Operating margin more than doubles to 12% at Express

11 Jun '10

5 min read

• Inventories were $155.6 million compared to $148.1 million at the end of the first quarter of 2009. Inventory per square foot, excluding e-commerce merchandise, increased approximately 2.9% compared to the first quarter of 2009; and
• Total debt amounted to $515.6 million at the end of the first quarter of 2010, including $246.5 million of Senior Notes issued on March 5, 2010, $121.6 million related to the Company's Holding Term Loan, and $147.5 million related to its Term B Loan under the Topco credit facility, which was paid off in full subsequent to the first quarter of 2010 using proceeds from the initial public offering completed on May 18, 2010. This compares to total debt of $423.4 million at the end of the first quarter of 2009.

Store Expansion:
During the first quarter of 2010, the Company opened 7 new stores and closed 4 existing stores in the United States, ending the quarter with 576 stores and approximately 5.0 million square feet in operation. For the remainder of 2010, the Company plans to open 15 additional stores and close 2 existing locations in the United States, ending the year with 589 locations and approximately 5.1 million square feet in operation.

Second Quarter and 2010 Guidance:

Tax Rate:
With the completion of the initial public offering, the Company's effective tax rate increased from approximately 2% as a partnership to approximately 40.7% as a corporation.

Second Quarter 2010:
The Company currently expects second quarter 2010 comparable stores sales to increase mid-to-high single-digits compared to a decrease of 12% in the second quarter last year. Net income, adjusted for one-time items related to the initial public offering, is currently expected in a range of $4 million to $6 million, or $0.05 to $0.07 per diluted share on 88.7 million weighted average shares outstanding. This compares to a net loss of ($6.8) million, or ($0.09) per diluted share on 74.4 million weighted average shares outstanding in the second quarter of last year.

Full Year 2010:
The Company currently expects 2010 comparable store sales to increase mid-single digits compared to a decrease of 6% in 2009. Net income, adjusted for one-time items related to the Senior Notes and initial public offerings, is currently expected in a range of $109 million to $114 million, or $1.27 to $1.33 per diluted share on 86.1 million weighted average shares outstanding. This compares to $75.3 million, or $1.00 per diluted share on 75.6 million weighted average shares outstanding in 2009.

Express is the sixth largest specialty retail brand of women's and men's apparel in the United States. The Company has 30 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 576 retail stores, located primarily in high-traffic shopping malls, lifestyle centers and street locations across the United States and Puerto Rico, and also distributes its products through the Company's e-commerce website, express.com.

Express, Inc

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