Express(US:EXPR)2022-09-08 14:30Financial Performance - Net sales increased by 2% to $464.9 million in Q2 2022 compared to $457.6 million in Q2 2021[123]. - Comparable sales increased by 1%, with comparable retail sales flat and comparable outlet sales up by 2%[123]. - Gross margin percentage improved by 50 basis points to 33.1%[123]. - Operating income decreased by $4.4 million to $10.4 million, while net income decreased by $3.6 million to $7.0 million, resulting in diluted earnings per share of $0.10[123]. - Net sales for the twenty-six weeks ended July 30, 2022, increased by approximately $112,318 thousand to $915,704 thousand, with total comparable sales percentage change of 14%[157]. - Gross profit for the twenty-six weeks ended July 30, 2022, was $285,201 thousand, up from $228,111 thousand in the prior year, with a gross margin percentage increase from 28.4% to 31.1%[158]. - EBITDA for the thirteen weeks ended July 30, 2022, was $25,565 thousand, down from $30,778 thousand in the prior year[167]. Expenses and Costs - Selling, general, and administrative expenses increased by $8,716 thousand to $143,278 thousand for the thirteen weeks ended July 30, 2022, representing 30.8% of net sales, up from 29.4% in the prior year[153]. - Selling, general, and administrative expenses for the twenty-six weeks ended July 30, 2022, were $284,371 thousand, compared to $253,955 thousand in the same period of 2021, representing 31.1% of net sales[160]. - Interest expense decreased by $315 thousand to $3,800 thousand for the thirteen weeks ended July 30, 2022, compared to $4,115 thousand for the same period in 2021[154]. - Interest expense for the twenty-six weeks ended July 30, 2022, decreased by $2,073 thousand to $7,294 thousand, compared to $9,367 thousand for the same period in 2021[161]. - The effective tax rate for the thirteen weeks ended July 30, 2022, was 3.5%, significantly higher than 0.2% for the same period in 2021, influenced by non-deductible executive compensation[155]. Customer Engagement and Product Development - The average unit retail price increased by 6.6% during Q2 2022, contributing to the sales growth[150]. - The number of active loyalty program members reached the highest level in company history, with four million new customers acquired since the program's relaunch[131]. - The company plans to launch several new women's products in Fall 2022, including the reintroduction of the Editor pant and Portofino shirt[127]. Operational Changes - The number of retail stores increased to 564 by the end of the period, despite closing one store during Q2 2022[150]. - The company is investing in eCommerce enhancements and improving customer experience through store renovations and pilot programs[132]. Liquidity and Capital Management - The company plans to enhance liquidity by managing costs and selling inventory at appropriate retail prices, ensuring compliance with financial covenants under its credit facilities[169]. - For the twenty-six weeks ended July 30, 2022, cash flows used in operating activities were $60.8 million, a decrease of $128.4 million compared to $67.6 million provided in the same period in 2021[174]. - Capital expenditures for the twenty-six weeks ended July 30, 2022, were approximately $13.5 million, up from $10.6 million in the same period in 2021, driven by investments in information technology[175]. - The company expects capital expenditures for the remainder of 2022 to be approximately $37.0 million, primarily for new and remodeled store construction and information technology investments[175]. - As of July 30, 2022, the net amount outstanding under credit facilities was $202.2 million, with $4.5 million classified as short-term debt and $197.7 million as long-term debt[177]. - The company borrowed a net additional $75.0 million on its Amended Revolving Credit Facility during the twenty-six weeks ended July 30, 2022[176]. - Approximately $70.9 million was available for borrowing under the Amended Revolving Credit Facility as of July 30, 2022, subject to borrowing base limitations[177]. - Cash and cash equivalents at the end of the period were $37.7 million, compared to $33.9 million at the end of the same period in 2021[173]. - The company had a negative working capital balance, but cash collected from sales is typically received before payment is due on current liabilities[170]. Interest Rate Sensitivity - A 100 basis point increase or decrease in underlying interest rates would increase or decrease annual interest expense by approximately $2.0 million based on borrowings as of July 30, 2022[182]. Share Repurchase - The company did not repurchase shares under the stock repurchase program during the thirteen and twenty-six weeks ended July 30, 2022[179].