Express, Inc. (NYSE: EXPR) announced its financial results for the fourth quarter and full year of 2022. These results, which cover the 13 and 52 weeks that ended January 28, 2023, are compared to the 13 and 52 weeks that ended January 29, 2022.
Fourth Quarter 2022 Operating Results
1.) Consolidated net sales decreased 14% to $514.3 million from $594.9 million in Q4 2021 with consolidated comparable sales down 13%
1a.) Comparable retail sales, which includes both Express stores and e-commerce, were down 15% compared to the fourth quarter of 2021. And retail stores comparable sales decreased by 11% while eCommerce declined by 19%
1b.) The comparable outlet sales decreased by 7% compared to the fourth quarter of 2021
2.) The gross margin was 23.9% of net sales compared to 29.2% in last year’s fourth quarter, a decrease of approximately 530 basis points
2a.) The merchandise margin contracted by 280 basis points primarily driven by the challenging macroeconomic and highly promotional retail environment
2b.) Buying and occupancy expenses deleveraged approximately 250 basis points due to the decline in comparable sales and a $2.2 million impairment charge taken against certain long-lived store-related assets and right-of-use assets
3.) Selling, general, and administrative (SG&A) expenses were $162.2 million, 31.5% of net sales, versus $163.2 million, 27.4% of net sales, in last year’s fourth quarter. The deleverage in the SG&A expense rate was driven by an increase in labor expenses and by the decline in comparable sales
4.) Operating loss was $39.3 million compared to operating income of $10.3 million in the fourth quarter of 2021
5.) Income tax expense was $19.9 million at an effective tax rate of 5.6% driven by the tax expense related to the gain on the transaction with WHP Global. Income tax expense was $0.1 million at an effective tax rate of 1.2% during the fourth quarter of 2021
6.) Net income was $333.2 million, or $4.82 per diluted share, which included the after-tax impact of the $409.5 million gain on the transaction with WHP Global, compared to net income of $7.6 million, $0.11 per diluted share, in the fourth quarter of 2021. On an adjusted basis, the net loss was $43.1 million, or a loss of $0.63 per diluted share, for the fourth quarter of 2022
7.) Earnings before interest, taxes, depreciation, and amortization (EBITDA) was $385.8 million, which included the $409.5 million gain on the transaction with WHP Global, compared to $25.8 million in the fourth quarter of 2021. Adjusted EBITDA was negative $10.1 million in the fourth quarter of 2022
KEY QUOTES:
“We delivered full-year 2022 diluted earnings per share of $4.25 which reflects the after tax impact of the gain of $409 million recognized upon completing the transaction with WHP Global. This transformative strategic partnership begins a bold, new chapter for our Company. As part of the transaction, we received proceeds of $260 million which repositioned our Company financially, and we are now beginning to reposition our Company strategically. In addition to our focus on achieving profitable growth in our core Express business, we will also focus on optimizing our omnichannel platform across a portfolio of brands and accelerating our growth and profitability in partnership with WHP Global. We will accomplish this by operating with consistent, rigorous, sustainable financial discipline, and we are fully committed to creating long-term shareholder value.”
“Our comparable sales were flat for the year with negative comps in the back half of 2022 offsetting gains we had made in the first half. Our strategy to elevate our brand with higher average unit retails and reduced promotions – which had driven steady growth for five consecutive quarters through the second quarter of 2022 – bumped up against reduced consumer spending and increased price sensitivity in discretionary categories. Our Women’s business further impacted our performance in the second half of the year. We recalibrated with urgency to address imbalances in the assortment architecture late in the third quarter of 2022, improve the composition of our inventory and advance product deliveries. Our outlook for 2023 reflects improved sales trends as we move through the year.”
“While we expect the margin pressure and recessionary environment we experienced in the back half of the year to continue, we have identified and begun to realize $40 million in annualized expense savings in early 2023 and are working to identify additional expense savings opportunities in 2023 and beyond. We remain confident in our ability to achieve our stated goal of long-term, profitable growth for the Express brand.”
— Tim Baxter, Chief Executive Officer
