.
Our certificate of incorporation and bylaws contain provisions that may make the acquisition of the Company or a
change in our management or Board of Directors more difficult without the approval of our Board of Directors. These
provisions do the following:
•
•
establish a classified Board of Directors so that not all members of our Board of Directors are elected at one
time;
authorize the issuance of undesignated preferred stock, the terms of which may be established, and the
shares of which may be issued without stockholder approval, and which may include super voting, special
approval, dividend, or other rights or preferences superior to the rights of the holders of common stock;
EXPRESS, INC. | 2021 Form 10-K | 24
•
•
prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a
meeting of our stockholders; and
establish advance notice requirements for nominations for elections to our Board of Directors or for
proposing matters that can be acted upon by stockholders at stockholder meetings.
Our certificate of incorporation also contains a provision that provides us with protections similar to Section 203 of
the Delaware General Corporation Law, that will prevent us from engaging in a business combination with a person
who acquires at least 15% of our common stock for a period of 3 years from the date such person acquired such
common stock, unless Board or stockholder approval
is obtained prior to the acquisition. These anti-takeover
provisions and other provisions under Delaware law could discourage, delay, or prevent a transaction involving a
change in control of our company, even if doing so would benefit our stockholders. These provisions could also
discourage proxy contests and make it more difficult for stockholders to elect directors of their choosing and to
cause us to take other corporate actions desired by stockholders.
As a result of the extreme volatility of the market prices and trading volume that our shares of common
stock have recently experienced, and may in the future again experience, purchasers of our common stock
could incur substantial losses.
The extreme volatility of the market prices and trading volume that our shares of common stock have recently
experienced, and may continue to experience could cause purchasers of our common stock to incur substantial
losses. Significant fluctuations in the market price of our common stock have been accompanied by reports of
strong and atypical retail investor interest, including on social media and online forums. The market volatility and
trading patterns we have experienced create several risks for investors, including the following:
•
•
•
•
•
the market price of our common stock may experience rapid and substantial
increases or decreases
unrelated to our operating performance, financial condition or business prospects, or macro or industry
fundamentals, and substantial increases may be significantly inconsistent with the risks and uncertainties
that we continue to face;
investors
factors in the public trading market for our common stock may include the sentiment of retail
(including as may be expressed on financial trading and other social media sites and online forums), the
direct access by retail
investors to broadly available trading platforms, the amount and status of short
interest in our securities, access to margin debt, trading in options and other derivatives on our common
stock and any related hedging and other trading factors;
our market capitalization, as implied by various trading prices, has reflected valuations that diverge
significantly from those seen prior to recent volatility and that are significantly higher than our market
capitalization immediately prior to such recent volatility, and to the extent these valuations reflect trading
dynamics unrelated to our financial performance or business prospects, purchasers of our common stock
could incur substantial losses if there are declines in market prices driven by a return to earlier valuations;
to the extent volatility in our common stock is caused by a “short squeeze” in which coordinated trading
activity causes a spike in the market price of our common stock as traders with a short position make
inflated prices
market purchases to avoid or to mitigate potential
unrelated to our financial performance or prospects, and may thereafter suffer substantial losses as prices
decline once the level of short-covering purchases has abated;
investors may purchase at
losses,
if the market price of our common stock declines, you may be unable to resell your shares at or above the
price at which you acquired them. We cannot assure you that the equity issuance of our common stock will
not fluctuate or decline significantly in the future, in which case you could incur substantial losses.
We may continue to incur rapid and substantial increases or decreases in our stock price in the foreseeable
future that may not coincide in timing with the disclosure of news or developments by or affecting us.
Accordingly, the market price of our shares of common stock may fluctuate dramatically, and may decline
rapidly, regardless of any developments in our business.
Overall, there are various factors, many of which are beyond our control, that could negatively affect the market
price of our common stock or result in fluctuations in the price or trading volume of our common stock, including: (1)
the ongoing impacts and developments relating to the COVID-19 pandemic; (2) actual or anticipated variations in
our annual or quarterly results of operations, including our earnings estimates and whether we meet market
expectations with regard to our earnings; (3) our current inability to pay dividends or other distributions; (4)
industry, which may be
publication of research reports by analysts or others about us or the specialty retail
EXPRESS, INC. | 2021 Form 10-K | 25
unfavorable, inaccurate, inconsistent or not disseminated on a regular basis; (5) changes in market interest rates
that may cause purchasers of our shares to demand a different yield; (6) changes in market valuations of similar
companies; (7) market reaction to any additional equity, debt or other securities that we may issue in the future, and
which may or may not dilute the holdings of our existing stockholders; (8) additions or departures of key personnel;
(9) actions by institutional or significant stockholders; (10) short interest in our stock and the market response to
such short interest; (11) the dramatic increase in the number of individual holders of our stock and their participation
in social media platforms targeted at speculative investing; (12) speculation in the press or investment community
about our company or industry; (13) strategic actions by us or our competitors, such as acquisitions or other
investments; (14) legislative, administrative, regulatory or other actions affecting our business, our industry,
including positions taken by the IRS; (15) investigations, proceedings, or litigation that involve or affect us; (16) the
occurrence of any of the other risk factors included or incorporated by reference in this prospectus supplement; and
(17) general market and economic conditions.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2. PROPERTIES.
HOME OFFICE, DISTRIBUTION CENTER, DESIGN STUDIO AND PHOTO STUDIO
The lease for our corporate headquarters in Columbus, Ohio and the lease for our distribution facility in Columbus,
Ohio are both scheduled to terminate in January 2026. Either lease may be terminated by either party upon 36
months prior notice provided that the lease term may not end between the months of October and February.
Termination of either lease will cause the termination of the other lease as well.
The lease for our design offices in New York City expires in July 2026. The lease of our photo studio in downtown
Columbus, Ohio expires in December 2024.
STORES
All of our 561 stores are leased from third parties. See "Item 1. Business - Stores" for further information on the
locations of our stores.
We may from time to time lease new facilities or vacate existing facilities as our operations require, including in
connection with opening new stores.
ITEM 3. LEGAL PROCEEDINGS.
Information relating to legal proceedings is set forth in Note 11 to our Consolidated Financial Statements included
elsewhere in this Annual Report on Form 10-K and is incorporated herein by reference.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
EXPRESS, INC. | 2021 Form 10-K | 26
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES.
Our common stock trades on the NYSE under the symbol "EXPR". As of February 26, 2022,
there were
approximately 11 holders of record of our common stock. The number of holders of record is based upon the actual
number of holders registered at such date and does not include holders of shares in “street name,” or persons,
partnerships, associates, corporations, or other entities identified in security position listings maintained by
depositories.
DIVIDENDS
We did not pay any dividends in 2021 or 2020. Our ability to pay dividends is restricted by the terms of our
Amended Revolving Credit Facility and our Term Loan Facility. Any future determination to pay dividends will be
made at the discretion of our Board of Directors and will depend on our results of operations, restrictions contained
in our Amended Revolving Credit Facility and our Term Loan Facility or future financing arrangements, and other
factors as deemed relevant. For more information about the restrictions in our Amended Revolving Credit Facility
and our Term Loan Facility, see Note 6 to our Consolidated Financial Statements included elsewhere in this Annual
Report on Form 10-K.
SHARE REPURCHASES
The following table provides information regarding the purchase of shares of our common stock made by or on
behalf of us or any "affiliated purchaser" as defined in Rule 10b-18(a)(3) under the Exchange Act of 1934, during
each month of the quarterly period ended January 29, 2022:
Month
Total Number of
Shares Purchased (1)
Average Price Paid
per Share
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
Approximate Dollar
Value of Shares
that May Yet be
Purchased under
the Plans or
Programs (2)
October 31, 2021 - November 27, 2021
November 28, 2021 - January 1, 2022
January 2, 2022 - January 29, 2022
Total
(in thousands, except per share amounts)
$
$
$
2
4
6
12
4.31
3.12
3.15
— $
— $
— $
—
34,215
34,215
34,215
1. Represents shares purchased in connection with employee tax withholding obligations under the Second Amended and Restated
Express, Inc. 2018 Incentive Compensation Plan (the “2018 Plan”). Refer to Note 8 of our Consolidated Financial Statements included
elsewhere in this Annual Report on Form 10-K for further details of the 2018 Plan.
2. On November 28, 2017, the Board approved a share repurchase program that authorized the Company to repurchase up to $150.0
million of the Company’s outstanding common stock using available cash. The Company may repurchase shares on the open market,
including through Rule 10b5-1 plans, in privately negotiated transactions, through block purchases, or otherwise in compliance with
applicable laws, including Rule 10b-18 of the Exchange Act of 1934. The timing and amount of stock repurchases will depend on a
variety of factors, including business and market conditions as well as corporate and regulatory considerations. The share repurchase
program may be suspended, modified, or discontinued at any time, and the Company has no obligation to repurchase any amount of
its common stock under the program.
EXPRESS, INC. | 2021 Form 10-K | 27
PERFORMANCE GRAPH
The following graph compares the changes in the cumulative total return to holders of our common stock with that of
the S&P 500 Index and the Dow Jones U.S. Apparel Retailers Index for the same period. The comparison of the
cumulative total returns for each investment assumes that $100 was invested in our common stock and the
respective indexes on January 28, 2017 and includes reinvestment of all dividends. The plotted points are based on
the closing price on the last trading day of each fiscal year.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
$250
$200
s
r
a
l
l
o
D
$150
$100
$50
$0
28-Jan-17
3-Feb-18
2-Feb-19
1-Feb-20
30-Jan-21
29-Jan-22
Period Ending
Express, Inc.
S&P 500
DJ US Retail Apparel
Express, Inc.
S&P 500 Index
Dow Jones U.S. Apparel Retailers
Index
$
$
$
1/28/17
2/3/18
2/2/19
2/1/20
1/30/21
1/29/22
100.00 $
65.58 $
52.07 $
39.55 $
59.17 $
28.60
100.00 $
120.37 $
117.95 $
140.56 $
161.86 $
193.14
100.00 $
109.41 $
118.60 $
131.47 $
139.65 $
150.90
The Performance Graph in this Item 5 shall not be deemed "soliciting material" or "filed" with the SEC or subject to
Regulation 14A or 14C under the Exchange Act of 1934 or to the liabilities of Section 18 of the Exchange Act of
1934 and will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as
amended, or the Exchange Act of 1934, except to the extent we specifically incorporate it by reference into such a
filing.
ITEM 6.
REMOVED AND RESERVED.
EXPRESS, INC. | 2021 Form 10-K | 28
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis summarizes the significant factors affecting the consolidated operating
results, financial condition, liquidity, and cash flows of the Company as of and for the periods presented below. The
following discussion and analysis should be read in conjunction with our Consolidated Financial Statements and
the related Notes included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking
statements that are based on the beliefs of our management, as well as assumptions made by, and information
currently available to, our management. Actual results could differ materially from those discussed in or implied by
forward-looking statements as a result of various factors, including those discussed below and elsewhere in this
Annual Report on Form 10-K, particularly in the section entitled “Risk Factors.” All references herein to "2021" and
"2020" refer to the 52-week periods ended January 29, 2022 and January 30, 2021, respectively.
This section of this Annual Report on Form 10-K generally discusses 2021 and 2020 items and year-to-year
comparisons between 2021 and 2020. Discussions of 2019 items and year-to-year comparisons between 2020 and
2019 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal
year ended January 30, 2021, which was filed with the Securities and Exchange Commission on March 25, 2021.
Our management's discussion and analysis of financial condition and results of operations is presented in the
following sections:
Overview
COVID-19 Pandemic
Financial Details
Outlook
How We Assess the Performance of Our Business
Results of Operations
Liquidity and Capital Resources
Critical Accounting Estimates
OVERVIEW
Page
29
29
30
30
31
34
37
40
Grounded in versatility and powered by a styling community, Express is a modern, multichannel apparel and
accessories brand whose purpose is to Create Confidence & Inspire Self-Expression. Launched in 1980 with the
idea that style, quality and value should all be found in one place, Express has been a part of some of the most
important and culture-defining fashion trends. The Express Edit design philosophy ensures that the brand is always
"of the now" so people can get dressed for every day and any occasion knowing that Express can help them look
the way they want to look and feel the way they want to feel. We operate 561 retail and factory outlet stores in the
United States and Puerto Rico, the express.com online store and the Express mobile app.
COVID-19 PANDEMIC
In March 2020, the World Health Organization declared the novel strain of coronavirus ("COVID-19") a global
pandemic and recommended containment and mitigation measures. Our business operations and financial
performance have been materially impacted by the COVID-19 pandemic. In March 2020, we temporarily closed all
of our retail and factory outlet stores and offices, and as a result all store associates and a number of home office
employees were furloughed. As mandated shutdowns and stay-at-home orders went into effect across the country,
we experienced an immediate reduction in sales levels compared to the prior year. We continued to be materially
impacted by COVID-19 throughout fiscal year 2020, even after all of our stores re-opened, as customer traffic
continued to be depressed, especially in our retail stores, and two of our key categories, wear to work and occasion
wear, saw significant declines in demand.
EXPRESS, INC. | 2021 Form 10-K | 29
Beginning in the first quarter of 2021 and continuing throughout the balance of 2021, we have seen improved trends
coinciding with the vaccination rollout and the lifting of COVID-19 related restrictions, especially in areas where
COVID-19 guidelines were less restrictive. We continue to monitor and comply with all governmental regulations
imposed.
Additionally, COVID-19 has contributed to disruptions and rising costs to global supply chains. Although we have
successfully managed these challenges thus far, our ability to continue to replenish our inventory to meet continued
levels of consumer demand could be impacted by further delays or disruptions. We expect these impacts to
information
continue for as long as the global supply chain is experiencing these challenges. For additional
regarding risks related to the COVID-19 pandemic, see “Item 1A. Risk Factors: Operational and Industry Risk
Factors”.
FINANCIAL DETAILS FOR 2021
■ Net sales increased 55% to $1.9 billion
■ Comparable sales increased 37%
■ Comparable retail sales (includes both retail stores and eCommerce sales) increased 41%
■ Comparable outlet sales increased 27%
■ Gross margin percentage increased 3,030 basis points to 29.9%
■ Operating income increased $456.0 million to $0.8 million
■ Net loss decreased $391.0 million to a loss of $14.4 million
■ Diluted earnings per share increased $6.05 to a loss of $0.22
OUTLOOK
Our comparable sales accelerated in each of the second, third, and fourth quarters of 2021 and we delivered
substantial gross margin expansion. We delivered positive operating income and operating cash flow for the year.
The EXPRESSway Forward strategy has effectively galvanized our organization, advanced our brand, and
accelerated our business. We believe our 2021 results demonstrate the power of this strategy.
The following defines each pillar of the EXPRESSway Forward strategy and provides an update on each priority:
PRODUCT
BRAND
CUSTOMER
EXECUTION
Product
We completely reimagined our product, bringing more style, more versatility, and more newness across our entire
assortment. We established a design and merchandising philosophy called the Express Edit that supports our brand
promise: “to edit the best of now for real
life versatility”. We are designing best-in-class, modern product at
incredible value, and gaining market share across some of the most significant, volume-driving categories.
Express customers have always appreciated newness and relied on us to help them be 'of the now', so we have a
consistent flow of fashion throughout the year in each category.
Our occasion-based categories that have historically been our strength, and were disproportionately impacted by
the pandemic, accelerated significantly as the year progressed. Dresses and men’s suits were particularly strong.
The foundation of every modern wardrobe is denim, and we completely reinvented our offering. We now offer a wide
variety of fits, leg shape, innovative fabrics, colors and washes. For the last nine months of 2021, our denim had its
best performance in recent history.
We introduced Express Essentials which are foundational pieces that help people build more flexible, versatile
wardrobes. Our men’s polos and graphic t-shirts also delivered their best results in recent history.
EXPRESS, INC. | 2021 Form 10-K | 30
Brand
Restoring the relevance of the Express brand is a top priority. We have made good progress toward reinvigorating
our brand, clarifying our message and articulating a clear, compelling brand purpose, to create confidence and
inspire self-expression.
We have reinvented our marketing model, optimized the investment and allocation of our marketing spend, evolved
to reflect where and how content is being consumed, and we are leveraging more social media platforms. Important
indicators of the health and vitality of our brand, including brand tracking measures, social media engagement, and
positive customer feedback, all continue to trend positively.
We have increased our spending on customer acquisition while decreasing spending related to store-wide and site-
wide promotions, and reinvested those markdown dollars into marketing programs and activations that we believe
drive customer traffic, engagement and conversion at much higher profits.
Customer
We are successfully engaging existing customers, acquiring new ones, and improving the quality of our customer
file. Our Express Insider loyalty program brought in 2.7 million new customers and reactivated 2.2 million lapsed
customers since its relaunch in the first quarter of 2021. We ended 2021 with the highest number of active loyalty
members in the Company's history.
Execution
Outstanding execution helped accelerate sales across all channels. We refined our go-to-market process, advanced
our multi-channel capabilities and identified meaningful operational and financial efficiencies. We have right sized
our fleet, closed nearly 100 stores, and begun to execute a fleet optimization strategy. We effectively navigated
supply chain challenges and applied strong financial discipline to both expenses and investments.
HOW WE ASSESS THE PERFORMANCE OF OUR BUSINESS
In assessing the performance of our business, we consider a variety of performance and financial measures. These
key measures include net sales, comparable sales, eCommerce demand, transactions, cost of goods sold, buying
and occupancy costs, gross profit/(loss)/gross margin, and selling, general, and administrative expenses. The
following describes and discusses these measures.
Net Sales
Description
Revenue from the sale of merchandise, less returns and discounts, as well as shipping and handling revenue related to
eCommerce, revenue from the rental of our LED sign in Times Square, gift card breakage, revenue earned from our private
label credit card agreement, and revenue earned from our franchise agreements.
Discussion
Our business is seasonal, and we have historically realized a higher portion of our net sales in the third and fourth quarters, due
primarily to the impact of the holiday season. Generally, approximately 45% of our annual net sales occur in the Spring season
(first and second quarters) and 55% occur in the Fall season (third and fourth quarters).
EXPRESS, INC. | 2021 Form 10-K | 31
Comparable Sales
Description
Comparable sales is a measure of the amount of sales generated in a period relative to the amount of sales generated in the
comparable prior year period. Comparable sales for 2021 was calculated using the 52-week period ended January 29, 2022 as
compared to the 52-week period ended January 30, 2021.
Comparable retail sales includes:
•
•
Sales from retail stores that were open 12 months or more as of the end of the reporting period
eCommerce shipped sales
Comparable outlet sales includes:
•
Sales from outlet stores that were open 12 months or more as of the end of the reporting period, including conversions
Comparable sales excludes:
•
•
•
Sales from stores where the square footage has changed by more than 20% due to remodel or relocation activity
Sales from stores in a phased remodel where a portion of the store is under construction and therefore not productive
selling space
Sales from stores where the store cannot open due to weather damage or other catastrophes, including pandemics
Discussion
Our business and our comparable sales are subject, at certain times, to calendar shifts, which may occur during key selling
periods close to holidays such as Easter, Thanksgiving, and Christmas, and regional fluctuations for events such as sales tax
holidays. We believe comparable sales provides a useful measure for investors by removing the impact of new stores and
closed stores. Management considers comparable sales a useful measure in evaluating continuing store performance.
eCommerce Demand
Description
eCommerce demand is defined as gross orders for Express and/or third party merchandise that originate through our
eCommerce platform, including the website, app, and buy online pick-up in store.
Discussion
We believe eCommerce demand is a useful operational metric for investors and management as it provides visibility for orders
placed but not yet shipped.
Transactions
Description
Transactions are defined as the number of customer point of sale interactions with customers.
Discussion
We believe this metric is useful as it provides a better indicator of the acceptance of our product.
EXPRESS, INC. | 2021 Form 10-K | 32
Cost of Goods Sold, Buying and Occupancy Costs
Description
Includes the following:
Direct cost of purchased merchandise
Inventory shrink and other adjustments
Inbound and outbound freight
•
•
•
• Merchandising, design, planning and allocation, and manufacturing/production costs
•
Occupancy costs related to store operations (such as rent and common area maintenance, utilities, and depreciation
on assets)
Logistics costs associated with our eCommerce business
Impairments on long-lived assets and right of use lease assets
•
•
Discussion
Our cost of goods sold typically increases in higher volume quarters because the direct cost of purchased merchandise is tied
to sales.
The primary drivers of the costs of individual goods are raw materials, labor in the countries where our merchandise is sourced,
and logistics costs associated with transporting our merchandise.
Buying and occupancy costs related to stores are largely fixed and do not necessarily increase as volume increases.
Changes in the mix of products sold by type of product or by channel may also impact our overall cost of goods sold, buying
and occupancy costs.
Extended periods of declined business and sales could result in additional impairment of our assets.
Gross Profit/(Loss)/Gross Margin
Description
Gross profit/(loss) is net sales minus cost of goods sold, buying and occupancy costs. Gross margin measures gross profit/
(loss) as a percentage of net sales.
Discussion
Gross profit/(loss)/gross margin is impacted by the price at which we are able to sell our merchandise and the cost of our
product.
We review our inventory levels on an on-going basis in order to identify slow-moving merchandise and generally use
markdowns to clear such merchandise. The timing and level of markdowns are driven primarily by seasonality and customer
acceptance of our merchandise and have a direct effect on our gross margin.
Any marked down merchandise that is not sold is marked-out-of-stock. We use third-party vendors to dispose of this marked-
out-of-stock merchandise.
Selling, General, and Administrative Expenses
Description
Includes operating costs not included in cost of goods sold, buying and occupancy costs such as:
Payroll and other expenses related to operations at our corporate offices
Store expenses other than occupancy costs
•
•
• Marketing expenses, including production, mailing, print, and digital advertising costs, among other things
Discussion
With the exception of store payroll, certain marketing expenses, and incentive compensation, selling, general, and
administrative expenses generally do not vary proportionally with net sales. As a result, selling, general, and administrative
expenses as a percentage of net sales are usually higher in lower volume quarters and lower in higher volume quarters.
EXPRESS, INC. | 2021 Form 10-K | 33
FISCAL YEAR COMPARISON
Net Sales
Net sales (in thousands)
Comparable retail sales
Comparable outlet sales
Total comparable sales percentage change
Gross square footage at end of period (in thousands)
Number of:
Stores open at beginning of period
New retail stores
New outlet stores
New Express Edit stores
New UpWest stores
Closed stores
Stores open at end of period
2021
2020
$ 1,870,296
$ 1,208,374
41 %
27 %
37 %
(29)%
(21)%
(27)%
4,686
4,841
570
—
1
6
8
(24)
561
595
1
1
1
—
(28)
570
Net sales increased by approximately $661.9 million, or 55%, between 2021 and 2020. The sales increase was
primarily attributed to our product and brand strategies resonating with our customers coupled with the vaccination
rollout and the lifting of COVID-related restrictions during 2021, as compared to the material adverse impact the
COVID-19 pandemic had on our business during 2020. Our retail comparable sales percentage increases were
lower than our total retail sales percentage increases for 2021 due primarily to the impact of closed stores. This was
due to our comparable sales calculation excluding sales for stores that were closed in the comparable period last
year due to the COVID-19 pandemic.
Gross Profit/(Loss)
The following table shows cost of goods sold, buying and occupancy costs, gross profit/(loss) in dollars, and gross
margin percentage for the stated periods:
Cost of goods sold, buying and occupancy costs
Gross profit/(loss)
Gross margin percentage
2021
2020
(in thousands, except percentages)
$ 1,311,829
$ 1,213,281
$ 558,467
$
(4,907)
29.9 %
(0.4)%
The 3,030 basis point increase in gross margin percentage, or gross profit/(loss) as a percentage of net sales, in
2021 compared to 2020 was comprised of a 1,300 basis point increase in merchandise margin and a 1,730 basis
point decrease in buying and occupancy costs as a percentage of net sales. The increase in merchandise margin
was primarily driven by positive customer response to our new receipts and significant reduction in promotional
activity. The improvement in buying and occupancy leverage was driven by increased sales. In addition, we had a
$34.4 million impairment related to certain long-lived store related assets and right of use assets in 2020. Refer to
Note 2 in our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for further
discussion regarding the impairment charges.
EXPRESS, INC. | 2021 Form 10-K | 34
Selling, General, and Administrative Expenses
The following table shows selling, general, and administrative expenses in dollars and as a percentage of net sales
for the stated periods:
Selling, general, and administrative expenses
2021
2020
(in thousands, except percentages)
$ 558,187
$ 450,834
Selling, general, and administrative expenses, as a percentage of net sales
29.8 %
37.3 %
The $107.4 million increase in selling, general, and administrative expenses in 2021 compared to 2020 was
primarily the result of an increase in variable costs driven by the sales increase, pandemic related store closures in
2020 and 2021 compensation related expenses and incremental investments in marketing.
Interest Expense, Net
The following table shows interest expense in dollars for the stated periods:
Interest expense, net
2021
2020
(in thousands)
$
15,198 $
3,401
The $11.8 million increase in interest expense, net in 2021 compared to 2020 was the result of borrowing under our
Term Loan Facility and Amended Revolving Credit Facility, which bear interest at variable rates. Refer to Note 6 in
our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for further
discussion regarding our borrowings during 2021.
Other (Income)/Expense, Net
The following table shows other (income)/expense in dollars for the stated periods:
Other (income)/expense, net
2021
2020
$
(in thousands)
(298) $
2,733
The $3.0 million decrease in other (income)/expense in 2021 compared to 2020 was the result of a $2.7 million pre-
tax write-off of our remaining investment in Homage, LLC, a privately held retail apparel company based in
Columbus, Ohio ("Homage") in 2020. Refer to Note 2 in our Consolidated Financial Statements included elsewhere
in this Annual Report on Form 10-K for further discussion regarding the write-off during 2020.
Income Tax Expense/(Benefit)
The following table shows income tax expense/(benefit) in dollars for the stated periods:
Income tax expense/(benefit)
2021
2020
$
(in thousands)
315 $
(55,900)
The effective tax rate was (2.2)% in 2021 compared to 12.1% in 2020. The effective tax rate for 2021 was less than
the statutory tax rate due to the impact of nondeductible executive compensation. The effective tax rate for 2020
was less than the statutory tax rate due to the impact of establishing a valuation allowance against our net deferred
tax assets, of which a portion relates to 2020 U.S. federal net operating losses that could not be carried back to
offset taxable income in the five-year carryback period as part of the CARES Act. This was partially offset by a $42.1
million tax benefit related to the portion of the 2019 and 2020 U.S. federal net operating losses that are able to be
carried back to years with a higher federal statutory tax rate than is currently enacted. Refer to Note 5 of the
Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional
information regarding the tax rate.
EXPRESS, INC. | 2021 Form 10-K | 35
Operating Income/(Loss), Net Loss, Diluted Earnings Per Share and EBITDA
Included in the table below is operating income/(loss), net loss, diluted earnings per share and earnings before
interest, taxes, depreciation, and amortization ("EBITDA") for 2021 and 2020, respectively. We supplement the
reporting of our financial
information determined under United States generally accepted accounting principles
("GAAP") with certain non-GAAP financial measures: adjusted operating income/(loss), adjusted net loss, adjusted
diluted earnings per share and EBITDA. The following table presents these financial measures, each a non-GAAP
financial measure, for the stated periods which eliminate certain non-core operating costs:
Operating income/(loss)
Adjusted operating income/(loss) (Non-GAAP)
Net loss
Adjusted net loss (Non-GAAP)
Diluted earnings per share
Adjusted diluted earnings per share (Non-GAAP)
EBITDA (Non-GAAP)
* No adjustments were made to operating income for 2021.
How These Measures Are Useful
2021
2020
(in thousands, except per share amounts)
$
$
$
$
$
$
$
$
779
779 * $
(14,436) $
(14,957) $
(0.22) $
(0.23) $
(455,215)
(420,835)
(405,449)
(314,343)
(6.27)
(4.86)
64,717
$
(384,689)
these non-GAAP measures provide additional useful
information to assist stockholders in
We believe that
understanding our financial results and assessing our prospects for future performance. Management believes
adjusted operating income/(loss), adjusted net loss, adjusted diluted earnings per share and EBITDA are important
indicators of our business performance because they exclude items that may not be indicative of, or are unrelated
to, our underlying operating results, and may provide a better baseline for analyzing trends in the business. In
addition, adjusted diluted earnings per share and EBITDA are used as performance measures in our long-term
executive compensation program for purposes of determining the number of equity awards that are ultimately
earned and EBITDA is also a metric used in our short-term cash incentive compensation plan.
Limitations of the Usefulness of These Measures
Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial
measures with other companies' non-GAAP financial measures having the same or similar names. These adjusted
financial measures should not be considered in isolation or as a substitute for reported net loss, operating income/
(loss), or diluted earnings per share. These non-GAAP financial measures reflect an additional way of viewing our
operations that, when viewed with the GAAP results and the below reconciliations to the corresponding GAAP
financial measures, provide a more complete understanding of our business. Management strongly encourages
investors and stockholders to review our financial statements and publicly-filed reports in their entirety and not to
rely on any single financial measure.
The following table reconciles the non-GAAP financial measures (adjusted operating income/(loss), adjusted net
loss, and adjusted diluted earnings per share) with the most directly comparable GAAP financial measures
(operating income/(loss), net loss, and diluted earnings per share, respectively) for 2021 and 2020, respectively.
(in thousands, except per share amounts)
Reported GAAP Measure
Valuation allowance on deferred taxes (a)
Adjusted Non-GAAP Measure
Operating
Income
Income Tax
Impact
2021
Net Loss
Diluted
Earnings
per Share
$
$
779
—
779
$ (14,436) $
(521)
(521)
$ (14,957) $
(0.22)
(0.01)
(0.23)
Weighted
Average Diluted
Shares
Outstanding
66,448
a.
Valuation allowance released due to utilization of deferred tax assets in the current year.
EXPRESS, INC. | 2021 Form 10-K | 36
(in thousands, except per share amounts)
Reported GAAP Measure
Impairment of property, equipment and
lease assets
Equity method investment impairment (b)
Valuation allowance on deferred taxes (c)
Tax impact of the CARES Act (d)
Tax impact of executive departures (e)
Operating
Loss
Income Tax
Impact
2020
Net Loss
Diluted
Earnings
per Share
Weighted
Average Diluted
Shares
Outstanding
$ (455,215)
$ (405,449) $
(6.27)
64,624
34,380
—
—
—
—
(9,111) (a)
(642)
105,695
(42,060)
111
25,269
2,091
105,695
(42,060)
111
0.39
0.03
1.64
(0.65)
—
Adjusted Non-GAAP Measure
$ (420,835)
$ (314,343) $
(4.86)
a.
b.
c.
d.
Items tax affected at the applicable deferred or statutory rate.
Impairment before tax was $2.7 million and was recorded in other expense, net.
Valuation allowance provided against previously recognized deferred tax assets and 2020 losses, less net operating losses utilized
under the CARES Act.
Income tax benefit primarily due to a net operating loss carryback under the CARES Act to years with a higher federal statutory tax rate
than is currently enacted.
e. Represents the tax impact related to the expiration of former executive non-qualified stock options.
The following table reconciles the non-GAAP financial measure EBITDA with the most directly comparable GAAP
financial measures for 2021 and 2020, respectively.
Net loss
Interest expense, net
Income tax expense/(benefit)
Depreciation and amortization
EBITDA (Non-GAAP Measure)
LIQUIDITY AND CAPITAL RESOURCES
Forward-Looking Liquidity Discussion
2021
2020
(in thousands)
(14,436) $
(405,449)
15,198
315
63,640
3,401
(55,900)
73,259
64,717 $
(384,689)
$
$
Our liquidity position benefits from the fact that we generally collect cash from sales to customers the same day or,
in the case of credit or debit card transactions, within three to five days of the related sale, and we have up to 75
days to pay certain merchandise vendors and 45 days to pay the majority of our non-merchandise vendors. We also
have commitments under lease agreements and debt agreements that will require future cash outlays. For
information on future payments required under lease agreements see Note 4 of our Consolidated Financial
Statements included elsewhere in this Annual Report on Form 10-K and for future payment information related to
our short-term and long-term debt see Note 6 of our Consolidated Financial Statements included elsewhere in this
Annual Report on Form 10-K.
Based upon the sales and results of operations recovery seen during 2021, as well as the availability of additional
liquidity under the Amended Revolving Credit Facility, and expense control and other measures taken to date, our
liquidity position has improved significantly. We continue to be in compliance with the financial covenants under our
Amended Revolving Credit Facility and Term Loan Facility and plan to continue our cost reduction measures taken
to date, and we are forecasting continued strength in both sales and profitability in 2022. We believe this will result
in sufficient cash flows to support our ongoing operations and to meet our covenant requirements under the
Amended Revolving Credit Facility and Term Loan Facility for one year following the date that the Consolidated
Financial Statements in Part II, Item 8 of this Annual Report are issued and beyond.
EXPRESS, INC. | 2021 Form 10-K | 37
As previously disclosed, the COVID-19 pandemic resulted in significant disruption to our business. As a result, our
revenues, results of operations and cash flows continued to be materially adversely impacted in the first quarter of
fiscal 2021 but we saw significant improvement as the year progressed. For the 52-week period ended January 29,
2022, we reported a net loss of $14.4 million but positive operating cash flows of $89.4 million. In response to the
COVID-19 pandemic and our ongoing working capital requirements we continue to utilize our Amended Revolving
Credit Facility and have $96.7 million outstanding under our Term Loan Facility including $6.7 million outstanding
that will be repaid upon receipt of the CARES Act receivable. We have (and in the future may continue to have) a
negative working capital balance. Our current liabilities include current operating lease liabilities, for which the
corresponding operating right of use assets are recorded as non-current on our Consolidated Balance Sheets.
However, the cash collected from our sales is typically collected before payment is due on our current liabilities.
Subsequent to year-end, we have borrowed an additional $87.0 million to fund normal working capital needs. The
Amended Revolving Credit Facility and the Term Loan Facility contain certain affirmative and negative covenants.
Refer to Note 6 in our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K
for further details regarding the Amended Revolving Credit Facility and Term Loan Facility.
Analysis of Cash Flows
A summary of cash provided by or used in operating, investing, and financing activities is shown in the following
table:
Provided by (used in) operating activities
Used in investing activities
(Used in) provided by financing activities
Decrease in cash and cash equivalents
Cash and cash equivalents at end of period
Operating Activities
2021
2020
(in thousands)
89,380 $
(34,771)
(69,307)
(14,698)
41,176 $
(323,626)
(16,854)
189,215
(151,265)
55,874
$
$
Our business historically relies on cash flows from operations as our primary source of liquidity, with the majority of
those cash flows being generated in the fourth quarter of the year. Our primary operating cash needs are for
merchandise inventories, payroll, store rent and marketing. Net cash provided by operating activities was $89.4
million in 2021 compared to $323.6 million used in operating activities in 2020. The $413.0 million improvement in
cash flows from operating activities for 2021 as compared to 2020 was primarily driven by the temporary closure of
our stores as a result of COVID-19 during 2020 and our improved operating results during 2021. In addition, we
received approximately $60.0 million of CARES Act receivables during 2021 ($43.3 million and $13.7 million related
to our 2020 and 2019 income tax returns, respectively, and $3.0 million related to the employee retention credit).
This was partially offset by the fact that we did not initially make our store rent payments for April, May or June of
2020, as a result of the COVID-19 related store closures. We established an accrual for the rent payments that were
not made and have continued to recognize accrued rent expense. As a result of negotiations with certain landlords,
we have since made rent payments for the majority of stores and some landlords have agreed to abate certain rent
payments. The appropriate adjustments were made to accrued rent and are reflected in the cash flows from
operations.
Investing Activities
We also use cash for investing activities. Our capital expenditures consist primarily of new and remodeled store
construction and fixtures and investments in information technology. We had capital expenditures of approximately
$34.8 million in 2021 and $16.9 million in 2020. The increase in investing activities in 2021 was primarily driven by
investments in information technology to support our strategic business initiatives.
Financing Activities
Credit Facilities
On January 13, 2021, we entered into a definitive loan agreement with Sycamore Partners as lead lender, along
with Wells Fargo and Bank of America Merrill Lynch. The new financing included a $90.0 million FILO Term Loan
EXPRESS, INC. | 2021 Form 10-K | 38
received in 2020, and a $50.0 million Delayed Draw Term Loan ("DDTL"), that was drawn down in March 2021.
During 2021, we received approximately $43.3 million of CARES Act income tax refunds that was used to repay a
portion of the DDTL. The remainder of the CARES Act tax refunds are expected to be received in 2022, at which
time we will be required to repay the remaining balance on the DDTL. This financing is in addition to our existing
$250.0 million Amended Revolving Credit Facility under which we drew down $165.0 million in the first quarter of
2020 in response to the COVID-19 outbreak. Upon the receipt of the proceeds from the FILO Term Loan, we repaid
$59.0 million of the amount borrowed under our Amended Revolving Credit Facility, and during 2021, we repaid a
net additional $71.1 million. The expiration date of the facilities is May 24, 2024.
As of January 29, 2022, the net amount outstanding under our facilities was $128.8 million, of which $11.2 million is
classified as short-term debt and $117.6 million is classified as long-term debt on the Consolidated Balance Sheet,
net of unamortized costs, and approximately $145.8 million was available for borrowing under our Amended
Revolving Credit Facility subject to certain borrowing base limitations and after outstanding letters of credit in the
amount of $34.6 million, primarily related to our third party logistics contract. Refer to Note 6 of our Consolidated
Financial Statements included elsewhere in this Annual Report on Form 10-K for additional
information on our
Amended Revolving Credit Facility and Term Loan Facility.
Share Repurchases
On November 28, 2017, the Board approved a share repurchase program that authorizes us to repurchase up to
$150.0 million of our outstanding common stock using available cash. During 2021 and 2020, we did not repurchase
shares under the stock repurchase program.
ATM Equity Offering Sales Agreement
On June 3, 2021, we entered into an ATM Equity Offering Sales Agreement (the “Sales Agreement”) with BofA
Securities, Inc. (“BofA”), as the sales agent to sell up to 15.0 million shares of our common stock, par value $0.01
per share, through an “at-the-market” offering program. Such shares are issued pursuant to the Company’s shelf
registration statement on Form S-3 (Registration No. 333-253368) filed with the SEC on April 6, 2021. During 2021,
we did not sell any shares under the Sales Agreement. We intend to use net proceeds, if any, from the sale of the
common stock pursuant to the Sales Agreement for general corporate purposes, which may include investments in
working capital, or capital expenditures,
investments to grow and enhance our
including the acceleration of
eCommerce channel and omni-channel assets, the repayment of indebtedness, and other investments.
EXPRESS, INC. | 2021 Form 10-K | 39
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with GAAP requires management to make estimates and
assumptions that affect the reported amounts of our assets, liabilities, revenues, and expenses, as well as the
related disclosure of contingent assets and liabilities at the date of the financial statements. Management evaluates
its accounting policies, estimates, and judgments on an on-going basis. Management bases its estimates and
judgments on historical experience and various other factors that are believed to be reasonable under the
circumstances. Actual results may differ from these estimates under different assumptions and conditions.
Management evaluated the development and selection of its critical accounting policies and estimates and believes
that the following policies involve a higher degree of judgment or complexity and are most significant to reporting
our results of operations and financial position and are, therefore, discussed as critical. The following critical
accounting policies reflect the significant estimates and judgments used in the preparation of our Consolidated
Financial Statements. More information on all of our significant accounting policies can be found in Note 2 to our
Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
Store Asset Impairment
Description of Policy
Store related Property and Equipment, including the right of use assets, are tested for recoverability whenever events or
changes in circumstances indicate that the carrying amount of these assets might not be recoverable. These include, but are
not limited to, material adverse changes in projected revenues, present cash flow losses combined with a history of cash flow
losses and a forecast that demonstrates significant continuing losses, significant negative economic conditions, a significant
decrease in the market value of an asset and store closure or relocation decisions. We review for indicators of impairment at
the individual store level, the lowest level for which cash flows are identifiable.
Stores that display an indicator of impairment are subjected to an impairment assessment. Our impairment assessment
requires management to make assumptions and judgments related, but not limited, to management’s expectations for future
operations and projected cash flows.
•
The key assumption used in our undiscounted future store cash flow models is the sales growth rate.
An impairment loss may be recognized when these undiscounted future cash flows are less than the carrying amount of the
asset group. In the circumstance of impairment, any loss would be measured as the excess of the carrying amount of the asset
group over its fair value. Fair value of our store-related assets is determined at the individual store level based on the highest
and best use of the asset group.
•
The key assumptions used in our fair value analysis may include discounted estimates of future store cash flows from
operating the store and/or comparable market rents.
Judgments and Uncertainties
Our analysis for impairment requires judgment surrounding identification of appropriate triggering events and assumptions used
in our fair value model. These judgments can be affected by factors such as expectations for future store performance, real
estate demand, market rent and economic conditions that can be difficult to predict.
Effect if Actual Results Differ from Assumptions
We have no reason to believe that there will be a material change in the future estimates or assumptions we use in this
evaluation. However, if we become aware of additional triggering events there is potential that additional stores could be
required to be tested for impairment and could be impaired. These events could include further deterioration in store operating
results, increased store labor costs, our inability to implement our cost savings initiatives or lower mall traffic. In addition, if
market rent fair values deteriorate, our fair value test could determine additional right of use asset impairment. A 1% reduction
in our store related assets would be approximately $6.0 million at January 29, 2022.
EXPRESS, INC. | 2021 Form 10-K | 40
Inventories - Lower of Cost or Net Realizable Value
Description of Policy
Inventories are principally valued at the lower of cost or net realizable value on a weighted-average cost basis. We record a
lower of cost or net realizable value adjustment for our inventories if the cost of specific inventory items on hand exceeds the
amount we expect to realize from the ultimate sale or disposal of the inventory.
Judgments and Uncertainties
Our accounting methodology for determining the lower of cost or net realizable value adjustment contains uncertainties
because it requires management
to make assumptions and estimates that are based on factors such as merchandise
seasonality, historical trends, and estimated inventory levels, including sell-through of remaining units.
Effect if Actual Results Differ from Assumptions
We have no reason to believe that there will be a material change in the future estimates or assumptions we use to measure
the lower of cost or net realizable value adjustment. However, if actual results are not consistent with our estimates or
assumptions, we may be exposed to losses or gains that could be material. A 100 basis point increase or decrease in the lower
of cost or net realizable value adjustment would not have had a material impact on the inventory balance or pre-tax income as
of and for the year ended January 29, 2022.
Valuation Allowance on Deferred Tax Assets
Description of Policy
Deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences that
currently exist between the tax basis and the financial reporting basis of our assets and liabilities. Valuation allowances are
established against deferred tax assets when it is more likely than not that the realization of those deferred tax assets will not
occur.
Judgments and Uncertainties
Our deferred tax asset and liability balances contain uncertainty because changes in tax laws, rates, or future taxable income
may differ from estimates and judgments made by management. Assessing whether deferred tax assets are realizable requires
significant
including past operating results and
expectations of future operating income. The ultimate realization of deferred tax assets is often dependent upon future
profitability, which is inherently uncertain. While we have a full valuation allowance on our net deferred tax asset assets, future
changes in assumptions could have an effect on our estimates.
judgment. We consider all available positive and negative evidence,
Effect if Actual Results Differ from Assumptions
We have no reason to believe that there will be a material change in the future estimates or assumptions we use to calculate
our deferred taxes. However, if future tax rates are changed, or if actual results are not consistent with our estimates, we may
need to adjust the carrying value of our deferred tax balances. An increase or decrease in the valuation allowance would result
in a respective increase or decrease in our effective tax rate in the period the increase or decrease occurs.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK.
INTEREST RATE RISK
Our Amended Revolving Credit Facility and Term Loan Facility bear interest at variable rates. See Note 6 to our
Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for further information
on the calculation of the rates. The nature and amount of our long-term debt can be expected to vary as a result of
future business requirements, market conditions, and other factors.
As of January 29, 2022, we had approximately $35.0 million in borrowings outstanding under our Amended
Revolving Credit Facility and approximately $96.7 million in borrowings outstanding under our Term Loan Facility.
Based on the levels of borrowings under our credit facilities at January 29, 2022, we estimate that a 100 basis point
increase or decrease in underlying interest rates would increase or decrease annual
interest expense by
approximately $1.3 million. This hypothetical analysis may differ from the actual change in interest expense due to
potential changes in interest rates or gross borrowings outstanding under our credit
facilities. The expected
transition from the widespread use of LIBOR rate to alternative rates over the next several years is not expected to
have a material impact on interest expense on borrowings outstanding under our credit facilities.
EXPRESS, INC. | 2021 Form 10-K | 41
IMPACT OF INFLATION
Inflationary factors such as increases in the cost of our products and operations may adversely affect our operating
results. Although we do not believe that inflation has had a material impact on our financial position or results of
operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current
levels of gross profit and selling, general, and administrative expenses as a percentage of net sales if the selling
prices of our products do not rise with these increased costs.
EXPRESS, INC. | 2021 Form 10-K | 42
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Report of Independent Registered Public Accounting Firm (PCAOB ID: 238)
Consolidated Balance Sheets
Consolidated Statements of Income and Comprehensive Income
Consolidated Statements of Changes in Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Page
44
47
48
49
50
51
EXPRESS, INC. | 2021 Form 10-K | 43
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Express, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Express,
Inc. and its subsidiaries (the
“Company”) as of January 29, 2022 and January 30, 2021, and the related consolidated statements of income and
comprehensive income, of changes in stockholders’ equity and of cash flows for each of the three years in the
period ended January 29, 2022, including the related notes (collectively referred to as the “consolidated financial
statements”). We also have audited the Company's internal control over financial reporting as of January 29, 2022,
based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of January 29, 2022 and January 30, 2021, and the results of its operations
and its cash flows for each of the three years in the period ended January 29, 2022 in conformity with accounting
principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of January 29, 2022, based on criteria
established in Internal Control - Integrated Framework (2013) issued by the COSO.
Change in Accounting Principle
As discussed in Note 4 to the consolidated financial statements, the Company changed the manner in which it
accounts for leases in 2019.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A.
Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's
internal control over financial reporting based on our audits. We are a public accounting firm registered with the
Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free
of material misstatement, whether due to error or fraud, and whether effective internal control over financial
reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of
the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
EXPRESS, INC. | 2021 Form 10-K | 44
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that (i)
relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the consolidated financial statements,
taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Store Asset Impairment Assessments
As described in Notes 2 and 3 to the consolidated financial statements, the Company has long-lived assets which
include consolidated property and equipment, net of $148 million and consolidated right of use assets, net of $615
million as of January 29, 2022, of which a significant portion of such balances relate to store level long-lived assets.
As disclosed by management, store related property and equipment and right of use assets are tested for
recoverability whenever events or changes in circumstances indicate that the carrying amount of these assets might
not be recoverable. Management reviews for indicators of impairment at the individual store level, the lowest level
for which cash flows are identifiable. Stores that display an indicator of impairment are subjected to an impairment
assessment. The impairment assessment requires management to make assumptions and judgments related, but
not limited, to management’s expectations for future operations and projected cash flows. The key assumption used
in undiscounted future store cash flow models is the sales growth rate. An impairment loss may be recognized when
these undiscounted future cash flows are less than the carrying amount of the asset group. In the circumstance of
impairment, any loss would be measured as the excess of the carrying amount of the asset group over its fair value.
Fair value of the store-related assets is determined at the individual store level based on the highest and best use of
the asset group. The key assumptions used in the fair value analysis may include discounted estimates of future
store cash flows from operating the store and/or comparable market rents.
The principal considerations for our determination that performing procedures relating to the store asset impairment
assessments is a critical audit matter are the high degree of auditor subjectivity and effort in performing procedures
and evaluating management’s significant assumptions related to the sales growth rate when developing the
undiscounted future cash flows, and comparable market rents when estimating the fair value. In addition, the audit
effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of
controls relating to the store asset impairment assessments, including controls over the assumptions used when
developing the undiscounted future cash flows expected to be generated by the assets to test for recoverability and
when estimating the fair value of the asset groups to measure for impairment. These procedures also included,
among others, (i) testing management’s process for developing the undiscounted future cash flows expected to be
generated by the assets and estimating the fair value of the asset groups; (ii) evaluating the appropriateness of the
models used by management; (iii) testing the completeness, accuracy and relevance of underlying data used in the
models; and (iv) evaluating the reasonableness of the significant assumptions related to the sales growth rate when
developing the undiscounted future cash flows, and comparable market rents when estimating the fair value.
Evaluating management’s assumptions related to the sales growth rate and comparable market rents involved
evaluating whether the assumptions used by management were reasonable considering the current and past
performance of the asset groups and the consistency with evidence obtained in other areas of the audit as it relates
to the sales growth rate and consistency with external market data as it relates to the sales growth rate and
EXPRESS, INC. | 2021 Form 10-K | 45
comparable market rents. Professionals with specialized skill and knowledge were used to assist in the evaluation
of the reasonableness of the comparable market rents significant assumption.
/s/ PricewaterhouseCoopers LLP
Columbus, Ohio
March 24, 2022
We have served as the Company’s auditor since 2008.
EXPRESS, INC. | 2021 Form 10-K | 46
EXPRESS, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except Per Share Amounts)
ASSETS
Current Assets:
Cash and cash equivalents
Receivables, net
Income tax receivable
Inventories
Prepaid rent
Other
Total current assets
Right of Use Asset, Net
Property and Equipment
Less: accumulated depreciation
Property and equipment, net
Other Assets
TOTAL ASSETS
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Short-term lease liability
Accounts payable
Deferred revenue
Short-term debt
Accrued expenses
Total current liabilities
Long-Term Lease Liability
Long-Term Debt
Other Long-Term Liabilities
Total Liabilities
Commitments and Contingencies (Note 11)
Stockholders’ Equity:
January 29, 2022
January 30, 2021
$
41,176
$
11,744
53,665
358,795
5,602
19,755
490,737
55,874
14,556
111,342
264,360
7,883
20,495
474,510
$
$
615,462
797,785
975,802
(827,820)
147,982
969,402
(789,204)
180,198
5,273
5,964
1,259,454
$
1,458,457
196,628
$
231,974
35,985
11,216
110,850
586,653
536,905
117,581
17,007
203,441
150,230
32,430
—
128,952
515,053
722,949
192,032
18,734
1,258,146
1,448,768
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 January 29, 2022 and January 30, 2021, respectively, and 67,072 shares
and 64,971 shares outstanding at January 29, 2022 and January 30, 2021, respectively
Additional paid-in capital
Retained earnings
Treasury stock – at average cost; 26,560 shares and 28,661 shares at January 29, 2022
and January 30, 2021, respectively
Total stockholders’ equity
—
—
936
220,078
77,093
(296,799)
1,308
936
222,141
114,732
(328,120)
9,689
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
1,259,454
$
1,458,457
See Notes to Consolidated Financial Statements.
EXPRESS, INC. | 2021 Form 10-K | 47
EXPRESS, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Amounts in Thousands, Except Per Share Amounts)
2021
2020
2019
Net Sales
Cost of Goods Sold, Buying and Occupancy Costs
GROSS PROFIT/(LOSS)
Operating Expenses:
$
1,870,296
$
1,208,374
$
1,311,829
558,467
1,213,281
(4,907)
Selling, general, and administrative expenses
558,187
450,834
Impairment of intangible assets
Restructuring costs
Other operating income, net
TOTAL OPERATING EXPENSES
OPERATING INCOME/(LOSS)
Interest Expense/(Income), Net
Other (Income)/Expense, Net
LOSS BEFORE INCOME TAXES
Income Tax Expense/(Benefit)
NET LOSS
COMPREHENSIVE LOSS
EARNINGS PER SHARE:
Basic
Diluted
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic
Diluted
See Notes to Consolidated Financial Statements.
2,019,194
1,468,619
550,575
564,332
197,618
7,337
(847)
768,440
(217,865)
(2,981)
—
—
—
(499)
557,688
779
15,198
(298)
(14,121)
—
—
(526)
450,308
(455,215)
3,401
2,733
(461,349)
(214,884)
$
$
$
$
315
(55,900)
(50,526)
(14,436) $
(405,449) $
(164,358)
(14,436) $
(405,449) $
(164,358)
(0.22) $
(0.22) $
(6.27) $
(6.27) $
(2.49)
(2.49)
66,448
66,448
64,624
64,624
66,133
66,133
EXPRESS, INC. | 2021 Form 10-K | 48
EXPRESS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Amounts in Thousands)
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 $
Adoption of ASC Topic 842
Net loss
Exercise of stock options and
restricted stock
Share-based compensation
Repurchase of common stock
—
—
1,204
—
(4,706)
—
—
—
—
—
—
(5,482)
— (164,358)
(4,951)
(10,334)
8,177
—
—
—
BALANCE, February 1, 2020
63,922 $
936 $ 215,207 $ 533,690 $
Net loss
Exercise of stock options and
restricted stock
Share-based compensation
Repurchase of common stock
—
1,392
—
(343)
—
—
—
—
— (405,449)
(2,528)
(13,509)
9,462
—
—
—
BALANCE, January 30, 2021
64,971 $
936 $ 222,141 $ 114,732 $
Net loss
Exercise of stock options and
restricted stock
Share-based compensation
Repurchase of common stock
—
3,084
—
(983)
—
—
—
—
—
(14,436)
(11,872)
(23,203)
9,809
—
—
—
BALANCE, January 29, 2022
67,072 $
936 $ 220,078 $
77,093 $
See Notes to Consolidated Financial Statements.
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
26,208 $(341,603) $ 585,178
—
—
—
(5,482)
— (164,358)
(1,204)
15,285
—
—
—
8,177
4,706
(17,213)
(17,213)
29,710 $(343,531) $ 406,302
—
— (405,449)
(1,392)
16,037
—
343
—
(626)
—
9,462
(626)
28,661 $(328,120) $
9,689
—
—
(14,436)
(3,084)
35,075
—
—
—
9,809
983
(3,754)
(3,754)
26,560 $(296,799) $
1,308
EXPRESS, INC. | 2021 Form 10-K | 49
2021
2020
2019
$
(14,436) $
(405,449) $
(164,358)
EXPRESS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:
Depreciation and amortization
Loss on disposal of property and equipment
Impairment of property, equipment, and lease assets
Impairment of intangible assets
Equity method investment impairment
Share-based compensation
Deferred taxes
Landlord allowance amortization
Other non-cash adjustments
Changes in operating assets and liabilities:
Receivables, net
Income tax receivable
Inventories
Accounts payable, deferred revenue, and accrued
expenses
Other assets and liabilities
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under the revolving credit facility
Repayment of borrowings under the revolving credit facility
Proceeds from borrowings under the term loan facility
Repayment of borrowings under the term loan facility
Proceeds on financing arrangements
Repayments of financing arrangements
Costs incurred in connection with debt arrangements
Payments on lease financing obligations
Repurchase of common stock under share repurchase programs (Note 7)
Repurchase of common stock for tax withholding obligations
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS, END OF PERIOD
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest
Cash paid to taxing authorities
See Notes to Consolidated Financial Statements.
$
$
$
EXPRESS, INC. | 2021 Form 10-K | 50
67,622
140
—
—
—
9,809
—
(496)
—
2,812
57,677
(94,435)
68,304
(7,617)
89,380
(34,771)
(34,771)
148,000
(219,050)
50,000
(43,263)
—
(769)
(471)
—
—
(3,754)
(69,307)
(14,698)
55,874
73,698
901
34,380
—
3,233
9,462
54,967
(416)
(500)
(3,732)
(108,342)
(44,057)
68,275
(6,046)
(323,626)
85,383
916
4,430
197,618
500
8,177
(49,561)
(2,205)
(500)
6,545
(1,500)
47,463
(32,339)
(9,859)
90,710
(16,854)
(16,854)
(37,039)
(37,039)
165,000
(58,950)
90,000
—
2,634
(1,864)
(6,979)
—
—
(626)
189,215
(151,265)
207,139
—
—
—
—
—
—
(899)
(90)
(15,610)
(1,603)
(18,202)
35,469
171,670
207,139
41,176
$
55,874
$
11,259
573
$
$
2,676
621
$
$
—
9,406
EXPRESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1
Note 2
Note 3
Note 4
Note 5
Note 6
Note 7
Note 8
Note 9
Description of Business and Basis of Presentation
Summary of Significant Accounting Policies
Property and Equipment, Net
Leases
Income Taxes
Debt
Stockholders' Equity
Long-Term Incentive Compensation
Earnings Per Share
Note 10
Retirement Benefits
Note 11
Commitments and Contingencies
Note 12
Restructuring Costs
Page
52
53
59
60
62
65
68
68
71
72
72
72
EXPRESS, INC. | 2021 Form 10-K | 51
NOTE 1 | DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Business Description
Grounded in versatility and powered by a styling community, Express, Inc., together with its subsidiaries (“Express”
or the “Company”),
is a modern, multichannel apparel and accessories brand whose purpose is to Create
Confidence & Inspire Self-Expression. Launched in 1980 with the idea that style, quality and value should all be
found in one place, Express has been a part of some of the most important and culture-defining fashion trends. The
Express Edit design philosophy ensures that the brand is always "of the now" so people can get dressed for every
day and any occasion knowing that Express can help them look the way they want to look and feel the way they
want to feel. The Company operates 561 retail and factory outlet stores in the United States and Puerto Rico, the
express.com online store and the Express mobile app. Express is comprised of the brands Express and UpWest.
As of January 29, 2022, Express operated 358 primarily mall-based retail stores in the United States and Puerto
Rico as well as 203 factory outlet stores. Additionally, as of January 29, 2022, the Company earned revenue from 6
to franchise
franchise stores in Latin America. These franchise stores are operated by franchisees pursuant
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. All references herein to the Company's fiscal years are as follows:
Fiscal Year
2021
2020
2019
Year Ended
January 29, 2022
January 30, 2021
February 1, 2020
Number of Weeks
52
52
52
Basis of Presentation
Express, Inc., a holding company, owns all of the outstanding equity interests in Express Topco LLC, a holding
company, which owns all of the outstanding equity interests in Express Holding, LLC ("Express Holding"). Express
Holding owns all of the outstanding equity interests in Express, LLC. Express, LLC, together with its subsidiaries,
including Express Fashion Operations, LLC, conducts the operations of the Company.
Principles of Consolidation
The Consolidated Financial Statements include the accounts of the Company 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, Chief Operating Officer and
Interim Chief Financial 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 generally accepted accounting principles in the United
States of America ("GAAP") requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the 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 Consolidated Financial Statements. Actual results may differ from those estimates.
The Company revises its estimates and assumptions as new information becomes available.
EXPRESS, INC. | 2021 Form 10-K | 52
NOTE 2 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
Cash and cash equivalents include investments in money market funds, payments due from banks for third-party
credit and debit card transactions for up to five days of sales, cash on hand, and deposits with financial institutions.
As of January 29, 2022 and January 30, 2021, amounts due from banks for credit and debit card transactions
totaled approximately $10.3 million and $7.5 million, respectively.
Outstanding checks not yet presented for payment amounted to $29.1 million and $32.1 million as of January 29,
2022 and January 30, 2021, respectively, and are included in accounts payable on the Consolidated Balance
Sheets.
Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. Assets and liabilities measured at fair value are
classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the
measurement date.
■ Level 1 - Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active
markets.
■ Level 2 - Valuation is based upon quoted prices for similar assets and liabilities in active markets or other
inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of
the financial instrument.
■ Level 3 - Valuation is based upon other unobservable inputs that are significant
to the fair value
measurement.
Financial Assets
The following table presents the Company's financial assets, recorded in cash and cash equivalents on the
Consolidated Balance Sheets, measured at fair value on a recurring basis as of January 29, 2022 and January 30,
2021, aggregated by the level in the fair value hierarchy within which those measurements fall.
Money market funds
Money market funds
January 29, 2022
Level 1
Level 2
Level 3
(in thousands)
— $
— $
—
January 30, 2021
Level 1
Level 2
Level 3
(in thousands)
35,964 $
— $
—
$
$
The money market funds are valued using quoted market prices in active markets.
Non-Financial Assets
The Company's non-financial assets, which include fixtures, equipment, improvements, right of use assets, and
intangible assets, are not required to be measured at fair value on a recurring basis. However, if certain triggering
events occur indicating the carrying value of these assets may not be recoverable, or annually in the case of
indefinite-lived intangibles, an impairment test is required. See additional discussion under the heading "Property
and Equipment, Net" in this note below.
EXPRESS, INC. | 2021 Form 10-K | 53
The carrying amounts reflected on the Consolidated Balance Sheets for the remaining cash, cash equivalents,
receivables, prepaid expenses, and payables as of January 29, 2022 and January 30, 2021 approximated their fair
values.
Receivables, Net
Receivables, net consist primarily of construction allowances, receivables from the Bank related to the Card
Agreement, our franchisees, and third-party resellers of our gift cards, and other miscellaneous receivables.
Outstanding receivables are continuously reviewed for collectability. The Company's allowance for estimated credit
losses was not significant as of January 29, 2022 or January 30, 2021.
Inventories
Inventories are principally valued at the lower of cost or net realizable value on a weighted-average cost basis. The
Company writes down inventory, the impact of which is reflected in cost of goods sold, buying and occupancy costs
in the 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 January 29, 2022 and
January 30, 2021 was $14.2 million and $14.5 million, respectively.
The Company also records an inventory shrink reserve for estimated merchandise inventory losses between the
last physical
inventory count and the balance sheet date. This estimate is based on management's analysis of
historical results.
Advertising
Advertising production costs are expensed at the time the promotion first appears in media, stores, or on the
website. Total advertising expense totaled $135.0 million, $110.6 million, and $114.7 million in 2021, 2020, and
respectively. Advertising costs are included in selling, general, and administrative expenses in the
2019,
Consolidated Statements of Income and Comprehensive Income.
Property and Equipment, Net
Property and equipment are stated at cost. Depreciation of property and equipment is computed on a straight-line
basis, using the following useful lives:
Category
Depreciable Life
Software, including software developed for internal use
Store related assets and other property and equipment
Furniture, fixtures and equipment
Leasehold improvements
Building improvements
3 - 7 years
3 - 10 years
5 - 7 years
Shorter of lease term or useful life of the asset,
typically no longer than 10 years
6 - 30 years
When a decision is made to dispose of property and equipment prior to the end of its previously estimated useful
life, depreciation estimates are revised to reflect the use of the asset over the shortened estimated useful life. The
cost of assets sold or retired and the related accumulated depreciation are removed from the accounts with any
resulting gain or loss included in other operating expense (income), net, in the Consolidated Statements of Income
and Comprehensive Income. Maintenance and repairs are charged to expense as incurred. Major renewals and
betterments that extend useful lives are capitalized.
Store Asset Impairment
Property and equipment, including the right of use assets, are not required to be measured at fair value on a
recurring basis. However, if certain triggering events occur indicating the carrying value of these assets may not be
recoverable, an impairment test is required. These events include, but are not limited to, material adverse changes
in projected revenues, present cash flow losses combined with a history of cash flow losses and a forecast that
EXPRESS, INC. | 2021 Form 10-K | 54
demonstrates significant continuing losses, significant negative economic conditions, a significant decrease in the
market value of an asset and store closure or relocation decisions. The reviews are conducted at the store level, the
lowest identifiable level of cash flow.
Stores that display an indicator of impairment are subjected to an impairment assessment. Such stores are tested
for recoverability by comparing the sum of the estimated future undiscounted cash flows to the carrying amount of
the asset. This recoverability test requires management to make assumptions and judgments related, but not
limited, to management’s expectations for future cash flows from operating the store.
▪
The key assumption used in the undiscounted future store cash flow models is the sales growth rate.
An impairment loss may be recognized when these undiscounted future cash flows are less than the carrying
amount of the asset group. In the circumstance of impairment, any loss would be measured as the excess of the
carrying amount of the asset group over its fair value. Fair value of the store-related assets is determined at the
individual store level based on the highest and best use of the asset group.
•
The key assumptions used in the fair value analysis may include discounted estimates of future store cash
flows from operating the store and/or comparable market rents.
During 2021, 2020 and 2019, the Company recognized impairment charges as follows:
Right of use asset impairment
Property and equipment asset impairment
Total asset impairment
$
$
2021
2020
2019
(in thousands)
— $
—
— $
25,117 $
9,263
34,380 $
1,289
3,141
4,430
Impairment charges are recorded in cost of goods sold, buying and occupancy costs in the Consolidated
Statements of Income and Comprehensive Income.
Investment in Equity Interests
In 2016, the Company made a $10.1 million investment in Homage, LLC, a privately held retail company based in
Columbus, Ohio. The non-controlling investment in the entity was being accounted for under the equity method.
Under the terms of the agreement governing the investment, the Company's investment was increased by $0.5
million during 2019 and 2020 as the result of an accrual of a non-cash preferred yield. This investment was
assessed for impairment whenever factors indicated an other-than-temporary loss in value. Factors providing
evidence of such a loss include the fair value of an investment that is less than its carrying value, absence of an
ability to recover the carrying value or the investee’s inability to generate income sufficient to justify the carrying
value. During 2020, the Company wrote off the remaining $2.7 million of its investment, inclusive of the $1.5 million
preferred yield within other (income)/expense, net in the Consolidated Statements of Income and Comprehensive
Income. In addition, in 2020 and 2019, the Company recognized an additional $0.5 million impairment charge within
other (income)/expense, net in the Consolidated Statements of Income and Comprehensive Income. The fair value
of the equity method investment was determined based on applying income and market approaches. The income
approach relied on the discounted cash flow method and the market approach relied on a market multiple approach
considering historical and projected financial results.
During the third quarter of 2020, the Company sold all of its interest in Homage, LLC back to Homage, LLC in
exchange for a promissory note payable to the Company in the principal amount of $1.5 million. The Company has
recorded a reserve against the full value of this promissory note.
During the fourth quarter of 2021, the Company revised the payment terms of the note receivable and collected
$0.3 million which was recorded as other income within other (income)/expense, net in the Consolidated Statements
of Income and Comprehensive Income.
EXPRESS, INC. | 2021 Form 10-K | 55
Income Taxes
The Company accounts for income taxes using the asset and liability method. Under this method, the amount of
taxes currently payable or refundable are accrued, and deferred tax assets and liabilities are recognized for the
estimated future tax consequences of temporary differences that currently exist between the tax basis and financial
reporting basis of the Company's assets and liabilities. Valuation allowances are established against deferred tax
assets when it is more likely than not that the realization of those deferred tax assets will not occur.
Deferred tax assets and liabilities are measured using the enacted tax rates in effect in the years when those
temporary differences are expected to reverse. The effect on deferred taxes from a change in tax rate is recognized
through continuing operations in the period that includes the enactment date of the change. Changes in tax laws
and rates could affect recorded deferred tax assets and liabilities in the future.
The Company considers all available evidence, both positive and negative, when evaluating whether deferred tax
assets are realizable. Such factors include past operating results, taxable income in prior carryback years, future
reversal of existing temporary differences, prudent and feasible tax planning strategies, and forecasts of future
operating income. The past operating results is given more weight than expectations of future profitability, which is
inherently uncertain. The assumptions utilized in determining future taxable income require significant judgment and
actual operating results in future years could differ from the Company’s current assumptions and estimates.
A tax benefit from an uncertain tax position may be recognized when it is more-likely-than-not that the position will
be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the
technical merits. Income tax positions must meet a more-likely-than-not recognition threshold to be recognized.
The Company recognizes tax liabilities for uncertain tax positions and adjusts these liabilities when the Company's
judgment changes as a result of the evaluation of new information not previously available. Due to the complexity of
some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the
current estimate of the tax liabilities. These differences will be reflected as increases or decreases to income tax
expense and the effective tax rate in the period in which the new information becomes available.
Interest and penalties related to unrecognized tax benefits are recognized within income tax expense in the
Consolidated Statements of Income and Comprehensive Income. Accrued interest and penalties are included within
other long-term liabilities on the Consolidated Balance Sheets.
The income tax liability was $0.8 million and $0.7 million as of January 29, 2022 and January 30, 2021, respectively,
and is included in accrued expenses on the Consolidated Balance Sheets.
The Company may be subject
to periodic audits by the Internal Revenue Service ("IRS") and other taxing
authorities. These audits may challenge certain of the Company's tax positions, such as the timing and amount of
deductions and allocation of taxable income to various jurisdictions.
Self-Insurance
The Company is generally self-insured in the United States for medical, workers' compensation, and general liability
benefits up to certain stop-loss limits. Such costs are accrued based on known claims and estimates of incurred but
not reported (“IBNR”) claims. IBNR claims are estimated using historical claim information and actuarial estimates.
The accrued liability for self-insurance is included in accrued expenses on the Consolidated Balance Sheets.
EXPRESS, INC. | 2021 Form 10-K | 56
Revenue Recognition
The following is information regarding the Company's major product categories and sales channels:
Apparel
Accessories and other
Other revenue
Total net sales
Retail
Outlet
Other revenue
Total net sales
2021
2020
2019
(in thousands)
1,652,706 $
1,033,140 $
1,736,700
168,211
49,379
132,069
43,165
216,152
66,342
1,870,296 $
1,208,374 $
2,019,194
2021
2020
2019
(in thousands)
1,339,091 $
860,613 $
1,467,261
481,826
49,379
304,596
43,165
485,591
66,342
1,870,296 $
1,208,374 $
2,019,194
$
$
$
$
Merchandise returns are reflected in the accounting records of the channel where they are physically returned.
Other revenue consists primarily of revenue earned from our private label credit card agreement, shipping and
handling revenue related to eCommerce activity, sell-off revenue related to marked-out-of-stock inventory sales to
third parties, revenue from gift card breakage and revenue from franchise agreements.
Revenue related to the Company’s international franchise operations was not material for any period presented and,
therefore, is not reported separately from domestic revenue.
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 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.
The Company also sells merchandise to multiple franchisees pursuant to different franchise agreements. Revenues
may consist of sales of merchandise and/or royalties. Revenues from merchandise sold to franchisees are recorded
at the time title transfers to the franchisees. Royalty revenue is based upon a percentage of the franchisee’s net
sales to third parties and is earned when such sales to third parties occur.
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 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
Consolidated Balance Sheets.
EXPRESS, INC. | 2021 Form 10-K | 57
Beginning balance loyalty deferred revenue
Reduction in revenue/(revenue recognized)
Ending balance loyalty deferred revenue
Sales Returns Reserve
2021
2020
(in thousands)
8,951 $
1,967
10,918 $
14,063
(5,112)
8,951
$
$
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 $9.8 million and $6.4 million as of January 29, 2022
and January 30, 2021, respectively, and is included in accrued expenses on the Consolidated Balance Sheets. The
asset related to projected returned merchandise is included in other assets on the Consolidated Balance Sheets.
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 $25.1 million and $23.5 million as of January 29, 2022
and January 30, 2021, respectively, and is included in deferred revenue on the Consolidated Balance Sheets.
During 2021 and 2020, the Company recognized approximately $8.2 million and $8.4 million of revenue that was
previously included in the beginning gift card contract liability, respectively. 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
within the other revenue component of net sales in the Consolidated Statements of Income and Comprehensive
Income.
Beginning gift card liability
Issuances
Redemptions
Gift card breakage
Ending gift card liability
Private Label Credit Card
2021
2020
(in thousands)
23,478 $
31,339
(27,218)
(2,533)
25,066 $
24,142
25,996
(24,027)
(2,633)
23,478
$
$
The Company has an agreement with Comenity Bank (the “Bank”) to provide customers with private label credit
cards (the “Card Agreement”) which was amended on August 28, 2017 to extend the term of the arrangement
through December 31, 2024. Each private label credit card bears the logo of the Express brand and can only be
used at the Company’s store locations and eCommerce channel. The Bank is the sole owner of the accounts issued
under the private label credit card program and absorbs the losses associated with non-payment by the private label
card holders and a portion of any fraudulent usage of the accounts.
Pursuant to the Card Agreement, the Company receives amounts from the Bank during the term based on a
percentage of private label credit card sales and is also eligible to receive incentive payments for the achievement
of certain performance targets. These funds are recorded within the other revenue component of net sales in the
Consolidated Statements of Income and Comprehensive Income. The Company also receives reimbursement funds
from the Bank for certain expenses the Company incurs. These reimbursement funds are used by the Company to
fund marketing and other programs associated with the private label credit card. The reimbursement funds received
related to private label credit cards are recorded within the other revenue component of net sales in the
Consolidated Statements of Income and Comprehensive Income.
EXPRESS, INC. | 2021 Form 10-K | 58
In connection with the Card Agreement, the Bank agreed to pay the Company a $20.0 million refundable payment
which the Company recognized upon receipt as deferred revenue within other
long-term liabilities in the
Consolidated Balance Sheets and began to recognize into income on a straight-line basis commencing January
2018. As of January 29, 2022, the deferred revenue balance of $8.4 million will be recognized over the remaining
term of the amended Card Agreement within the other revenue component of net sales in the Consolidated
Statements of Income and Comprehensive Income.
Beginning balance refundable payment liability
Recognized in revenue
Ending balance refundable payment liability
Cost of Goods Sold, Buying and Occupancy Costs
2021
2020
(in thousands)
11,272 $
(2,878)
8,394 $
14,150
(2,878)
11,272
$
$
Cost of goods sold, buying and occupancy costs, includes merchandise costs, freight, inventory shrinkage, and
other gross margin related expenses. Buying and occupancy expenses primarily include payroll, benefit costs, and
other operating expenses for the buying departments (merchandising, design, manufacturing, and planning and
allocation), distribution, eCommerce fulfillment, rent, common area maintenance, real estate taxes, utilities,
maintenance, and depreciation for stores.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses include all operating costs not included in cost of goods sold, buying
and occupancy costs, with the exception of proceeds received from insurance claims and gain/loss on disposal of
assets, which are included in other operating expense, net. These costs include payroll and other expenses related
to operations at our corporate home office, store expenses other than occupancy, and marketing expenses.
Other Operating Expense, Net
Other operating expense, net primarily consists of gains/losses on disposal of assets, excess proceeds from the
settlement of insurance claims and the write off of certain costs associated with aborted debt negotiations.
Other (Income)/Expense, Net
Other expense, net for 2020 primarily consists of the pre-tax write-off of our 2016 investment in Homage, LLC.
NOTE 3 | PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consisted of:
January 29, 2022
January 30, 2021
Building improvements
Furniture, fixtures and equipment, and software
Leasehold improvements
Construction in process
Other
Total
Less: accumulated depreciation
(in thousands)
$
16,206 $
557,130
393,221
8,433
812
975,802
(827,820)
Property and equipment, net
$
147,982 $
16,206
552,412
396,668
3,304
812
969,402
(789,204)
180,198
Depreciation expense totaled $66.5 million, $76.1 million, and $87.9 million in 2021, 2020, and 2019, respectively,
excluding impairment charges discussed in Note 2.
EXPRESS, INC. | 2021 Form 10-K | 59
NOTE 4 | LEASES
leases under Accounting Standards Update (“ASU”) 2016-02,
“Leases (Topic
The Company accounts for
842)” (“ASC 842”). This ASU is a comprehensive standard that requires lessees to recognize lease assets and
lease liabilities for most leases, including those leases previously classified as operating leases. The Company
adopted ASC 842 on February 3, 2019 on a modified retrospective basis and applied the new standard to all leases
through a cumulative-effect adjustment to beginning retained earnings.
The Company’s right of use assets represent a right to use underlying assets for the lease term and lease liabilities
represent the Company’s obligation to make lease payments arising from the lease. Lease assets and liabilities are
recognized at the lease commencement date (date on which the Company gains access to the property) based on
the estimated present value of lease payments over the lease term, net of landlord allowances to be received. The
Company accounts for the lease and non-lease components as a single lease component for all current classes of
leases.
The Company leases all of its store locations and its corporate headquarters, which also includes its distribution
center, under operating leases. The store leases typically have initial terms of 5 to 10 years however, most of the
leases that are coming to the end of their lease lives are being renegotiated with shorter terms. The current lease
term for the corporate headquarters expires in 2026, with one optional five-year extension period. The Company
also leases certain equipment and other assets under operating leases, typically with initial terms of 3 to 5
years. The lease term includes the initial contractual term as well as any options to extend the lease when it is
reasonably certain that the Company will exercise that option. Leases with an initial term of 12 months or less
(short-term leases) are not recorded on the balance sheet. The Company does not currently have any material
short-term leases. The Company is generally obligated for the cost of property taxes, insurance and other landlord
costs, including common area maintenance charges, relating to its leases. If these charges are fixed, they are
combined with lease payments in determining the lease liability; however, if such charges are not fixed, they are
considered variable lease costs and are expensed as incurred. The variable payments are not included in the
measurement of the lease liability or asset. The Company’s finance leases are immaterial. The Company did not
make any amendments to its lease modification policies as a result of the COVID-19 pandemic.
Certain lease agreements include rental payments based on a percentage of retail sales over contractual levels and
others include rental payments adjusted periodically for inflation. The Company’s lease agreements do not contain
any material residual value guarantees or material restrictive covenants.
The Company’s lease agreements do not provide an implicit rate, so the Company uses an estimated incremental
borrowing rate, which is derived from third-party information available at
in
determining the present value of lease payments. The rate used is for a secured borrowing of a similar term as the
lease.
the lease commencement date,
As a result of the impact of the COVID-19 pandemic, the Company did not initially make its store rent payments for
certain stores in portions of the first and second quarter of 2020. The Company established an accrual for rent
payments that were not made and has continued to recognize accrued rent expense. As a result of negotiations with
certain landlords, the Company has since made rent payments for certain stores and some landlords have agreed
to abate certain rent payments. The appropriate adjustments were made to accrued rent. Accrued rent is within
accrued expenses on the Consolidated Balance Sheets. Accrued minimum rent as of January 29, 2022 and
January 30, 2021, was $7.7 million and $56.3 million, respectively.
Annual store rent consists of a fixed minimum amount and/or contingent rent based on a percentage of sales
exceeding a stipulated amount.
EXPRESS, INC. | 2021 Form 10-K | 60
The following table is a summary of the Company’s components of net lease cost, which is included in cost of goods
sold, buying and occupancy costs, in the Consolidated Statements of Income and Comprehensive Income:
Operating lease costs
Variable and short-term lease costs
Total lease costs
$
$
2021
2020
2019
234,911 $
45,355
280,266 $
(in thousands)
272,896 $
60,925
333,821 $
280,166
65,535
345,701
Supplemental cash flow information related to leases is as follows:
Cash paid for amounts included in the
measurement of lease liabilities:
Operating cash flows for operating leases
Right of use assets obtained in exchange
for operating lease liabilities
$
$
2021
2020
2019
(in thousands)
296,353 $
44,952 $
197,824 $
44,433 $
279,092
39,851
Supplemental balance sheet information related to leases is as follows:
Operating leases:
Weighted average remaining lease term (in
years)
Weighted average discount rate
2021
2020
2019
4.4
6.5 %
5.1
5.4 %
5.7
4.8 %
The following table reconciles the undiscounted cash flows for each of the first five years and total of the remaining
years to the operating lease liabilities recorded on the Consolidated Balance Sheets as of January 29, 2022:
2022
2023
2024
2025
2026
Thereafter
Total minimum lease payments
Less: amount of lease payments representing interest
Present value of future minimum lease payments
Less: current obligations under leases
Long-term lease obligations
January 29, 2022
(in thousands)
222,658
209,422
159,485
117,738
68,665
70,486
848,454
114,921
733,533
196,628
536,905
$
$
EXPRESS, INC. | 2021 Form 10-K | 61
NOTE 5 | INCOME TAXES
The provision (benefit) for income taxes consists of the following:
2021
2020
2019
Current:
U.S. federal
U.S. state and local
Total
Deferred:
U.S. federal
U.S. state and local
Total
$
(in thousands)
(239) $
554
315
(109,627) $
(1,240)
(110,867)
—
—
—
37,292
17,675
54,967
Income tax (benefit)/expense
$
315 $
(55,900) $
(602)
(363)
(965)
(39,272)
(10,289)
(49,561)
(50,526)
The following table provides a reconciliation between the statutory federal income tax rate and the effective tax rate:
Federal income tax rate
State income taxes, net of federal income tax effect
Change in uncertain tax positions
Share-based compensation
Non-deductible executive compensation
Change in valuation allowance
Change in tax law
Tax credits
Other items, net
Effective tax rate
2021
2020
2019
21.0 %
(5.0)%
0.8 %
(3.2)%
(22.6)%
4.0 %
— %
3.7 %
(0.9)%
(2.2)%
21.0 %
5.2 %
0.1 %
(0.3)%
(0.2)%
(22.9)%
9.1 %
0.1 %
— %
12.1 %
21.0 %
3.4 %
0.4 %
(1.3)%
(0.4)%
(0.1)%
— %
0.3 %
0.2 %
23.5 %
The decrease in the tax rate in 2021 compared to 2020 is primarily attributable to the impact of nondeductible
executive compensation in 2021, as well as establishing a valuation allowance against the Company's net deferred
tax assets in 2020. This was partially offset by the impact from the CARES Act of the 2019 and 2020 U.S. federal
net operating losses that are able to be carried back to years with a higher federal statutory tax rate than is currently
enacted.
On March 27, 2020, the CARES Act was enacted into law. The CARES Act provides several provisions that impact
the Company, including the establishment of a five-year carryback of net operating losses originating in the tax
years 2018, 2019, and 2020, temporarily suspending the 80% limitation on the use of net operating losses, relaxing
limitation rules on business interest deductions, and retroactively clarifying that businesses may immediately write-
off certain qualified leasehold improvement property dating back to January 1, 2018. The Company carried back
certain of its U.S. federal net operating losses to offset taxable income in the five-year carryback period as part of
the CARES Act. As of January 29, 2022, the Company has a $52.3 million income tax receivable that is expected to
be received in 2022.
The decrease in the tax rate in 2020 compared to 2019 is primarily attributable to the impact of establishing a
valuation allowance against the Company's net deferred tax assets, partially offset by the carryback of 2019 and
2020 U.S. federal net operating losses to years with a higher federal statutory rate than is currently enacted.
EXPRESS, INC. | 2021 Form 10-K | 62
The following table provides the effect of
temporary differences that created deferred income taxes as of
January 29, 2022 and January 30, 2021. Deferred tax assets and liabilities represent the future effects on income
taxes resulting from temporary differences and carry-forwards at the end of the respective periods.
Deferred tax assets:
Accrued expenses and deferred compensation
Lease liability
Intangible assets
Inventory
Deferred revenue
Other
Net operating losses, tax credit and other carryforwards
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Prepaid expenses
Inventory
Right of use asset
Other
Property and equipment
Total deferred tax liabilities
Net deferred tax asset
January 29, 2022
January 30, 2021
(in thousands)
$
13,693 $
197,063
21,402
—
5,142
986
41,137
(107,669)
171,754
2,844
1,305
161,105
—
6,500
171,754
$
— $
10,478
249,819
24,592
1,154
7,582
—
51,204
(108,418)
236,411
3,861
—
210,796
1,200
20,554
236,411
—
The Company evaluates whether deferred tax assets are realizable on a quarterly basis. The Company considers
all available positive and negative evidence, including past operating results and expectations of future operating
income. Accordingly, the Company continues to maintain a valuation allowance against the full amount of the U.S.
net deferred tax assets as of January 29, 2022.
As of January 29, 2022, the Company had U.S. federal net operating loss carryforwards of $54.8 million and U.S.
state net operating loss carryforwards of $469.0 million. The U.S. federal net operating losses have an indefinite
carryforward period. The U.S. state net operating losses have carryforward periods of five to twenty years with
varying expiration dates and certain jurisdictions have an unlimited carryforward. The Company had U.S. federal
and state capital loss carryforwards of $10.2 million, which, if unused, will expire beginning in 2026. The Company
has U.S. federal tax credits carryforwards in the amount of $3.9 million which can be carried forward 20 years and
expire starting in 2035. The Company also has $0.1 million in foreign tax credits, which can be carried forward 10
years and expire starting in 2027. A valuation allowance has been recorded on all of these tax attributes.
The following table summarizes the changes in the valuation allowance:
Valuation allowance, beginning of year
$
108,418 $
2,313 $
Changes in related gross deferred tax assets/liabilities
(228)
410
Charge/(release)
Valuation allowance, end of year
(521)
107,669 $
105,695
108,418 $
$
2,108
—
205
2,313
2021
2020
2019
(in thousands)
EXPRESS, INC. | 2021 Form 10-K | 63
Uncertain Tax Positions
The Company evaluates tax positions using a more likely than not recognition criterion.
A reconciliation of the beginning to ending unrecognized tax benefits is as follows:
Unrecognized tax benefits, beginning of year
Gross addition for tax positions of the current year
Gross addition for tax positions of the prior year
Settlements
Reduction for tax positions of prior years
Lapse of statute of limitations
Unrecognized tax benefits, end of year
$
$
January 29, 2022
January 30, 2021
February 1, 2020
(in thousands)
1,388 $
1,305 $
1,928
—
291
—
—
—
327
—
—
(106)
1,573 $
(244)
1,388 $
—
300
(2)
(240)
(681)
1,305
The amount of the above unrecognized tax benefits as of January 29, 2022, January 30, 2021, and February 1,
2020 that would impact the Company's effective tax rate, if recognized, is $1.6 million, $1.4 million, and $1.3 million,
respectively.
During 2021 and 2020, the Company released gross uncertain tax positions of $0.1 million and $0.2 million,
respectively, and the related accrued interest and penalties of $0.1 million and $0.2 million, respectively, as a result
of the expiration of associated statutes of limitation.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of
income tax expense. The total amount of net interest in tax expense related to interest and penalties included in the
Consolidated Statements of Income and Comprehensive Income was $(0.1) million for 2021, $(0.1) million for 2020,
and $(0.1) million for 2019. As of January 29, 2022 and January 30, 2021, the Company had accrued interest and
penalties of $0.3 million and $0.4 million, respectively.
The Company is subject to examination by the IRS for years subsequent to 2013. The Company is currently under
audit for refund claims related to the carryback of U.S. federal net operating losses as a result of CARES Act
provisions. The Company is also generally subject to examination by various U.S. state and local and non-U.S. tax
jurisdictions for the years subsequent to 2013. The Company does not expect the results from any income tax audit
to have a material impact on the Company’s financial statements.
The Company believes that over the next twelve months, it is reasonably possible that up to $0.1 million of
unrecognized tax benefits could be resolved as the result of settlements of audits and the expiration of statutes of
limitation. Final settlement of these issues may result in payments that are more or less than this amount, but the
Company does not anticipate that the resolution of these matters will result in a material change to its consolidated
financial position or results of operations.
EXPRESS, INC. | 2021 Form 10-K | 64
NOTE 6 | DEBT
The following table summarizes the Company's outstanding debt as of the dates indicated:
Term Loan Facility
Revolving Facility
Total outstanding borrowings
Less: unamortized debt issuance costs
Total debt, net
Less: current portion of long-term debt
Long-term debt, net
Outstanding letters of credit
Term Loan Facility
January 29, 2022
January 30, 2021
(in thousands)
$
96,737 $
35,000
131,737
(2,940)
128,797
11,216
90,000
106,050
196,050
(4,018)
192,032
—
$
$
117,581 $
192,032
34,636 $
36,099
On January 13, 2021, Express Holding, LLC, a wholly-owned subsidiary of the Company (“Express Holding”), and
its subsidiaries entered into the $140.0 million Asset-Based Term Loan Agreement (the “Term Loan Facility”), among
the Loan Parties (as defined therein), Wells Fargo Bank, National Association (“Wells Fargo”), as administrative
agent and collateral agent, and the other lenders named therein (the “Term Loan Lenders”).
The Term Loan Facility provides for a “first in, last out” term loan in an amount equal to $90.0 million (the “FILO
Term Loan”) and a delayed draw term loan facility in an amount equal to $50.0 million (the “DDTL”). The Term Loan
Facility is a senior secured obligation that ranks equally with the Loan Parties’ other senior secured obligations.
During 2021, the Company drew down the additional $50.0 million under the DDTL and repaid $43.3 million with
proceeds from 2020 CARES Act tax refunds, as required under the Term Loan Facility.
As of January 29, 2022, the Company had $6.7 million in borrowings outstanding under the DDTL and $90.0 million
in borrowings outstanding under the Term Loan Facility. The fair value of
the $96.7 million total borrowings
outstanding under the Term Loan Facility at January 29, 2022 was $98.0 million.
Amounts borrowed under the FILO Term Loan will be repaid in quarterly installments at a rate of 1.25% per quarter
based on the original principal amount of the FILO Term Loan, commencing with the fiscal quarter beginning on or
about January 30, 2022. All remaining amounts of the Term Loan Facility outstanding on the maturity date will be
paid in full on the maturity date, or May 24, 2024. The Loan Parties must repay amounts incurred under the Term
Loan Facility with net proceeds from the incurrence of certain additional debt, after payment in full and termination
of the $250.0 million asset-based loan credit facility, when outstanding loans under the Term Loan Facility and
asset-based loan credit facility exceed the aggregate borrowing base under the Term Loan Facility and asset-based
loan credit facility, and, in the case of the DDTL only, with tax refund proceeds payable to the Company pursuant to
the CARES Act. Voluntary prepayments under the Term Loan Facility are permitted at any time upon proper notice
and subject to minimum dollar amounts and, in certain instances, a prepayment fee.
Amounts borrowed under the Term Loan Facility bear interest at a variable rate indexed to LIBOR plus a pricing
margin ranging from 7.00% to 8.25% per annum, as determined in accordance with the provisions of the Term Loan
Facility based on EBITDA, as of any date of determination, for the most recently ended twelve month period.
Interest payments under the Term Loan Facility are due on the first day of each calendar month. As of January 29,
2022 the interest rate on the outstanding FILO Term Loan was 9.3%.
The Term Loan Facility is subject to a borrowing base which is calculated based on specified percentages of eligible
inventory, credit card receivables, intellectual property and, after the advance of the DDTL, the lesser of the amount
of the tax refund claim under the CARES Act and the outstanding amount of the DDTL.
EXPRESS, INC. | 2021 Form 10-K | 65
The Term Loan Facility financial covenant requires the Borrower to maintain minimum excess availability of at least
the greater of (i) $25.0 million or (ii) 10% of the sum of (x) Amended Revolving Credit Facility (defined below) loan
cap (calculated without giving effect to any term pushdown reserve) plus (y) the lesser of (A) the outstanding
principal balance under the Term Loan Facility and (B) the term loan borrowing base. In addition, the Term Loan
Facility contains customary covenants and restrictions on the Company’s and its subsidiaries’ activities, including,
but not limited to, limitations on the amount of cash that can be held, the incurrence of additional indebtedness,
liens, negative pledges, guarantees, investments, loans, asset sales, mergers, acquisitions, prepayment of other
debt, distributions, dividends, the repurchase of capital stock, transactions with affiliates, the ability to change the
nature of its business or its fiscal year, and permitted activities of the Company.
The Term Loan Facility includes customary events of default that include, among other things, non-payment
defaults, inaccuracy of representations and warranties, covenant defaults, cross-default to material indebtedness,
bankruptcy and insolvency defaults, material judgment defaults, ERISA defaults, structural defaults under the loan
documents and a change of control default. The occurrence of an event of default could result in the acceleration of
the obligations under the Term Loan Facility. Under certain circumstances, a default interest rate will apply on any
amount payable under the Term Loan Facility during the existence of an event of default at a per annum rate equal
to 2.00% above the applicable interest rate for any principal and 2.00% above the rate applicable for base rate
loans for any other interest.
All obligations under the Term Loan Facility are guaranteed by the Loan Parties (other than the Borrower (as
defined therein)) and secured by (a) a second priority lien on, substantially all of the Loan Parties’ working capital
assets, including cash, accounts receivable, and inventory, and (b) a first priority lien on, substantially all of the Loan
Parties’ non-working capital assets, including intellectual property, and the tax refund payable to the Company
pursuant to the CARES Act, in each case, subject to certain permitted liens.
The Company recorded deferred financing costs associated with the issuance of the Term Loan Facility. The
unamortized balance was $2.9 million as of January 29, 2022. These costs will be amortized over the respective
contractual terms of the Term Loan Facility or written off ratably as the Term Loan Facility is extinguished. The
Company’s Term Loan debt is presented on the Consolidated Balance Sheets, net of the unamortized fees.
Maturities of the Term Loan Facility during the next five fiscal years and thereafter are as follows:
2022
2023
2024
2025
2026
Thereafter
Total
$
January 29, 2022
(in thousands)
11,237
4,500
81,000
—
—
—
$
96,737
Revolving Credit Facility
On May 24, 2019, Express Holding and its subsidiaries entered into a First Amendment to the Second Amended
and Restated $250.0 million Asset-Based Loan Credit Agreement (as amended, the “Revolving Credit Facility”).
On March 17, 2020, the Company provided notice to the lenders under the Revolving Credit Facility of a request to
borrow $165.0 million.
On January 13, 2021, Express Holding and its subsidiaries entered into the Second Amendment to the Second
Amended and Restated $250.0 million Asset-Based Loan Credit Agreement and the Second Amendment to the
Amended and Restated Security Agreement, among the Loan Parties (as defined therein), the lenders party thereto,
and Wells Fargo, as administrative agent, as collateral agent, as issuing bank and as swing line lender (the
“Revolving Credit Facility Amendment”). The Revolving Credit Facility Amendment amends the Loan Parties’
existing asset-based Revolving Credit Facility (as amended by the Revolving Credit Facility Amendment, the
“Amended Revolving Credit Facility”), which is scheduled to expire on May 24, 2024.
EXPRESS, INC. | 2021 Form 10-K | 66
The Revolving Credit Facility Amendment added the Company and Express Topco LLC as Loan Parties, fully
obligated and bound by all of the respective covenants, representations, warranties and events of default.
Under the Amended Revolving Credit Facility, revolving loans may be borrowed, repaid and reborrowed until May
24, 2024, at which time all amounts borrowed must be repaid. Borrowings under the Amended Revolving Credit
Facility bear interest at variable rates that are indexed, at the Borrower’s option, to LIBOR or the base rate as
defined in the credit agreement governing the asset-based loan credit facility, in each case plus a pricing margin.
The pricing margin for LIBOR loans ranges from 2.00% to 2.25% per annum, and the pricing margin for base rate
loans ranges from 1.00% to 1.25% per annum, in each case as determined in accordance with the provisions of the
Amended Revolving Credit Facility based on average daily excess availability. The Amended Revolving Credit
Facility has a maximum borrowing amount of $250.0 million, subject to a borrowing base which is calculated based
on specified percentages of eligible inventory, credit card receivables and cash, less certain reserves. Commitment
reductions and termination of the Amended Revolving Credit Facility prior to the maturity date is permitted, subject
in certain instances to a prepayment fee. As of January 29, 2022, the interest rate on the outstanding borrowings of
$35.0 million at LIBOR was approximately 4.3%.
The unused line fee payable under the Amended Revolving Credit Facility is 0.375% per annum when average daily
excess availability during an applicable fiscal quarter is greater than or equal to 50% of the borrowing base and
0.20% per annum when average daily excess availability is less than 50% of the borrowing base, payable quarterly
in arrears on the first day of each calendar month. The Borrower is also obligated to pay other customary closing
fees, arrangement fees, administration fees and letter of credit fees for a credit facility of this size and type.
Interest payments under the Amended Revolving Credit Facility are due on the first day of each calendar month for
base rate loans. Interest payments under the Amended Revolving Credit Facility are due on the last day of the
interest period for LIBOR loans for interest periods of one and three months, and additionally every three months
after the first day of the interest period for LIBOR loans for interest periods of greater than three months.
The Amended Revolving Credit Facility financial covenant requires the Borrower to maintain minimum excess
availability of at least the greater of (i) $25 million or (ii) 10% of the sum of (x) Amended Revolving Credit Facility
loan cap (calculated without giving effect to any term pushdown reserve) plus (y) the lesser of (A) the outstanding
principal balance under the Term Loan Facility and (B) the term loan borrowing base. Subject to certain conditions,
the Amended Revolving Credit Facility restricts prepayment of the Term Loan Facility, except in connection with a
prepayment made solely from the tax refund payable to the Company pursuant to the CARES Act. In addition, the
Amended Revolving Credit Facility contains customary covenants and restrictions on the Company’s and its
subsidiaries’ activities, including, but not limited to, limitations on the amount of cash that can be held, incurrence of
additional
loans, asset sales, mergers,
acquisitions, prepayment of other debt, distributions, dividends, the repurchase of capital stock, transactions with
affiliates, the ability to change the nature of its business or its fiscal year, and permitted activities of the Company.
liens, negative pledges, guarantees,
indebtedness,
investments,
inaccuracy of representations and warranties, covenant defaults, cross-default
The Amended Revolving Credit Facility includes customary events of default that, include among other things, non-
payment defaults,
to material
indebtedness, bankruptcy and insolvency defaults, material judgment defaults, ERISA defaults, structural defaults
under the loan documents and a change of control default. The occurrence of an event of default could result in the
acceleration of the obligations under the Amended Revolving Credit Facility. Under certain circumstances, a default
interest rate will apply on any amount payable under the Amended Revolving Credit Facility during the existence of
an event of default at a per annum rate equal to 2.00% above the applicable interest rate for any principal and
2.00% above the rate applicable for base rate loans for any other interest.
All obligations under the Amended Revolving Credit Facility are guaranteed by the Loan Parties (other than the
Borrower) and secured by (a) a first priority lien on, substantially all of the Loan Parties’ working capital assets,
including cash, accounts receivable, and inventory, and (b) a second priority lien on, substantially all of the Loan
Parties’ non-working capital assets, including intellectual property, and the refund payable to the Company pursuant
to the CARES Act, in each case, subject to certain permitted liens.
As of January 29, 2022, the Company had $35.0 million in borrowings outstanding under the Amended Revolving
Credit Facility and approximately $145.8 million remained available for borrowing under the Amended Revolving
Credit Facility after giving effect to outstanding letters of credit in the amount of $34.6 million and subject to certain
borrowing base limitations as further discussed above. The fair value of the Amended Revolving Credit Facility at
January 29, 2022 was $36.5 million.
EXPRESS, INC. | 2021 Form 10-K | 67
Subsequent to year-end, the Company has borrowed an additional $87.0 million to fund normal working capital
needs.
Letters of Credit
The Company may enter into various trade letters of credit ("trade LCs") in favor of certain vendors to secure
merchandise. These trade LCs are issued for a defined period of time, for specific shipments, and generally expire
three weeks after the merchandise shipment date. As of January 29, 2022 and January 30, 2021, there were no
outstanding trade LCs. Additionally, the Company enters into stand-by letters of credit ("stand-by LCs") on an as-
needed basis to secure payment obligations for third party logistic services, merchandise purchases, and other
general and administrative expenses. As of January 29, 2022 and January 30, 2021, outstanding stand-by LCs
totaled $34.6 million and $36.1 million, respectively.
NOTE 7 | STOCKHOLDERS' EQUITY
Share Repurchase Programs
in privately negotiated transactions,
On November 28, 2017, the Company's Board of Directors ("Board") approved a share repurchase program that
authorizes the Company to repurchase up to $150.0 million of the Company’s outstanding common stock using
available cash (the "Repurchase Program"). The Company may repurchase shares on the open market, including
through Rule 10b5-1 plans,
through block purchases, or otherwise in
compliance with applicable laws, including Rule 10b-18 of the Exchange Act of 1934. The timing and amount of
stock repurchases will depend on a variety of factors, including business and market conditions as well as corporate
and regulatory considerations. The share repurchase program may be suspended, modified, or discontinued at any
time and the Company has no obligation to repurchase any amount of its common stock under the program. In
2019, the Company repurchased 4.3 million shares of its common stock under the Repurchase Program for an
aggregate amount equal
the Company did not
including commissions.
repurchase shares of its common stock. As of January 29, 2022, the Company had approximately $34.2 million
remaining under this authorization.
In 2021 and 2020,
to $15.6 million,
ATM Equity Offering Sales Agreement
On June 3, 2021, the Company entered into an ATM Equity Offering Sales Agreement (the "Sales Agreement") with
BofA Securities, Inc. ("BofA"), as the sales agent to sell up to 15.0 million shares of the Company's common stock,
par value $0.01 per share, through an “at-the-market” offering program. Such shares are issued pursuant to the
Company’s shelf registration statement on Form S-3 (Registration No. 333-253368) filed with the SEC on April 6,
the shares may be made by means of ordinary brokers’
2021. Pursuant
transactions on The New York Stock Exchange at market prices or as otherwise agreed by the Company and BofA.
to the Sales Agreement, sales of
During 2021, the Company did not sell any shares under the Sales Agreement. The Company intends to use net
proceeds, if any, from the sale of the common stock pursuant to the Sales Agreement for general corporate
purposes, which may include investments in working capital, or capital expenditures, including the acceleration of
investments to grow and enhance its eCommerce channel and omni-channel assets,
the repayment of
indebtedness, and other investments.
NOTE 8 | LONG-TERM INCENTIVE COMPENSATION
The Company records the fair value of share-based payments to employees in the Consolidated Statements of
Income and Comprehensive Income as compensation expense, net of forfeitures, over the requisite service period.
The Company issues shares of common stock from treasury stock, at average cost, upon exercise of stock options
and vesting of restricted stock units, including those with performance conditions.
Long-Term Incentive Compensation Plans
On April 30, 2018, upon the recommendation of the Committee, the Board unanimously approved and adopted,
subject to stockholder approval, the Express, Inc. 2018 Incentive Compensation Plan (the “2018 Plan”) to replace
the previous plan. On June 13, 2018, stockholders of the Company approved the 2018 Plan and all grants made
EXPRESS, INC. | 2021 Form 10-K | 68
subsequent to that approval have been made under the 2018 Plan. The primary change made by the 2018 Plan
was to increase the number of shares of common stock available for equity-based awards by 2.4 million shares.
In the third quarter of 2019, in connection with updates made by the Company to its policy regarding the clawback
of incentive compensation awarded to associates, the Board approved an amendment to the 2018 Plan, solely for
the purpose of updating the language regarding the recoupment of awards granted under the 2018 Plan.
On March 17, 2020, upon the recommendation of the Committee, the Board unanimously approved and adopted,
subject to stockholder approval, a second amendment to the 2018 Plan, which increased the number of shares of
common stock available under the 2018 Plan by 2.5 million shares. On June 10, 2020, stockholders of the
Company approved this plan amendment.
The following summarizes long-term incentive compensation expense:
Restricted stock units
Stock options
Performance-based restricted stock units
Total share-based compensation
Cash-settled awards
Total long-term incentive compensation
2021
2020
2019
(in thousands)
$
$
$
6,212 $
728
2,869
9,809 $
9,142
8,220 $
1,242
—
9,462 $
695
18,951 $
10,157 $
7,956
795
(574)
8,177
53
8,230
The stock compensation related income tax benefit, excluding consideration of valuation allowances, recognized by
the Company in 2021, 2020, and 2019 was $4.2 million, $0.9 million, and $1.8 million, respectively.
The valuation allowances associated with these tax benefits were $4.2 million in 2021. There were no valuation
allowances associated with the tax benefits in 2020 and 2019.
Equity Awards
Restricted Stock Units
During 2021, the Company granted restricted stock units ("RSUs") under the terms of the 2018 Plan. The fair value
of the RSUs is determined based on the Company's closing stock price on the day prior to the grant date in
accordance with the 2018 Plan. The RSUs granted in 2021, in general, vest ratably over one to three years and the
expense related to these RSUs will be recognized using the straight-line attribution method over this vesting period.
The Company's activity with respect to RSUs, including awards with performance conditions granted prior to 2018,
for 2021 was as follows:
Unvested, January 30, 2021
Granted
Vested
Forfeited
Unvested, January 29, 2022
Number of
Shares
Grant Date
Weighted Average
Fair Value
(in thousands, except per share amounts)
7,090 $
197 $
(3,084) $
(642) $
3,561 $
2.63
5.22
2.84
2.85
2.55
The total fair value of RSUs that vested during 2021, 2020, and 2019 was $8.8 million, $7.4 million, and $12.2
million,
total unrecognized
compensation expense related to unvested RSUs, which is expected to be recognized over a weighted-average
period of approximately 1.0 years.
there was approximately $5.0 million of
respectively. As of January 29, 2022,
EXPRESS, INC. | 2021 Form 10-K | 69
Stock Options
During 2021, the Company did not grant stock options. The expense for stock options is recognized using the
straight-line attribution method.
The Company's activity with respect to stock options during 2021 was as follows:
Number of
Shares
Grant Date
Weighted Average
Exercise Price
Weighted-Average
Remaining
Contractual Life
(in years)
Aggregate
Intrinsic Value
(in thousands, except per share amounts and years)
Outstanding, January 30, 2021
Granted
Exercised
Forfeited or expired
Outstanding, January 29, 2022
Expected to vest at January 29, 2022
Exercisable at January 29, 2022
3,324 $
— $
— $
(351) $
2,973 $
553 $
2,413 $
6.65
—
—
17.27
5.39
2.60
6.04
The following provides additional information regarding the Company's stock options:
6.6 $
7.5 $
6.4 $
696
166
528
Weighted average grant date fair value of options granted
Total intrinsic value of options exercised
2021
N/A
N/A
2020
2019
(in thousands, except per share amounts)
N/A
$
N/A
$
1.25
—
As of January 29, 2022, there was approximately $0.5 million of total unrecognized compensation expense related
to stock options, which is expected to be recognized over a weighted-average period of approximately 1.1 years.
The Company uses the Black-Scholes-Merton option-pricing model to value stock options granted to employees
and directors. The Company's determination of the fair value of stock options is affected by the Company's stock
price, as well as a number of subjective and complex assumptions. These assumptions include the risk-free interest
rate, the Company's expected stock price volatility over the term of the awards, expected term of the award, and
dividend yield. The following are the weighted-average assumptions used in the determination of the fair value of
the Company's stock options:
Risk-free interest rate (1)
Price Volatility (2)
Expected term (years) (3)
Dividend yield (4)
2021
N/A
N/A
N/A
N/A
2020
N/A
N/A
N/A
N/A
2019
1.93 %
47.27 %
6.29
—
(1) Represents the yield on U.S. Treasury securities with a term consistent with the expected term of the stock options.
(2) Primarily based on the historical volatility of the Company's common stock over a period consistent with the expected term of
the stock options.
(3) The Company calculated the expected term assumption using the midpoint scenario, which combines historical exercise
data with hypothetical exercise data for outstanding options. The Company believes this data currently represents the best
estimate of the expected term of new employee options.
(4) The Company does not currently plan on paying regular dividends.
Performance-Based Restricted Stock Units
During 2021, the Company granted 1.4 million performance-based restricted stock units to a limited number of
senior executive-level employees, which entitle these employees to receive a specified number of shares of the
Company’s common stock upon vesting. The number of shares earned could range between 0% and 200% of the
target amount depending upon performance achieved over a three-year vesting period beginning on the first day of
EXPRESS, INC. | 2021 Form 10-K | 70
the Company's 2021 fiscal year and ending on the last day of the Company's 2023 fiscal year. These awards are
valued based on the fair value of the award at the grant date and do not vary based on changes in the Company's
stock price. The performance condition of the award is adjusted earnings before interest, taxes, depreciation, and
amortization ("Adjusted EBITDA"). The number of shares that are expected to vest will change based on estimates
of the Company’s Adjusted EBITDA performance in relation to the pre-established targets. As of January 29,
2022, $7.5 million of total unrecognized compensation cost is expected to be recognized on performance-based
restricted stock units over a remaining weighted-average period of 2.2 years.
Cash-Settled Awards
Time-Based Cash-Settled Awards
During 2021, the Company granted time-based cash-settled awards to employees that vest ratably over three
years. These awards are classified as liabilities and do not vary based on changes in the Company's stock price or
performance. The expense related to these awards will be accrued using a straight-line method over this vesting
period. As of January 29, 2022, $9.1 million of total unrecognized compensation cost is expected to be recognized
on time-based cash-settled awards over a weighted-average period of 1.5 years.
Performance-Based Cash-Settled Awards
In March 2020, the Company granted performance-based cash-settled awards to a limited number of senior
executive-level employees. Due to the significant disruption caused by the COVID-19 pandemic on the Company’s
business operations, as well as its adverse impact on consumer confidence and demand, the Committee delayed
setting performance targets for the 2020 long-term performance-based awards until February 2021. While the 2020
long-term performance awards remain subject to a three-year vesting cliff, these awards are subject to a two-year
performance period instead of a three-year performance period. These awards are classified as liabilities, with the
amount to be paid out estimated each reporting period. Expense is being recognized in proportion to the completed
requisite period up until date of settlement. The amount of cash earned could range between 0% and 200% of the
target amount depending upon performance achieved over a two-year performance period commencing on the first
day of the Company’s 2021 fiscal year and ending on the last day of the Company’s 2022 fiscal year. The
performance condition of the award is Adjusted EBITDA. The amount of cash earned will change based on
estimates of
the Company’s Adjusted EBITDA performance in relation to the pre-established targets. As
of January 29, 2022, $5.8 million of total unrecognized compensation cost is expected to be recognized on
performance-based cash-settled awards over a remaining weighted-average period of 1.2 years.
NOTE 9 | EARNINGS PER SHARE
The following table provides a reconciliation between basic and diluted weighted-average shares used to calculate
basic and diluted earnings per share:
Weighted-average shares - basic
Dilutive effect of stock options, restricted stock units, and
restricted stock
Weighted-average shares - diluted
2021
2020
2019
66,448
—
66,448
(in thousands)
64,624
—
64,624
66,133
—
66,133
Equity awards representing 7.8 million, 10.6 million, and 7.5 million shares of common stock were excluded from the
computation of diluted earnings per share for 2021, 2020, and 2019, respectively, as the inclusion of these awards
would have been anti-dilutive.
Additionally, for 2021, 1.4 million shares were excluded from the computation of diluted weighted average shares
because the number of shares that will ultimately be issued is contingent on the Company's performance compared
to pre-established performance goals, which have not been achieved as of January 29, 2022.
EXPRESS, INC. | 2021 Form 10-K | 71
NOTE 10 | RETIREMENT BENEFITS
The employees of the Company, if eligible, participate in a qualified defined contribution retirement plan (the
“Qualified Plan”) sponsored by the Company.
Participation in the Company's Qualified Plan is available to employees who meet certain age and service
requirements. The Qualified Plan permits employees to elect contributions up to the lesser of 15% of
their
compensation or the maximum limits allowable under the Internal Revenue Code ("IRC"). The Company matches
employee contributions according to a predetermined formula. Employee contributions and Company matching
contributions vest immediately.
Total expense recognized related to the Qualified Plan employer match was $3.7 million, $3.4 million, and $4.2
million in 2021, 2020, and 2019, respectively.
NOTE 11 | COMMITMENTS AND CONTINGENCIES
In a complaint filed in January 2017 by Mr. Jorge Chacon in the Superior Court for the State of California for the
County of Orange, certain subsidiaries of the Company were named as defendants in a representative action
alleging violations of California state wage and hour statutes and other labor standards. The lawsuit seeks
unspecified monetary damages and attorneys’ fees.
In July 2018, former associate Ms. Christie Carr filed suit in Alameda County Superior Court for the State of
California naming certain subsidiaries of the Company as defendants in a representative action alleging violations of
California State wage and hour statutes and other labor standard violations. The lawsuit seeks unspecified
monetary damages and attorneys’ fees.
In August 2018, former associate Ms. Leticia Rosete filed suit in Los Angeles County Superior Court for the State of
California naming certain subsidiaries of the Company as defendants in a representative action alleging violations of
California state wage and hour statutes and other labor standard violations (including claims for discrimination,
harassment, retaliation, etc.). On September 8, 2021, the Rosete case was settled.
On January 29, 2019, Mr. Jorge Chacon filed a second representative action in the Superior Court for the State of
California for the County of Orange alleging violations of California state wages and hour statutes and other labor
standard violations, which was removed to federal court by the Company and is now pending in the United States
District Court for the Central District of California. The lawsuit seeks unspecified monetary damages and attorneys'
fees. In June 2021, a portion of Mr. Chacon’s claims in this action were certified as a class action. Plaintiff and the
Company both filed Motions for Summary Judgement on February 28, 2022. No trial date has been set.
The Company is vigorously defending itself against the unresolved claims and, as of January 29, 2022, the
Company's Consolidated Balance Sheet includes an estimated liability based on its best estimate of the outcome of
the unresolved matters.
The Company is subject to various other claims and contingencies arising out of the normal course of business.
Management believes that the ultimate liability arising from such claims and contingencies, if any, is not likely to
have a material adverse effect on the Company’s results of operations, financial condition, or cash flows.
NOTE 12 | RESTRUCTURING COSTS
In the fourth quarter of 2019, in connection with the announcement with the Company’s new strategy and the
restructuring of
the Company recognized $7.3 million in
restructuring and related reorganization charges. The charges were primarily related to employee severance,
benefits and professional fees. As of January 29, 2022, the Consolidated Balance Sheet does not reflect any
amounts related to this restructuring.
the Company’s work force to align to this strategy,
EXPRESS, INC. | 2021 Form 10-K | 72
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) promulgated
under the Exchange Act of 1934) that are designed to provide reasonable assurance that information required to be
disclosed in our Exchange Act of 1934 reports is recorded, processed, summarized, and reported within the time
periods specified in the SEC's rules and forms and that such information is accumulated and communicated to our
management, including our principal executive officer and principal financial officer, as appropriate, to allow timely
In designing and evaluating the disclosure controls and procedures,
decisions regarding required disclosure.
management recognizes that any controls and procedures, no matter how well designed and operated, can provide
only reasonable, and not absolute, assurance of achieving the desired control objectives. In reaching a reasonable
level of assurance, management necessarily was required to apply its judgment in evaluating the cost benefit
relationship of possible controls and procedures.
Under the supervision and with the participation of our management, including our principal executive officer and
principal financial officer, we conducted an evaluation prior to filing this report of our disclosure controls and
procedures. Based on this evaluation, our principal executive officer and our principal financial officer concluded that
our disclosure controls and procedures were effective at the reasonable assurance level as of January 29, 2022.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting,
as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act of 1934. Our internal control over
financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of the Company's financial statements for external reporting purposes in accordance
with generally accepted accounting principles. We conducted an evaluation of the effectiveness of our internal
control over financial reporting based on Internal Control - Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission ("COSO"). Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to risk that controls may become inadequate because of changes in
conditions or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company's internal control over financial reporting as of January 29,
2022. In making this assessment, we used the criteria set forth by COSO. Based on our assessment, management
concluded that, as of January 29, 2022, the Company's internal control over financial reporting was effective.
The effectiveness of the Company’s internal control over financial reporting as of January 29, 2022 has been
audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report
which appears herein. See “Item 8. Financial Statements and Supplementary Data” of this Annual Report.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act of 1934) that occurred during the fourth quarter of 2021 that materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
None.
EXPRESS, INC. | 2021 Form 10-K | 73
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT
PREVENT INSPECTIONS.
Not Applicable.
EXPRESS, INC. | 2021 Form 10-K | 74
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE.
The information required by this item is incorporated herein by reference from our Proxy Statement for our 2022
Annual Meeting of Stockholders.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item is incorporated herein by reference from our Proxy Statement for our 2022
Annual Meeting of Stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The information required by this item is incorporated herein by reference from our Proxy Statement for our 2022
Annual Meeting of Stockholders.
The following table summarizes share and exercise price information about our equity compensation plan as of
January 29, 2022.
Category
Equity compensation plans approved by
security holders
Equity compensation plans not approved
by security holders
Total
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
Weighted-average
exercise price of
outstanding options,
warrants and rights
(a)
(b)
Number of securities
remaining available for
future issuance under
equity compensation plan
(excluding securities
reflected in column (a))
(c)
7,924,617 $
—
7,924,617 $
5.39
—
5.39
4,783,567
—
4,783,567
The table above includes 1,390,498 RSUs with performance conditions. The number of performance-based RSUs
that are ultimately earned may vary from 0% to 200% of target depending on achievement relative to the predefined
financial performance targets. The amounts in columns (a) and (c) reflected in the table are calculated assuming the
target payout for all performance-based restricted stock units.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE.
The information required by this item is incorporated herein by reference from our Proxy Statement for our 2022
Annual Meeting of Stockholders.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The information required by this item is incorporated herein by reference from our Proxy Statement for our 2022
Annual Meeting of Stockholders.
EXPRESS, INC. | 2021 Form 10-K | 75
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a)
(1) Consolidated Financial Statements
The following consolidated financial statements of Express, Inc. and its subsidiaries are filed as part of this
report under Item 8. Financial Statements and Supplementary Data:
Report of Independent Registered Public Accounting Firm - PricewaterhouseCoopers, LLP
Consolidated Balance Sheets as of January 29, 2022 and January 30, 2021
Consolidated Statements of
January 29, 2022, January 30, 2021, and February 1, 2020
Income and Comprehensive Income for
the years ended
Consolidated Statements of Changes in Stockholders' Equity for the years ended January 29,
2022, January 30, 2021, and February 1, 2020
Consolidated Statements of Cash Flows for the years ended January 29, 2022, January 30,
2021, and February 1, 2020
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules
Schedules have been omitted because they are not required or are not applicable or because the
information required to be set forth therein either is not material or is included in the financial statements or
notes thereto.
(3) List of Exhibits
The following exhibits are either included in this report or incorporated by reference as indicated in the
following:
Exhibit
Number
3.1
3.2
3.3
3.4
4.1
4.2*
10.1+
10.2+
10.3+
EXHIBIT INDEX
Exhibit Description
Incorporation of Express,
Inc. (incorporated by reference to Exhibit 4.1 to the
Certificate of
Registration Statement on Form S-8 (File No. 333-168097), filed with the SEC on July 14, 2010).
Certificate of Amendment of Certificate of Incorporation of Express, Inc. (incorporated by reference to
Exhibit 3.1 to the Current Report on Form 8-K, filed with the SEC on June 11, 2013).
Bylaws of Express, Inc. (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K,
filed with the SEC on June 11, 2013).
Certificate of Designations of Series A Preferred Stock of Express, Inc., as filed with the Secretary of
State of the State of Delaware on April 20, 2020 (incorporated by reference to Exhibit 3.1 to the
Current Report on Form 8-K, filed with the SEC on April 21, 2020).
Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registration
Statement on Form S-1/A (File No. 333-164906), filed with the SEC on April 30, 2010 (the "Express
S-1")).
the Registrant's Securities Registered Pursuant
Description of
Exchange Act of 1934.
Form of Amended and Restated Employment Agreement (incorporated by reference to Exhibit 10.4
to the Quarterly Report on Form 10-Q, filed with the SEC on June 6, 2013).
Form of Amended and Restated Severance Agreement (incorporated by reference to Exhibit 10.5 to
the Quarterly Report on Form 10-Q, filed with the SEC on June 6, 2013).
Form of Incentive Stock Option Agreement (incorporated by reference to Exhibit 10.11 to the Express
S-1).
to Section 12 of
the Securities
EXPRESS, INC. | 2021 Form 10-K | 76
10.4+
10.5+
10.6+
10.7+
10.8+
10.9+
10.10+
10.11+
10.12
10.13
10.14
10.15+
10.16
10.17+
10.18
10.19+
10.20+
10.21+
10.22+
10.23+
10.24+
10.25+
10.26+
10.27+
Form of Nonqualified Stock Option Agreement (incorporated by reference to Exhibit 10.17 to the
Express S-1).
Form of Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.19 to the Express
S-1).
Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10.13 to the Express S-1).
Form of Stock Option Grant Agreement (incorporated by reference to Exhibit 10.2 to the Quarterly
Report on Form 10-Q, filed with the SEC on June 6, 2013).
Form of Performance Share Unit Agreement (incorporated by reference to Exhibit 10.3 to the
Quarterly Report on Form 10-Q, filed with the SEC on June 6, 2013).
Form of Non-Qualified Stock Option Grant (incorporated by reference to Exhibit 10.1 to the Form 8-K
filed with the SEC on April 4, 2014).
Form of Restricted Stock Unit Agreement for Restricted Stock Units (incorporated by reference to
Exhibit 10.2 to the Form 8-K filed with the SEC on April 4, 2014).
Form of Restricted Stock Unit Agreement for Performance Stock Units (incorporated by reference to
Exhibit 10.3 to the Form 8-K filed with the SEC on April 4, 2014).
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.22 to the Express S-1
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Current Report
on Form 8-K, filed with the SEC on January 5, 2012).
Second Amended and Restated $250,000,000 Asset-Based Loan Credit Agreement, dated as of May
20, 2015 among Express Holding, LLC, as Parent, Express, LLC, as Borrower, the Initial Lenders,
Initial Issuing Bank and Swing Line Bank, Wells Fargo Bank, National Association, as Administrative
Agent and Collateral Agent, U.S. Bank National Association, as Syndication Agent, and Wells Fargo
Bank, National Association, as Sole Lead Arranger and Sole Bookrunner (incorporated by reference
to Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on May 27, 2015).
Form of Severance Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on
Form 8-K, filed with the SEC on July 7, 2015).
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.2 to the Current Report
on Form 8-K, filed with the SEC on July 7, 2015).
Form of Restricted Stock Unit Agreement for Performance Stock Units (incorporated by reference to
Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on April 1, 2016).
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Current Report
on Form 8-K, filed with the SEC on August 3, 2016).
Form of Restricted Stock Unit Agreement for Performance Stock Units (incorporated by reference to
Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on March 17, 2017).
Form of Second Amended and Restated Employment Agreement (incorporated by reference to
Exhibit 10.2 to the Current Report on Form 8-K, filed with the SEC on March 17, 2017).
Form of Amended and Restated Severance Agreement (incorporated by reference to Exhibit 10.3 to
the Current Report on Form 8-K, filed with the SEC on March 17, 2017).
Second Amended and Restated Express, Inc. 2010 Incentive Compensation Plan (incorporated by
reference to Appendix B to Express, Inc.'s definitive proxy statement on Schedule 14A, filed with the
SEC on April 28, 2017).
Form of Restricted Stock Unit and Other Cash-Based Award Agreement (incorporated by reference
to Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on April 6, 2018).
Form of Restricted Stock Unit Agreement for Directors (incorporated by reference to Exhibit 10.1 to
the Current Report on Form 8-K, filed with the SEC on June 14, 2018).
Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.1 to the
Current Report on Form 8-K, filed with the SEC on March 21, 2019).
Form of Other Cash-Based Award Agreement (incorporated by reference to Exhibit 10.2 to the
Current Report on Form 8-K, filed with the SEC on March 21, 2019).
Employment Agreement, dated as of May 21, 2019, between Timothy Baxter and Express, Inc.
(incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on
May 21, 2019).
EXPRESS, INC. | 2021 Form 10-K | 77
10.28
10.29+
10.30+
10.31+
10.32+
10.33
10.34
21.1*
23.1*
31.1*
31.2*
32.1*
101.INS*
101.SCH*
First Amendment
to Second Amended and Restated $250,000,000 Asset-Based Loan Credit
Agreement and First Amendment to Amended and Restated Security Agreement, dated as of May
24, 2019, among Express Holding, LLC, as Parent, Express, LLC, as Borrower, the subsidiary
guarantors party thereto, the lenders party thereto and Wells Fargo Bank, National Association, as
Administrative Agent, as Collateral Agent, as Issuing Bank and as Swingline Bank (incorporated by
reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on May 30, 2019).
Form of Express, Inc. Employment Inducement Award Agreement of Non-qualified Stock Options
(incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q, filed with the SEC
on September 10, 2019).
Form of Express,
Inducement Award Agreement of Restricted Stock Units
(incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q, filed with the SEC
on September 10, 2019).
Inc. Employment
Letter Agreement, dated as of September 23, 2019, between Express, Inc. and Matt Moellering
(incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on
September 23, 2019).
Second Amended and Restated Express, Inc. 2018 Incentive Compensation Plan (incorporated by
reference to Exhibit 99.1 to the Registration Statement on Form S-8, filed with the SEC on June 15,
2020).
$140,000,000 Asset-Based Term Loan Agreement, dated January 13, 2021 (incorporated by
reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on January 13,
2021).
Second Amendment to the Second Amended and Restated $250,000,000 Asset-Based Loan Credit
Agreement, dated January 13, 2021 incorporated by reference to Exhibit 10.1 to the Current Report
on Form 8-K, filed with the SEC on January 13, 2021).
List of subsidiaries of registrant.
Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm.
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Principal Financial Officer and Principal Executive Officer pursuant to 18 U.S.C
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File
because its XBRL tags are embedded within the Inline XBRL document).
Inline XBRL Taxonomy Extension Schema Document.
101.CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
+ Indicates a management contract or compensatory plan or arrangement.
* Filed herewith.
(b)
Exhibits
The exhibits to this report are listed in section (a)(3) of Item 15 above.
(c)
Financial Statement Schedules
None.
ITEM 16. FORM 10-K SUMMARY.
Not applicable.
EXPRESS, INC. | 2021 Form 10-K | 78
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 24, 2022
EXPRESS, INC.
By:
/s/ Matthew Moellering
Matthew Moellering
President, Chief Operating Officer, and Interim Chief Financial
Officer
EXPRESS, INC. | 2021 Form 10-K | 79
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each of the undersigned constitutes and appoints Matthew
Moellering as attorney-in-fact and agent, with full power of substitution and re-substitution, for and in the name,
place and stead of the undersigned, in any and all capacities, to sign any and all amendments to this Annual Report
on Form 10-K, and to file the same, with all exhibits thereto and all other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to
do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as the undersigned might or could do in son, hereby ratifying and confirming all that said
attorney-in-fact or substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: March 24, 2022
By:
/s/ Timothy Baxter
Timothy Baxter
Chief Executive Officer (Principal Executive Officer), Director
Date: March 24, 2022
By:
/s/ Matthew Moellering
Matthew Moellering
President, Chief Operating Officer, and Interim Chief Financial
Officer (Principal Financial Officer and Principal Accounting
Officer)
Date: March 24, 2022
By:
/s/ Michael G. Archbold
Michael G. Archbold
Director
Date: March 24, 2022
By:
/s/ Terry Davenport
Terry Davenport
Director
Date: March 24, 2022
By:
/s/ Michael F. Devine
Michael F. Devine
Director
Date: March 24, 2022
By:
/s/ Karen Leever
Karen Leever
Director
Date: March 24, 2022
By:
/s/ Patricia E. Lopez
Patricia E. Lopez
Director
Date: March 24, 2022
By:
/s/ Antonio J. Lucio
Antonio J. Lucio
Director
Date: March 24, 2022
By:
/s/ Mylle H. Mangum
Mylle H. Mangum
Director
Date: March 24, 2022
By:
/s/ Peter Swinburn
Peter Swinburn
Director
EXPRESS, INC. | 2021 Form 10-K | 80
Executive Officers of Express, Inc.
Timothy Baxter
Chief Executive Officer
Sara Tervo
Executive Vice President and Chief Marketing
Officer
Matthew Moellering
Jason Judd
President and Chief Operating Officer
Senior Vice President, Chief Financial Officer and
Treasurer
Malissa Akay
Executive Vice President and Chief Merchandising
Officer
Board of Directors
Michael Archbold
(1)
Patricia Lopez
Retired Chief Executive Officer, GNC Holdings,
Inc.
Retired Chief Executive Officer, High Ridge
Brands, Inc.
Timothy Baxter
Antonio Lucio
Chief Executive Officer, Express, Inc.
Principal and Founder, 5S Diversity
(1)
(2)
Terry Davenport
(2)
Mylle Mangum
(1,2,3)
Retired Global Brand Advisor, Starbucks Coffee
Company
Chief Executive Officer, IBT Holdings, LLC
Michael F. Devine
(1)
Peter Swinburn
(2)
Retired Executive Vice President and Chief
Financial Officer, Coach
Retired Chief Executive Officer and President,
Molson Coors Brewing Company
Karen Leever
(2)
Chief Operating Officer, Fetch by The Dodo
1 = Member of the Audit Committee
2 = Member of the Compensation and Governance Committee
3 = Chairman of the Board
Company Information
Headquarters
Express, Inc.
1 Express Drive
Columbus, Ohio 43230
(614) 474-7000
Stock Exchange Listing
New York Stock Exchange
(Trading Symbol “EXPR”)
Annual Meeting of Shareholders
8:30 a.m., June 8, 2022
The Annual Meeting will be held virtually via live
webcast at
www.virtualshareholdermeeting.com/EXPR2022
Independent Registered Public Accounting Firm
PricewaterhouseCoopers, LLP
Columbus, Ohio
Information Requests
Stock Transfer Agent
Through our website:
www.express.com/investor
Upon written request to:
Express, Inc.
Investor Relations
1 Express Drive
Columbus, Ohio 43230
Computershare Trust Company N.A.
150 Royall Street
Canton, MA 02021
(800) 962-4284
www.computershare.com
By calling:
(888) 423-2421
NYSE Certification Statement
Our Chief Executive Officer and Chief Financial
Officer have filed the certifications required by
Section 302 of the Sarbanes-Oxley Act of 2002 with
the Securities and Exchange Commission as exhibits
to our Form 10-K for the fiscal year ended January
29, 2022. In addition, our Chief Executive Officer
filed a separate annual certification to the New York
Stock Exchange following our annual meeting of
shareholders on June 9, 2021.
Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements that are subject to risks and uncertainties. All statements
other than statements of historical fact included in this Annual Report on Form 10-K 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, objectives, strategies, and initiatives for future operations or growth; the expected outcome of such
plans, objectives, strategies, and initiatives; or 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, but not limited to those under the heading "Risk Factors" in Part I, Item 1A in
this Annual Report on Form 10-K. Those factors should not be construed as exhaustive and should be read in conjunction with
the other cautionary statements included in this Annual Report on Form 10-K. We caution you not to place undue reliance on
these forward-looking statements. We do not undertake any obligation to make any revisions to these forward-looking
statements to reflect events or circumstances after the date of this Annual Report on Form 10-K or to reflect the occurrence of
unanticipated events, except as required by law, including the securities laws of the United States and rules and regulations of
the Securities and Exchange Commission ("SEC").