expr jan 2016 irpresentation (exvideo) 1.16

8/20/2019 EXPR jan 2016 IRPresentation (ExVideo) 1.16

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January 2016


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Cautionary Statement RegardingForward-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 historicalor current fact and include, but are not limited to, (1) guidance for the fourth quarter and full year 2015, including statementsregarding expected comparable sales, net income, adjusted net income, earnings per diluted share, and adjusted earningsper diluted share, (2) statements regarding expected store openings and store closures, and (3) statements regarding theCompany's future plans and initiatives, including, but not limited to, objectives for 2015 and 2016 and the Company’s growth

strategies. Forward-looking statements are based on our current expectations and assumptions, which may not prove to beaccurate. These statements are not guarantees and are subject to risks, uncertainties, and changes in circumstances thatare difficult to predict, and significant contingencies, many of which are beyond the Company's control. Many factors couldcause 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 changingfashion trends, customer preferences, and other related factors; (3) fluctuations in our sales, results of operations, and cashlevels 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, and promotions; (4) competition from other retailers; (5) customer traffic at malls, shoppingcenters, and at our stores and customer traffic to our website; (6) our dependence on a strong brand image; (7) our ability todevelop and maintain a reliable omni-channel experience for our customers; (8) the failure or breach of information systemsupon which we rely; (9) our ability to protect customer data from fraud and theft; (10) our dependence upon third parties tomanufacture all of our merchandise; (11) changes in the cost of raw materials, labor, and freight; (12) supply chain disruption;

(13) our dependence upon key executive management; (14) our growth strategies, including our new store, e-commerce, andinternational plans; (15) our reliance on third parties to provide us with certain key services for our business; (16) claimsmade against us resulting in litigation or changes in laws and regulations applicable to our business; (17) our inability toprotect our trademarks or other intellectual property rights which may preclude the use of our trademarks or other intellectualproperty around the world; (18) impairment charges on long-lived assets; (19) substantial lease obligations; (20) changes intax requirements, results of tax audits, and other factors that may cause fluctuations in our effective tax rates; and (21)restrictions imposed on us under the terms of our asset-based loan facility. Additional information concerning these and otherfactors can be found in Express, Inc.'s filings with the Securities and Exchange Commission. We undertake no obligation topublicly update or revise any forward-looking statement as a result of new information, future events, or otherwise, except as

required by law.


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Cautionary Statement RegardingNon GAAP Financial Measures

Non-GAAP Financial Measures

This presentation contains references to Adjusted Net Income and Adjusted Diluted Earnings Per Share, which are Non-GAAP financial measures. These measures should be considered supplemental to and not a substitute for financialinformation 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 toslides 24 and 26 in this presentation for additional information and a reconciliation of these measures to the most directlycomparable financial measures calculated in accordance with GAAP. Management believes that Adjusted Net Income and

Adjusted Diluted EPS are important indicators of our operations because they exclude items that may not be indicative of orare unrelated to our core operating results, and provide a better baseline for analyzing trends in our underlying business.


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• One of the largest specialty apparel retailers in the U.S.; FY 2014 net sales of $2.2 billion

• 576 company operated retail and 78 outlet stores (3Q15); in 47 states and Canada

• International franchises – Middle East, Latin America and South Africa

• Strong, tenured leadership team

Who We Are


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• A fashion authority for men and womensince 1980

̶ 20’s and 30’s

̶ Narrow edit point for Express girl and guy(Ages 23/27)

̶ Curated point of view

̶ Brand essence: Confident, Sexy & Vibrant

̶ Towards the front end of the fashionlifecycle, but not cutting edge

̶ Focused on style and quality; Strongprice/value proposition

̶ Addressing four key wearingoccasions:

̶ Jeans

̶ Wear to Work

A Fashion Authority

̶ Casual

̶ Going Out

Stephen Curry


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Serving Four Wearing Occasions

Work Casual Jeanswear GoingOut

Teens

20-30s

Mid - Late 30's

Online:

Amazon

ASOS

Nasty Gal

Shop bop


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2015 Priorities


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• Improve profitability

̶ Balanced approach to drive predictable, sustainable and profitable growth

̶ Planning for a return to double digit operating margins

• Elevate our customer experience

• Sharpen our brand position

• Upgrade and enhance our systems and processes

• Support and develop our people

Driving Our Growth

2015 Priorities


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Why Invest in Express?

Four Growth Pillars

EXPRESS

Existing StorePerformance

E-Commerce

International

OptimizeRetail &Expand

Outlet Real

Estate


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• Objective: consistent positive comparable sales and margin expansion

• Disciplined execution of Go to Market strategy elevates assortment

• Tightly controlled inventory management

• More effective marketing to drive traffic and expand brand awareness

• Optimize customer engagement across all touch points

• Introduction of new categories to drive growth

Improve Existing Store Performance


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• Website launched July 2008;continuously enhanced

• 16% of FY 2014 sales

̶ Grew 4% in 2014; 8% in 1Q-3Q 2015 (y/o/y)

• Driving sales through:

̶ Emphasizing fashion and story telling over promotions

̶ Mobile first approach to development

̶ Improving search and checkout capabilities

̶ More targeted customer outreach and segmentationusing analytics

̶ Exclusive product offerings + expanded sizes and

colors

E-Commerce as a % of Sales

E-Commerce Growth

5%

8%

10%

13%

15%16%

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014


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• Express Factory Outlets

̶ Expect 81 outlets at end of FY 2015

̶ Testing conversion of select mall stores tooutlet format

̶ Potential for ~ 150 stores

• Rationalize retail store fleet

− FY 2015: Opened one retail store

− Plan to close ~ 50 retail stores as leases

expire (2015-2018)

23 closed 1Q-3Q 2015

− Reduce duration of lease renewals

# of Stores

Store Count

Optimize Retail & Expand Outlet Store Base

Net Sq Ft Growth 3% 3% 3% 1% 2%

573 591609 625 632

(5) (9)(12)

(9) (19)2327

28 1628

591609

625 632641

FY 2010 FY 2011 FY 2012 FY 2013 FY 2014

Existing Stores Store Closures New Stores


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Financial Snapshot


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3Q 2015 Highlights: Progress ContinuedFinancial:• Net sales rose 10%; comparable sales rose 6%

• Merchandise margin rose 160 basis points reflecting promotional restraint

• Strong comps facilitated 170 basis points of buying and occupancy leverage

• SG&A expenses deleveraged by 140 basis points ‒ Due primarily to outlet related expenses and incentive compensation

• Operating income increased to $44.5 million; rising 200 bps to 8.1%

• Diluted EPS rose 82% to $0.31

Operations:• Focused on improving fashion, driving traffic and enhancing the brand

• E-commerce grew 6% despite anniversarying heavy 2014 promotions

• Outlets – strong results continued; 17 new stores and one conversion increased total to 78

• Build out of new IT systems continues our progression to full omni-channel capability


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YTD 2015 vs. 2014 Financial Results

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Merchandise Margin Change (Bps)Net Sales ($ millions)

$461 $481 $498

$1,440

$502 $536 $547

$1,585

Q1 Q2 Q3 YTD

2014 2015

-20

-70

30

-20

200

240

160

200

Q1 Q2 Q3 YTD

2014 2015


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YTD 2015 vs. 2014 Financial Results

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Earnings Per ShareOperating Margin (Percent)

3.3%3.0%

6.1%

4.2%

6.8% 6.7%

8.1%

7.2%

Q1 Q2 Q3 YTD

2014 2015

$0.06

$0.08

$0.17

$0.31

$0.22 (1)$0.25

$0.31

$0.78 (1)

Q1 Q2 Q3 YTD

2014 2015

(1) Refer to Schedule 1 for a reconciliation of GAAP to Non-GAAP financial measures.


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• Fiscal 2015 free cash flow estimated to exceed $100million

• Debt free balance sheet provides financial flexibility

• $40 million of common stock repurchased between August 1, 2015 and the last earnings call (12/3/15)

• New $100 million share repurchase program announcedon December 9, 2015

Strong Financial Position


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• Planning to deliver balanced top line and margin growth while controlling expenses

• Longer term focus: return to double digit operating margins and drive 10-12%

operating income growth

(1) Includes the impact of approximately 1.0 million shares repurchased since the end of the third quarter for an aggregate amount equal to$18.0 million.

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Fourth Quarter 2015 Guidance As of January 12, 2016

Comparable Sales: + 3%

Net Income $53 to $55 million

Diluted EPS $0.63 to $0.65(1)


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Investment Rationale• Iconic dual gender lifestyle brand appealing to 20-30 year olds ‒ Provides four wearing occasions, with a focus on fashion and quality

• Data driven approach coupled with inventory discipline

‒ Key differentiator among specialty retail competitors lessening fashion risk

• Significant opportunity for retail, e-commerce and outlet gains facilitatedby implementation of new IT systems

• Balanced approach to growth supports both sales increases andoperating margin improvement


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Non-GAAP Reconciliation(Schedule 1)

(a) Includes the redemption premium paid, the write-off of unamortized debt issuance costs, and the write-off of the unamortizeddebt discount related to the redemption of all $200.9 million of Senior Notes.

* Items were tax affected at our statutory rate of approximately 39% for the thirteen weeks ended May 2, 2015 and the thirty-nineweeks ended October 31, 2015.

Thirteen Weeks Ended May 2, 2015

(in thousands, except per share amounts) Net Income Earnings per DilutedShare

Weighted Average

Diluted SharesOutstanding

Reported GAAP Measure $ 13,062 $ 0.15 84,978

Interest Expense (a) * 5,916 * 0.07

Adjusted Non-GAAP Measure $ 18,978 $ 0.22

Thirty-Nine Weeks Ended October 31, 2015

(in thousands, except per share amounts) Net IncomeEarnings per Diluted

Share

Weighted AverageDiluted Shares

Outstanding

Reported GAAP Measure $ 60,397 $ 0.71 85,009

Interest Expense (a) * 5,916 * 0.07

Adjusted Non-GAAP Measure $ 66,313 $ 0.78

expr jan 2016 irpresentation (exvideo) 1.16

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