8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 4, 2017

EXPRESS, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-34742	26-2828128
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1 Express Drive Columbus, Ohio	43230
(Address of principal executive offices)	(Zip Code)

(614) 474-4001

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Introductory Note

On May 4, 2017, Express, Inc. announced that it intends to close all 17 of its retail stores in Canada and discontinue all operations through its Canadian subsidiary, Express Fashion Apparel Canada Inc. (“Express Canada”). In connection with the plan to close all Canadian stores, on May 4, 2017, certain of Express, Inc.’s Canadian subsidiaries filed an application with the Ontario Superior Court of Justice (Commercial List) in Toronto (the “Court”) seeking protection for Express, Inc.’s Canadian subsidiaries under the Companies’ Creditors Arrangement Act in Canada and the appointment of Alvarez & Marsal Canada as monitor to oversee the liquidation and wind-down process. Express Canada intends to begin conducting store closing liquidation sales in the middle of May with store closures to take effect on or around June 15, 2017, in each case with the consent of the Court. As a result of the foregoing, Express Canada and its subsidiaries will be deconsolidated from Express, Inc.’s financial statements as of May 4, 2017 and accounted for thereafter as an investment using the cost method of accounting.

Item 2.05 Costs Associated with Exit or Disposal Activities.

As a result of the planned Canadian store closures, Express, Inc. expects to incur pre-tax costs of approximately $6 million in the first quarter of 2017 and $22 to $28 million of pre-tax costs in the second quarter of 2017. The second quarter costs include an estimate for the impairment of the Express Canada investment and an estimate of certain claims that may be asserted against Express, Inc. or it subsidiaries as a result of such subsidiary's guarantee of certain lease obligations of Express Canada or other claims that may be made against Express, Inc. or it subsidiaries. Given the early stage of the exit activities, management’s estimates of losses are based on currently available information and its assessment of the validity of certain claims. These estimates may change as new information becomes available and it is reasonably possible that Express, Inc. may incur a material loss in excess of the estimated amounts. For additional information regarding expected costs and expected cash costs refer to Item 7.01, which is hereby incorporated by reference in this Item 2.05.

The information set forth under "Introductory Note" above is hereby incorporated by reference in this Item 2.05.

Item 2.06 Material Impairment.

Express, Inc. expects to incur non-cash, pre-tax impairment charges of approximately $6 million in the first quarter of 2017 related to certain Express Canada fixed assets based on expected store closings in the second quarter of 2017. In addition, in the second quarter of 2017, Express, Inc. expects to impair its investment in Express Canada based on the estimated fair value of Express Canada’s net assets. This impairment is expected to result in a non-cash, pre-tax charge of approximately $11 million.

The information set forth under "Introductory Note" above is hereby incorporated by reference in this Item 2.06.

Item 7.01 Regulation FD Disclosure.

Express, Inc. expects the wind-down of its Canadian operations to impact pre-tax profit on its consolidated financial statements in the range of $28 to $34 million in 2017, driven primarily by the write-down of its investment in Express Canada along with costs associated with exiting Canada. Express, Inc. expects to incur charges of approximately $6 million in the first quarter of 2017 and the remaining $22 to $28 million of exit costs in the second quarter of 2017. In addition, Express, Inc. anticipates tax benefits of approximately $7 million in the first quarter of 2017 and approximately $7 to $9 million in the second quarter of 2017. As a result, Express, Inc. expects to report an impact to net income in the range of $14 to $18 million in 2017, of which approximately $1 million of benefit is expected in the first quarter of 2017 and an impact of $15 to $19 million expected in the second quarter of 2017. Total after tax cash costs to exit Canada are expected to be in a range of $8 to $12 million. The impact of these exit costs was not included in the Company’s most recently provided guidance.

On May 4, 2017, Express, Inc. issued a press release announcing the events described above, which is furnished as Exhibit 99.1 to this Form 8-K, and is incorporated by reference herein.

Statements in this Form 8-K regarding plans to discontinue Canadian operations and the expected financial impacts related thereto are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements speak only as of the date they are made and are subject to risks and uncertainties which could cause Express Inc.’s actual results to differ materially. Information concerning these risks and uncertainties can be found and are described in Item 1A of Express Inc.’s Form 10-K for the fiscal year ended January 28, 2017.

Item 9.01 Financial Statements and Exhibits.

Exhibit No.	Description of Exhibit
99.1	Press Release

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	EXPRESS, INC.
Date: May 4, 2017	By	/s/ Periclis Pericleous
		Periclis Pericleous
		Senior Vice President, Chief Financial Officer and Treasurer

EX-99.1

Investor Contact:

Mark Rupe

Express, Inc.

Vice President, Investor Relations

(614) 474-4465

Media Contact:

Robin Hoffman

Express, Inc.

Director, Communications

(614) 474-4834

EXPRESS ANNOUNCES KEY MEASURE TO CONTINUE OPTIMIZING ITS STORE FOOTPRINT

• Express to close its 17 stores in Canada; following these closings, Express will continue to operate 635 stores in the U.S.

• Actions aligned with strategic focus on improving profitability and optimizing the store footprint

Columbus, Ohio - May 4, 2017 - Express, Inc. (NYSE: EXPR) (the “Company”) today announces an additional measure as part of its continued strategic approach to improving profitability and managing and optimizing its store footprint.

As part of this plan, Express intends to close all 17 Canadian stores and discontinue its Canadian operations through its Canadian subsidiary, Express Fashion Apparel Canada Inc. (“Express Canada”). This morning, as a part of that process, Express Canada filed an application for protection under the Companies’ Creditors Arrangement Act (the “CCAA”) with the Ontario Superior Court of Justice (Commercial List) in Toronto.

David Kornberg, Express, Inc. president and chief executive officer noted that, "The challenging Canadian retail environment, coupled with unfavorable exchange rates prevented us from meeting the expectations we had when we entered the market in 2011. While difficult, this action is best for the future of Express and we are committed to carry it out in a way that reflects our respect and appreciation for employees who are impacted. Our overriding focus remains to invest in and direct our resources towards those areas that can generate the greatest return, including growing our e-commerce business, relaunching our customer loyalty program, and continuing to build our omni-channel capabilities to allow our customers to engage with our brand and shop wherever, whenever, and however they want. The decision to exit Canada is consistent with our long-term strategy and will have no impact on our operations in the U.S., which remain in a solid financial position.”

For the fiscal year ended January 28, 2017, Express Canada had net sales of approximately $34 million in U.S. dollars ($45 million in Canadian dollars) and contributed a net loss of approximately $6 million in U.S. dollars to the Express, Inc. consolidated financial statements.

Express Canada currently has 17 stores across Alberta, British Columbia, and Ontario. To facilitate an orderly wind-down, Express Canada intends to conduct store closing sales beginning mid-May. Subsequent to the closings, Canadian customers will continue to be able to make purchases through the Company's e-commerce website, www.express.com, as well as through the Express mobile app. As part of its application, Express Canada is seeking the appointment of Alvarez & Marsal Canada as Monitor in the CCAA proceedings to oversee the liquidation and wind-down process for Express Canada.

As a result of the CCAA filing, Express, Inc. has determined that Express Canada will be deconsolidated from Express, Inc. financial statements as of the date of the filing. As shown in the table below and detailed as follows, Express, Inc. expects this to impact pre-tax profit on its consolidated financial statements in the range of $28 to $34 million in 2017, driven primarily by the write-down of its investment in Express Canada along with costs associated with exiting Canada. The Company will incur charges of approximately $6 million in the first quarter of 2017 and the remaining $22 to $28 million of exit costs in the second quarter of 2017. In addition, the Company anticipates tax benefits related to exiting Canada in the range of $14 to $16 million, of which approximately $7 million is expected in the first quarter of 2017 and the remaining $7 to $9 million in the second quarter of 2017. As a result, Express, Inc. expects to report an impact to net income in the range of $14 to $18 million in 2017, of which approximately a $1 million benefit is expected in the first quarter of 2017 and an impact of $15 to $19 million expected in the second quarter of 2017. Total after tax cash costs to exit Canada are expected to be in a range of $8 to $12 million. The impact of these exit costs was not included in the Company’s most recently provided guidance.

The Company plans to release first quarter fiscal 2017 results on Thursday, June 1, 2017.

The expected impact of Express Canada's CCAA Filing on the Express, Inc. consolidated financial statements is as follows:

	First Quarter 2017	Second Quarter 2017	Full Year 2017
Income (Loss) Before Tax	(~$6 million)(1)	($22 to $28 million)(2)	($28 to $34 million)
Income Tax Benefit(3)	~$7 million	$7 to $9 million	$14 to $16 million
Net Income (Loss)	~$1 million	($15 to $19 million)	($14 to $18 million)
Total After-Tax Cash Costs			($8 to $12 million)

(1) Driven primarily by a non-cash asset impairment charge of approximately $6 million in the first quarter of 2017.

(2) Driven primarily by the write-down of the investment in Express Canada along with costs associated with exiting Canada in 2017.

(3) Anticipated tax benefits related to exiting Canada.

About Express, Inc.:

Express is a specialty apparel and accessories retailer of women's and men's merchandise, targeting the 20 to 30- year-old customer. Express has more than 35 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 more than 650 retail and factory outlet stores, located primarily in high-traffic shopping malls, lifestyle centers, and street locations across the United States, Canada, and Puerto Rico. Express merchandise is also available at franchise locations and online in Latin America. Express also markets and sells its products through its e-commerce website, www.express.com, as well as on its mobile app.

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 historical or current fact and include, but are not limited to, the Company’s plans to improve profitability and to make certain investments in the business and results from such plans and investments, as well as the plan to discontinue Canadian operations and expected financial impacts. Forward-looking statements are based on our current expectations and assumptions, which may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict, and significant contingencies, many of which are beyond the Company's control. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Additional information concerning these factors can be found in Express, Inc.'s filings with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events, or otherwise, except as otherwise required by law.