Attached files
| file | filename |
|---|---|
| EX-99.2 - INVESTOR PRESENTATION - EXPRESS, INC. | exprq42017earningspresen.htm |
| EX-99.1 - PRESS RELEASE - EXPRESS, INC. | exhibit991-q42017earningsr.htm |
| 8-K - 8-K - EXPRESS, INC. | a8-kq42017earningsreleasec.htm |
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 | |||||||||||||||||||||||