Document


 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 14, 2018
 
 EXPRESS, INC.
(Exact name of registrant as specified in its charter)
 
 
 
 
 
 
Delaware
 
001-34742
 
26-2828128
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 
 
 
 
 
 
1 Express Drive
Columbus, Ohio
 
43230
(Address of principal executive offices)
 
(Zip Code)
(614) 474-4001
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report.)
 
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
 







Item 2.02 Results of Operations and Financial Condition.
On March 14, 2018, Express, Inc. issued a press release providing information regarding earnings for the fourteen and fifty-three weeks ended February 3, 2018 and outlook for 2018 and also made available an investor presentation with supplemental information regarding the same. A copy of the press release is attached hereto as Exhibit 99.1. A copy of the investor presentation is attached hereto as Exhibit 99.2.

Item 7.01 Regulation FD Disclosure.
Express, Inc. adopted ASC 606, a new revenue recognition standard, in the first quarter of 2018. Express, Inc. is furnishing Exhibit 99.3 as supplemental information regarding its adoption.

The information in this Item 2.02 and 7.01, including Exhibits 99.1, 99.2, and 99.3 in this Form 8-K are being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section. The information in this Form 8-K shall not be incorporated by reference into any filing under the Securities Act of 1933, except as shall otherwise be expressly set forth by specific reference in such filing.

Item 8.01 Other Events.
Express, Inc. will hold its 2018 annual meeting of stockholders on June 13, 2018.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits
 
 
Press Release
Investor Presentation
Information Regarding Adoption of ASC 606, Revenue from Contracts with Customers





SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
EXPRESS, INC.
Date: March 14, 2018
 
/s/ Periclis Pericleous
 
 
Periclis Pericleous
 
 
Senior Vice President, Chief Financial Officer and Treasurer




Exhibit


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12127589&doc=5


Contact:
Mark Rupe
Express, Inc.
Vice President Investor Relations
(614) 474-4465



EXPRESS, INC. REPORTS FOURTH QUARTER AND FULL YEAR 2017 RESULTS;
INTRODUCES FIRST QUARTER AND FULL YEAR 2018 OUTLOOK

Fourth quarter comparable sales decreased 1%
Fourth quarter diluted EPS of $0.37, including a $0.03 net tax benefit
Record e-commerce sales for both the fourth quarter and full year; $203 million in the fourth quarter and $509 million for the year, up 17% and 22% respectively, on a comparable sales basis
Merchandise margin expanded 130 basis points in the fourth quarter
Achieved target of $20 million in cost savings in 2017 and remain on track to deliver $44 to $54 million in total savings by 2019
Strong balance sheet maintained with $236 million in cash and no debt at year end
Repurchased 3.2 million shares for $25 million to date under existing $150 million share repurchase program

Columbus, Ohio - March 14, 2018 - Express, Inc. (NYSE: EXPR), a specialty retail apparel company, announced its financial results for the fourth quarter and full year 2017. These results, which cover the fourteen and fifty-three weeks ended February 3, 2018, are compared to the thirteen and fifty-two weeks ended January 28, 2017. Comparable sales for the fourth quarter and full year 2017 were calculated using the fourteen and fifty-three week periods ended February 3, 2018, as compared to the fourteen and fifty-three week periods ended February 4, 2017.
David Kornberg, the Company's president and chief executive officer, noted that, "While our overall 2017 full year results were below plan, our performance showed improvement over the course of the year, as our key initiatives gained traction. We were particularly pleased with the performance of our e-commerce business, which continues its significant growth and accounted for over $500 million in sales in 2017. We are confident that our strategy will continue to yield improved results and believe that Express is uniquely positioned to capture opportunities presented by the ongoing retail industry transformation. For 2018, we are focused on delivering compelling product, growing our customer base and brand awareness, and pursuing double-digit growth in our e-commerce business. In addition, we will continue to expand our omni-channel capabilities, while further optimizing our store footprint."
Mr. Kornberg continued, "Our financial position remains strong with more than $235 million in cash and no debt, and we generate solid cash flow. Since our Board authorized a $150 million share repurchase program in November, we have repurchased $25 million, or 3.2 million shares, underscoring our confidence in the business and commitment to driving shareholder value."





Fourth Quarter 2017 Operating Results:
Net sales increased 2% to $693.8 million from $678.8 million in the fourth quarter of 2016. Fourth quarter 2017 net sales benefited from an extra week, which was worth $26 million.
Comparable sales (including e-commerce sales) decreased 1%, compared to a 13% decrease in the fourth quarter of 2016.
E-commerce sales increased 20% to $203.3 million. On a comparable sales basis, e-commerce sales increased 17%.
Merchandise margin increased by 130 basis points driven by sourcing-related cost savings. Buying and occupancy as a percentage of net sales decreased by 30 basis points. In combination, this resulted in a 160 basis point increase in gross margin, representing 30.0% of net sales compared to 28.4% in last year’s fourth quarter.
Selling, general, and administrative (SG&A) expenses were $162.6 million versus $154.0 million in last year's fourth quarter, an increase principally due to the extra week in the fourth quarter. As a percentage of net sales, SG&A expenses increased by 70 basis points to 23.4%.
Operating income was $44.2 million, or 6.4% of net sales, compared to $38.8 million, or 5.7% of net sales in the fourth quarter of 2016.
Income tax expense was $14.6 million, at an effective tax rate of 33.2%, compared to $15.5 million, at an effective tax rate of 40.5% in last year's fourth quarter. During the fourth quarter of 2017, the Company recognized a one-time gain of approximately $3.1 million related to tax reform, specifically the re-measurement of the Company's deferred taxes, as well as a tax impact of $0.4 million related to the exit of Canada.
Net income was $29.4 million, or $0.37 per diluted share. On an adjusted basis, net income was $26.8 million, or $0.34 per diluted share, excluding the aforementioned tax-related items. This compares to net income of $22.8 million, or $0.29 per diluted share, in the fourth quarter of 2016.
Real estate activity for the fourth quarter of 2017 is presented in Schedule 5.
Full Year 2017 Operating Results:
Net sales decreased 2% to $2,138.0 million from $2,192.5 million in 2016. In 2017, net sales benefited from an extra week which was worth $26 million.
Comparable sales (including e-commerce sales) decreased 3%, compared to a 9% decrease in 2016.
E-commerce sales increased 23% to $509.0 million from $413.4 million in 2016. On a comparable sales basis, e-commerce sales increased 22% in 2017 as compared to 2016.
Operating income was $29.7 million, and on an adjusted basis was $53.9 million in 2017. This compared with $103.6 million in 2016.
Net income was $19.4 million, or $0.25 per diluted share, compared to $57.4 million, or $0.73 per diluted share in 2016. On an adjusted basis, net income was $28.4 million, or $0.36 per diluted share, compared to $64.3 million, or $0.81 per diluted share in 2016.
Balance Sheet And Cash Flow Highlights:
Cash and cash equivalents totaled $236.2 million at the end of 2017 versus $207.4 million at the end of 2016.
During the fifty-three weeks ended February 3, 2018, approximately $17.3 million was used to repurchase approximately 2.1 million shares of the Company's outstanding common stock.





Capital expenditures totaled $57.4 million for 2017 compared to $98.7 million for 2016.
Inventory was $266.3 million at the end of 2017 compared to $241.4 million at the end of 2016.
Share Repurchase Program:
On November 28, 2017, the Company's Board of Directors approved a new share repurchase program that authorized the Company to repurchase up to $150 million of the Company’s outstanding common stock using available cash. Under this authorization, the Company repurchased 2.1 million common shares for $17 million during the fourth quarter of 2017. Subsequent to year-end, the Company has repurchased an additional 1.1 million shares for $8 million and currently has $125 million remaining under its authorization. The Company’s first quarter and full year 2018 guidance reflects share repurchases made to date, however does not contemplate any future share repurchases.

Tax Legislation:
"H.R.1", formerly known as the "Tax Cuts and Jobs Act", was enacted into law on December 22, 2017. The new tax legislation will affect the Company by reducing its corporate income tax rate from 35% to 21% and through a one-time re-measurement of the Company's deferred taxes using this new lower tax rate. During the fourth quarter of 2017, the Company recognized a one-time gain related to the value of the Company's deferred taxes of $3.1 million. Excluding the impact of discrete items, the Company estimates that its operating tax rate will be reduced to approximately 28% due primarily to the new tax legislation.
Revenue Recognition Changes:
The Company adopted the new Financial Accounting Standards Board (FASB) revenue recognition standard effective in the first quarter of 2018. The new standard impacts the timing of e-commerce revenue recognition and the accounting treatment for the Company's loyalty and private label credit card programs, however it will not have a material impact on the Company's overall financial statements. The Company is utilizing the full retrospective method of adoption, and accordingly, has recast its income statements for 2017 and 2016. The Company has included the recast statements in the Form 8-K filed with the SEC as Exhibit 99.3 on March 14, 2018 and has also made them available on the Investor Relations section of its website. The Company's first quarter and full year 2018 guidance is based on the new standard.
2018 Guidance:
The table below compares the Company's projected results for the thirteen week period ended May 5, 2018 to the recast results for the thirteen week period ended April 29, 2017, which reflect retrospective adoption of the new revenue recognition standard.
 
First Quarter 2018 Guidance
 
First Quarter 2017 Results
Comparable Sales
-1% to 1%
 
(10)%
Effective Tax Rate
NM(1)
 
64.5%(2,4)
Interest Expense, Net
$0.3 million
 
$0.8 million
Net (Loss)/Income
($3.0) to $0.0 million
 
($2.7) million(2,3,4)
Adjusted Net (Loss)/Income
N/A
 
($3.7) million(4,5)
Diluted Earnings Per Share (EPS)
($0.04) to $0.00
 
($0.03)(2,3,4)
Adjusted Diluted EPS
N/A
 
($0.05)(4,5)
Weighted Average Diluted Shares Outstanding
75.9 million
 
78.4 million






(1) Not meaningful for the first quarter of 2018 due to the projected near break even pre-tax income and the expected negative impact from certain discrete tax items totaling approximately $1.5 million. This will raise the Company's effective tax rate above its operating tax rate of approximately 28%.
(2) Includes a tax benefit of $7.3 million related to the exit of Canada, partially offset by a net tax impact of approximately $3.2 million attributable to certain discrete items that occurred during the first quarter.
(3) Includes restructuring costs of $6.3 million incurred in the first quarter of 2017 related to the exit of Canada, including the impairment of Canadian assets in the amount of $5.5 million.
(4) Retrospectively adjusted to reflect adoption of the new revenue recognition accounting standard. For additional information regarding the adjustments see Exhibit 99.3 to the Company's Form 8-K filed with the SEC on March 14, 2018.
(5) Adjusted Net Income and Adjusted Diluted EPS are non-GAAP financial measures. Refer to Schedule 4 for a reconciliation of GAAP to Non-GAAP financial measures.
The table below compares the Company's projected results for the 52 week period ended February 2, 2019 to the recast results for the 53 week period ended February 3, 2018, which reflect retrospective adoption of the new revenue recognition standard.
 
Full Year 2018 Guidance
 
Full Year 2017
Results
Comparable Sales
-1% to 1%
 
(3)%
Effective Tax Rate
Approximately 33%(1)
 
34.6%(2,4)
Interest Expense, Net
$1 million
 
$2.2 million
Net Income
$25 to $35 million
 
$18.9 million(2,3,4)
Adjusted Net Income
N/A
 
$28.9 million(4,5)
Diluted EPS
$0.32 to $0.46
 
$0.24(2,3,4)
Adjusted Diluted EPS
N/A
 
$0.37(4,5)
Weighted Average Diluted Shares Outstanding
76.6 million
 
78.9 million
Capital Expenditures
$60 to $65 million
 
$57.4 million
(1) The Company expects a negative impact from certain discrete tax items totaling approximately $1.5 million in 2018. This tax impact is expected to raise the Company's effective tax rate for the full year above its operating tax rate of approximately 28%.
(2) Includes a net $12.1 million tax benefit related to the exit of Canada, as well as a $3.1 million net tax benefit related to tax reform, specifically the re-measurement of the Company's deferred taxes.
(3) Includes $24.2 million in restructuring costs and inventory adjustments related to the exit of Canada.
(4) Retrospectively adjusted to reflect adoption of the new revenue recognition accounting standard. For additional information regarding the adjustments see Exhibit 99.3 to the Company's Form 8-K filed with the SEC on March 14, 2018.





(5) Adjusted Net Income and Adjusted Diluted EPS are non-GAAP financial measures. Refer to Schedule 4 for a reconciliation of GAAP to Non-GAAP financial measures.
This guidance does not take into account any additional non-core items that may occur and excludes the impact of discrete items on the tax rate and future share repurchases.
See Schedule 5 for a discussion of projected real estate activity.
Conference Call Information:
A conference call to discuss fourth quarter 2017 results is scheduled for Wednesday, March 14, 2018 at 9:00 a.m. Eastern Time (ET). Investors and analysts interested in participating in the call are invited to dial (877) 705-6003 approximately ten minutes prior to the start of the call. The conference call will also be webcast live at: http://www.express.com/investor and remain available for 90 days. A telephone replay of this call will be available at 12:00 p.m. ET on March 14, 2018 until 11:59 p.m. ET on March 21, 2018 and can be accessed by dialing (844) 512-2921 and entering replay pin number 13676416.
An investor presentation with information regarding the fourth quarter and fiscal year 2017 results and outlook for 2018 will also be available at: http://www.express.com/investor at approximately 7:00 a.m. ET on Wednesday, March 14, 2018.
About Express, Inc.:
Express is a specialty retailer of women's and men's apparel and accessories, targeting the 20 to 30-year-old customer. Express has more than 35 years of experience offering a distinct combination of fashion and quality for multiple lifestyle occasions at an attractive value addressing fashion needs across work, casual, jeanswear, and going-out occasions. The Company currently operates more than 600 retail and factory outlet stores, located primarily in high-traffic shopping malls, lifestyle centers, and street locations across the United States and Puerto Rico. Express merchandise is also available at franchise locations and online in Latin America. Express also markets and sells its products through its e-commerce website, www.express.com, as well as on its mobile app.
Forward-Looking Statements:
Certain statements are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include any statement that does not directly relate to any historical or current fact and include, but are not limited to, (1) guidance and expectations for the first quarter and full year 2018, including statements regarding expected comparable sales, effective tax rates, interest expense, net income, diluted earnings per share, and capital expenditures, (2) statements regarding expected store openings, closures, conversions, and gross square footage, and (3) statements regarding the Company's strategy, future plans, and initiatives, and results expected there from. Forward-looking statements are based on our current expectations and assumptions, which may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict, and significant contingencies, many of which are beyond the Company's control. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are (1) changes in consumer spending and general economic conditions; (2) our ability to identify and respond to new and changing fashion trends, customer preferences, and other related factors; (3) fluctuations in our sales, results of operations, and cash levels on a seasonal





basis and due to a variety of other factors, including, our product offerings relative to customer demand, the mix of merchandise we sell, promotions, and inventory levels; (4) competition from other retailers; (5) customer traffic at malls, shopping centers, and at our stores and online; (6) our dependence on a strong brand image; (7) our ability to develop and maintain a relevant and reliable omni-channel experience for our customers; (8) the failure or breach of information systems upon which we rely; (9) our ability to protect customer data from fraud and theft; (10) our dependence upon third parties to manufacture all of our merchandise; (11) changes in the cost of raw materials, labor, and freight; (12) supply chain or other business disruption; (13) our dependence upon key executive management; (14) our ability to achieve our strategic objectives; (15) our substantial lease obligations; (16) our reliance on third parties to provide us with certain key services for our business; (17) claims made against us resulting in litigation or changes in laws and regulations applicable to our business; (18) our inability to protect our trademarks or other intellectual property rights which may preclude the use of our trademarks or other intellectual property around the world; (19) restrictions imposed on us under the terms of our asset-based loan facility; (20) impairment charges on long-lived assets; and (21) changes in tax requirements, results of tax audits, and other factors that may cause fluctuations in our effective tax rate. Additional information concerning these and other factors can be found in Express, Inc.'s filings with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events, or otherwise, except as required by law.





Schedule 1
Express, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)

 
February 3, 2018
 
January 28, 2017
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
236,222

 
$
207,373

Receivables, net
12,084

 
15,787

Inventories
266,271

 
241,424

Prepaid minimum rent
30,779

 
31,626

Other
19,780

 
17,923

Total current assets
565,136

 
514,133

 
 
 
 
PROPERTY AND EQUIPMENT
1,047,447

 
1,029,176

Less: accumulated depreciation
(642,434
)
 
(577,890
)
Property and equipment, net
405,013

 
451,286

 
 
 
 
TRADENAME/DOMAIN NAMES/TRADEMARKS
197,618

 
197,618

DEFERRED TAX ASSETS
7,025

 
7,926

OTHER ASSETS
12,815

 
14,226

Total assets
$
1,187,607

 
$
1,185,189

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 
Accounts payable
$
145,589

 
$
172,668

Deferred revenue
28,920

 
29,428

Accrued expenses
116,355

 
80,301

Total current liabilities
290,864

 
282,397

 
 
 
 
DEFERRED LEASE CREDITS
137,618

 
146,328

OTHER LONG-TERM LIABILITIES
105,125

 
120,777

Total liabilities
533,607

 
549,502

 
 
 
 
COMMITMENTS AND CONTINGENCIES
 
 
 
 
 
 
 
Total stockholders’ equity
654,000

 
635,687

Total liabilities and stockholders’ equity
$
1,187,607

 
$
1,185,189







Schedule 2
Express, Inc.
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)

 
Fourteen Weeks Ended
 
Thirteen Weeks Ended
 
Fifty-Three Weeks Ended
 
Fifty-Two Weeks Ended
 
February 3, 2018
 
January 28, 2017
 
February 3, 2018
 
January 28, 2017
NET SALES
$
693,814

 
$
678,781

 
$
2,138,030

 
$
2,192,547

COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS
485,850

 
485,961

 
1,522,797

 
1,529,343

Gross profit
207,964

 
192,820

 
615,233

 
663,204

OPERATING EXPENSES:
 
 
 
 
 
 
 
Selling, general, and administrative expenses
162,559

 
153,994

 
562,088

 
559,541

Restructuring costs

 

 
22,869

 

Other operating expense, net
1,200

 
34

 
536

 
62

Total operating expenses
163,759

 
154,028

 
585,493

 
559,603

 
 
 
 
 
 
 
 
OPERATING INCOME
44,205

 
38,792

 
29,740

 
103,601

 
 
 
 
 
 
 
 
INTEREST EXPENSE, NET
172

 
623

 
2,242

 
13,468

OTHER INCOME, NET

 
(80
)
 
(537
)
 
(484
)
INCOME BEFORE INCOME TAXES
44,033

 
38,249

 
28,035

 
90,617

INCOME TAX EXPENSE
14,604

 
15,475

 
8,669

 
33,200

NET INCOME
$
29,429

 
$
22,774

 
$
19,366

 
$
57,417

 
 
 
 
 
 
 
 
EARNINGS PER SHARE:
 
 
 
 
 
 
 
Basic
$
0.38

 
$
0.29

 
$
0.25

 
$
0.73

Diluted
$
0.37

 
$
0.29

 
$
0.25

 
$
0.73

 
 
 
 
 
 
 
 
WEIGHTED AVERAGE SHARES OUTSTANDING:
 
 
 
 
 
 
 
Basic
78,333

 
78,414

 
78,592

 
78,669

Diluted
78,927

 
78,741

 
78,870

 
79,049








Schedule 3
Express, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
Fifty-Three Weeks Ended
 
Fifty-Two Weeks Ended
 
February 3, 2018
 
January 28, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$
19,366

 
$
57,417

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
90,221

 
82,144

Loss on disposal of property and equipment
2,891

 
942

Impairment charge
9,850

 
5,108

Loss on deconsolidation of Canada
10,672

 

Amortization of lease financing obligation discount

 
11,354

Share-based compensation
14,008

 
12,858

Deferred taxes
(912
)
 
20,065

Landlord allowance amortization
(13,183
)
 
(11,280
)
Other non-cash adjustments
(500
)
 

Changes in operating assets and liabilities:
 
 
 
Receivables, net
3,279

 
6,371

Inventories
(28,954
)
 
14,144

Accounts payable, deferred revenue, and accrued expenses
(12,862
)
 
(15,857
)
Other assets and liabilities
24,691

 
3,442

Net cash provided by operating activities
118,567

 
186,708

 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Capital expenditures
(57,435
)
 
(98,712
)
Decrease in cash and cash equivalents resulting from deconsolidation of Canada
(9,232
)
 

Purchase of intangible assets

 
(21
)
Investment in equity interests

 
(10,133
)
Net cash used in investing activities
(66,667
)
 
(108,866
)
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Payments on lease financing obligations
(1,710
)
 
(1,595
)
Repayments of financing arrangements
(2,040
)
 
(3,274
)
Proceeds from exercise of stock options

 
2,735

Repurchase of common stock under share repurchase program
(17,264
)
 
(51,538
)
Repurchase of common stock for tax withholding obligations
(1,599
)
 
(4,599
)
Net cash used in financing activities
(22,613
)
 
(58,271
)
 
 
 
 
EFFECT OF EXCHANGE RATE ON CASH
(438
)
 
899

 
 
 
 
NET INCREASE IN CASH AND CASH EQUIVALENTS
28,849

 
20,470

CASH AND CASH EQUIVALENTS, Beginning of period
207,373

 
186,903

CASH AND CASH EQUIVALENTS, End of period
$
236,222

 
$
207,373






Schedule 4
Supplemental Information - Consolidated Statements of Income
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
The Company supplements the reporting of its financial information determined under United States generally accepted accounting principles (GAAP) with certain non-GAAP financial measures: adjusted operating income, adjusted net income, and adjusted diluted earnings per share. The Company believes that these non-GAAP measures provide additional useful information to assist stockholders in understanding its financial results and assessing its prospects for future performance. Management believes adjusted operating income, adjusted net income, and adjusted diluted earnings per share are important indicators of the Company's business performance because they exclude items that may not be indicative of, or are unrelated to, the Company's underlying operating results, and provide a better baseline for analyzing trends in the business. In addition, adjusted operating income is used as a performance measure in the Company's short-term cash incentive compensation program and adjusted diluted earnings per share is used as a performance measure in the Company's long-term executive compensation program for purposes of determining the number of equity awards that are ultimately earned. 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 operating income, reported net income and reported diluted earnings per share. These non-GAAP financial measures reflect an additional way of viewing the Company's operations that, when viewed with the GAAP results and the below reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of the Company's business. Management strongly encourages investors and stockholders to review the Company's financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.
 
Fourteen Weeks Ended February 3, 2018
(in thousands, except per share amounts)
Net Income
 
Diluted Earnings per Share
 
Weighted Average Diluted Shares Outstanding
Reported GAAP Measure
$
29,429

 
$
0.37

 
78,927

Income Tax Expense - Canadian Exit
402

 
0.01

 
 
Impact of Tax Reform
(3,051
)
 
(0.04
)
 
 
Adjusted Non-GAAP Measure
$
26,780

 
$
0.34

 
 
 
Fifty-Three Weeks Ended February 3, 2018
(in thousands, except per share amounts)
Operating Income
 
Net Income
 
Diluted Earnings per Share
 
Weighted Average Diluted Shares Outstanding
Reported GAAP Measure
$
29,740

 
$
19,366

 
$
0.25

 
78,870

Impact of Canadian Exit
24,151

 
24,151

 
0.31

 
 
Income Tax Benefit - Canadian Exit

 
(12,067
)
 
(0.15
)
 
 
Impact of Tax Reform

 
(3,051
)
 
(0.04
)
 
 
Adjusted Non-GAAP Measure
$
53,891

 
$
28,399

 
$
0.36

 
 
 
Fifty-Two Weeks Ended January 28, 2017
(in thousands, except per share amounts)
Net Income
 
Diluted Earnings per Share
 
Weighted Average Diluted Shares Outstanding
Reported GAAP Measure
$
57,417

 
$
0.73

 
79,049

Interest Expense (a)
11,354

 
0.14

 
 
Income Tax Benefit (b)
(4,428
)
 
(0.06
)
 
 
Adjusted Non-GAAP Measure
$
64,343

 
$
0.81

 
 
(a)
Represents non-core items related to the amendment of the Times Square Flagship store lease.
(b)
Items were tax affected at our statutory rate of approximately 39% for 2016.





The following reconciliations have been retrospectively adjusted to reflect adoption of the new revenue recognition accounting standard. For additional information regarding the adjustments see Exhibit 99.3 to the Company's Form 8-K filed with the SEC on March 14, 2018.
 
Thirteen Weeks Ended April 29, 2017
(in thousands, except per share amounts)
Net Loss
 
Diluted Earnings per Share
 
Weighted Average Diluted Shares Outstanding
Recast GAAP Measure (a)
$
(2,668
)
 
$
(0.03
)
 
78,446

Impact of Canadian Exit
6,271

 
0.08

 
 
Income Tax Benefit - Canadian Exit
(7,297
)
 
(0.09
)
 
 
Recast Non-GAAP Measure (a)
$
(3,694
)
 
$
(0.05
)
 
 
(a)
Retrospectively adjusted to reflect adoption of the new revenue recognition accounting standard.
 
Fifty-Three Weeks Ended February 3, 2018
(in thousands, except per share amounts)
Net Income
 
Diluted Earnings per Share
 
Weighted Average Diluted Shares Outstanding
Recast GAAP Measure (a)
$
18,873

 
$
0.24

 
78,870

Impact of Canadian Exit
24,151

 
0.31

 
 
Income Tax Benefit - Canadian Exit
(12,067
)
 
(0.15
)
 
 
Impact of Tax Reform (a)
(2,050
)
 
(0.03
)
 
 
Recast Non-GAAP Measure (a)
$
28,907

 
$
0.37

 
 
(a)
Retrospectively adjusted to reflect adoption of the new revenue recognition accounting standard.






Schedule 5
Express, Inc.
Real Estate Activity
(Unaudited)

 
 
 
 
 
Fourth Quarter 2017 - Actual
 
February 3, 2018 - Actual
Company-Operated Stores
Opened
Closed
Conversion
 
Store Count
Gross Square Footage
United States - Retail Stores
(6)
(3)
 
490
 
United States - Outlet Stores
1
3
 
145
 
Canada
 
 
Total
1
(6)
 
635
5.4 million
 
 
 
 
 
 
 
First Quarter 2018 - Projected
 
May 5, 2018 - Projected
Company-Operated Stores
Opened
Closed
Conversion
 
Store Count
Gross Square Footage
United States - Retail Stores
(4)
 
486
 
United States - Outlet Stores
1
 
146
 
Total
1
(4)
 
632
5.4 million
 
 
 
 
 
 
 
Full Year 2018 - Projected
 
February 2, 2019 - Projected
Company-Operated Stores
Opened
Closed
Conversion
 
Store Count
Gross Square Footage
United States - Retail Stores
(8)
(28)
 
454
 
United States - Outlet Stores
10
28
 
183
 
Total
10
(8)
 
637
5.4 million



exprq42017earningspresen
Q4 & FY 2017 Earnings


 
Cautionary Statement Regarding Forward-Looking Statements Forward Looking Statements: Certain statements are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include any statement that does not directly relate to any historical or current fact and include, but are not limited to: (1) guidance and expectations for the first quarter and full year 2018, including statements regarding expected comparable sales, interest expense, effective tax rates, net income, earnings per diluted share, and capital expenditures; (2) statements regarding expected store openings, closures, conversions, and gross square footage; and (3) statements regarding the Company's future plans and initiatives. Forward looking statements are based on our current expectations and assumptions, which may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict, and significant contingencies, many of which are beyond the Company's control. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are (1) changes in consumer spending and general economic conditions; (2) our ability to identify and respond to new and changing fashion trends, customer preferences, and other related factors; (3) fluctuations in our sales, results of operations, and cash levels on a seasonal basis and due to a variety of other factors, including our product offerings relative to customer demand, the mix of merchandise we sell, promotions, and inventory levels; (4) competition from other retailers; (5) customer traffic at malls, shopping centers, and at our stores and online; (6) our dependence on a strong brand image; (7) our ability to develop and maintain a relevant and reliable omni-channel experience for our customers; (8) the failure or breach of information systems upon which we rely; (9) our ability to protect customer data from fraud and theft; (10) our dependence upon third parties to manufacture all of our merchandise; (11) changes in the cost of raw materials, labor, and freight; (12) supply chain or other business disruption; (13) our dependence upon key executive management; (14) our ability to achieve our strategic objectives; (15) our substantial lease obligations; (16) our reliance on third parties to provide us with certain key services for our business; (17) claims made against us resulting in litigation or changes in laws and regulations applicable to our business; (18) our inability to protect our trademarks or other intellectual property rights which may preclude the use of our trademarks or other intellectual property around the world; (19) restrictions imposed on us under the terms of our asset-based loan facility; (20) impairment charges on long-lived assets; and (21) changes in tax requirements, results of tax audits, and other factors that may cause fluctuations in our effective tax rate. Additional information concerning these and other factors can be found in Express, Inc.'s filings with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward looking statement as a result of new information, future events, or otherwise, except as required by law. 2


 
♦ One of the largest specialty retail apparel brands with $2.1 billion in annual sales ♦ Enduring dual-gender brand appealing to 20-30 year olds ♦ Address fashion needs across multiple wearing occasions ♦ Strong, tenured leadership team 3 Express Is A Large Fashion Apparel Brand Men’s 38% 62% Women’s  Work  Casual  Jeanswear  Going out Sales Profile1,2 Wearing Occasions 1. For the fiscal year ended February 3, 2018. 2. Excludes “other revenue” of $38 million.


 
4 Transforming Business Model $2.1B 2017 Net Sales1 STORES  635 company- operated stores in the U.S. and Puerto Rico  Full price and outlet stores  Vital to the overall customer and brand experience  Effective marketing and customer acquisition vehicle  Integral to omni- channel strategy E-COMMERCE  Express.com and the Express mobile app  Extends brand reach  More choices with expanded sizing and assortments (Petites, Men’s Tall)  More targeted customer outreach and segmentation using analytics  Growing as a percentage of total net sales 1. For the fiscal year ended February 3, 2018. 2. Excludes “other revenue” of $38 million.


 
Q4 & 2017 Results


 
6 Key 2017 Achievements ♦ Record e-commerce sales of $509 million, increasing 22% on a comparable sales basis, and accounting for 24% of net sales, up from 19% in the prior year period ♦ Successful relaunch of NEXT loyalty program, with significant year-over-year growth in customer sign-ups ♦ Expanded omni-channel capabilities through the launch of “ship from store” in 200 stores and the pilot of “buy online, pick up in store” ♦ Further optimization of retail store footprint, closing 38 retail stores and converting another 24 stores to outlets ♦ Execution of outlet strategy, with a nearly 40% increase in outlet store base through new openings and conversions ♦ Proactive management of our cost base, achieving target of $20 million in cost savings through SG&A expense reduction and lower sourcing costs ♦ Strengthening our balance sheet to $236 million in cash at year-end with no debt obligations and repurchasing 2.1 million shares for $17 million


 
 Q4-2017 diluted EPS includes a $0.04 per share benefit from the 53rd week 7 Q4 2017 Financial Performance $ in millions Net Sales Adjusted Diluted EPS  Net sales1 +2%  Comparable sales2 -1%  E-commerce sales2 +17% • E-commerce comparable sales increased 17% and accounted for 29% of net sales vs. 25% last year • Merchandise margin expanded 130 basis points year-over-year • Operating margin improved 70 basis points year-over-year Key Highlights 1 Q4-2017 is a fourteen-week period, which compares to Q4-2016, which is a thirteen-week period. The 53rd week accounted for $26 million in net sales. 2 Comparable sales for the fourth quarter and full year 2017 were calculated using the fourteen and fifty-three week periods ended February 3, 2018, as compared to the fourteen and fifty- three week periods ended February 4, 2017. Reported e-commerce sales, which include the extra week, increased 20%. 3 Q4-2017 Adjusted Diluted EPS is adjusted to exclude a net $0.03 per share tax benefit related to the new federal tax legislation. Q4-2016 Diluted EPS is GAAP. Adjusted Diluted EPS is a non-GAAP financial measure. Refer to pages 18-20 for information about non-GAAP financial measures and reconciliations of GAAP to non-GAAP financial measures. 3 1


 
8 Fiscal Year 2017 Performance $ in millions Net Sales Adjusted Diluted EPS  Net sales1 -2%  Comparable sales2 -3%  E-commerce sales2 +22% • E-commerce comparable sales increased 22%, accounting for 24% of net sales vs. 19% last year • Successful expansion of our omni-channel capabilities • Further optimized retail store footprint and expanded outlet strategy • Achieved target of $20 million in cost savings Key Highlights  2017 adjusted diluted EPS includes a $0.04 per share benefit from the 53rd week 1 2017 is a 53-week year, which compares to 2016, which is a 52-week year. The 53rd week accounted for $26 million in net sales. 2 Comparable sales for the fourth quarter and full year 2017 were calculated using the fourteen and fifty-three week periods ended February 3, 2018, as compared to the fourteen and fifty- three week periods ended February 4, 2017. Reported e-commerce sales, which include the extra week, increased 23%. 3 Adjusted Diluted EPS is calculated based on Adjusted Net Income which excludes the impact of non-core items. Adjusted Diluted EPS is a non-GAAP financial measure. Refer to pages 18- 20 for information about non-GAAP financial measures and reconciliations of GAAP to non-GAAP financial measures. 3 1 3


 
9 2017 Balance Sheet And Cash Flow $ in millions Cash Capital Expenditures  No debt outstanding  Untapped revolver of up to $250M • Strengthened balance sheet to $236 million in cash and no debt • Generated solid operating cash flow of $119 million and free cash flow of $61 million1 • Repurchased 2.1 million shares for $17 million in 2017 • Subsequent to year-end, repurchased an additional 1.1 million shares for $8 million $ in millions Key Highlights 1. Free cash flow is a non-GAAP financial measure. Free cash flow represents cash flow from operations less capital expenditures. Refer to page 18 for information about non- GAAP financial measures. Free cash flow of $61 million noted above is operating cash flow of $119 million less capital expenditures of $57 million.


 
2018 Financial Guidance


 
11 ♦ Our key 2018 initiatives include:  Delivering compelling new product and improving upon key existing categories  Growing e-commerce and mobile sales  Expanding omni-channel capabilities  Investing in growing brand awareness and focusing on customer acquisition and retention  Increasing NEXT loyalty and Express NEXT credit card customers  Optimizing store footprint and executing outlet strategy  Managing overall cost structure 2018 Key Initiatives


 
12 2018 Financial Guidance Guidance as of March 14, 20181 Q1 2018 FY 2018 Comparable Sales -1% to +1% -1% to +1% Interest Expense, Net $0.3 million $1.0 million Effe tive Tax Rate NM (2) Approximately 33% Net Income ($3) million to $0 million $25 to $35 million Diluted EPS ($0.04) to $0.00 $0.32 to $0.46 75.9 million 76.6 million Capital Expenditures N/A $60 to $65 million Weighted Average Diluted Shares 1. This guidance does not take into account any additional non-core items that may occur and also excludes the impact of any future share repurchases. 2. Not meaningful for the first quarter of 2018 due to the projected near break even pre-tax income and the expected negative impact from certain discrete tax items totaling approximately $1.5 million. This will raise the Company's effective tax rate above its operating tax rate of approximately 28% during the first quarter of 2018 and for the full year 2018.


 
Appendix


 
14 Projected 2018 Real Estate Activity


 
15 Our Store Portfolio Net Sq Ft Growth 3% 3% 1% 2% 0% 0% -4% 0% # of Stores 1 Projection for the period ending February 2, 2019. 1


 
16 New Revenue Recognition Standard Our fiscal 2018 guidance reflects the adoption of new revenue recognition standards. While the adoption of the new standard will not have a material impact on our overall results, it will change the timing and classification of certain items on our income statement. As illustrated below, the new standard changes the timing of e- commerce revenue recognition and impacts the accounting treatment for our loyalty and private label credit card programs. Revenue Recognition Impact Net Sales Cost of Goods Sold SG&A Expense Private Label Credit Card Pre Adoption: recognized as an offset to SG&A expense Post Adoption: recognized in net sales Loyalty Program Pre Adoption: recognized on a cost basis Post Adoption: recognized as a deferral of revenue E-Commerce Revenue Pre Adoption: recognized when merchandise is received by customer Post Adoption: recognized when merchandise is shipped The Company is utilizing the full retrospective method of adoption and accordingly, has recast its income statements for 2016 and 2017. The Company has included the recast statements in Exhibit 99.3 to its Form 8-K filed with the SEC on March 14, 2018 and posted them on its Investor Relations website.


 
Non-GAAP Reconciliations


 
Cautionary Statement Regarding Non-GAAP Financial Measures Non-GAAP Financial Measures This presentation contains references to Adjusted Net Income, Adjusted Diluted Earnings per Share (EPS), and Free Cash Flow which are non-GAAP financial measures. These measures should be considered supplemental to and not a substitute for financial information prepared in accordance with generally accepted accounting principles (GAAP) included in Express, Inc.’s filings with the Securities and Exchange Commission and may differ from similarly titled measures used by others. Please refer to slides 19-20 in this presentation for additional information and reconciliations of Adjusted Net Income and Adjusted Diluted EPS to the most directly comparable financial measures calculated in accordance with GAAP. Management believes that Adjusted Net Income and Adjusted Diluted EPS provide useful information because they exclude items that may not be indicative of or are unrelated to our underlying business results, and provide a better baseline for analyzing trends in our underlying business. In addition, Adjusted Diluted EPS is used as a performance measure in our executive compensation program for purposes of determining the number of equity awards that are ultimately earned. Management believes that Free Cash Flow provides useful information regarding liquidity as it shows our operating cash flow generation less cash reinvested back into the business (capital expenditures). 18


 
19 Non-GAAP Reconciliations Q4 2017 Adjusted Net Income and Adjusted Diluted EPS Q4-2017 Adjusted Net Income and Adjusted Diluted EPS exclude a one-time gain related to tax reform, specifically the re-measurement of the Company's deferred taxes, of $3.1 million, or $0.04 per share, as well as a tax impact of $0.4 million, or $0.01 per share, related to the exit of Canada. * *


 
Fifty-Three Weeks Ended February 3, 2018 (in thousands, except per share amounts) Net Loss Diluted Earnings per Share Weighted Average Diluted Shares Outstanding Reported GAAP Measure $ 19,366 $ 0.25 78,870 Impact of Canadian Exit 24,151 0.31 Income Tax Benefit - Canadian Exit (12,067 ) (0.15 ) Impact of Tax Reform (3,051 ) (0.04 ) Adjusted Non-GAAP Measure $ 28,399 $ 0.36 20 Non-GAAP Reconciliations 2016 and 2017 Adjusted Net Income and Adjusted Diluted EPS * Does not foot due to rounding. *


 


 
Exhibit


Information Regarding Adoption of ASC 606, Revenue from Contracts with Customers

Express, Inc. (the "Company") adopted the new revenue recognition accounting standard, ASC 606, Revenue from Contracts with Customers ("ASC 606") in the first quarter of 2018. ASC 606 is effective for all public companies for annual reporting periods beginning after December 15, 2017. The Company adopted the new revenue accounting standard using the “full retrospective” method. This requires that the financial statements for 2017 and 2016 be adjusted as though ASC 606 was adopted in the first period presented. The Company has provided the information contained in this Exhibit 99.3, which details the adjustments required in applying the full retrospective method, because it believes it provides information to be able to compare the 2018 outlook with prior periods on a consistent basis under ASC 606. Beginning with the the first quarter of 2018, the Company's financial results will be reported under ASC 606 with prior period financial results being retrospectively adjusted as provided in this exhibit.

The new standard primarily impacts the Company's revenue recognition as follows:
accounting for points earned through the NEXT customer loyalty program as a deferral of revenue at retail rather than a liability under the cost method;
reclassification of income and associated costs related to our private label credit card arrangement from Selling, General, and Administrative Expenses to Net Sales and Costs of Goods Sold; and
the recognition of e-commerce revenue when merchandise is shipped rather than when it is received by the customer.

Selected Information from the Consolidated Statements of Income (Unaudited)
(in thousands, except per share amounts)
 
 
2017
 
 
 
 
 
2016
 
 
As reported
 
Adjustments
 
Recast
 
As reported
 
Adjustments
 
Recast
NET SALES
$
2,138,030

 
$
20,472

 
$
2,158,502

 
$
2,192,547

 
$
11,870

 
$
2,204,417

COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS
1,522,797

 
8,194

 
1,530,991

 
1,529,343

 
385

 
1,529,728

Gross profit
615,233

 
12,278

 
627,511

 
663,204

 
11,485

 
674,689

Selling, general and administrative expenses
562,088

 
11,462

 
573,550

 
559,541

 
10,005

 
569,546

OPERATING INCOME
29,740

 
816

 
30,556

 
103,601

 
1,480

 
105,081

INCOME BEFORE INCOME TAXES
28,035

 
816

 
28,851

 
90,617

 
1,480

 
92,097

INCOME TAX EXPENSE
8,669

 
1,309

 
9,978

 
33,200

 
557

 
33,757

NET INCOME
$
19,366

 
$
(493
)
 
$
18,873

 
$
57,417

 
$
923

 
$
58,340

 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS PER SHARE:
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.25

 
$
(0.01
)
 
$
0.24

 
$
0.73

 
$
0.01

 
$
0.74

Diluted
$
0.25

 
$
(0.01
)
 
$
0.24

 
$
0.73

 
$
0.01

 
$
0.74



 
 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE SHARES OUTSTANDING:

 
 
 
 
 
 
 
 
 
 
Basic
78,592

 
 
 
78,592

 
78,669

 
 
 
78,669

Diluted
78,870

 
 
 
78,870

 
79,049

 
 
 
79,049


Sales by Channel (Unaudited)
(in thousands)
 
 
2017
 
 
 
 
 
2016
 
 
As reported
 
Adjustments
 
Recast
 
As reported
 
Adjustments
 
Recast
Stores
$
1,590,745

 
$
1,476

 
$
1,592,221

 
$
1,737,722

 
$
2,438

 
$
1,740,160

E-commerce
509,039

 
432

 
509,471

 
413,448

 
(523
)
 
412,925

Other revenue
38,246

 
18,564

 
56,810

 
41,377

 
9,955

 
51,332

Total net sales
$
2,138,030

 
$
20,472

 
$
2,158,502

 
$
2,192,547

 
$
11,870

 
$
2,204,417








Selected Information from the Consolidated Statements of Income (Unaudited)

(in thousands, except per share amounts)
 
 
Q1'17
 
 
 
 
Q2'17
 
 
 
 
Q3'17
 
 
 
 
 
Q4'17
 
 
As reported
 
Adj.
 
Recast
 
As reported
 
Adj.
 
Recast
 
As reported
 
Adj.
 
Recast
 
As reported
 
Adj.
 
Recast
NET SALES
$
467,029

 
$
7,163

 
$
474,192

 
$
478,536

 
$
2,673

 
$
481,209

 
$
498,651

 
$
4,768

 
$
503,419

 
$
693,814

 
$
5,868

 
$
699,682

COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS
340,031

 
1,880

 
341,911

 
347,066

 
386

 
347,452

 
349,850

 
2,377

 
352,227

 
485,850

 
3,551

 
489,401

Gross profit
126,998

 
5,283

 
132,281

 
131,470

 
2,287

 
133,757

 
148,801

 
2,391

 
151,192

 
207,964

 
2,317

 
210,281

Selling, general and administrative expenses
130,072

 
2,267

 
132,339

 
131,736

 
2,433

 
134,169

 
137,721

 
2,772

 
140,493

 
162,559

 
3,990

 
166,549

OPERATING INCOME
(9,746
)
 
3,016

 
(6,730
)
 
(15,882
)
 
(146
)
 
(16,028
)
 
11,163

 
(381
)
 
10,782

 
44,205

 
(1,673
)
 
42,532

(LOSS) INCOME BEFORE INCOME TAXES
(10,531
)
 
3,016

 
(7,515
)
 
(16,053
)
 
(146
)
 
(16,199
)
 
10,586

 
(381
)
 
10,205

 
44,033

 
(1,673
)
 
42,360

INCOME TAX (BENEFIT) EXPENSE
(6,000
)
 
1,153

 
(4,847
)
 
(4,251
)
 
(57
)
 
(4,308
)
 
4,316

 
(142
)
 
4,174

 
14,604

 
355

 
14,959

NET INCOME (LOSS)
$
(4,531
)
 
$
1,863

 
$
(2,668
)
 
$
(11,802
)
 
$
(89
)
 
$
(11,891
)
 
$
6,270

 
$
(239
)
 
$
6,031

 
$
29,429

 
$
(2,028
)
 
$
27,401

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS PER SHARE:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
(0.06
)
 
$
0.02

 
$(0.03)
 
$
(0.15
)
 
$

 
$(0.15)
 
$
0.08

 
$

 
$0.08
 
$
0.38

 
$
(0.03
)
 
$0.35
Diluted
$
(0.06
)
 
$
0.02

 
$(0.03)
 
$
(0.15
)
 
$

 
$(0.15)
 
$
0.08

 
$

 
$0.08
 
$
0.37

 
$
(0.03
)
 
$0.35

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
WEIGHTED AVERAGE SHARES OUTSTANDING
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
Basic
78,446

 
 
 
78,446
 
78,786

 
 
 
78,786
 
78,805

 
 
 
78,805
 
78,333

 
 
 
78,333
Diluted
78,446

 
 
 
78,446
 
78,786

 
 
 
78,786
 
78,890

 
 
 
78,890
 
78,927

 
 
 
78,927

Sales by Channel (Unaudited)

(in thousands)
 
 
Q1'17
 
 
 
 
Q2'17
 
 
 
 
Q3'17
 
 
 
 
 
Q4'17
 
 
As reported
 
Adj.
 
Recast
 
As reported
 
Adj.
 
Recast
 
As reported
 
Adj.
 
Recast
 
As reported
 
Adj.
 
Recast
Stores
$
357,779

 
$
4,142

 
$
361,921

 
$
382,376

 
$
(47
)
 
$
382,329

 
$
371,847

 
$
(931
)
 
$
370,916

 
$
478,743

 
$
(1,688
)
 
$
477,055

E-commerce
97,572

 
758

 
98,330

 
89,955

 
283

 
90,238

 
118,176

 
(77
)
 
118,099

 
203,336

 
(532
)
 
202,804

Other revenue
11,678

 
2,263

 
13,941

 
6,205

 
2,437

 
8,642

 
8,628

 
5,776

 
14,404

 
11,735

 
8,088

 
19,823

Total net sales
$
467,029

 
$
7,163

 
$
474,192

 
$
478,536

 
$
2,673

 
$
481,209

 
$
498,651

 
$
4,768

 
$
503,419

 
$
693,814

 
$
5,868

 
$
699,682