10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended May 2, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ______ TO ______

Commission File Number 001-34742

EXPRESS, INC.

(Exact name of registrant as specified in its charter)

Delaware	26-2828128
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1 Express Drive Columbus, Ohio	43230
(Address of principal executive offices)	(Zip Code)

Telephone: (614) 474-4001

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value	EXPR	The New York Stock Exchange
Preferred Stock Purchase Rights	EXPR	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  ☒   No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐    No  ☒

The number of outstanding shares of the registrant’s common stock was 64,459,170 as of May 30, 2020.

EXPRESS, INC. | Q1 2020 Form 10-Q | 1

EXPRESS, INC.

INDEX TO FORM 10-Q

FORWARD-LOOKING STATEMENTS			3
PART I		FINANCIAL INFORMATION	5
	Item 1.	Financial Statements (Unaudited)	5
		Consolidated Balance Sheets	5
		Consolidated Statements of Income and Comprehensive Income	6
		Consolidated Statements of Changes in Stockholders' Equity	7
		Consolidated Statements of Cash Flows	8
		Notes to Unaudited Consolidated Financial Statements	9
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
	Item 4.	Controls and Procedures	31
PART II		OTHER INFORMATION	31
	Item 1.	Legal Proceedings	31
	Item 1A.	Risk Factors	31
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
	Item 3.	Defaults Upon Senior Securities	33
	Item 4.	Mine Safety Disclosures	33
	Item 5.	Other Information	33
	Item 6.	Exhibits	34
SIGNATURES			35

EXPRESS, INC. | Q1 2020 Form 10-Q | 2

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements within the “safe harbor” provisions of the Private Securities Reform Act of 1995 that are subject to risks and uncertainties. All statements other than statements of historical fact included in this Quarterly Report are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance, and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “potential,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely,” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated and projected costs, expenditures, cash flows, and financial results, our plans and objectives for future operations, growth, initiatives, or strategies, plans to repurchase shares of our common stock, or the expected outcome or impact of pending or threatened litigation are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including:

External Risks such as:

•changes in consumer spending and general economic conditions;

•customer traffic at malls, shopping centers, and at our stores;

•the novel coronavirus outbreak, declared a pandemic by the World Health Organization, is adversely affecting and may continue to adversely affect our business operations, store traffic, employee availability, financial condition, liquidity and cash flow;

•competition from other retailers;

•our dependence upon independent third parties to manufacture all of our merchandise;

•changes in the cost of raw materials, labor, and freight;

•supply chain disruption and increased tariffs;

•difficulties associated with our distribution facilities;

•natural disasters, extreme weather, public health issues, including pandemics, fire, and other events that cause business interruption; and

•our reliance on third parties to provide us with certain key services for our business.

Strategic Risks such as:

•our ability to identify and respond to new and changing fashion trends, customer preferences, and other related factors;

•fluctuations in our sales, results of operations, and cash levels 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, promotions, inventory levels, and sales mix between stores and e-commerce;

•our dependence on a strong brand image;

•our ability to adapt to changes in consumer behavior and develop and maintain a relevant and reliable omnichannel experience for our customers;

•our dependence upon key executive management; and

•our ability to execute our growth strategy, including but not limited to, engaging our customers and acquiring new ones, executing with precision to accelerate sales and profitability, putting product first, and reinvigorating our brand.

Information Technology Risks such as:

•the failure or breach of information systems upon which we rely;

•the increase of our employees working remotely and use of technology for work functions; and

•our ability to protect our customer data from fraud and theft.

Financial Risks such as:

•our substantial lease obligations;

•restrictions imposed on us under the terms of our asset-based loan facility, including restrictions on our ability to repurchase shares of our common stock; and

•impairment charges on long-lived assets and our lease assets.

EXPRESS, INC. | Q1 2020 Form 10-Q | 3

Legal, Regulatory and Compliance Risks such as:

•claims made against us resulting in litigation or changes in laws and regulations applicable to our business;

•our inability to protect our trademarks or other intellectual property rights that may preclude the use of our trademarks or other intellectual property around the world;

•changes in tax requirements, results of tax audits, and other factors that may cause fluctuations in our effective tax rate; and

•our failure to maintain adequate internal controls.

We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. For a discussion of these risks and other risks and uncertainties that could cause actual results to differ materially from those contained in our forward-looking statements, please refer to “Item 1A. Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended February 1, 2020 (“Annual Report”), filed with the Securities and Exchange Commission (“SEC”) on March 17, 2020. The forward-looking statements included in this Quarterly Report are made only as of the date hereof. 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 required by law.

EXPRESS, INC. | Q1 2020 Form 10-Q | 4

PART I – FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS.

EXPRESS, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in Thousands, Except Per Share Amounts) (Unaudited)

	May 2, 2020		February 1, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	236,185	$	207,139
Receivables, net	12,897		10,824
Inventories	268,787		220,303
Prepaid rent	330		6,850
Other	35,881		25,573
Total current assets	554,080		470,689
RIGHT OF USE ASSET, NET	963,142		1,010,216
PROPERTY AND EQUIPMENT	985,091		979,639
Less: accumulated depreciation	(754,414)		(731,309)
Property and equipment, net	230,677		248,330
DEFERRED TAX ASSETS	—		54,973
OTHER ASSETS	51,285		6,531
Total assets	$	1,799,184	$	1,790,739
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Short-term lease liability	$	225,383	$	226,174
Accounts payable	123,429		126,863
Deferred revenue	31,331		38,227
Accrued expenses	91,797		76,211
Total current liabilities	471,940		467,475
LONG-TERM LEASE LIABILITY	879,983		897,304
LONG-TERM DEBT	165,000		—
DEFERRED LEASE CREDITS	1,731		1,835
OTHER LONG-TERM LIABILITIES	26,316		17,823
Total liabilities	1,544,970		1,384,437
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS’ EQUITY:
Preferred stock – $0.01 par value; 10,000 shares authorized; no shares issued or outstanding	—		—
Common stock – $0.01 par value; 500,000 shares authorized; 93,632 shares and 93,632 shares issued at May 2, 2020 and February 1, 2020, respectively, and 64,456 shares and 63,922 shares outstanding at May 2, 2020 and February 1, 2020, respectively	936		936
Additional paid-in capital	216,100		215,207
Retained earnings	371,981		533,690
Treasury stock – at average cost; 29,176 shares and 29,710 shares at May 2, 2020 and February 1, 2020, respectively	(334,803)		(343,531)
Total stockholders’ equity	254,214		406,302
Total liabilities and stockholders’ equity	$	1,799,184	$	1,790,739

See Notes to Unaudited Consolidated Financial Statements.

EXPRESS, INC. | Q1 2020 Form 10-Q | 5

EXPRESS, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Amounts in Thousands, Except Per Share Amounts) (Unaudited)

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
NET SALES	$	210,275	$	451,271
COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS	256,482		328,768
Gross (loss)/profit	(46,207)		122,503
OPERATING EXPENSES:
Selling, general, and administrative expenses	99,165		135,367
Other operating income, net	(93)		(1,310)
Total operating expenses	99,072		134,057
OPERATING LOSS	(145,279)		(11,554)
INTEREST EXPENSE/(INCOME), NET	56		(712)
OTHER EXPENSE, NET	2,733		—
LOSS BEFORE INCOME TAXES	(148,068)		(10,842)
INCOME TAX EXPENSE/(BENEFIT)	5,982		(908)
NET LOSS	$	(154,050)	$	(9,934)
COMPREHENSIVE LOSS	$	(154,050)	$	(9,934)
EARNINGS PER SHARE:
Basic	$	(2.41)	$	(0.15)
Diluted	$	(2.41)	$	(0.15)
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic	64,030		66,845
Diluted	64,030		66,845

See Notes to Unaudited Consolidated Financial Statements.

EXPRESS, INC. | Q1 2020 Form 10-Q | 6

EXPRESS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Amounts in Thousands) (Unaudited) 

	Common Stock									Treasury Stock
	Shares Outstanding	Par Value		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Shares	At Average Cost		Total
BALANCE, February 1, 2020	63,922	$	936	$	215,207	$	533,690	$	—	29,710	$	(343,531)	$	406,302
Net loss	—	—		—		(154,050)		—		—	—		(154,050)
Exercise of stock options and restricted stock	802	—		(1,609)		(7,659)		—		(802)	9,268		—
Share-based compensation	—	—		2,502		—		—		—	—		2,502
Repurchase of common stock	(268)	—		—		—		—		268	(540)		(540)
BALANCE, May 2, 2020	64,456	$	936	$	216,100	$	371,981	$	—	29,176	$	(334,803)	$	254,214

	Common Stock									Treasury Stock
	Shares Outstanding	Par Value		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Shares	At Average Cost		Total
BALANCE, February 2, 2019	67,424	$	936	$	211,981	$	713,864	$	—	26,208	$	(341,603)	$	585,178
Adoption of ASC Topic 842	—	—		—		(5,482)		—		—	—		(5,482)
Net loss	—	—		—		(9,934)		—		—	—		(9,934)
Exercise of stock options and restricted stock	1,024	—		(4,316)		(8,735)		—		(1,024)	13,051		—
Share-based compensation	—	—		2,372		—		—		—	—		2,372
Repurchase of common stock	(1,273)	—		—		—		—		1,273	(6,387)		(6,387)
BALANCE, May 4, 2019	67,175	$	936	$	210,037	$	689,713	$	—	26,457	$	(334,939)	$	565,747

See Notes to Unaudited Consolidated Financial Statements.

EXPRESS, INC. | Q1 2020 Form 10-Q | 7

EXPRESS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in Thousands) (Unaudited)

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(154,050)	$	(9,934)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	19,332		22,216
Loss on disposal of property and equipment	—		350
Impairment of property, equipment and lease assets	14,678		—
Equity method investment impairment	2,733		—
Share-based compensation	2,502		2,372
Deferred taxes	64,424		(14)
Landlord allowance amortization	(104)		(813)
Changes in operating assets and liabilities:
Receivables, net	(2,073)		3,453
Inventories	(48,485)		(17,875)
Accounts payable, deferred revenue, and accrued expenses	2,117		(10,819)
Other assets and liabilities	(32,312)		(5,881)
Net cash used in operating activities	(131,238)		(16,945)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(4,176)		(4,078)
Net cash used in investing activities	(4,176)		(4,078)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from financing arrangements	165,000		—
Payments on lease financing obligations	—		(27)
Repurchase of common stock under share repurchase program	—		(4,889)
Repurchase of common stock for tax withholding obligations	(540)		(1,498)
Net cash provided by (used in) financing activities	164,460		(6,414)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	29,046		(27,437)
CASH AND CASH EQUIVALENTS, Beginning of period	207,139		171,670
CASH AND CASH EQUIVALENTS, End of period	$	236,185	$	144,233

See Notes to Unaudited Consolidated Financial Statements.

EXPRESS, INC. | Q1 2020 Form 10-Q | 8

EXPRESS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

		Page
Note 1	Description of Business and Basis of Presentation	10
Note 2	Revenue Recognition	11
Note 3	Earnings Per Share	13
Note 4	Fair Value Measurements	14
Note 5	Income Taxes	15
Note 6	Leases	15
Note 7	Debt	16
Note 8	Share-Based Compensation	17
Note 9	Commitments and Contingencies	19
Note 10	Investment in Equity Interests	20
Note 11	Stockholders' Equity	20

EXPRESS, INC. | Q1 2020 Form 10-Q | 9

NOTE 1 | DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Business Description

Express, Inc., together with its subsidiaries (“Express” or the “Company”), is a leading fashion brand for women and men. Since 1980, Express has provided the latest apparel and accessories to help customers build a wardrobe for every occasion, offering fashion and quality at an attractive value. The company operates 594 retail and factory outlet stores in the United States and Puerto Rico, as well as an online destination.

As of May 2, 2020, Express operated 380 primarily mall-based retail stores in the United States and Puerto Rico as well as 214 factory outlet stores. Additionally, as of May 2, 2020, the Company earned revenue from 7 franchise stores in Latin America. These franchise stores are operated by franchisees pursuant to franchise agreements. Under the franchise agreements, the franchisees operate stand-alone Express stores that sell Express-branded apparel and accessories purchased directly from the Company.

Fiscal Year

The Company’s fiscal year ends on the Saturday closest to January 31. Fiscal years are referred to by the calendar year in which the fiscal year commences. References herein to “2020” and “2019” represent the 52-week period ended January 30, 2021 and the 52-week period ended February 1, 2020, respectively. All references herein to “the first quarter of 2020” and “the first quarter of 2019” represent the thirteen weeks ended May 2, 2020 and May 4, 2019, respectively.

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and therefore do not include all of the information or footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited Consolidated Financial Statements reflect all adjustments (which are of a normal recurring nature) necessary to state fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for 2020. Therefore, these statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto for the year ended February 1, 2020, included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 17, 2020.

Principles of Consolidation

The unaudited Consolidated Financial Statements include the accounts of Express, Inc. and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Segment Reporting 

The Company defines an operating segment on the same basis that it uses to evaluate performance internally. The Company has determined that, together, its Chief Executive Officer and its President and Chief Operating Officer are the Chief Operating Decision Maker, and that there is one operating segment. Therefore, the Company reports results as a single segment, which includes the operation of its Express brick-and-mortar retail and outlet stores, e-commerce operations, and franchise operations.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenue and expense during the reporting period, as well as the related disclosure of contingent assets and liabilities as of the date of the Consolidated Financial Statements. Actual results may differ from those estimates. The Company revises its estimates and assumptions as new information becomes available.

EXPRESS, INC. | Q1 2020 Form 10-Q | 10

Impact of the COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of the novel strain of coronavirus ("COVID-19") a global pandemic and recommended containment and mitigation measures. Since then, extraordinary actions have been taken by international, federal, state, and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19. The pandemic has significantly impacted global economies, resulting in workforce and travel restrictions, supply chain and production disruptions and reduced demand and spending across many industries.

During March 2020, in response to the COVID-19 outbreak and business disruption resulting from quarantines, stay-at-home orders, and similar mandates, Express temporarily closed all its Company stores and offices, and as a result, all store associates and a number of home office employees were furloughed. For the remainder of the home office employees, remote work arrangements were put in place and were designed to allow for continued operation of the business, including financial reporting systems and internal controls.

The Company's website, www.express.com, remained open, supported by third-party logistics providers, and Company employees working remotely.

We have considered the impact of COVID-19 on our unaudited Consolidated Financial Statements, and expect it to have future impacts, the extent of which is uncertain and largely subject to whether the severity worsens or duration lengthens. These impacts could include but may not be limited to risks and uncertainty in the near to medium term related to Federal, state, and local store closure requirements, customer demand, worker availability, our ability to procure inventory, distribution facility closures, shifts in demand between sales channels, and market volatility in our supply chain. Due to the impacts of COVID-19, we performed a recoverability test for our property plant and equipment and lease right of use assets. Consequently, this may subject us to future risk of long-lived asset and lease right of use asset impairments, increased reserves for uncollectible accounts, and adjustments for inventory.

NOTE 2 | REVENUE RECOGNITION

The following is information regarding the Company’s major product categories and sales channels:

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Apparel	$	179,583	$	388,855
Accessories and other	21,380		45,895
Other revenue	9,312		16,521
Total net sales	$	210,275	$	451,271

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Retail	$	159,537	$	328,339
Outlet	41,426		106,411
Other revenue	9,312		16,521
Total net sales	$	210,275	$	451,271

Other revenue consists primarily of revenue earned from our private label credit card agreement, shipping and handling revenue related to e-commerce activity, revenue from gift card breakage, sell-off revenue related to marked-out-of-stock inventory sales to third parties, and revenue from franchise agreements.

Revenue related to the Company’s international franchise operations were not material for any period presented and, therefore, are not reported separately from domestic revenue.

EXPRESS, INC. | Q1 2020 Form 10-Q | 11

Revenue Recognition Policies

Merchandise Sales

The Company recognizes sales for in-store purchases at the point-of-sale. Revenue related to e-commerce transactions is recognized upon shipment based on the fact that control transfers to the customer at that time. The Company has made a policy election to treat shipping and handling as costs to fulfill the contract and as a result any amounts received from customers are included in the transaction price allocated to the performance obligation of providing goods with a corresponding amount accrued within cost of goods sold, buying and occupancy costs in the unaudited Consolidated Statements of Income and Comprehensive Income for amounts paid to applicable carriers. Associate discounts on merchandise purchases are classified as a reduction of net sales. Net sales excludes sales tax collected from customers and remitted to governmental authorities.

Loyalty Program

The Company maintains a customer loyalty program in which customers earn points toward rewards for qualifying purchases and other marketing activities. Upon reaching specified point values, customers are issued a reward, which they may redeem on merchandise purchases at the Company’s stores or on its website. Generally, rewards earned must be redeemed within 60 days from the date of issuance. The Company defers a portion of merchandise sales based on the estimated standalone selling price of the points earned. This deferred revenue is recognized as certificates that are redeemed or expire. To calculate this deferral, the Company makes assumptions related to card holder redemption rates based on historical experience. The loyalty liability is included in deferred revenue on the unaudited Consolidated Balance Sheets.

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Beginning balance loyalty deferred revenue	$	14,063	$	15,319
Revenue recognized	(4,478)		(603)
Ending balance loyalty deferred revenue	$	9,585	$	14,716

Sales Returns Reserve

The Company reduces net sales and provides a reserve for projected merchandise returns based on prior experience. Merchandise returns are often resalable merchandise and are refunded by issuing the same payment tender as the original purchase. The sales returns reserve was $7.5 million and $9.1 million as of May 2, 2020 and February 1, 2020, respectively, and is included in accrued expenses on the unaudited Consolidated Balance Sheets. The asset related to projected returned merchandise is included in other assets on the unaudited Consolidated Balance Sheets.

Gift Cards

The Company sells gift cards in its stores, on its e-commerce website, and through third parties. These gift cards do not expire or lose value over periods of inactivity. The Company accounts for gift cards by recognizing a liability at the time a gift card is sold. The gift card liability balance was $21.7 million and $24.1 million, as of May 2, 2020 and February 1, 2020, respectively, and is included in deferred revenue on the unaudited Consolidated Balance Sheets. The Company recognizes revenue from gift cards when they are redeemed by the customer. The Company also recognizes income on unredeemed gift cards, referred to as “gift card breakage.” Gift card breakage is recognized proportionately using a time-based attribution method from issuance of the gift card to the time when it can be determined that the likelihood of the gift card being redeemed is remote and that there is no legal obligation to remit unredeemed gift cards to relevant jurisdictions. The gift card breakage rate is based on historical redemption patterns. Gift card breakage is included in net sales in the unaudited Consolidated Statements of Income and Comprehensive Income.

EXPRESS, INC. | Q1 2020 Form 10-Q | 12

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Beginning gift card liability	$	24,142	$	25,133
Issuances	4,040		7,713
Redemptions	(5,418)		(10,119)
Gift card breakage	(1,036)		(1,151)
Ending gift card liability	$	21,728	$	21,576

Private Label Credit Card

The Company has an agreement with Comenity Bank (the “Bank”) to provide customers with private label credit cards (the “Card Agreement”) which was amended on August 28, 2017 to extend the term of the arrangement through December 31, 2024. Each private label credit card bears the logo of the Express brand and can only be used at the Company’s store locations and e-commerce channel. The Bank is the sole owner of the accounts issued under the private label credit card program and absorbs the losses associated with non-payment by the private label card holders and a portion of any fraudulent usage of the accounts.

Pursuant to the Card Agreement, the Company receives amounts from the Bank during the term based on a percentage of private label credit card sales and is also eligible to receive incentive payments for the achievement of certain performance targets. These funds are recorded as net sales in the unaudited Consolidated Statements of Income and Comprehensive Income. The Company also receives reimbursement funds from the Bank for expenses the Company incurs. These reimbursement funds are used by the Company to fund marketing and other programs associated with the private label credit card. The reimbursement funds received related to private label credit cards are recorded as net sales in the unaudited Consolidated Statements of Income and Comprehensive Income.

In connection with the Card Agreement, the Bank agreed to pay the Company a $20.0 million refundable payment which the Company recognized upon receipt as deferred revenue within other long-term liabilities in the Consolidated Balance Sheets and began to recognize into income on a straight-line basis commencing January of 2018. As of May 2, 2020, the deferred revenue balance of $13.4 million will be recognized over the remaining term of the amended Card Agreement within the other revenue component of net sales.

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Beginning balance refundable payment liability	$	14,150	$	17,028
Recognized in revenue	(719)		(719)
Ending balance refundable payment liability	$	13,431	$	16,309

NOTE 3 | EARNINGS PER SHARE

The following table provides a reconciliation between basic and diluted weighted-average shares used to calculate basic and diluted earnings per share:

	Thirteen Weeks Ended
	May 2, 2020	May 4, 2019
	(in thousands)
Weighted-average shares - basic	64,030	66,845
Dilutive effect of stock options and restricted stock units	—	—
Weighted-average shares - diluted	64,030	66,845

Equity awards representing 9.6 million shares of common stock were excluded from the computation of diluted earnings per share for the thirteen weeks ended May 2, 2020, as the inclusion of these awards would have been

EXPRESS, INC. | Q1 2020 Form 10-Q | 13

anti-dilutive. Equity awards representing 5.9 million shares of common stock were excluded from the computation of diluted earnings per share for the thirteen weeks ended May 4, 2019, as the inclusion of these awards would have been anti-dilutive.

Additionally, for the thirteen weeks ended May 2, 2020, approximately 0.2 million shares were excluded from the computation of diluted weighted average shares because the number of shares that will ultimately be issued is contingent on the Company’s performance compared to pre-established performance goals which have not been achieved as of May 2, 2020.

NOTE 4 | FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date.

■Level 1 - Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets.

■Level 2 - Valuation is based upon quoted prices for similar assets and liabilities in active markets or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

■Level 3 - Valuation is based upon other unobservable inputs that are significant to the fair value measurement.

Financial Assets

The following table presents the Company’s financial assets, recorded in cash and cash equivalents on the unaudited Consolidated Balance Sheets, measured at fair value on a recurring basis as of May 2, 2020 and February 1, 2020, aggregated by the level in the fair value hierarchy within which those measurements fall.

	May 2, 2020
	Level 1		Level 2		Level 3
	(in thousands)
Money market funds	$	231,476	$	—	$	—
	February 1, 2020
	Level 1		Level 2		Level 3
	(in thousands)
Money market funds	$	188,182	$	—	$	—

The money market funds are valued using quoted market prices in active markets.

The carrying amounts reflected on the unaudited Consolidated Balance Sheets for the remaining cash and cash equivalents, receivables, prepaid expenses, and payables as of May 2, 2020 and February 1, 2020 approximated their fair values.

Non-Financial Assets

The Company’s non-financial assets, which include fixtures, equipment, improvements, and right of use assets are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur indicating the carrying value of these assets may not be recoverable, an impairment test is required. For stores that trigger, a recovery test is performed first comparing the undiscounted cash flows to the net assets of the store. The second step impairment test requires the Company to estimate the fair value of the assets and compare this to the carrying value of the assets. If the fair value of the asset is less than the carrying value, then an impairment charge is recognized, and the non-financial assets are recorded at fair value. The Company estimates the fair value using a discounted cash flow model or other fair value models as appropriate. Factors used in the evaluation include, but

EXPRESS, INC. | Q1 2020 Form 10-Q | 14

are not limited to, management’s plans for future operations, recent operating results, projected cash flows, and overall economic factors, including the current global outbreak of COVID-19. As a result of the COVID-19 pandemic, including temporary store closures and the related decline in sales beginning in March 2020, the Company concluded that a triggering event had occurred. Consequently, the Company performed interim impairment testing. As a result of this testing, during the thirteen weeks ended May 2, 2020, the Company recognized impairment charges of approximately $14.7 million related to store-level property and equipment and right of use assets. During the thirteen weeks ended May 4, 2019, the Company did not recognize any impairment charges. Impairment charges are recorded in cost of goods sold, buying and occupancy costs in the unaudited Consolidated Statements of Income and Comprehensive Income.

NOTE 5 | INCOME TAXES

The provision for income taxes is based on a current estimate of the annual effective tax rate, adjusted to reflect the effect of discrete items. The Company’s effective income tax rate may fluctuate from quarter to quarter as a result of a variety of factors, including the estimate of annual pre-tax income, the related changes in the estimate, and the effect of discrete items. The impact of these items on the effective tax rate will be greater at lower levels of pre-tax earnings.

The Company’s effective tax rate was (4.0)% and 8.4% for the thirteen weeks ended May 2, 2020 and May 4, 2019, respectively. The effective tax rate for the thirteen weeks ended May 2, 2020 reflects the impact of establishing a valuation allowance against the Company’s net deferred tax assets, which includes $54.3 million of discrete tax expense from a valuation allowance on previously recognized deferred tax assets and $6.8 million valuation allowance on 2020 U.S. state taxes and other tax credits. The effective tax rate for the thirteen weeks ended May 4, 2019 reflects a tax benefit from a pre-tax loss offset by $1.4 million of discrete tax expense related to a tax shortfall for share-based compensation.

Due to the impact of the COVID-19 pandemic that arose during Q1, the Company no longer believes they are able to objectively forecast taxable income in future years, which provides significant negative evidence when assessing whether the Company will more likely than not realize the full amount of the U.S. net deferred tax assets. As such, the Company recorded a valuation allowance against the full amount of the U.S. net deferred tax assets that are not forecasted to be utilized with the 2020 net operating loss carryback. We will continue to evaluate the Company’s ability to realize the deferred tax assets on a quarterly basis.

On March 27, 2020, the Coronavirus Aid Relief and Economic Security (“CARES”) Act was enacted into law. The CARES Act provided several provisions that impacted the Company including the establishment of a five-year carryback of net operating losses originating in the tax years 2018, 2019, and 2020, temporarily suspending the 80% limitation on the use of net operating losses, relaxing limitation rules on business interest deductions, and retroactively clarifying that businesses may immediately write-off certain qualified leasehold improvement property dating back to January 1, 2018.

The Company’s effective tax rate for the thirteen weeks ended May 2, 2020 includes the $61.1 million valuation allowance noted above offset by a $19.5 million tax benefit related to the CARES Act, which includes the benefit for the portion of the estimated 2019 and 2020 U.S. Federal net operating losses that are able to be carried back to offset taxable income in the five-year carryback period.

Included in other current assets is a $9.7 million income tax receivable due to the 2019 carryback of net operating losses allowed under the CARES Act. Included in other assets is a $48.2 million income tax receivable due to the expected net operating loss carryback allowed under the CARES Act based on current quarter losses.

NOTE 6 | LEASES

The Company leases all of its store locations and its corporate headquarters, which also includes its distribution center, under operating leases. The store leases typically have initial terms of 5 to 10 years. The current lease term for the corporate headquarters expires in 2026, with one optional five-year extension period. The Company also leases certain equipment and other assets under operating leases, typically with initial terms of 3 to 5 years. The lease term includes the initial contractual term as well as any options to extend the lease when it is reasonably certain that the Company will exercise that option. Leases with an initial term of 12 months or less (short-term

EXPRESS, INC. | Q1 2020 Form 10-Q | 15

leases) are not recorded on the balance sheet. The Company does not currently have any material short-term leases. The Company is generally obligated for the cost of property taxes, insurance and other landlord costs, including common area maintenance charges, relating to its leases. If these charges are fixed, they are combined with lease payments in determining the lease liability; however, if such charges are not fixed, they are considered variable lease costs and are expensed as incurred. The variable payments are not included in the measurement of the lease liability or asset. The Company’s finance leases are immaterial.

Certain lease agreements include rental payments based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company’s lease agreements do not provide an implicit rate, so the Company uses an estimated incremental borrowing rate, which is derived from third-party information available at the lease commencement date, in determining the present value of lease payments. The rate used is for a secured borrowing of a similar term as the lease.

As a result of the impact of the COVID-19 pandemic, the Company did not make its store rent payments for April 2020. The Company has continued to recognize expense and has established an accrual for the payments that were not made. The accrued rent is within accrued expenses on the unaudited Consolidated Balance Sheets. Accrued minimum rent as of May 2, 2020 and February 1, 2020, was $30.3 million and $3.2 million, respectively.

Supplemental cash flow information related to leases is as follows:

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	41,467	$	70,832
Right-of-use assets obtained in exchange for operating lease liabilities	$	15,243	$	3,717

NOTE 7 | DEBT

A summary of the Company’s financing activities are as follows:

Revolving Credit Facility

On May 24, 2019, Express Holding, LLC, a wholly-owned subsidiary of the Company (“Express Holding”), and its subsidiaries entered into a First Amendment to the Second Amended and Restated $250.0 million Asset-Based Loan Credit Agreement (“Revolving Credit Facility”). The expiration date of the Revolving Credit Facility is May 24, 2024.

On March 17, 2020, the Company provided notice to the lenders under the Revolving Credit Facility of a request to borrow $165.0 million. The Company borrowed under the Revolving Credit Facility in order to strengthen its liquidity position and preserve financial flexibility in response to the COVID-19 pandemic and the related temporary store closures. As of May 2, 2020, the Company had $165.0 million in borrowings outstanding and approximately $67.8 million remained available for borrowing under the Revolving Credit Facility after $17.2 million of letters of credit outstanding and subject to certain borrowing base limitations as further discussed below.

Under the Revolving Credit Facility, revolving loans may be borrowed, repaid, and reborrowed until May 24, 2024, at which time all amounts borrowed must be repaid. Borrowings under the Revolving Credit Facility bear interest at a rate equal to either the rate published by ICE Benchmark Administration Limited (with a floor of 0%) (the “Eurodollar Rate”) plus an applicable margin rate or the highest of (1) Wells Fargo Bank, National Association’s prime lending rate (with a floor of 0%), (2) 0.50% per annum above the federal funds rate (with a floor of 0%) or (3) 1% above the Eurodollar Rate (the “Base Rate”), in each case plus an applicable margin rate. The applicable margin rate is determined based on excess availability as determined by reference to the borrowing base. The applicable margin rate for Eurodollar Rate-based advances is 1.25% or 1.50% and the applicable margin rate for Base Rate-based advances is 0.25% or 0.50%, in each case, based on the borrowing base. Under certain circumstances, a default

EXPRESS, INC. | Q1 2020 Form 10-Q | 16

interest rate will apply on any overdue amount payable under the Revolving Credit Facility during the existence of an event of default at a per annum rate equal to 2.0% above the applicable interest rate for any overdue principal and 2.0% above the rate applicable for Base Rate-based advances for any other overdue interest. As of May 2, 2020 the interest rate on the outstanding borrowing was approximately 2.4%.

The Revolving Credit Facility requires Express Holding and its subsidiaries to maintain a fixed charge coverage ratio of at least 1.0:1.0 if excess availability plus eligible cash collateral is less than 10.0% of the borrowing base for 15 consecutive days. Since our excess availability was above 10% as of May 2, 2020, the fixed charge coverage ratio covenant was not applicable. In addition, the Revolving Credit Facility contains customary covenants and restrictions on Express Holding’s and its subsidiaries’ activities, including, but not limited to, limitations on the incurrence of additional indebtedness, liens, negative pledges, guarantees, investments, loans, asset sales, mergers, acquisitions, prepayment of other debt, distributions, dividends, the repurchase of capital stock, transactions with affiliates, the ability to change the nature of its business or fiscal year, and permitted business activities. All obligations under the Revolving Credit Facility are guaranteed by Express Holding and its domestic subsidiaries (that are not borrowers) and secured by a lien on, among other assets, substantially all working capital assets including cash, accounts receivable, and inventory of Express Holding and its domestic subsidiaries.

Letters of Credit

The Company may enter into stand-by letters of credit (“stand-by LCs”) on an as-needed basis to secure payment obligations for third party logistic services, merchandise purchases, and other general and administrative expenses. As of May 2, 2020 and February 1, 2020, outstanding stand-by LCs totaled $17.2 million and $12.7 million, respectively.

NOTE 8 | SHARE-BASED COMPENSATION

The Company records the fair value of share-based payments to employees in the unaudited Consolidated Statements of Income and Comprehensive Income as compensation expense, net of forfeitures, over the requisite service period. The Company issues shares of common stock from treasury stock, at average cost, upon exercise of stock options and vesting of restricted stock units, including those with performance conditions.

Share-Based Compensation Plans

In 2010, the Board approved, and the Company implemented, the Express, Inc. 2010 Incentive Compensation Plan (as amended, the "2010 Plan"). The 2010 Plan authorized the Compensation Committee (the "Committee") of the Board and its designees to offer eligible employees and directors cash and stock-based incentives as deemed appropriate in order to attract, retain, and reward such individuals.

On April 30, 2018, upon the recommendation of the Committee, the Board unanimously approved and adopted, subject to stockholder approval, the Express, Inc. 2018 Incentive Compensation Plan (the “2018 Plan”) to replace the 2010 Plan. On June 13, 2018, stockholders of the Company approved the 2018 Plan and all grants made subsequent to that approval will be made under the 2018 Plan. The primary change made by the 2018 Plan was to increase the number of shares of common stock available for equity-based awards by 2.4 million shares. In addition to increasing the number of shares, the Company also made several enhancements to the 2010 Plan to reflect best practices in corporate governance. The 2018 Plan incorporates these concepts and also includes several other enhancements which are practices the Company already follows but were not explicitly stated in the 2010 Plan. None of these changes will have a significant impact on the accounting for awards made under the 2018 Plan.

In the third quarter of 2019, in connection with updates made by the Company to its policy regarding the clawback of incentive compensation awarded to associates, the Board approved an amendment to the 2018 Plan, solely for the purpose of updating the language regarding the recoupment of awards granted under the 2018 Plan.

As of March 17, 2020, upon the recommendation of the Committee, the Board unanimously approved and adopted, subject to stockholder approval, a plan amendment, which would increase the number of shares of Common Stock available under the 2018 Plan by 2.5 million shares.

EXPRESS, INC. | Q1 2020 Form 10-Q | 17

The following summarizes share-based compensation expense:

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Restricted stock units	$	2,184	$	2,210
Stock options	318		38
Performance-based restricted stock units	—		124
Total share-based compensation	$	2,502	$	2,372

The stock compensation related income tax benefit recognized by the Company during the thirteen weeks ended May 2, 2020 and May 4, 2019 was $0.5 million and $1.5 million, respectively.

Restricted Stock Units

During the thirteen weeks ended May 2, 2020, the Company granted restricted stock units (“RSUs”) under the 2018 Plan. The fair value of RSUs is determined based on the Company’s closing stock price on the day prior to the grant date in accordance with the 2018 Plan. The RSUs granted in 2020 vest ratably over three years and the expense related to these RSUs will be recognized using the straight-line attribution method over this vesting period.

The Company’s activity with respect to RSUs, including awards with performance conditions granted prior to 2018, for the thirteen weeks ended May 2, 2020 was as follows:

	Number of Shares	Grant Date Weighted Average Fair Value Per Share
	(in thousands, except per share amounts)
Unvested - February 1, 2020	4,260	$	4.78
Granted	4,548	$	1.69
Vested	(802)	$	6.95
Forfeited	(247)	$	4.98
Unvested - May 2, 2020	7,759	$	2.74

The total fair value of RSUs that vested during the thirteen weeks ended May 2, 2020 and May 4, 2019 was $5.6 million and $10.5 million, respectively. As of May 2, 2020, there was approximately $17.1 million of total unrecognized compensation expense related to unvested RSUs, which is expected to be recognized over a weighted-average period of approximately 1.8 years.

Stock Options

The Company’s activity with respect to stock options during the thirteen weeks ended May 2, 2020 was as follows:

	Number of Shares	Grant Date Weighted Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value
	(in thousands, except per share amounts and years)
Outstanding - February 1, 2020	3,650	$	7.67
Granted	—	$	—
Exercised	—	$	—
Forfeited or expired	(69)	$	18.84
Outstanding - May 2, 2020	3,581	$	7.46	7.2	$	—
Expected to vest at May 2, 2020	2,267	$	2.70	9.2	$	—
Exercisable at May 2, 2020	1,225	$	16.63	3.5	$	—

EXPRESS, INC. | Q1 2020 Form 10-Q | 18

As of May 2, 2020, there was approximately $2.1 million of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted average period of approximately 1.6 years.

Performance-based Restricted Stock Units

In the first quarter of 2018, the Company granted performance shares to a limited number of senior executive-level employees, which entitle these employees to receive a specified number of shares of the Company’s common stock upon vesting. The number of shares earned could range between 0% and 200% of the target amount depending upon performance achieved over a three-year vesting period. The performance conditions of the award include adjusted diluted earnings per share ("EPS") targets and total shareholder return ("TSR") of the Company’s common stock relative to a select group of peer companies. A Monte Carlo valuation model was used to determine the fair value of the awards. The TSR performance metric is a market condition. Therefore, fair value of the awards is fixed at the measurement date and is not revised based on actual performance. The number of shares that will ultimately vest will change based on estimates of the Company’s adjusted EPS performance in relation to the pre-established targets. As of May 2, 2020, it is estimated that none of the shares granted in 2018 will vest based on the performance against predefined financial targets to date.

Time-based Cash-Settled Awards

During the thirteen weeks ended May 2, 2020, the Company granted time-based cash-settled awards to employees that vest ratably over three years. These awards are classified as liabilities, are valued based on the fair value of the award at the grant date and do not vary based on changes in the Company's stock price. The expense related to these awards will be recognized using the straight-line attribution method over this vesting period. As of May 2, 2020, $3.9 million of total unrecognized compensation cost is expected to be recognized on cash-settled awards over a weighted-average period of 2.0 years.

Performance-based Cash-Settled Awards

In 2019, the Company granted cash-settled awards to a limited number of senior executive-level employees. These awards are classified as liabilities, are valued based on the fair value of the award at the grant date and are remeasured at each reporting date until settlement with compensation expense being recognized in proportion to the completed requisite period up until date of settlement. The amount of cash earned could range between 0% and 200% of the target amount depending upon performance achieved over the three-year vesting period. The performance conditions of the award include EPS targets and TSR of the Company’s common stock relative to a select group of peer companies. A Monte Carlo valuation model is used to determine the fair value of the awards. As of May 2, 2020, it is estimated that none of the shares granted in 2019 will vest based on the performance against predefined financial targets to date.

NOTE 9 | COMMITMENTS AND CONTINGENCIES

In a complaint filed in January 2017 by Mr. Jorge Chacon in the Superior Court for the State of California for the County of Orange, certain subsidiaries of the Company were named as defendants in a representative action alleging violations of California state wage and hour statutes and other labor standards. The lawsuit seeks unspecified monetary damages and attorneys’ fees. In July 2018, former associate Ms. Christie Carr filed suit in Alameda County Superior Court for the State of California naming certain subsidiaries of the Company in a representative action alleging violations of California State wage and hour statutes and other labor standard violations. The lawsuit seeks unspecified monetary damages and attorneys’ fees. On January 28, 2019, Mr. Jorge Chacon filed a second representative action in the Superior Court for the State of California for the County of Orange alleging violations of California state wages and hour statutes and other labor standard violations. The lawsuit seeks unspecified monetary damages and attorneys' fees. The Company is vigorously defending itself against these claims and, as of May 2, 2020, has established an estimated liability based on its best estimate of the outcome of the matters. The Company is subject to various other claims and contingencies arising out of the normal course of business. Management believes that the ultimate liability arising from such claims and contingencies, if any, is not likely to have a material adverse effect on the Company’s results of operations, financial condition, or cash flows.

EXPRESS, INC. | Q1 2020 Form 10-Q | 19

NOTE 10 | INVESTMENT IN EQUITY INTERESTS

In 2016, the Company made a $10.1 million investment in Homage, LLC, a privately held retail company based in Columbus, Ohio. The non-controlling investment in the entity is being accounted for under the equity method. Under the terms of the agreement governing the investment, the Company's investment was increased by $0.5 million during 2018 and 2019 as the result of an accrual of a non-cash preferred yield. This investment is assessed for impairment whenever factors indicate an other-than-temporary loss in value. Factors providing evidence of such a loss include the fair value of an investment that is less than its carrying value, absence of an ability to recover the carrying value or the investee’s inability to generate income sufficient to justify the carrying value. As a result of this assessment in 2018, the Company determined the carrying value exceeded the fair value and recognized an $8.4 million impairment charge within other expense/(income), net in the Consolidated Statements of Income and Comprehensive Income. In addition, during 2019, the Company recognized an additional $0.5 million impairment charge within other expense/(income), net in the Consolidated Statements of Income and Comprehensive Income. During the first quarter of 2020, the Company wrote off its remaining $2.7 million investment, inclusive of the $1.5 million preferred yield within other expense/(income), net in the unaudited Consolidated Statements of Income and Comprehensive Income. The fair value of the equity method investment was determined based on applying income and market approaches. The income approach relied on the discounted cash flow method and the market approach relied on a market multiple approach considering historical and projected financial results.

NOTE 11 | STOCKHOLDERS' EQUITY

On November 28, 2017, the Company's Board of Directors ("Board") approved a share repurchase program that authorizes the Company to repurchase up to $150.0 million of the Company’s outstanding common stock using available cash (the "2017 Repurchase Program"). The Company may repurchase shares on the open market, including through Rule 10b5-1 plans, in privately negotiated transactions, through block purchases, or otherwise in compliance with applicable laws, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The timing and amount of stock repurchases will depend on a variety of factors, including business and market conditions as well as corporate and regulatory considerations. The share repurchase program may be suspended, modified, or discontinued at any time and the Company has no obligation to repurchase any amount of its common stock under the program. During the thirteen weeks ended May 4, 2019, the Company repurchased 0.9 million shares of its common stock under the 2017 Repurchase Program for an aggregate amount equal to $4.9 million, including commissions. During the thirteen weeks ended May 2, 2020, the Company did not repurchase shares of its common stock. As of May 2, 2020, the Company had approximately $34.2 million remaining under this authorization.

Stockholder Rights Agreement

On April 20, 2020, the Board adopted a Stockholder Rights Agreement (the “Rights Agreement”). Under the Rights Agreement, one preferred share purchase right was distributed for each share of common stock, par value $0.01, outstanding at the close of business on April 30, 2020 and one right will be issued for each new share of common stock issued thereafter. The rights will initially trade with common stock and will generally become exercisable only if any person (or any persons acting as a group) acquires 10% (or 20% in the case of certain passive investors) or more of the Company’s outstanding common stock (the “triggering percentage”). In the event the rights become exercisable, each holder of a right, other than triggering person, will be entitled to purchase additional shares of common stock at a 50% discount or the Company may exchange each right held by such holders for one share of common stock. Existing 10% or greater stockholders are grandfathered to the extent of their April 21, 2020 ownership levels. The Rights Agreement will continue in effect until April 19, 2021, or unless earlier redeemed or terminated by the Company, as provided in the Rights Agreement. The rights have no voting or dividend privileges, and, unless and until they become exercisable, have no dilutive effect on the earnings of the Company.

EXPRESS, INC. | Q1 2020 Form 10-Q | 20

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity, and cash flows of the Company as of the dates and for the periods presented below. The following discussion and analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended February 1, 2020 and our unaudited Consolidated Financial Statements and the related notes included in Item 1 of this Quarterly Report on Form 10-Q ("Quarterly Report"). This discussion contains forward-looking statements that are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors. See “Forward-Looking Statements.”

Our management's discussion and analysis of financial condition and results of operations is presented in the following sections:

	Page
Overview	21
COVID-19 Pandemic	21
Financial Highlights	22
Business Outlook	23
How We Assess the Performance of Our Business	24
Results of Operations	26
Liquidity and Capital Resources	29
Contractual Obligations	30
Critical Accounting Policies	30

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OVERVIEW

Express is a leading fashion brand for women and men. Since 1980, Express has provided the latest apparel and accessories to help customers build a wardrobe for every occasion, offering fashion and quality at an attractive value. The Company operates 594 retail and factory outlet stores in the United States and Puerto Rico, as well as an online destination.

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COVID-19 PANDEMIC

In March 2020, the World Health Organization declared the novel strain of coronavirus ("COVID-19") a global pandemic and recommended containment and mitigation measures. In response to the pandemic, many states and localities in which we operate have issued stay-at-home orders and other social distancing measures. Effective March 17, 2020, we temporarily closed all of our retail and factory outlet stores and offices, and as a result all store associates and a number of home office employees were furloughed. As mandated shutdowns and stay-at-home orders went into effect across the country, we experienced an immediate reduction in sales levels compared to the prior year.

In response to the uncertainty of the circumstances described above, and in accordance with the latest federal and state guidelines, we continue to implement plans to adapt to changing circumstances arising from this pandemic and have implemented the following actions to provide a safe and comfortable environment for our associates and customers:

▪Training associates on the new health and safety protocols

▪Practicing proper social distancing, and providing contact-free customer service and payment options

▪Implementing enhanced cleaning and sanitizing procedures across all stores

▪Designating a maximum capacity for each store

▪Installing Plexiglas shields at all checkout counters

▪Requiring all associates to wear face coverings

EXPRESS, INC. | Q1 2020 Form 10-Q | 21

▪Offering curbside pickup at Easton in Columbus, OH and Chicago, IL test locations with a plan to expand to more stores

▪Introducing enhanced buy online pick-up in stores ("BOPIS") customer experience in select reopened stores, with plans to roll out to the entire store base by the end of the third quarter

We are taking a phased approach with respect to store openings, with the pace and staffing calibrated to mall traffic and consumer demand, and the overall plan may be accelerated or modified based on updated guidance from local, state and federal government officials or new measures to ensure associate and customer safety. As of June 3, 2020, we have re-opened approximately 300 stores in the U.S. We are continuously monitoring the performance of our stores to ensure the locations are sustainable during the pandemic.

We have also enhanced our liquidity position through several actions. In March 2020, we accessed $165.0 million available to us under our Revolving Credit Facility. See Note 7 of our unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report for more information.

To further improve our liquidity, we have also significantly reduced expenses, capital expenditures and working capital; this included inventory reductions, furloughing most store associates and a number of corporate associates while stores were closed, suspending merit pay increases, and freezing hiring. See "Liquidity and Capital Resources" included elsewhere in this Quarterly Report for more information.

There can be no assurance as to the time required to fully recover operations and sales to pre-pandemic levels. As we begin to re-open, we will work closely with local authorities and our landlords, and comply with Centers for Disease Control, state, and local guidelines during the process, including social distancing and other safety restrictions and recommendations.

As we move through this transition, we expect to incur some labor inefficiencies as we adjust to new protocols and operating models with a goal to remain as efficient as possible while still offering safe and high quality service to our communities. The further spread of COVID-19, and the requirements to take action to help limit the spread of the illness, will impact our ability to carry out our business as usual and may materially adversely impact global economic conditions, our business, results of operations, cash flows and financial condition. The extent of the impact of COVID-19 on our business and financial results will depend on future developments, including the duration and spread of the outbreak within the markets in which we operate, the related impact on consumer confidence and spending, any disruptions in our supply chain, and the effect of governmental regulations imposed in response to the pandemic, all of which are highly uncertain and ever-changing. The sweeping nature of the COVID-19 pandemic makes it extremely difficult to predict how our business and operations will be affected in the long run. However, the likely overall economic impact of the pandemic is viewed as highly negative to the general economy. Any of the foregoing factors, or other cascading effects of the COVID-19 pandemic, could materially increase our costs, negatively impact our sales and damage our results of operations and liquidity, possibly to a significant degree. The duration of any such impacts cannot be predicted with certainty. Given the dynamic and unpredictable nature of this situation, we cannot reasonably estimate with certainty the impacts of COVID-19 on our financial condition, results of operations or cash flows in the future. We will continue to monitor the rapidly evolving situation and guidance from domestic authorities.

FINANCIAL HIGHLIGHTS FOR THE FIRST QUARTER 2020

■Net sales decreased 53% to $210.3 million

■Gross margin percentage decreased 4,910 basis points to (22.0)%

■Operating loss increased $133.7 million to a loss of $145.3 million

■Net loss increased $144.1 million to a loss of $154.1 million

■Diluted loss per share increased $2.26 to a loss of $2.41

As a result of the store closures due to COVID-19, we do not believe providing comparable sales for the first quarter would be meaningful and therefore will not report comparable sales for the first quarter of 2020.

EXPRESS, INC. | Q1 2020 Form 10-Q | 22

The following charts show key performance metrics for the first quarter of 2020 compared to the first quarter of 2019.

 

 

OUTLOOK & FIRST QUARTER UPDATE

As previously mentioned, COVID-19 led to the temporary closure of all Express stores in mid-March through the remainder of the first quarter. These closures and reduced consumer spending negatively impacted our first quarter results. This occurred while we were in the early stages of a transformation. Our new corporate strategy, the EXPRESSway Forward, had been set in motion, and while much work was ahead of us, a great deal had been accomplished. We had completed a comprehensive restructure of our organization, in order to better align our teams with our objective. We had implemented a more streamlined and efficient go-to-market process, established a new design & merchandising vision, called Express Edit, and developed a new brand positioning to stake our claim to territory our customers told us would be relevant and compelling to them. We had also identified a total of $80.0 million dollars in cost savings opportunities that we expect to achieve over a three year period. While we expect our results to remain challenging in the near-term as a result of COVID-19, we believe that by focusing on these foundational elements we have a significant opportunity to improve the trend of the business and return the business to long term profitable growth. The following defines each foundational element of the EXPRESSway Forward:

▪Product

▪Brand

▪Customer

▪Execution

EXPRESS, INC. | Q1 2020 Form 10-Q | 23

Product

We will put product first. The new product vision is called the Express Edit. This vision is about standing for certain elements of fashion and style that we know matter to our customers. This includes providing the customer with a wardrobe that has the functionality to cover multiple needs and wearing occasions. In the fourth quarter, we introduced new products that resonated with our customers. We expect that implementation of this new product vision will take some time and we will see incremental impact throughout the year.

Brand

We believe we have an opportunity to reinvigorate our brand. To accomplish this we have clarified our new brand purpose: Creating Confidence and Inspiring Self Expression. We have realized and accelerated this new brand positioning through the launch of multiple content series under the heading hashtag ExpressTogether. We believe this will allow us to capture the position in the market for a dual fashion brand that helps customers dress for every day and any occasion.

Customer

We need to be more effective at engaging our customers and attracting new ones. We are building strategies and developing tactics to communicate with customers differently. We are using a marketing mix model tool to assess where we are spending our marketing dollars and which channels deliver the best return on investment. We are also using a multi-touch attribution tool to evaluate the real-time performance of our in-market messages and track the customer’s journey to purchase, both online and offline. Going forward we plan to relaunch the Express loyalty program and reissue the Express credit card.

Execution

We will execute with precision to accelerate sales and profitability. To this end, we have completed the redesign of our go-to-market process and have begun driving stronger cross functional alignment. The goal is to increase our speed to market by 20-25%. In addition, we have been focused on inventory optimization, which includes eliminating unproductive inventory and optimizing the composition of our assortment. We are focused on improving the performance of our brick and mortar stores by reducing time spent on non-selling activities and improving conversion and other metrics through improved merchandise flow and a better customer experience.

HOW WE ASSESS THE PERFORMANCE OF OUR BUSINESS

In assessing the performance of our business, we consider a variety of performance and financial measures. These key measures include net sales, comparable sales, cost of goods sold, buying and occupancy costs, gross (loss)/profit/gross margin, and selling, general, and administrative expenses. The following table describes and discusses these measures.

Financial Measures	Description	Discussion
Net Sales	Revenue from the sale of merchandise, less returns and discounts, as well as shipping and handling revenue related to e-commerce, revenue from the rental of our LED sign in Times Square, gift card breakage, revenue earned from our private label credit card agreement, and revenue earned from our franchise agreements.	Our business is seasonal, and we have historically realized a higher portion of our net sales in the third and fourth quarters, due primarily to the impact of the holiday season. Generally, approximately 46% of our annual net sales occur in the Spring season (first and second quarters) and 54% occur in the Fall season (third and fourth quarters). We expect this ratio to be higher in the Fall season in 2020 due to COVID-19.

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Financial Measures	Description	Discussion
Comparable Sales	Comparable sales is a measure of the amount of sales generated in a period relative to the amount of sales generated in the comparable prior year period. As a result of the temporary store closures due to COVID-19, we will not present comparable sales for the first quarter of 2020.	Our business and our comparable sales are subject, at certain times, to calendar shifts, which may occur during key selling periods close to holidays such as Easter, Thanksgiving, and Christmas, and regional fluctuations for events such as sales tax holidays. We believe comparable sales provides a useful measure for investors by removing the impact of new stores and closed stores. Management considers comparable sales a useful measure in evaluating continuing store performance.
Cost of goods sold, buying and occupancy costs	Includes the following: •Direct cost of purchased merchandise •Inventory shrink and other adjustments •Inbound and outbound freight •Merchandising, design, planning and allocation, and manufacturing/production costs •Occupancy costs related to store operations (such as rent and common area maintenance, utilities, and depreciation on assets) •Logistics costs associated with our e-commerce business •Impairments on long-lived assets and right of use lease assets	Our cost of goods sold typically increases in higher volume quarters because the direct cost of purchased merchandise is tied to sales. The primary drivers of the costs of individual goods are raw materials, labor in the countries where our merchandise is sourced, and logistics costs associated with transporting our merchandise. Buying and occupancy costs related to stores are largely fixed and do not necessarily increase as volume increases. Changes in the mix of products sold by type of product or by channel may also impact our overall cost of goods sold, buying and occupancy costs.
Gross (Loss)/Profit/Gross Margin	Gross (loss)/profit is net sales minus cost of goods sold, buying and occupancy costs. Gross margin measures gross (loss)/profit as a percentage of net sales.	Gross (loss)/profit/gross margin is impacted by the price at which we are able to sell our merchandise and the cost of our product. We review our inventory levels on an on-going basis in order to identify slow-moving merchandise and generally use markdowns to clear such merchandise. The timing and level of markdowns are driven primarily by seasonality and customer acceptance of our merchandise and have a direct effect on our gross margin. Any marked down merchandise that is not sold is marked-out-of-stock. We use third-party vendors to dispose of this marked-out-of-stock merchandise.
Selling, General, and Administrative Expenses	Includes operating costs not included in cost of goods sold, buying and occupancy costs such as: •Payroll and other expenses related to operations at our corporate offices •Store expenses other than occupancy costs •Marketing expenses, including production, mailing, print, and digital advertising costs, among other things	With the exception of store payroll, certain marketing expenses, and incentive compensation, selling, general, and administrative expenses generally do not vary proportionally with net sales. As a result, selling, general, and administrative expenses as a percentage of net sales are usually higher in lower volume quarters and lower in higher volume quarters.

EXPRESS, INC. | Q1 2020 Form 10-Q | 25

RESULTS OF OPERATIONS

The First Quarter of 2020 compared to the First Quarter of 2019

Net Sales

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
Net sales (in thousands)	$	210,275	$	451,271
Gross square footage at end of period (in thousands)	5,045		5,349
Number of:
Stores open at beginning of period	595		631
New retail stores	—		—
New outlet stores	—		15
Retail stores converted to outlets	—		(15)
Closed stores	(1)		(2)
Stores open at end of period	594		629

Net sales in the first quarter of 2020 decreased approximately $241.0 million compared to the first quarter of 2019. The sales decrease is primarily attributed to the temporary closure of all Express stores from mid-March through the end of the first quarter of 2020.

Gross (Loss)/Profit

The following table shows cost of goods sold, buying and occupancy costs, gross (loss)/profit in dollars, and gross margin percentage for the stated periods:

	Thirteen Weeks Ended
	May 2, 2020			May 4, 2019
	(in thousands, except percentages)
Cost of goods sold, buying and occupancy costs	$	256,482		$	328,768
Gross (loss)/profit	$	(46,207)		$	122,503
Gross margin percentage	(22.0)		%	27.1		%

The 4,910 basis point decrease in gross margin percentage, or gross (loss)/profit as a percentage of net sales, in the first quarter of 2020 compared to the first quarter of 2019 was comprised of a decrease in merchandise margin and an increase in buying and occupancy costs as a percentage of net sales. The decrease in merchandise margin was primarily driven by increased promotions as we shifted to a highly competitive online only environment while our stores were temporarily closed as a result of COVID-19. In addition, we recorded higher valuation reserves related to our inventory as well as higher levels of reserves against certain fabric commitments. Buying and occupancy costs deleveraged as a result of the reduction in sales and were also impacted by $14.7 million due to an impairment charge of certain long-lived store related assets and right of use assets. Refer to Note 4 in our unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report for further discussion regarding the impairment charges for the thirteen weeks ended May 2, 2020.

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Selling, General, and Administrative Expenses

The following table shows selling, general, and administrative expenses in dollars and as a percentage of net sales for the stated periods:

	Thirteen Weeks Ended
	May 2, 2020			May 4, 2019
	(in thousands, except percentages)
Selling, general, and administrative expenses	$	99,165		$	135,367
Selling, general, and administrative expenses, as a percentage of net sales	47.2		%	30.0		%

The $36.2 million decrease in selling, general, and administrative expenses in the first quarter of 2020 as compared to the first quarter of 2019 was the result of the previously announced cost savings from the corporate restructuring, the mitigation actions we took in response to COVID-19, and the reduction of certain variable costs associated with operations.

Other Expense, Net

The following table shows other expense in dollars for the stated periods:

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Other expense, net	$	2,733	$	—

The $2.7 million increase in other expense in the first quarter of 2020 as compared to the first quarter of 2019 was the result of a pretax write-off of our 2016 investment in Homage. Refer to Note 10 in our unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report for further discussion regarding the write-off during the thirteen weeks ended May 2, 2020.

Income Tax Expense/(Benefit)

The following table shows income tax expense/(benefit) in dollars for the stated periods:

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Income tax expense/(benefit)	$	5,982	$	(908)

The effective tax rate was (4.0)% for the thirteen weeks ended May 2, 2020 compared to 8.4% for the thirteen weeks ended May 4, 2019. The effective tax rate for the thirteen weeks ended May 2, 2020 reflects the impact of establishing a valuation allowance against the Company’s net deferred tax assets, which includes $54.3 million of discrete tax expense from a valuation allowance on previously recognized deferred tax assets and $6.8 million valuation allowance on 2020 U.S. state taxes and other tax credits. This tax expense was partially offset by a $19.5 million tax benefit related to the CARES Act, which includes the benefit for the portion of the estimated 2019 and 2020 U.S. Federal net operating losses that are able to be carried back to offset taxable income in the five-year carryback period. The effective tax rate for the thirteen weeks ended May 4, 2019 reflects a tax benefit from a pre-tax loss offset by $1.4 million of discrete tax expense related to a tax shortfall for share-based compensation. The effective tax rate, excluding discrete items, was 33.2% and 22.1% for the thirteen weeks ended May 2, 2020 and May 4, 2019, respectively. The effective tax rate, excluding discrete items, is higher for the current year due to the ability to carryback current year net operating losses allowed under the CARES Act to tax years with higher statutory tax rates.

Operating Loss, Net Loss and Diluted Earnings Per Share

Included in the table below is operating loss, net loss and diluted earnings per share for the thirteen weeks ended May 2, 2020 and May 4, 2019, respectively. We supplement the reporting of our financial information determined

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under United States generally accepted accounting principles ("GAAP") with certain non-GAAP financial measures: adjusted operating loss, adjusted net loss, and adjusted diluted earnings per share. The following table presents these financial measures, each a non-GAAP financial measure, for the stated periods which eliminate certain non-core operating costs:

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands, except per share amounts)
Operating loss	$	(145,279)	$	(11,554)
Adjusted operating loss (Non-GAAP)	$	(130,601)	$	(11,554)	*
Net loss	$	(154,050)	$	(9,934)
Adjusted net loss (Non-GAAP)	$	(99,424)	$	(9,934)	*
Diluted earnings per share	$	(2.41)	$	(0.15)
Adjusted diluted earnings per share (Non-GAAP)	$	(1.55)	$	(0.15)	*

* No adjustments were made to operating loss, net loss or diluted earnings per share for the thirteen weeks ended May 4, 2019.

We believe that these non-GAAP measures provide additional useful information to assist stockholders in understanding our financial results and assessing our prospects for future performance. Management believes adjusted operating loss, adjusted net loss, and adjusted diluted earnings per share are important indicators of our business performance because they exclude items that may not be indicative of, or are unrelated to, our underlying operating results, and provide a better baseline for analyzing trends in our business. In addition, adjusted diluted earnings per share is used as a performance measure in our long-term executive compensation program for purposes of determining the number of equity awards that are ultimately earned, and adjusted operating loss is a metric used in our short-term cash incentive compensation plan. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. These adjusted financial measures should not be considered in isolation or as a substitute for reported operating loss, net loss or diluted earnings per share. These non-GAAP financial measures reflect an additional way of viewing our operations that, when viewed with the GAAP results and the below reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of our business. Management strongly encourages investors and stockholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

The following table reconciles the non-GAAP financial measures, adjusted operating loss, adjusted net loss, and adjusted diluted earnings per share, with the most directly comparable GAAP financial measures, operating loss, net loss, and diluted earnings per share for the thirteen weeks ended May 2, 2020.

	Thirteen Weeks Ended May 2, 2020
(in thousands, except per share amounts)	Operating Loss		Income Tax Impact	Net Loss		Diluted Earnings per Share		Weighted Average Diluted Shares Outstanding
Reported GAAP Measure	$	(145,279)		$	(154,050)	$	(2.41)	64,030
Impairment of property, equipment and lease assets	14,678		(3,856)	10,822		0.17
Equity method investment impairment (a)	—		(642)	2,091		0.03
Valuation allowance on deferred taxes (b)			61,075	61,075		0.95
Tax impact of the CARES Act (c)			(19,473)	(19,473)		(0.30)
Tax impact of executive departures (d)	—		111	111		—
Adjusted Non-GAAP Measure	$	(130,601)		$	(99,424)	$	(1.55)

a.Impairment before tax was $2.7 million and was recorded in Other Expense, net

b.Valuation allowance provided against incurred and potential 2020 losses and previously recognized deferred tax assets, less net operating losses utilized within CARES Act

c.The Company recognized an income tax benefit of $19.5 million primarily due to a net operating loss carryback under the enacted CARES Act.

d.Represents the tax impact related to the expiration of former executive non-qualified stock options.

EXPRESS, INC. | Q1 2020 Form 10-Q | 28

LIQUIDITY AND CAPITAL RESOURCES

COVID-19 Pandemic

As previously announced, we took a number of actions to maintain liquidity throughout the COVID-19 pandemic, which are as follows:

■Accessed $165.0 million from our $250.0 million asset based credit facility

■Cut second quarter inventory receipts by over $100.0 million

■Identified cost savings of approximately $75.0 million dollars to be realized in 2020, including the impact from our previously announced COVID-19 mitigation actions, and a decrease in our variable costs as a result of the decline in sales

■Lowered expected annual capital expenditures by approximately $25.0 million

■Anticipated cash benefits in 2020 from the CARES Act of approximately $20.0 million, including the expanded operating loss carry back, employer payroll tax credit and deferral provisions. Additional significant cash benefits from the CARES Act are also expected to be realized in 2021.

The total liquidity benefits from these actions in 2020 are expected to be approximately $385.0 million, of which $195.0 million was realized in the first quarter of 2020. These benefits are incremental to the previously announced cost savings associated with the EXPRESSway Forward strategy.

Forward-Looking Liquidity Discussion

Our liquidity position benefits from the fact that we generally collect cash from sales to customers the same day or, in the case of credit or debit card transactions, within three to five days of the related sale, and we have up to 75 days to pay certain merchandise vendors and 45 days to pay the majority of our non-merchandise vendors.

We believe our existing cash and cash generated from future operations combined with the actions we have taken in response to COVID-19 will be sufficient to fund our operating lease obligations, capital expenditures and working capital needs for at least the next 12 months and the foreseeable future.

Analysis of Cash Flows

A summary of cash provided by or used in operating, investing, and financing activities is shown in the following table:

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Used in operating activities	$	(131,238)	$	(16,945)
Used in investing activities	(4,176)		(4,078)
Provided by (used in) financing activities	164,460		(6,414)
Increase (decrease) in cash and cash equivalents	29,046		(27,437)
Cash and cash equivalents at end of period	$	236,185	$	144,233

Operating Activities

Our business relies on cash flows from operations as our primary source of liquidity, with the majority of those cash flows being generated in the fourth quarter of the year. Our primary operating cash needs are for merchandise inventories, payroll, store rent and marketing. For the thirteen weeks ended May 2, 2020, our cash flows used in operating activities were $131.2 million compared to $16.9 million used in operating activities for the thirteen weeks ended May 4, 2019. This $114.3 million decrease in cash flows from operating activities for the thirteen weeks

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ended May 2, 2020 was primarily driven by the temporary closure of our stores as a result of COVID-19. Also, as a result of COVID-19, we did not make our store rent payments for April, May or June 2020.

Investing Activities

We also use cash for capital expenditures and financing transactions. For the thirteen weeks ended May 2, 2020, we had capital expenditures of approximately $4.2 million. These relate primarily to new and remodeled store construction and fixtures and investments in information technology. We expect capital expenditures for the remainder of 2020 to be approximately $16.0 million to $20.0 million, primarily driven by new and remodeled store construction and investments in information technology. These capital expenditures do not include the impact of landlord allowances, which are expected to be approximately $2.0 million for the remainder of 2020.

Financing Activities

On March 17, 2020, we provided notice to the lenders under our Revolving Credit Facility of our request to borrow $165.0 million in order to strengthen our liquidity position and preserve financial flexibility in response to the COVID-19 outbreak that led to the temporary closure of all of our Express and Express Factory Outlet stores. As of May 2, 2020, amounts outstanding under our Revolving Credit Facility were $165.0 million, which is classified as long-term debt on the unaudited Consolidated Balance Sheet and approximately $67.8 million was available for borrowing under the Revolving Credit Facility subject to certain borrowing base limitations and after outstanding letters of credit in the amount of $17.2 million, primarily related to our third party logistics contract. Refer to Note 7 to our unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information on our Revolving Credit Facility.

On November 28, 2017, the Board approved a share repurchase program that authorizes us to repurchase up to $150.0 million of our outstanding common stock using available cash. During the thirteen weeks ended May 2, 2020, we did not repurchase shares under the stock repurchase program. During the thirteen weeks ended May 4, 2019, we repurchased 0.9 million shares under the share repurchase program for an aggregate amount equal to $4.9 million, including commissions. As of May 2, 2020, we had approximately $34.2 million remaining under the share repurchase program.

CONTRACTUAL OBLIGATIONS

Our contractual obligations and other commercial commitments did not change materially between February 1, 2020 and May 2, 2020, except for the borrowing of the $165.0 million under our Revolving Credit Facility. Refer to Note 7 to our unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information on our Revolving Credit Facility. For additional information regarding our contractual obligations as of February 1, 2020, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended February 1, 2020.

CRITICAL ACCOUNTING POLICIES

Management has determined that our most critical accounting policies are those related to revenue recognition, merchandise inventory valuation, long-lived asset valuation, claims and contingencies, and income taxes. We continue to monitor our accounting policies to ensure proper application of current rules and regulations. There have been no significant changes to the policies discussed in our Annual Report on Form 10-K for the year ended February 1, 2020.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

INTEREST RATE RISK

As discussed in Note 7 of our unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report, our Revolving Credit Facility bears interest at variable rates. The nature and amount of our long-term debt can be expected to vary as a result of future business requirements, market conditions, and other factors.

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Based on the levels of borrowings under the Revolving Credit Facility at May 2, 2020, we estimate that a 100 basis point increase or decrease in underlying interest rates would increase or decrease annual interest expense by approximately $1.7 million.

With the exception of these changes in the levels of borrowings under our Revolving Credit Facility, there have been no material changes in our quantitative and qualitative market risks from those disclosed in our Annual Report on Form 10-K for the year ended February 1, 2020.

ITEM 4. CONTROLS AND PROCEDURES.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934) that are designed to provide reasonable assurance that information required to be disclosed in our Securities Exchange Act of 1934 reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation prior to filing this report of our disclosure controls and procedures. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of May 2, 2020.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) that occurred during the first quarter of 2020 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

Information relating to legal proceedings is set forth in Note 9 to our unaudited Consolidated Financial Statements included in Part I of this Quarterly Report and is incorporated herein by reference.

ITEM 1A. RISK FACTORS.

In addition to the other information set forth in this Quarterly Report, careful consideration should be given to the risk factors set forth in “Item 1A. Risk Factors”, of our Annual Report on Form 10-K for the year ended February 1, 2020, any of which could materially affect our business, operations, financial position, stock price, or future results. The risks described herein and in our Annual Report on Form 10-K for the year ended February 1, 2020, are important to an understanding of the statements made in this Quarterly Report, in our other filings with the SEC, and in any other discussion of our business. These risk factors, which contain forward-looking information, should be read in conjunction with “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and the unaudited Consolidated Financial Statements and related notes included elsewhere in this Quarterly Report.

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The COVID-19 pandemic could continue to adversely affect our business, sales, financial condition, results of operations and cash flows, and our ability to access current or obtain new lending facilities.

Since being reported in December 2019, COVID-19 has spread globally, including to every state in the United States, and has been declared a pandemic by the World Health Organization. The COVID-19 pandemic and preventative measures taken to contain or mitigate such have caused, and are continuing to cause, business slowdown or shutdown in affected areas and significant disruption in the financial markets both globally and in the United States, which could lead to a decline in discretionary spending by consumers, and in turn impact, possibly materially, our business, sales, financial condition and results of operations. The impacts include, but are not limited to:

•retail and outlet store closures or reduced operating hours and/or decreased traffic;

•disruption to our distribution centers and our third-party manufacturing partners and other vendors, including the effects of facility closures, reductions in operating hours, labor shortages, and real time changes in operating procedures, including for additional cleaning and disinfection procedures; and

•significant disruption of global financial markets, which could have a negative impact on our ability to access capital in the future.

The further spread of COVID-19, and the requirements to take action to help limit the spread of the illness, will impact our ability to carry out our business as usual and may materially adversely impact global economic conditions, our business, results of operations, cash flows and financial condition. The extent of the impact of COVID-19 on our business and financial results will depend on future developments, including the duration and spread of the outbreak within the markets in which we operate, the related impact on consumer confidence and spending, and the effect of governmental regulations imposed in response to the pandemic, all of which are highly uncertain and ever-changing. The sweeping nature of the COVID-19 pandemic makes it extremely difficult to predict how our business and operations will be affected in the long run. However, the likely overall economic impact of the pandemic is viewed as highly negative to the general economy. Any of the foregoing factors, or other cascading effects of the COVID-19 pandemic, could materially increase our costs, negatively impact our sales and damage our results of operations and liquidity, possibly to a significant degree. While we currently believe liquidity will be sufficient to fund our lease obligations, capital expenditures, and working capital for the next 12 months and the foreseeable future, the duration of any such impacts cannot be predicted.

If we are unable to maintain compliance with the covenants contained in our current credit facility, we may be unable to make additional borrowings on any undrawn amounts and may be required to repay our then outstanding debt under the facility. In addition, global economic conditions may make it more difficult to access new credit facilities.

Our liquidity position is, in part, dependent upon our ability to borrow under our current credit facility. As discussed in Note 7 of our unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report, on May 24, 2019, Express Holding, LLC, a wholly-owned subsidiary of the Company (“Express Holding”), and its subsidiaries entered into a First Amendment to the Second Amended and Restated $250.0 million Asset-Based Loan Credit Agreement (“Revolving Credit Facility”). The expiration date of the Revolving Credit Facility is May 24, 2024. On March 17, 2020, we drew down $165.0 million available to us under the credit facility to increase liquidity and enhance financial flexibility given the uncertain market conditions as a result of the COVID-19 outbreak. We may be required to comply with a minimum fixed charge coverage ratio from our Revolving Credit Facility Agreement. If we borrow additional funds so that our availability is less than 10%, a requirement of a greater than 1:1 ratio would be necessary. In addition to other customary affirmative and negative covenants, including those which (subject to certain exceptions and dollar thresholds) limit our ability to incur debt; incur liens; make investments; engage in mergers, consolidations, liquidations or acquisitions; dispose of assets; make distributions on or repurchase equity securities; engage in transactions with affiliates; and prohibit us, with certain exceptions, from engaging in any line of business not related to our current line of business. As of May 2, 2020, we were in compliance with all covenants. However, as a result of the COVID-19 outbreak, our total revenues have decreased significantly and we have implemented certain operational changes in order to address the evolving challenges presented by the global pandemic on our operations. Due to the impacts of COVID-19, our financial performance in future fiscal quarters will be negatively impacted. There is no guarantee that our financial performance will improve for the next 12 months from this filing. A failure to comply with the financial covenants under our credit facility would give rise to an event of

EXPRESS, INC. | Q1 2020 Form 10-Q | 32

default under the term of the credit facility, allowing the lenders to refuse to lend additional available amounts to us and giving them the right to terminate the facility and accelerate repayment of any outstanding debt under the credit facility.

Our stockholder rights agreement could make it more difficult for a third party to acquire control of the Company which could have a negative effect on the price of our common stock.

Effective April 20, 2020, we adopted a Stockholder Rights Agreement (the "Rights Agreement") which could discourage potential acquisition proposals and could delay or prevent a change in control of the Company or a change in our management or Board of Directors, even in situations that may be considered beneficial by some of our stockholders. The Rights Agreement may substantially dilute the stock ownership of a person or group that attempts to acquire a large interest without first negotiating with our Board of Directors. These deterrents could also adversely affect the price of our common stock.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

The following table provides information regarding the purchase of shares of our common stock made by or on behalf of the Company or any “affiliated purchaser” as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, during each month of the quarterly period ended May 2, 2020:

Month	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs(2)
	(in thousands, except per share amounts)
February 2, 2020 - February 29, 2020	1	$	4.37	—	$	34,215
March 1, 2020 - April 4, 2020	4	$	4.14	—	$	34,215
April 5, 2020 - May 2, 2020	263	$	1.97	—	$	34,215
Total	268			—

1.Includes shares purchased in connection with employee tax withholding obligations under the Express, Inc. 2010 Incentive Compensation Plan, as amended (the “2010 Plan”) and the Express, Inc. 2018 Incentive Compensation Plan (the “2018 Plan”). Refer to Note 8 of our unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report for further details of the 2010 Plan and 2018 Plan.

2.On November 28, 2017, the Board approved a share repurchase program that authorizes the Company to repurchase up to $150 million of the Company’s outstanding common stock using available cash. The Company may repurchase shares on the open market, including through Rule 10b5-1 plans, in privately negotiated transactions, through block purchases, or otherwise in compliance with applicable laws, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The timing and amount of stock repurchases will depend on a variety of factors, including business and market conditions as well as corporate and regulatory considerations. The share repurchase program may be suspended, modified, or discontinued at any time and the Company has no obligation to repurchase any amount of its common stock under the program.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

EXPRESS, INC. | Q1 2020 Form 10-Q | 33

ITEM 6. EXHIBITS.

The following exhibits are filed as part of this Quarterly Report on Form 10-Q or are incorporated herein by reference.

Exhibit Number	Exhibit Description
3.1	Certificate of Designations of Series A Preferred Stock of Express, Inc., as filed with the Secretary of State of the State of Delaware on April 20, 2020 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, filed with the SEC on April 21, 2020).
4.1	Rights Agreement, dated as of April 20, 2020, between Express, Inc. and Computershare Trust Company, N.A., as rights agent (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, filed with the SEC on April 21, 2020).
10.1*+	Form of Express, Inc. Restricted Stock Unit Award Agreement
10.2*+	Form of Express, Inc. Other Cash-Based Award Agreement
31.1*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH*	Inline XBRL Taxonomy Extension Schema Document.
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
* Filed herewith.
+ Indicates a management contractor compensatory plan or arrangement.

EXPRESS, INC. | Q1 2020 Form 10-Q | 34

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:	June 9, 2020	EXPRESS, INC.
		By:	/s/ Periclis Pericleous
			Periclis Pericleous
			Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)

EXPRESS, INC. | Q1 2020 Form 10-Q | 35

EX-10.1

Exhibit 10.1

RESTRICTED STOCK UNIT AWARD AGREEMENT

PURSUANT TO THE

AMENDED AND RESTATED

EXPRESS, INC. 2018 INCENTIVE COMPENSATION PLAN

* * * * *

Participant:

Grant Date:

Number of Restricted Stock Units Granted:

Vesting Terms: See Section 3 below

* * * * *

THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”), is entered into by and between Express, Inc., a Delaware corporation (the “Company”), and Participant specified above, as of the Grant Date specified above. This Agreement documents the grant by the Company to Participant under the Amended and Restated Express, Inc. 2018 Incentive Compensation Plan (the “Plan”) of the Restricted Stock Units specified above, subject to the terms of this Agreement (the “RSUs”).

1.Grant of Restricted Stock Unit Award.

a.The Company hereby grants to Participant the RSUs as of the Grant Date. Each of the RSUs shall entitle Participant to receive one share of Common Stock at such future date or dates and subject to such terms as set forth in this Agreement. Except as otherwise specifically provided for in the Plan, nothing in this Agreement provides, or is intended to provide, Participant with any protection against potential future dilution of Participant’s interest in the Company for any reason. Except as set forth in Section 5 below, Participant shall not have the rights of a stockholder in respect of the shares underlying the RSUs until such shares are delivered to Participant in accordance with Section 4 below.

b.Participant must accept the terms of this Agreement through the Company’s online acceptance process within sixty days after the Agreement is presented to Participant for review. If Participant does not accept this Agreement through the online acceptance process within sixty days after the Agreement is presented for review, the Company shall automatically accept this Agreement on Participant’s behalf.

2.Plan Terms Control.

a.This Agreement is subject in all respects to the terms of the Plan (including any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the RSUs). All of the terms of the Plan are made a part of and incorporated in this Agreement as if they were each expressly set forth herein. Any capitalized terms not defined in this Agreement shall have the same meaning as is ascribed under the Plan.

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b.Participant acknowledges receipt of a true copy of the Plan (which is also filed publicly) and a prospectus describing the material terms of the Plan. Participant has read the Plan carefully and fully understands its content, including the Committee’s broad authority to administer the Plan (as set forth under Article III of the Plan).

c.In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.

3.[Vesting.

a.Vesting. The RSUs subject to this grant shall become vested pursuant to the schedule set forth in the table below, provided Participant has not incurred a Termination before the applicable vesting date. There shall be no proportionate or partial vesting in the periods prior to each vesting date.

Vesting Date	Cumulative Percentage of RSUs Vested
[____]	33 1/3%
[____]	66 2/3%
[____]	100%]

b.Forfeiture. Subject to Section 3(c) and Section 3(d) below, all unvested RSUs shall be immediately forfeited upon Participant’s Termination for any reason.

c.Death or Disability. Notwithstanding Section 3(a) above, if Participant incurs a Termination due to Participant’s death or Disability, then any unvested RSUs not previously forfeited shall become fully vested immediately.

d.Retirement. Notwithstanding Section 3(a) above, if Participant incurs a Retirement (as defined below), a pro rata amount of RSUs shall become vested upon such Retirement, with the amount to be determined by multiplying the number of unvested RSUs scheduled to vest on the vesting date immediately following the date of such Retirement by a fraction, the numerator of which is the number of days in which Participant was in service with the Company or its Affiliates for the period commencing on the vesting date immediately preceding the date of such Retirement and continuing through the date of such Retirement, and the denominator of which is the number of days in the period commencing on the vesting date immediately preceding the date of such Retirement and ending on the vesting date immediately following the date of such Retirement. Except as set forth in this paragraph, all unvested RSUs shall be immediately forfeited upon the Participant’s Retirement. “Retirement” means any voluntary Termination by Participant, other than a Termination for Cause, death, or Disability, at or after the time Participant reaches age fifty-five and completes at least ten years of full-time continuous service with the Company or any of its Subsidiaries.

e.Effect of Detrimental Activity. For the avoidance of doubt, Section 10.4 of the Plan, regarding Detrimental Activity, shall apply to the Participant and the RSUs, and the provisions thereof are hereby incorporated by reference into this Agreement.

f.Recoupment. For the avoidance of doubt, Section 14.23 of the Plan, regarding recoupment and clawback of Awards under the Plan, shall apply to the Participant and the RSUs, and the provisions thereof are hereby incorporated by reference into this Agreement.

2

4.Delivery of Shares.

a.General. Subject to Section 4(b) and the provisions of the Plan, the Company shall deliver to Participant on the applicable vesting date the number of shares of Common Stock equal to the amount of RSUs that vested on such date. In no event shall Participant be entitled to receive any shares with respect to any unvested or forfeited portion of the RSUs. For avoidance of doubt, in the event of a distribution in connection with Retirement, such distribution may be delayed pursuant to Section 14.16 of the Plan if Participant is a “specified employee” at the time of such Retirement.

b.Blackout Periods. To the extent permitted by Section 1.409A-2(b)(7)(ii) of the Treasury Regulations, if Participant is subject to any Company “blackout” policy or other trading restriction imposed by the Company on the date such distribution would otherwise be made pursuant to Section 4(a), and the distribution (including any tax withholding procedures applicable thereto) otherwise would be subject to such restrictions and the Company reasonably anticipates that the making of such a payment would violate federal securities law, such distribution shall be instead made as soon as reasonably practicable following the first date on which the Company anticipates or reasonably should anticipate that making the payment would not cause such violation.

c.Fractional Shares. In lieu of delivering any fractional shares of Common Stock to Participant pursuant to this Agreement, the Company shall first aggregate any such fractional amounts due to be delivered to Participant at such time and then round down for fractional amounts less than one-half and round up for fractional amounts equal to or greater than one-half. No cash settlements shall be made with respect to fractional shares eliminated by rounding.

5.Dividends and Other Distributions.Participant, as a holder of RSUs, shall be entitled to receive all dividends and other distributions paid with respect to the shares of Common Stock underlying the RSUs; provided, that, any such dividends or other distributions shall be subject to the same vesting requirements as the RSUs and shall be paid at the time the RSUs become vested pursuant to Section 3 above, and, provided, further, that such dividends or distributions shall be accumulated and deemed reinvested in additional shares of Common Stock based on the Fair Market Value of the Common Stock at the time of the dividend or distribution (e.g., on the last trading date before such shares trade “ex dividend”) and shall be paid only in shares of Common Stock. Any such shares shall be subject to the same restrictions on transferability and forfeitability as the RSUs with respect to which they were paid.

6.Non-transferability. Neither the RSUs nor any rights or interests with respect thereto shall be sold, exchanged, transferred, assigned, or otherwise disposed of in any way by Participant (or any beneficiary(ies) of Participant), other than by testamentary disposition by Participant or the laws of descent and distribution. Any attempt to sell, exchange, transfer, assign, pledge, encumber, or otherwise dispose of or hypothecate the RSUs in any way, or the levy of any execution, attachment, or similar legal process upon the RSUs contrary to the terms of this Agreement shall be null and void and without legal force or effect.

7.Governing Law. All questions concerning the construction, validity, and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the choice of law principles thereof.

3

8.Withholding of Tax. The Company shall have the power and the right to deduct or withhold, or require Participant to remit to the Company, an amount sufficient to satisfy any federal, state, local, and foreign taxes of any kind (including Participant’s FICA and SDI obligations) which the Company, in its sole discretion, deems necessary to be withheld or remitted to comply with the Code or any other applicable law, rule, or regulation with respect to the RSUs and, if Participant fails to do so, the Company may otherwise refuse to issue or transfer any shares of Common Stock otherwise required to be issued under this Agreement. Any statutorily required minimum withholding obligation with regard to Participant may, unless not permitted by the Committee, be satisfied by reducing the amount of shares of Common Stock otherwise deliverable to Participant hereunder, and any additional tax withholding permitted by the Committee up to the maximum permissible withholding may be satisfied similarly provided such reduction or shares would not cause adverse accounting or tax consequences to the Company.

9.Entire Agreement; Amendment. This Agreement, together with the Plan, contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter. The Committee shall have the right to modify or amend this Agreement from time to time in accordance with and as provided in the Plan. This Agreement may also be modified or amended by a writing signed by both the Company and Participant. The Company shall give written notice to Participant of any such modification or amendment of this Agreement as soon as practicable after the adoption thereof.

10.Notices. Any notice hereunder by Participant shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the General Counsel of the Company. Any notice hereunder by the Company shall be given to Participant in writing and such notice shall be deemed duly given only upon receipt thereof at such address as Participant may have on file with the Company.

11.No Right to Employment. Any questions as to whether and when there has been a Termination and the cause of such Termination shall be determined in the sole discretion of the Committee. Nothing in this Agreement shall interfere with or limit in any way the right of the Company, its Subsidiaries or their respective Affiliates to terminate Participant’s employment or service at any time, for any reason and with or without cause.

12.Transfer of Personal Data. Participant authorizes, agrees, and unambiguously consents to the transmission by the Company (or any Affiliate) of any personal data information related to the RSUs for legitimate business purposes (including the administration of the Plan). This authorization and consent is freely given by Participant.

13.Compliance with Laws. The grant of the RSUs and the issuance of any shares of Common Stock underlying the RSUs shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules and regulations (including the Exchange Act and the Securities Act) and any other law or regulation applicable thereto. The Company shall not be obligated to grant the RSUs or issue any of share of Common Stock under the RSUs if such grant or issuance would violate any such requirements.

14.Binding Agreement; Assignment. This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns. Participant shall not assign (except as provided by Section 6 above) any part of this Agreement without the prior express written consent of the Company.

4

15.Headings. The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.

16.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.

17.Further Assurances. Participant shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments, and documents as the Company reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement.

18.Severability; Waiver. The invalidity or unenforceability of any term of this Agreement in any jurisdiction shall not affect the validity, legality, or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality, or enforceability of any term of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law. The waiver by any party to this Agreement of a breach of any term of the Agreement shall not operate or be construed as a waiver of any other subsequent breach.

19.Acquired Rights. Participant acknowledges and agrees that: (a) the Company may terminate or amend the Plan at any time; (b) the grant of the RSUs is completely independent of any other award or grant and is made at the sole discretion of the Company; (c) no past grants or awards (including the RSUs) give Participant any right to any grants or awards in the future whatsoever; and (d) any benefits granted under this Agreement are not part of Participant’s ordinary salary, and shall not be considered as part of such salary in the event of severance, redundancy, or resignation.

20.Electronic Delivery and Acceptance. The Company may deliver any documents related to current or future participation in the Plan by electronic means. Participant consents to receive those documents by electronic delivery and to participate in the Plan through any on-line or electronic system established and maintained by the Company or a third party designated by the Company.

[Remainder of page intentionally left blank.]

5

By selecting the signature button below, Participant is signing this Agreement electronically and agreeing that Participant’s electronic signature is the legal equivalent of a manual signature on this Agreement. In addition, Participant is agreeing to the terms of this Agreement, as of the Grant Date.

6

EX-10.2

Exhibit 10.2

OTHER CASH-BASED

AWARD AGREEMENT

PURSUANT TO THE

AMENDED AND RESTATED

EXPRESS, INC. 2018 INCENTIVE COMPENSATION PLAN

* * * * *

Participant:[_________]

Grant Date:[_________]

Value of Cash-Based Award: [___________]

* * * * *

THIS AWARD AGREEMENT FOR OTHER CASH-BASED AWARDS (this “Agreement”), dated as of the Grant Date specified above, is entered into by and between Express, Inc., a Delaware corporation organized in the State of Delaware (the “Company”), and the Participant specified above, pursuant to the Amended and Restated Express, Inc. 2018 Incentive Compensation Plan, as in effect and as amended from time to time (the “Plan”), which is administered by the Committee; and

WHEREAS, it has been determined under the Plan that it would be in the best interests of the Company to grant to the Participant an Other Cash-Based Award in the amount set forth above, which will be settled in cash (“Cash Award”).

NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, the parties hereto hereby mutually covenant and agree as follows:

1.Grant of Cash Award.

a.The Company hereby grants to Participant, as of the Grant Date specified above, an amount of Cash Award as specified above.

b.Participant must accept the terms of this Agreement through the Company’s online acceptance process within sixty days after the Agreement is presented to Participant for review. If Participant does not accept this Agreement through the online acceptance process within sixty days after the Agreement is presented for review, the Company shall automatically accept this Agreement on Participant’s behalf.

2.Plan Terms Control.

a.This Agreement is subject in all respects to the terms of the Plan (including any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the award provided hereunder). All of the terms of the Plan are made a part of and incorporated in this Agreement as if they were each expressly set forth herein. Any capitalized terms not defined in this Agreement shall have the same meaning as is ascribed under the Plan.

1

b.Participant acknowledges receipt of a true copy of the Plan (which is also filed publicly) and a prospectus describing the material terms of the Plan. Participant has read the Plan carefully and fully understands its content, including the Committee’s broad authority to administer the Plan (as set forth under Article III of the Plan).

c.In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.

3.[Vesting and Payment.

a.Vesting. The Cash Award subject to this grant shall become vested pursuant to the schedule set forth in the table below, provided Participant has not incurred a Termination before the applicable vesting date. There shall be no proportionate or partial vesting in the periods prior to each vesting date.

Vesting Date	Cumulative Percentage of Cash Award Vested
[____]	33 1/3%
[____]	66 2/3%
[____]	100%]

b.Forfeiture. Subject to Section 3(c) and Section 3(d) below, all unvested Cash Award amounts shall be immediately forfeited upon Participant’s Termination for any reason.

c.Death or Disability. Notwithstanding Section 3(a) above, if Participant incurs a Termination due to Participant’s death or Disability, then any unvested Cash Award amounts not previously forfeited shall become fully vested immediately.

d.Retirement. Notwithstanding Section 3(a) above, if Participant incurs a Retirement (as defined below), a pro rata amount of Cash Award amounts shall become vested upon such Retirement, with the amount to be determined by multiplying the number of unvested Cash Award amounts scheduled to vest on the vesting date immediately following the date of such Retirement by a fraction, the numerator of which is the number of days in which Participant was in service with the Company or its Affiliates for the period commencing on the vesting date immediately preceding the date of such Retirement and continuing through the date of such Retirement, and the denominator of which is the number of days in the period commencing on the vesting date immediately preceding the date of such Retirement and ending on the vesting date immediately following the date of such Retirement. Except as set forth in this paragraph, all unvested Cash Award amounts shall be immediately forfeited upon the Participant’s Retirement. “Retirement” means any voluntary Termination by Participant, other than a Termination for Cause, death, or Disability, at or after the time Participant reaches age fifty-five and completes at least ten years of full-time continuous service with the Company or any of its Subsidiaries.

e.Effect of Detrimental Activity. For the avoidance of doubt, Section 10.4 of the Plan, regarding Detrimental Activity, shall apply to the Participant and the Cash Award amounts, and the provisions thereof are hereby incorporated by reference into this Agreement.

f.Recoupment. For the avoidance of doubt, Section 14.23 of the Plan, regarding recoupment and clawback of Awards under the Plan, shall apply to the Participant and the Cash Award

2

amounts, and the provisions thereof are hereby incorporated by reference into this Agreement.

4.Award Settlement. Subject to the provisions of the Plan, the Company shall deliver to the Participant on the first payroll date following the date on which each portion of the Cash Award becomes vested hereunder, but in no event later than thirty days after such date, a lump sum cash payment equal to the applicable percentage of the Cash Award as of the vesting date, in each case less any amounts required to satisfy any federal, state or local taxes required by law to be withheld. In no event shall a Participant be entitled to receive any cash distribution with respect to any unvested or forfeited portion of the Cash Award.

5.Non-transferability. The Cash Award, and any rights and interests with respect thereto, issued under this Agreement and the Plan shall not be sold, exchanged, transferred, assigned or otherwise disposed of in any way by the Participant (or any beneficiary(ies) of the Participant), other than by testamentary disposition by the Participant or the laws of descent and distribution. Any attempt to sell, exchange, transfer, assign, pledge, encumber or otherwise dispose of or hypothecate in any way the Cash Award, or the levy of any execution, attachment or similar legal process upon the Cash Award, contrary to the terms and provisions of this Agreement and/or the Plan shall be null and void and without legal force or effect.

6.Governing Law. All questions concerning the construction, validity and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the choice of law principles thereof.

7.Withholding of Tax. The Company shall have the power and the right to deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy any federal, state, local and foreign taxes of any kind (including, but not limited to, the Participant’s FICA and SDI obligations) which the Company, in its sole discretion, deems necessary to be withheld or remitted to comply with the Code and/or any other applicable law, rule or regulation with respect to the Cash Award. Any statutorily required withholding obligation with regard to the Participant may, unless not permitted by the Committee, be satisfied by reducing the amount of cash otherwise deliverable to the Participant hereunder, and any additional tax withholding permitted by the Committee up to the maximum permissible withholding may be satisfied similarly provided such reduction or shares would not cause adverse accounting or tax consequences to the Company.

8.Entire Agreement; Amendment. This Agreement, together with the Plan, contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter. The Committee shall have the right, in its sole discretion, to modify or amend this Agreement from time to time in accordance with and as provided in the Plan. This Agreement may also be modified or amended by a writing signed by both the Company and the Participant. The Company shall give written notice to the Participant of any such modification or amendment of this Agreement as soon as practicable after the adoption thereof.

9.Notices. Any notice hereunder by the Participant shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the General Counsel of the Company. Any notice hereunder by the Company shall be given to the Participant in writing and such notice shall be deemed duly given only upon receipt thereof at such address as the Participant may have on file with the Company.

3

10.No Right to Employment. Any questions as to whether and when there has been a Termination and the cause of such Termination shall be determined in the sole discretion of the Committee. Nothing in this Agreement shall interfere with or limit in any way the right of the Company, its Subsidiaries or their respective Affiliates to terminate the Participant’s employment or service at any time, for any reason and with or without cause.

11.Transfer of Personal Data. The Participant authorizes, agrees and unambiguously consents to the transmission by the Company (or any Subsidiary) of any personal data information related to the Cash Award granted under this Agreement for legitimate business purposes (including, without limitation, the administration of the Plan). This authorization and consent is freely given by the Participant.

12.Compliance with Laws. This issuance of Cash Award pursuant to this Agreement shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules and regulations (including the Exchange Act and the Securities Act) and any other law or regulation applicable thereto.

13.Binding Agreement; Assignment. This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns. The Participant shall not assign (except as provided by Section 5 hereof) any part of this Agreement without the prior express written consent of the Company.

14.Headings. The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.

15.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.

16.Further Assurances. Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as either party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the Plan and the consummation of the transactions contemplated thereunder.

17.Severability; Waiver. The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law. The waiver by any party to this Agreement of a breach of any term of the Agreement shall not operate or be construed as a waiver of any other subsequent breach.

18.Acquired Rights. The Participant acknowledges and agrees that: (a) the Company may terminate or amend the Plan at any time; (b) the grant of the Cash Award made under this Agreement is completely independent of any other award or grant and is made at the sole discretion of the Company; (c) no past grants or awards (including, without limitation, the Cash Award granted hereunder) give the Participant any right to any grants or awards in the future whatsoever; and (d) any benefits granted under this Agreement are not part of the Participant’s ordinary salary, and shall not be considered as part of such salary in the event of severance, redundancy or resignation.

4

19.Electronic Delivery and Acceptance. The Company may deliver any documents related to current or future participation in the Plan by electronic means. Participant consents to receive those documents by electronic delivery and to participate in the Plan through any on-line or electronic system established and maintained by the Company or a third party designated by the Company.

[Remainder of page intentionally left blank.]

5

By selecting the signature button below, Participant is signing this Agreement electronically and agreeing that Participant’s electronic signature is the legal equivalent of a manual signature on this Agreement. In addition, Participant is agreeing to the terms of this Agreement, as of the Grant Date.

6

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Timothy Baxter, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Express, Inc. for the quarter ended May 2, 2020;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	June 9, 2020	By:	/s/ Timothy Baxter
			Timothy Baxter
			Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Periclis Pericleous, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Express, Inc. for the quarter ended May 2, 2020;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	June 9, 2020	By:	/s/ Periclis Pericleous
			Periclis Pericleous
			Senior Vice President, Chief Financial Officer and Treasurer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Express, Inc. (the "Company") on Form 10-Q for the quarter ended May 2, 2020 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned Timothy Baxter, Chief Executive Officer of the Company, and Periclis Pericleous, Senior Vice President, Chief Financial Officer, and Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of each of our knowledge:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company and its subsidiaries.

Date: June 9, 2020

/s/ Timothy Baxter

Timothy Baxter

Chief Executive Officer

/s/ Periclis Pericleous 

Periclis Pericleous

Senior Vice President, Chief Financial Officer and Treasurer

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

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Leases (Tables)

3 Months Ended

May 02, 2020

Leases [Abstract]

Supplemental Cash Flow Information on Leases

Supplemental cash flow information related to leases is as follows:

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	41,467	$	70,832
Right-of-use assets obtained in exchange for operating lease liabilities	$	15,243	$	3,717

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Revenue Recognition - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	May 02, 2020	Feb. 01, 2020	May 04, 2019	Feb. 02, 2019	Aug. 28, 2017
Disaggregation of Revenue [Line Items]
Redemption period for rewards earned	60 days
Sales returns reserve	$ 7,500	$ 9,100
Gift card liability	31,331	38,227
Gift Card Liability
Disaggregation of Revenue [Line Items]
Gift card liability	21,728	24,142	$ 21,576	$ 25,133
Comenity Bank
Disaggregation of Revenue [Line Items]
Deferred revenue	13,431	$ 14,150	$ 16,309	$ 17,028
Comenity Bank | Credit Card
Disaggregation of Revenue [Line Items]
Deferred revenue	$ 13,400				$ 20,000

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Share-Based Compensation - Schedule of Restricted Stock Units, Including Awards with Performance Conditions (Details) - Restricted stock units - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended
	May 02, 2020	May 04, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	3 years
Number of Shares
Unvested at beginning of period (in shares)	4,260
Granted (in shares)	4,548
Vested (in shares)	(802)
Forfeited (in shares)	(247)
Unvested at end of period (in shares)	7,759
Grant Date Weighted Average Fair Value Per Share
Unvested at beginning of period (in USD per share)	$ 4.78
Granted (in USD per share)	1.69
Vested (in USD per share)	6.95
Forfeited (in USD per share)	4.98
Unvested at end of period (in USD per share)	$ 2.74
Fair value of options vested	$ 5.6	$ 10.5

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Leases - Narrative (Details) $ in Millions	3 Months Ended
	May 02, 2020 USD ($) renewalOption	Feb. 01, 2020 USD ($)
Lessee, Lease, Description [Line Items]
Accrued minimum rent | $	$ 30.3	$ 3.2
Office Building
Lessee, Lease, Description [Line Items]
Number of renewal options | renewalOption	1
Lease renewal term	5 years
Minimum | Stores
Lessee, Lease, Description [Line Items]
Lease term	5 years
Minimum | Equipment and Other Assets
Lessee, Lease, Description [Line Items]
Lease term	3 years
Maximum | Stores
Lessee, Lease, Description [Line Items]
Lease term	10 years
Maximum | Equipment and Other Assets
Lessee, Lease, Description [Line Items]
Lease term	5 years

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Description of Business and Basis of Presentation

3 Months Ended

May 02, 2020

Description of Business and Basis of Presentation [Abstract]

Description of Business and Basis of Presentation

NOTE 1 | DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Business Description

Express, Inc., together with its subsidiaries (“Express” or the “Company”), is a leading fashion brand for women and men. Since 1980, Express has provided the latest apparel and accessories to help customers build a wardrobe for every occasion, offering fashion and quality at an attractive value. The company operates 594 retail and factory outlet stores in the United States and Puerto Rico, as well as an online destination.

As of May 2, 2020, Express operated 380 primarily mall-based retail stores in the United States and Puerto Rico as well as 214 factory outlet stores. Additionally, as of May 2, 2020, the Company earned revenue from 7 franchise stores in Latin America. These franchise stores are operated by franchisees pursuant to franchise agreements. Under the franchise agreements, the franchisees operate stand-alone Express stores that sell Express-branded apparel and accessories purchased directly from the Company.

Fiscal Year

The Company’s fiscal year ends on the Saturday closest to January 31. Fiscal years are referred to by the calendar year in which the fiscal year commences. References herein to “2020” and “2019” represent the 52-week period ended January 30, 2021 and the 52-week period ended February 1, 2020, respectively. All references herein to “the first quarter of 2020” and “the first quarter of 2019” represent the thirteen weeks ended May 2, 2020 and May 4, 2019, respectively.

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and therefore do not include all of the information or footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited Consolidated Financial Statements reflect all adjustments (which are of a normal recurring nature) necessary to state fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for 2020. Therefore, these statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto for the year ended February 1, 2020, included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 17, 2020.

Principles of Consolidation

The unaudited Consolidated Financial Statements include the accounts of Express, Inc. and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Segment Reporting 

The Company defines an operating segment on the same basis that it uses to evaluate performance internally. The Company has determined that, together, its Chief Executive Officer and its President and Chief Operating Officer are the Chief Operating Decision Maker, and that there is one operating segment. Therefore, the Company reports results as a single segment, which includes the operation of its Express brick-and-mortar retail and outlet stores, e-commerce operations, and franchise operations.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenue and expense during the reporting period, as well as the related disclosure of contingent assets and liabilities as of the date of the Consolidated Financial Statements. Actual results may differ from those estimates. The Company revises its estimates and assumptions as new information becomes available.

Impact of the COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of the novel strain of coronavirus ("COVID-19") a global pandemic and recommended containment and mitigation measures. Since then, extraordinary actions have been taken by international, federal, state, and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19. The pandemic has significantly impacted global economies, resulting in workforce and travel restrictions, supply chain and production disruptions and reduced demand and spending across many industries.

During March 2020, in response to the COVID-19 outbreak and business disruption resulting from quarantines, stay-at-home orders, and similar mandates, Express temporarily closed all its Company stores and offices, and as a result, all store associates and a number of home office employees were furloughed. For the remainder of the home office employees, remote work arrangements were put in place and were designed to allow for continued operation of the business, including financial reporting systems and internal controls.

The Company's website, www.express.com, remained open, supported by third-party logistics providers, and Company employees working remotely.

We have considered the impact of COVID-19 on our unaudited Consolidated Financial Statements, and expect it to have future impacts, the extent of which is uncertain and largely subject to whether the severity worsens or duration lengthens. These impacts could include but may not be limited to risks and uncertainty in the near to medium term related to Federal, state, and local store closure requirements, customer demand, worker availability, our ability to procure inventory, distribution facility closures, shifts in demand between sales channels, and market volatility in our supply chain. Due to the impacts of COVID-19, we performed a recoverability test for our property plant and equipment and lease right of use assets. Consequently, this may subject us to future risk of long-lived asset and lease right of use asset impairments, increased reserves for uncollectible accounts, and adjustments for inventory.

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Description of Business and Basis of Presentation (Policies)

3 Months Ended

May 02, 2020

Description of Business and Basis of Presentation [Abstract]

Fiscal Year

Fiscal Year

The Company’s fiscal year ends on the Saturday closest to January 31. Fiscal years are referred to by the calendar year in which the fiscal year commences. References herein to “2020” and “2019” represent the 52-week period ended January 30, 2021 and the 52-week period ended February 1, 2020, respectively. All references herein to “the first quarter of 2020” and “the first quarter of 2019” represent the thirteen weeks ended May 2, 2020 and May 4, 2019, respectively.

Basis of Presentation

Basis of PresentationThe accompanying unaudited Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and therefore do not include all of the information or footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited Consolidated Financial Statements reflect all adjustments (which are of a normal recurring nature) necessary to state fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for 2020. Therefore, these statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto for the year ended February 1, 2020, included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 17, 2020.

Principles of Consolidation

Principles of ConsolidationThe unaudited Consolidated Financial Statements include the accounts of Express, Inc. and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Segment Reporting

Segment Reporting 

The Company defines an operating segment on the same basis that it uses to evaluate performance internally. The Company has determined that, together, its Chief Executive Officer and its President and Chief Operating Officer are the Chief Operating Decision Maker, and that there is one operating segment. Therefore, the Company reports results as a single segment, which includes the operation of its Express brick-and-mortar retail and outlet stores, e-commerce operations, and franchise operations.

Use of Estimates in the Preparation of Financial Statements

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenue and expense during the reporting period, as well as the related disclosure of contingent assets and liabilities as of the date of the Consolidated Financial Statements. Actual results may differ from those estimates. The Company revises its estimates and assumptions as new information becomes available.

Revenue Recognition

Revenue Recognition Policies

Merchandise Sales

The Company recognizes sales for in-store purchases at the point-of-sale. Revenue related to e-commerce transactions is recognized upon shipment based on the fact that control transfers to the customer at that time. The Company has made a policy election to treat shipping and handling as costs to fulfill the contract and as a result any amounts received from customers are included in the transaction price allocated to the performance obligation of providing goods with a corresponding amount accrued within cost of goods sold, buying and occupancy costs in the unaudited Consolidated Statements of Income and Comprehensive Income for amounts paid to applicable carriers. Associate discounts on merchandise purchases are classified as a reduction of net sales. Net sales excludes sales tax collected from customers and remitted to governmental authorities.

Loyalty Program

The Company maintains a customer loyalty program in which customers earn points toward rewards for qualifying purchases and other marketing activities. Upon reaching specified point values, customers are issued a reward, which they may redeem on merchandise purchases at the Company’s stores or on its website. Generally, rewards earned must be redeemed within 60 days from the date of issuance. The Company defers a portion of merchandise sales based on the estimated standalone selling price of the points earned. This deferred revenue is recognized as certificates that are redeemed or expire. To calculate this deferral, the Company makes assumptions related to card holder redemption rates based on historical experience. The loyalty liability is included in deferred revenue on the unaudited Consolidated Balance Sheets.

Sales Returns Reserve

The Company reduces net sales and provides a reserve for projected merchandise returns based on prior experience. Merchandise returns are often resalable merchandise and are refunded by issuing the same payment tender as the original purchase. The sales returns reserve was $7.5 million and $9.1 million as of May 2, 2020 and February 1, 2020, respectively, and is included in accrued expenses on the unaudited Consolidated Balance Sheets. The asset related to projected returned merchandise is included in other assets on the unaudited Consolidated Balance Sheets.

Gift Cards

The Company sells gift cards in its stores, on its e-commerce website, and through third parties. These gift cards do not expire or lose value over periods of inactivity. The Company accounts for gift cards by recognizing a liability at the time a gift card is sold. The gift card liability balance was $21.7 million and $24.1 million, as of May 2, 2020 and February 1, 2020, respectively, and is included in deferred revenue on the unaudited Consolidated Balance Sheets. The Company recognizes revenue from gift cards when they are redeemed by the customer. The Company also recognizes income on unredeemed gift cards, referred to as “gift card breakage.” Gift card breakage is recognized proportionately using a time-based attribution method from issuance of the gift card to the time when it can be determined that the likelihood of the gift card being redeemed is remote and that there is no legal obligation to remit unredeemed gift cards to relevant jurisdictions. The gift card breakage rate is based on historical redemption patterns. Gift card breakage is included in net sales in the unaudited Consolidated Statements of Income and Comprehensive Income.

Private Label Credit Card

The Company has an agreement with Comenity Bank (the “Bank”) to provide customers with private label credit cards (the “Card Agreement”) which was amended on August 28, 2017 to extend the term of the arrangement through December 31, 2024. Each private label credit card bears the logo of the Express brand and can only be used at the Company’s store locations and e-commerce channel. The Bank is the sole owner of the accounts issued under the private label credit card program and absorbs the losses associated with non-payment by the private label card holders and a portion of any fraudulent usage of the accounts.

Pursuant to the Card Agreement, the Company receives amounts from the Bank during the term based on a percentage of private label credit card sales and is also eligible to receive incentive payments for the achievement of certain performance targets. These funds are recorded as net sales in the unaudited Consolidated Statements of Income and Comprehensive Income. The Company also receives reimbursement funds from the Bank for expenses the Company incurs. These reimbursement funds are used by the Company to fund marketing and other programs associated with the private label credit card. The reimbursement funds received related to private label credit cards are recorded as net sales in the unaudited Consolidated Statements of Income and Comprehensive Income.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date.

■Level 1 - Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets.

■Level 2 - Valuation is based upon quoted prices for similar assets and liabilities in active markets or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

■Level 3 - Valuation is based upon other unobservable inputs that are significant to the fair value measurement.

The money market funds are valued using quoted market prices in active markets.

The carrying amounts reflected on the unaudited Consolidated Balance Sheets for the remaining cash and cash equivalents, receivables, prepaid expenses, and payables as of May 2, 2020 and February 1, 2020 approximated their fair values.

Non-Financial Assets

The Company’s non-financial assets, which include fixtures, equipment, improvements, and right of use assets are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur indicating the carrying value of these assets may not be recoverable, an impairment test is required. For stores that trigger, a recovery test is performed first comparing the undiscounted cash flows to the net assets of the store. The second step impairment test requires the Company to estimate the fair value of the assets and compare this to the carrying value of the assets. If the fair value of the asset is less than the carrying value, then an impairment charge is recognized, and the non-financial assets are recorded at fair value. The Company estimates the fair value using a discounted cash flow model or other fair value models as appropriate. Factors used in the evaluation include, but

are not limited to, management’s plans for future operations, recent operating results, projected cash flows, and overall economic factors, including the current global outbreak of COVID-19. As a result of the COVID-19 pandemic, including temporary store closures and the related decline in sales beginning in March 2020, the Company concluded that a triggering event had occurred. Consequently, the Company performed interim impairment testing. As a result of this testing, during the thirteen weeks ended May 2, 2020, the Company recognized impairment charges of approximately $14.7 million related to store-level property and equipment and right of use assets. During the thirteen weeks ended May 4, 2019, the Company did not recognize any impairment charges. Impairment charges are recorded in cost of goods sold, buying and occupancy costs in the unaudited Consolidated Statements of Income and Comprehensive Income.

Leases

The lease term includes the initial contractual term as well as any options to extend the lease when it is reasonably certain that the Company will exercise that option. Leases with an initial term of 12 months or less (short-term

leases) are not recorded on the balance sheet. The Company does not currently have any material short-term leases. The Company is generally obligated for the cost of property taxes, insurance and other landlord costs, including common area maintenance charges, relating to its leases. If these charges are fixed, they are combined with lease payments in determining the lease liability; however, if such charges are not fixed, they are considered variable lease costs and are expensed as incurred. The variable payments are not included in the measurement of the lease liability or asset. The Company’s finance leases are immaterial.

Certain lease agreements include rental payments based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company’s lease agreements do not provide an implicit rate, so the Company uses an estimated incremental borrowing rate, which is derived from third-party information available at the lease commencement date, in determining the present value of lease payments. The rate used is for a secured borrowing of a similar term as the lease.

Share-Based Compensation

The Company records the fair value of share-based payments to employees in the unaudited Consolidated Statements of Income and Comprehensive Income as compensation expense, net of forfeitures, over the requisite service period. The Company issues shares of common stock from treasury stock, at average cost, upon exercise of stock options and vesting of restricted stock units, including those with performance conditions.

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Consolidated Balance Sheets (Parentheticals) - $ / shares	May 02, 2020	Feb. 01, 2020
Statement of Financial Position [Abstract]
Preferred stock, par value (in USD per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	10,000,000	10,000,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (in USD per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	500,000,000	500,000,000
Common stock, issued (in shares)	93,632,000	93,632,000
Common stock, outstanding (in shares)	64,456,000	63,922,000
Treasury stock (in shares)	29,176,000	29,710,000

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Fair Value Measurements

3 Months Ended

May 02, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

NOTE 4 | FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date.

■Level 1 - Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets.

■Level 2 - Valuation is based upon quoted prices for similar assets and liabilities in active markets or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

■Level 3 - Valuation is based upon other unobservable inputs that are significant to the fair value measurement.

Financial Assets

The following table presents the Company’s financial assets, recorded in cash and cash equivalents on the unaudited Consolidated Balance Sheets, measured at fair value on a recurring basis as of May 2, 2020 and February 1, 2020, aggregated by the level in the fair value hierarchy within which those measurements fall.

	May 2, 2020
	Level 1		Level 2		Level 3
	(in thousands)
Money market funds	$	231,476	$	—	$	—
	February 1, 2020
	Level 1		Level 2		Level 3
	(in thousands)
Money market funds	$	188,182	$	—	$	—

The money market funds are valued using quoted market prices in active markets.

The carrying amounts reflected on the unaudited Consolidated Balance Sheets for the remaining cash and cash equivalents, receivables, prepaid expenses, and payables as of May 2, 2020 and February 1, 2020 approximated their fair values.

Non-Financial Assets

The Company’s non-financial assets, which include fixtures, equipment, improvements, and right of use assets are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur indicating the carrying value of these assets may not be recoverable, an impairment test is required. For stores that trigger, a recovery test is performed first comparing the undiscounted cash flows to the net assets of the store. The second step impairment test requires the Company to estimate the fair value of the assets and compare this to the carrying value of the assets. If the fair value of the asset is less than the carrying value, then an impairment charge is recognized, and the non-financial assets are recorded at fair value. The Company estimates the fair value using a discounted cash flow model or other fair value models as appropriate. Factors used in the evaluation include, but

are not limited to, management’s plans for future operations, recent operating results, projected cash flows, and overall economic factors, including the current global outbreak of COVID-19. As a result of the COVID-19 pandemic, including temporary store closures and the related decline in sales beginning in March 2020, the Company concluded that a triggering event had occurred. Consequently, the Company performed interim impairment testing. As a result of this testing, during the thirteen weeks ended May 2, 2020, the Company recognized impairment charges of approximately $14.7 million related to store-level property and equipment and right of use assets. During the thirteen weeks ended May 4, 2019, the Company did not recognize any impairment charges. Impairment charges are recorded in cost of goods sold, buying and occupancy costs in the unaudited Consolidated Statements of Income and Comprehensive Income.

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Share-Based Compensation

3 Months Ended

May 02, 2020

Share-based Payment Arrangement [Abstract]

Share-Based Compensation

NOTE 8 | SHARE-BASED COMPENSATION

The Company records the fair value of share-based payments to employees in the unaudited Consolidated Statements of Income and Comprehensive Income as compensation expense, net of forfeitures, over the requisite service period. The Company issues shares of common stock from treasury stock, at average cost, upon exercise of stock options and vesting of restricted stock units, including those with performance conditions.

Share-Based Compensation Plans

In 2010, the Board approved, and the Company implemented, the Express, Inc. 2010 Incentive Compensation Plan (as amended, the "2010 Plan"). The 2010 Plan authorized the Compensation Committee (the "Committee") of the Board and its designees to offer eligible employees and directors cash and stock-based incentives as deemed appropriate in order to attract, retain, and reward such individuals.

On April 30, 2018, upon the recommendation of the Committee, the Board unanimously approved and adopted, subject to stockholder approval, the Express, Inc. 2018 Incentive Compensation Plan (the “2018 Plan”) to replace the 2010 Plan. On June 13, 2018, stockholders of the Company approved the 2018 Plan and all grants made subsequent to that approval will be made under the 2018 Plan. The primary change made by the 2018 Plan was to increase the number of shares of common stock available for equity-based awards by 2.4 million shares. In addition to increasing the number of shares, the Company also made several enhancements to the 2010 Plan to reflect best practices in corporate governance. The 2018 Plan incorporates these concepts and also includes several other enhancements which are practices the Company already follows but were not explicitly stated in the 2010 Plan. None of these changes will have a significant impact on the accounting for awards made under the 2018 Plan.

In the third quarter of 2019, in connection with updates made by the Company to its policy regarding the clawback of incentive compensation awarded to associates, the Board approved an amendment to the 2018 Plan, solely for the purpose of updating the language regarding the recoupment of awards granted under the 2018 Plan.

As of March 17, 2020, upon the recommendation of the Committee, the Board unanimously approved and adopted, subject to stockholder approval, a plan amendment, which would increase the number of shares of Common Stock available under the 2018 Plan by 2.5 million shares.

The following summarizes share-based compensation expense:

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Restricted stock units	$	2,184	$	2,210
Stock options	318		38
Performance-based restricted stock units	—		124
Total share-based compensation	$	2,502	$	2,372

The stock compensation related income tax benefit recognized by the Company during the thirteen weeks ended May 2, 2020 and May 4, 2019 was $0.5 million and $1.5 million, respectively.

Restricted Stock Units

During the thirteen weeks ended May 2, 2020, the Company granted restricted stock units (“RSUs”) under the 2018 Plan. The fair value of RSUs is determined based on the Company’s closing stock price on the day prior to the grant date in accordance with the 2018 Plan. The RSUs granted in 2020 vest ratably over three years and the expense related to these RSUs will be recognized using the straight-line attribution method over this vesting period.

The Company’s activity with respect to RSUs, including awards with performance conditions granted prior to 2018, for the thirteen weeks ended May 2, 2020 was as follows:

	Number of Shares	Grant Date Weighted Average Fair Value Per Share
	(in thousands, except per share amounts)
Unvested - February 1, 2020	4,260	$	4.78
Granted	4,548	$	1.69
Vested	(802)	$	6.95
Forfeited	(247)	$	4.98
Unvested - May 2, 2020	7,759	$	2.74

The total fair value of RSUs that vested during the thirteen weeks ended May 2, 2020 and May 4, 2019 was $5.6 million and $10.5 million, respectively. As of May 2, 2020, there was approximately $17.1 million of total unrecognized compensation expense related to unvested RSUs, which is expected to be recognized over a weighted-average period of approximately 1.8 years.

Stock Options

The Company’s activity with respect to stock options during the thirteen weeks ended May 2, 2020 was as follows:

	Number of Shares	Grant Date Weighted Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value
	(in thousands, except per share amounts and years)
Outstanding - February 1, 2020	3,650	$	7.67
Granted	—	$	—
Exercised	—	$	—
Forfeited or expired	(69)	$	18.84
Outstanding - May 2, 2020	3,581	$	7.46	7.2	$	—
Expected to vest at May 2, 2020	2,267	$	2.70	9.2	$	—
Exercisable at May 2, 2020	1,225	$	16.63	3.5	$	—

As of May 2, 2020, there was approximately $2.1 million of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted average period of approximately 1.6 years.

Performance-based Restricted Stock Units

In the first quarter of 2018, the Company granted performance shares to a limited number of senior executive-level employees, which entitle these employees to receive a specified number of shares of the Company’s common stock upon vesting. The number of shares earned could range between 0% and 200% of the target amount depending upon performance achieved over a three-year vesting period. The performance conditions of the award include adjusted diluted earnings per share ("EPS") targets and total shareholder return ("TSR") of the Company’s common stock relative to a select group of peer companies. A Monte Carlo valuation model was used to determine the fair value of the awards. The TSR performance metric is a market condition. Therefore, fair value of the awards is fixed at the measurement date and is not revised based on actual performance. The number of shares that will ultimately vest will change based on estimates of the Company’s adjusted EPS performance in relation to the pre-established targets. As of May 2, 2020, it is estimated that none of the shares granted in 2018 will vest based on the performance against predefined financial targets to date.

Time-based Cash-Settled Awards

During the thirteen weeks ended May 2, 2020, the Company granted time-based cash-settled awards to employees that vest ratably over three years. These awards are classified as liabilities, are valued based on the fair value of the award at the grant date and do not vary based on changes in the Company's stock price. The expense related to these awards will be recognized using the straight-line attribution method over this vesting period. As of May 2, 2020, $3.9 million of total unrecognized compensation cost is expected to be recognized on cash-settled awards over a weighted-average period of 2.0 years.

Performance-based Cash-Settled Awards

In 2019, the Company granted cash-settled awards to a limited number of senior executive-level employees. These awards are classified as liabilities, are valued based on the fair value of the award at the grant date and are remeasured at each reporting date until settlement with compensation expense being recognized in proportion to the completed requisite period up until date of settlement. The amount of cash earned could range between 0% and 200% of the target amount depending upon performance achieved over the three-year vesting period. The performance conditions of the award include EPS targets and TSR of the Company’s common stock relative to a select group of peer companies. A Monte Carlo valuation model is used to determine the fair value of the awards. As of May 2, 2020, it is estimated that none of the shares granted in 2019 will vest based on the performance against predefined financial targets to date.

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Share-Based Compensation - Cost by Award Type (Details) - USD ($) $ in Thousands, shares in Millions			3 Months Ended
	Mar. 17, 2020	Jun. 13, 2018	May 02, 2020	May 04, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Increase in shares available for equity-based awards (in shares)	2.5	2.4
Share-based compensation			$ 2,502	$ 2,372
Tax benefit from share-based compensation expense			500	1,500
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation			2,184	2,210
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation			318	38
Performance-based restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation			$ 0	$ 124

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Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
	May 02, 2020	May 04, 2019
Valuation Allowance [Line Items]
Effective income tax rate	(4.00%)	8.40%
Valuation allowance	$ 61.1
Discrete tax expense, share-based compensation		$ 1.4
Tax benefit related to CARES Act	19.5
Income taxes receivable, current	9.7
Income taxes receivable, noncurrent	48.2
Previously Recognized Deferred Tax Assets
Valuation Allowance [Line Items]
Valuation allowance	54.3
State and Local Income Taxes and Other Tax Credits
Valuation Allowance [Line Items]
Valuation allowance	$ 6.8

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Income Taxes

3 Months Ended

May 02, 2020

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 5 | INCOME TAXES

The provision for income taxes is based on a current estimate of the annual effective tax rate, adjusted to reflect the effect of discrete items. The Company’s effective income tax rate may fluctuate from quarter to quarter as a result of a variety of factors, including the estimate of annual pre-tax income, the related changes in the estimate, and the effect of discrete items. The impact of these items on the effective tax rate will be greater at lower levels of pre-tax earnings.

The Company’s effective tax rate was (4.0)% and 8.4% for the thirteen weeks ended May 2, 2020 and May 4, 2019, respectively. The effective tax rate for the thirteen weeks ended May 2, 2020 reflects the impact of establishing a valuation allowance against the Company’s net deferred tax assets, which includes $54.3 million of discrete tax expense from a valuation allowance on previously recognized deferred tax assets and $6.8 million valuation allowance on 2020 U.S. state taxes and other tax credits. The effective tax rate for the thirteen weeks ended May 4, 2019 reflects a tax benefit from a pre-tax loss offset by $1.4 million of discrete tax expense related to a tax shortfall for share-based compensation.

Due to the impact of the COVID-19 pandemic that arose during Q1, the Company no longer believes they are able to objectively forecast taxable income in future years, which provides significant negative evidence when assessing whether the Company will more likely than not realize the full amount of the U.S. net deferred tax assets. As such, the Company recorded a valuation allowance against the full amount of the U.S. net deferred tax assets that are not forecasted to be utilized with the 2020 net operating loss carryback. We will continue to evaluate the Company’s ability to realize the deferred tax assets on a quarterly basis.

On March 27, 2020, the Coronavirus Aid Relief and Economic Security (“CARES”) Act was enacted into law. The CARES Act provided several provisions that impacted the Company including the establishment of a five-year carryback of net operating losses originating in the tax years 2018, 2019, and 2020, temporarily suspending the 80% limitation on the use of net operating losses, relaxing limitation rules on business interest deductions, and retroactively clarifying that businesses may immediately write-off certain qualified leasehold improvement property dating back to January 1, 2018.

The Company’s effective tax rate for the thirteen weeks ended May 2, 2020 includes the $61.1 million valuation allowance noted above offset by a $19.5 million tax benefit related to the CARES Act, which includes the benefit for the portion of the estimated 2019 and 2020 U.S. Federal net operating losses that are able to be carried back to offset taxable income in the five-year carryback period.

Included in other current assets is a $9.7 million income tax receivable due to the 2019 carryback of net operating losses allowed under the CARES Act. Included in other assets is a $48.2 million income tax receivable due to the expected net operating loss carryback allowed under the CARES Act based on current quarter losses.

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Commitments and Contingencies

3 Months Ended

May 02, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 9 | COMMITMENTS AND CONTINGENCIES

In a complaint filed in January 2017 by Mr. Jorge Chacon in the Superior Court for the State of California for the County of Orange, certain subsidiaries of the Company were named as defendants in a representative action alleging violations of California state wage and hour statutes and other labor standards. The lawsuit seeks unspecified monetary damages and attorneys’ fees. In July 2018, former associate Ms. Christie Carr filed suit in Alameda County Superior Court for the State of California naming certain subsidiaries of the Company in a representative action alleging violations of California State wage and hour statutes and other labor standard violations. The lawsuit seeks unspecified monetary damages and attorneys’ fees. On January 28, 2019, Mr. Jorge Chacon filed a second representative action in the Superior Court for the State of California for the County of Orange alleging violations of California state wages and hour statutes and other labor standard violations. The lawsuit seeks unspecified monetary damages and attorneys' fees. The Company is vigorously defending itself against these claims and, as of May 2, 2020, has established an estimated liability based on its best estimate of the outcome of the matters. The Company is subject to various other claims and contingencies arising out of the normal course of business. Management believes that the ultimate liability arising from such claims and contingencies, if any, is not likely to have a material adverse effect on the Company’s results of operations, financial condition, or cash flows.

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Consolidated Statements of Cash Flows - USD ($)	3 Months Ended		12 Months Ended
	May 02, 2020	May 04, 2019	Feb. 01, 2020	Feb. 02, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (154,050,000)	$ (9,934,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	19,332,000	22,216,000
Loss on disposal of property and equipment	0	350,000
Impairment of property, equipment and lease assets	14,678,000	0
Equity method investment impairment	2,733,000	0	$ 500,000	$ 8,400,000
Share-based compensation	2,502,000	2,372,000
Deferred taxes	64,424,000	(14,000)
Landlord allowance amortization	(104,000)	(813,000)
Changes in operating assets and liabilities:
Receivables, net	(2,073,000)	3,453,000
Inventories	(48,485,000)	(17,875,000)
Accounts payable, deferred revenue, and accrued expenses	2,117,000	(10,819,000)
Other assets and liabilities	(32,312,000)	(5,881,000)
Net cash used in operating activities	(131,238,000)	(16,945,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(4,176,000)	(4,078,000)
Net cash used in investing activities	(4,176,000)	(4,078,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from financing arrangements	165,000,000	0
Payments on lease financing obligations	0	(27,000)
Repurchase of common stock under share repurchase program	0	(4,889,000)
Repurchase of common stock for tax withholding obligations	(540,000)	(1,498,000)
Net cash provided by (used in) financing activities	164,460,000	(6,414,000)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	29,046,000	(27,437,000)
CASH AND CASH EQUIVALENTS, Beginning of period	207,139,000	171,670,000	171,670,000
CASH AND CASH EQUIVALENTS, End of period	$ 236,185,000	$ 144,233,000	$ 207,139,000	$ 171,670,000

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Consolidated Balance Sheets - USD ($) $ in Thousands	May 02, 2020	Feb. 01, 2020
CURRENT ASSETS:
Cash and cash equivalents	$ 236,185	$ 207,139
Receivables, net	12,897	10,824
Inventories	268,787	220,303
Prepaid rent	330	6,850
Other	35,881	25,573
Total current assets	554,080	470,689
RIGHT OF USE ASSET, NET	963,142	1,010,216
PROPERTY AND EQUIPMENT	985,091	979,639
Less: accumulated depreciation	(754,414)	(731,309)
Property and equipment, net	230,677	248,330
DEFERRED TAX ASSETS	0	54,973
OTHER ASSETS	51,285	6,531
Total assets	1,799,184	1,790,739
CURRENT LIABILITIES:
Short-term lease liability	225,383	226,174
Accounts payable	123,429	126,863
Deferred revenue	31,331	38,227
Accrued expenses	91,797	76,211
Total current liabilities	471,940	467,475
LONG-TERM LEASE LIABILITY	879,983	897,304
LONG-TERM DEBT	165,000	0
DEFERRED LEASE CREDITS	1,731	1,835
OTHER LONG-TERM LIABILITIES	26,316	17,823
Total liabilities	1,544,970	1,384,437
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS’ EQUITY:
Preferred stock – $0.01 par value; 10,000 shares authorized; no shares issued or outstanding	0	0
Common stock – $0.01 par value; 500,000 shares authorized; 93,632 shares and 93,632 shares issued at May 2, 2020 and February 1, 2020, respectively, and 64,456 shares and 63,922 shares outstanding at May 2, 2020 and February 1, 2020, respectively	936	936
Additional paid-in capital	216,100	215,207
Retained earnings	371,981	533,690
Treasury stock – at average cost; 29,176 shares and 29,710 shares at May 2, 2020 and February 1, 2020, respectively	(334,803)	(343,531)
Total stockholders’ equity	254,214	406,302
Total liabilities and stockholders’ equity	$ 1,799,184	$ 1,790,739

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Revenue Recognition (Tables)

3 Months Ended

May 02, 2020

Revenue from Contract with Customer [Abstract]

Schedule of Revenue by Major Product Categories and Sales Channels

The following is information regarding the Company’s major product categories and sales channels:

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Apparel	$	179,583	$	388,855
Accessories and other	21,380		45,895
Other revenue	9,312		16,521
Total net sales	$	210,275	$	451,271

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Retail	$	159,537	$	328,339
Outlet	41,426		106,411
Other revenue	9,312		16,521
Total net sales	$	210,275	$	451,271

Schedule of Contract with Customer, Liability

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Beginning balance loyalty deferred revenue	$	14,063	$	15,319
Revenue recognized	(4,478)		(603)
Ending balance loyalty deferred revenue	$	9,585	$	14,716

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Beginning gift card liability	$	24,142	$	25,133
Issuances	4,040		7,713
Redemptions	(5,418)		(10,119)
Gift card breakage	(1,036)		(1,151)
Ending gift card liability	$	21,728	$	21,576

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Beginning balance refundable payment liability	$	14,150	$	17,028
Recognized in revenue	(719)		(719)
Ending balance refundable payment liability	$	13,431	$	16,309

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Stockholders' Equity (Details) $ / shares in Units, shares in Millions		3 Months Ended
	Apr. 20, 2020 $ / shares	May 02, 2020 USD ($) right $ / shares shares	May 04, 2019 USD ($) shares	Feb. 01, 2020 $ / shares	Nov. 28, 2017 USD ($)
Class of Stock [Line Items]
Stock repurchase program, authorized amount					$ 150,000,000.0
Treasury stock, value, acquired		$ 540,000	$ 6,387,000
Stock repurchase program, remaining authorized amount		$ 34,200,000
Common stock, par value (in USD per share) | $ / shares	$ 0.01	$ 0.01		$ 0.01
Number of rights issued per common stock | right		1
Minimum ownership percentage which would cause triggering event	10.00%
Minimum ownership percentage for certain passive investors which would cause triggering event	20.00%
Stockholder right, exercise discount percentage	50.00%
Minimum ownership percentage grandfathered from triggering event	10.00%
Share Repurchase Program 2017
Class of Stock [Line Items]
Treasury stock, acquired (in shares) | shares		0.0	0.9
Treasury stock, value, acquired			$ 4,900,000

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Share-Based Compensation (Tables)

3 Months Ended

May 02, 2020

Share-based Payment Arrangement [Abstract]

Schedule of Shared-based Compensation Expense

The following summarizes share-based compensation expense:

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Restricted stock units	$	2,184	$	2,210
Stock options	318		38
Performance-based restricted stock units	—		124
Total share-based compensation	$	2,502	$	2,372

Schedule Activity related to Restricted Stock Units, Including Awards with Performance Conditions

The Company’s activity with respect to RSUs, including awards with performance conditions granted prior to 2018, for the thirteen weeks ended May 2, 2020 was as follows:

	Number of Shares	Grant Date Weighted Average Fair Value Per Share
	(in thousands, except per share amounts)
Unvested - February 1, 2020	4,260	$	4.78
Granted	4,548	$	1.69
Vested	(802)	$	6.95
Forfeited	(247)	$	4.98
Unvested - May 2, 2020	7,759	$	2.74

Schedule of Activity related to Stock Options

The Company’s activity with respect to stock options during the thirteen weeks ended May 2, 2020 was as follows:

	Number of Shares	Grant Date Weighted Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value
	(in thousands, except per share amounts and years)
Outstanding - February 1, 2020	3,650	$	7.67
Granted	—	$	—
Exercised	—	$	—
Forfeited or expired	(69)	$	18.84
Outstanding - May 2, 2020	3,581	$	7.46	7.2	$	—
Expected to vest at May 2, 2020	2,267	$	2.70	9.2	$	—
Exercisable at May 2, 2020	1,225	$	16.63	3.5	$	—

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Revenue Recognition - Loyalty Deferred Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	May 02, 2020	May 04, 2019
Contract With Customer, Liability [Roll Forward]
Beginning balance	$ 38,227
Ending balance	31,331
Loyalty Program
Contract With Customer, Liability [Roll Forward]
Beginning balance	14,063	$ 15,319
Revenue recognized	(4,478)	(603)
Ending balance	$ 9,585	$ 14,716

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Revenue Recognition

3 Months Ended

May 02, 2020

Revenue from Contract with Customer [Abstract]

Revenue Recognition

NOTE 2 | REVENUE RECOGNITION

The following is information regarding the Company’s major product categories and sales channels:

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Apparel	$	179,583	$	388,855
Accessories and other	21,380		45,895
Other revenue	9,312		16,521
Total net sales	$	210,275	$	451,271

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Retail	$	159,537	$	328,339
Outlet	41,426		106,411
Other revenue	9,312		16,521
Total net sales	$	210,275	$	451,271

Other revenue consists primarily of revenue earned from our private label credit card agreement, shipping and handling revenue related to e-commerce activity, revenue from gift card breakage, sell-off revenue related to marked-out-of-stock inventory sales to third parties, and revenue from franchise agreements.

Revenue related to the Company’s international franchise operations were not material for any period presented and, therefore, are not reported separately from domestic revenue.

Revenue Recognition Policies

Merchandise Sales

The Company recognizes sales for in-store purchases at the point-of-sale. Revenue related to e-commerce transactions is recognized upon shipment based on the fact that control transfers to the customer at that time. The Company has made a policy election to treat shipping and handling as costs to fulfill the contract and as a result any amounts received from customers are included in the transaction price allocated to the performance obligation of providing goods with a corresponding amount accrued within cost of goods sold, buying and occupancy costs in the unaudited Consolidated Statements of Income and Comprehensive Income for amounts paid to applicable carriers. Associate discounts on merchandise purchases are classified as a reduction of net sales. Net sales excludes sales tax collected from customers and remitted to governmental authorities.

Loyalty Program

The Company maintains a customer loyalty program in which customers earn points toward rewards for qualifying purchases and other marketing activities. Upon reaching specified point values, customers are issued a reward, which they may redeem on merchandise purchases at the Company’s stores or on its website. Generally, rewards earned must be redeemed within 60 days from the date of issuance. The Company defers a portion of merchandise sales based on the estimated standalone selling price of the points earned. This deferred revenue is recognized as certificates that are redeemed or expire. To calculate this deferral, the Company makes assumptions related to card holder redemption rates based on historical experience. The loyalty liability is included in deferred revenue on the unaudited Consolidated Balance Sheets.

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Beginning balance loyalty deferred revenue	$	14,063	$	15,319
Revenue recognized	(4,478)		(603)
Ending balance loyalty deferred revenue	$	9,585	$	14,716

Sales Returns Reserve

The Company reduces net sales and provides a reserve for projected merchandise returns based on prior experience. Merchandise returns are often resalable merchandise and are refunded by issuing the same payment tender as the original purchase. The sales returns reserve was $7.5 million and $9.1 million as of May 2, 2020 and February 1, 2020, respectively, and is included in accrued expenses on the unaudited Consolidated Balance Sheets. The asset related to projected returned merchandise is included in other assets on the unaudited Consolidated Balance Sheets.

Gift Cards

The Company sells gift cards in its stores, on its e-commerce website, and through third parties. These gift cards do not expire or lose value over periods of inactivity. The Company accounts for gift cards by recognizing a liability at the time a gift card is sold. The gift card liability balance was $21.7 million and $24.1 million, as of May 2, 2020 and February 1, 2020, respectively, and is included in deferred revenue on the unaudited Consolidated Balance Sheets. The Company recognizes revenue from gift cards when they are redeemed by the customer. The Company also recognizes income on unredeemed gift cards, referred to as “gift card breakage.” Gift card breakage is recognized proportionately using a time-based attribution method from issuance of the gift card to the time when it can be determined that the likelihood of the gift card being redeemed is remote and that there is no legal obligation to remit unredeemed gift cards to relevant jurisdictions. The gift card breakage rate is based on historical redemption patterns. Gift card breakage is included in net sales in the unaudited Consolidated Statements of Income and Comprehensive Income.

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Beginning gift card liability	$	24,142	$	25,133
Issuances	4,040		7,713
Redemptions	(5,418)		(10,119)
Gift card breakage	(1,036)		(1,151)
Ending gift card liability	$	21,728	$	21,576

Private Label Credit Card

The Company has an agreement with Comenity Bank (the “Bank”) to provide customers with private label credit cards (the “Card Agreement”) which was amended on August 28, 2017 to extend the term of the arrangement through December 31, 2024. Each private label credit card bears the logo of the Express brand and can only be used at the Company’s store locations and e-commerce channel. The Bank is the sole owner of the accounts issued under the private label credit card program and absorbs the losses associated with non-payment by the private label card holders and a portion of any fraudulent usage of the accounts.

Pursuant to the Card Agreement, the Company receives amounts from the Bank during the term based on a percentage of private label credit card sales and is also eligible to receive incentive payments for the achievement of certain performance targets. These funds are recorded as net sales in the unaudited Consolidated Statements of Income and Comprehensive Income. The Company also receives reimbursement funds from the Bank for expenses the Company incurs. These reimbursement funds are used by the Company to fund marketing and other programs associated with the private label credit card. The reimbursement funds received related to private label credit cards are recorded as net sales in the unaudited Consolidated Statements of Income and Comprehensive Income.

In connection with the Card Agreement, the Bank agreed to pay the Company a $20.0 million refundable payment which the Company recognized upon receipt as deferred revenue within other long-term liabilities in the Consolidated Balance Sheets and began to recognize into income on a straight-line basis commencing January of 2018. As of May 2, 2020, the deferred revenue balance of $13.4 million will be recognized over the remaining term of the amended Card Agreement within the other revenue component of net sales.

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Beginning balance refundable payment liability	$	14,150	$	17,028
Recognized in revenue	(719)		(719)
Ending balance refundable payment liability	$	13,431	$	16,309

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Debt

3 Months Ended

May 02, 2020

Debt Disclosure [Abstract]

Debt

NOTE 7 | DEBT

A summary of the Company’s financing activities are as follows:

Revolving Credit Facility

On May 24, 2019, Express Holding, LLC, a wholly-owned subsidiary of the Company (“Express Holding”), and its subsidiaries entered into a First Amendment to the Second Amended and Restated $250.0 million Asset-Based Loan Credit Agreement (“Revolving Credit Facility”). The expiration date of the Revolving Credit Facility is May 24, 2024.

On March 17, 2020, the Company provided notice to the lenders under the Revolving Credit Facility of a request to borrow $165.0 million. The Company borrowed under the Revolving Credit Facility in order to strengthen its liquidity position and preserve financial flexibility in response to the COVID-19 pandemic and the related temporary store closures. As of May 2, 2020, the Company had $165.0 million in borrowings outstanding and approximately $67.8 million remained available for borrowing under the Revolving Credit Facility after $17.2 million of letters of credit outstanding and subject to certain borrowing base limitations as further discussed below.

Under the Revolving Credit Facility, revolving loans may be borrowed, repaid, and reborrowed until May 24, 2024, at which time all amounts borrowed must be repaid. Borrowings under the Revolving Credit Facility bear interest at a rate equal to either the rate published by ICE Benchmark Administration Limited (with a floor of 0%) (the “Eurodollar Rate”) plus an applicable margin rate or the highest of (1) Wells Fargo Bank, National Association’s prime lending rate (with a floor of 0%), (2) 0.50% per annum above the federal funds rate (with a floor of 0%) or (3) 1% above the Eurodollar Rate (the “Base Rate”), in each case plus an applicable margin rate. The applicable margin rate is determined based on excess availability as determined by reference to the borrowing base. The applicable margin rate for Eurodollar Rate-based advances is 1.25% or 1.50% and the applicable margin rate for Base Rate-based advances is 0.25% or 0.50%, in each case, based on the borrowing base. Under certain circumstances, a default

interest rate will apply on any overdue amount payable under the Revolving Credit Facility during the existence of an event of default at a per annum rate equal to 2.0% above the applicable interest rate for any overdue principal and 2.0% above the rate applicable for Base Rate-based advances for any other overdue interest. As of May 2, 2020 the interest rate on the outstanding borrowing was approximately 2.4%.

The Revolving Credit Facility requires Express Holding and its subsidiaries to maintain a fixed charge coverage ratio of at least 1.0:1.0 if excess availability plus eligible cash collateral is less than 10.0% of the borrowing base for 15 consecutive days. Since our excess availability was above 10% as of May 2, 2020, the fixed charge coverage ratio covenant was not applicable. In addition, the Revolving Credit Facility contains customary covenants and restrictions on Express Holding’s and its subsidiaries’ activities, including, but not limited to, limitations on the incurrence of additional indebtedness, liens, negative pledges, guarantees, investments, loans, asset sales, mergers, acquisitions, prepayment of other debt, distributions, dividends, the repurchase of capital stock, transactions with affiliates, the ability to change the nature of its business or fiscal year, and permitted business activities. All obligations under the Revolving Credit Facility are guaranteed by Express Holding and its domestic subsidiaries (that are not borrowers) and secured by a lien on, among other assets, substantially all working capital assets including cash, accounts receivable, and inventory of Express Holding and its domestic subsidiaries.

Letters of Credit

The Company may enter into stand-by letters of credit (“stand-by LCs”) on an as-needed basis to secure payment obligations for third party logistic services, merchandise purchases, and other general and administrative expenses. As of May 2, 2020 and February 1, 2020, outstanding stand-by LCs totaled $17.2 million and $12.7 million, respectively.

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Stockholders' Equity

3 Months Ended

May 02, 2020

Equity [Abstract]

Stockholders' Equity

NOTE 11 | STOCKHOLDERS' EQUITY

On November 28, 2017, the Company's Board of Directors ("Board") approved a share repurchase program that authorizes the Company to repurchase up to $150.0 million of the Company’s outstanding common stock using available cash (the "2017 Repurchase Program"). The Company may repurchase shares on the open market, including through Rule 10b5-1 plans, in privately negotiated transactions, through block purchases, or otherwise in compliance with applicable laws, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The timing and amount of stock repurchases will depend on a variety of factors, including business and market conditions as well as corporate and regulatory considerations. The share repurchase program may be suspended, modified, or discontinued at any time and the Company has no obligation to repurchase any amount of its common stock under the program. During the thirteen weeks ended May 4, 2019, the Company repurchased 0.9 million shares of its common stock under the 2017 Repurchase Program for an aggregate amount equal to $4.9 million, including commissions. During the thirteen weeks ended May 2, 2020, the Company did not repurchase shares of its common stock. As of May 2, 2020, the Company had approximately $34.2 million remaining under this authorization.

Stockholder Rights Agreement

On April 20, 2020, the Board adopted a Stockholder Rights Agreement (the “Rights Agreement”). Under the Rights Agreement, one preferred share purchase right was distributed for each share of common stock, par value $0.01, outstanding at the close of business on April 30, 2020 and one right will be issued for each new share of common stock issued thereafter. The rights will initially trade with common stock and will generally become exercisable only if any person (or any persons acting as a group) acquires 10% (or 20% in the case of certain passive investors) or more of the Company’s outstanding common stock (the “triggering percentage”). In the event the rights become exercisable, each holder of a right, other than triggering person, will be entitled to purchase additional shares of common stock at a 50% discount or the Company may exchange each right held by such holders for one share of common stock. Existing 10% or greater stockholders are grandfathered to the extent of their April 21, 2020 ownership levels. The Rights Agreement will continue in effect until April 19, 2021, or unless earlier redeemed or terminated by the Company, as provided in the Rights Agreement. The rights have no voting or dividend privileges, and, unless and until they become exercisable, have no dilutive effect on the earnings of the Company.

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Consolidated Statements of Income and Comprehensive Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	May 02, 2020	May 04, 2019
Income Statement [Abstract]
NET SALES	$ 210,275	$ 451,271
COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS	256,482	328,768
Gross (loss)/profit	(46,207)	122,503
OPERATING EXPENSES:
Selling, general, and administrative expenses	99,165	135,367
Other operating income, net	(93)	(1,310)
Total operating expenses	99,072	134,057
OPERATING LOSS	(145,279)	(11,554)
INTEREST EXPENSE/(INCOME), NET	56	(712)
OTHER EXPENSE, NET	2,733	0
LOSS BEFORE INCOME TAXES	(148,068)	(10,842)
INCOME TAX EXPENSE/(BENEFIT)	5,982	(908)
NET LOSS	(154,050)	(9,934)
COMPREHENSIVE LOSS	$ (154,050)	$ (9,934)
EARNINGS PER SHARE:
Basic (in USD per share)	$ (2.41)	$ (0.15)
Diluted (in USD per share)	$ (2.41)	$ (0.15)
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic (in shares)	64,030	66,845
Diluted (in shares)	64,030	66,845

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Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	3 Months Ended
	May 02, 2020	May 04, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$ 41,467	$ 70,832
Right-of-use assets obtained in exchange for operating lease liabilities	$ 15,243	$ 3,717

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Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended
	May 02, 2020	May 04, 2019
Earnings Per Share [Abstract]
Weighted-average shares - basic (in shares)	64,030	66,845
Dilutive effect of stock options and restricted stock units (in shares)	0	0
Weighted-average shares - diluted (in shares)	64,030	66,845
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities excluded from computation of earnings per share (in shares)	9,600	5,900
Performance Shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities excluded from computation of earnings per share (in shares)	200

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Share-Based Compensation - Unrecognized Compensation Expense and Period for Recognition (Details) $ in Millions	3 Months Ended
	May 02, 2020 USD ($)
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense related to unvested RSUs	$ 17.1
Period for recognition	1 year 9 months 18 days
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense related to stock options	$ 2.1
Period for recognition	1 year 7 months 6 days

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Share-Based Compensation - Performance-based Restricted Stock Units and Cash-Settled Awards (Details) $ in Millions	3 Months Ended
	May 02, 2020 USD ($) shares
Performance-based restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	3 years
Shares outstanding (in shares)	0
Performance-based restricted stock units | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Target percentage of performance award which can be earned	0.00%
Performance-based restricted stock units | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Target percentage of performance award which can be earned	200.00%
Time-Based Cash-Settled Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	3 years
Unrecognized compensation costs | $	$ 3.9
Period for recognition	2 years
Performance-Based Cash-Settled Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	3 years
Shares outstanding (in shares)	0
Performance-Based Cash-Settled Awards | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Target percentage of performance award which can be earned	0.00%
Performance-Based Cash-Settled Awards | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Target percentage of performance award which can be earned	200.00%

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Revenue Recognition - Refundable Payment Liability (Details) - Comenity Bank - USD ($) $ in Thousands	3 Months Ended
	May 02, 2020	May 04, 2019
Contract With Customer, Liability [Roll Forward]
Beginning balance refundable payment liability	$ 14,150	$ 17,028
Recognized in revenue	(719)	(719)
Ending balance refundable payment liability	$ 13,431	$ 16,309

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Fair Value Measurements (Tables)

3 Months Ended

May 02, 2020

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following table presents the Company’s financial assets, recorded in cash and cash equivalents on the unaudited Consolidated Balance Sheets, measured at fair value on a recurring basis as of May 2, 2020 and February 1, 2020, aggregated by the level in the fair value hierarchy within which those measurements fall.

	May 2, 2020
	Level 1		Level 2		Level 3
	(in thousands)
Money market funds	$	231,476	$	—	$	—
	February 1, 2020
	Level 1		Level 2		Level 3
	(in thousands)
Money market funds	$	188,182	$	—	$	—

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Revenue Recognition - Revenue by Major Product Categories and Sales Channels (Details) - USD ($) $ in Thousands	3 Months Ended
	May 02, 2020	May 04, 2019
Disaggregation of Revenue [Line Items]
Total net sales	$ 210,275	$ 451,271
Apparel
Disaggregation of Revenue [Line Items]
Total net sales	179,583	388,855
Accessories and other
Disaggregation of Revenue [Line Items]
Total net sales	21,380	45,895
Other revenue
Disaggregation of Revenue [Line Items]
Total net sales	9,312	16,521
Retail
Disaggregation of Revenue [Line Items]
Total net sales	159,537	328,339
Outlet
Disaggregation of Revenue [Line Items]
Total net sales	$ 41,426	$ 106,411

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Investment in Equity Interests - Equity Method Investments (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	May 02, 2020	May 04, 2019	Feb. 01, 2020	Feb. 02, 2019	Jan. 28, 2017
Equity Method Investments and Joint Ventures [Abstract]
Equity method investment					$ 10,100
Increase in equity method investment during period			$ 500	$ 500
Impairment charge	$ 2,733	$ 0	$ 500	$ 8,400
Preferred yield	$ 1,500

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Earnings Per Share (Tables)

3 Months Ended

May 02, 2020

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table provides a reconciliation between basic and diluted weighted-average shares used to calculate basic and diluted earnings per share:

	Thirteen Weeks Ended
	May 2, 2020	May 4, 2019
	(in thousands)
Weighted-average shares - basic	64,030	66,845
Dilutive effect of stock options and restricted stock units	—	—
Weighted-average shares - diluted	64,030	66,845

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Description of Business and Basis of Presentation (Details)	3 Months Ended
	May 02, 2020 store segment
Description of Business and Basis of Presentation [Line Items]
Number of stores	594
Number of stores under franchise agreements	7
Number of operating segments | segment	1
Retail
Description of Business and Basis of Presentation [Line Items]
Number of stores	380
Outlet
Description of Business and Basis of Presentation [Line Items]
Number of stores	214

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Revenue Recognition - Gift Card Liability (Details) - USD ($) $ in Thousands	3 Months Ended
	May 02, 2020	May 04, 2019
Contract With Customer, Liability [Roll Forward]
Beginning balance	$ 38,227
Ending balance	31,331
Gift Card Liability
Contract With Customer, Liability [Roll Forward]
Beginning balance	24,142	$ 25,133
Ending balance	21,728	21,576
Issuances
Contract With Customer, Liability [Roll Forward]
Increase (decrease) in gift card liability	4,040	7,713
Redemptions
Contract With Customer, Liability [Roll Forward]
Increase (decrease) in gift card liability	(5,418)	(10,119)
Gift card breakage
Contract With Customer, Liability [Roll Forward]
Increase (decrease) in gift card liability	$ (1,036)	$ (1,151)

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Consolidated Statements of Changes in Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands	Total	Cumulative Effect, Period of Adoption, Adjustment	Common Stock	Additional Paid-in Capital	Retained Earnings	Retained Earnings Cumulative Effect, Period of Adoption, Adjustment	Accumulated Other Comprehensive Loss	Treasury Stock
Balance, at start of period (in shares) at Feb. 02, 2019			67,424
Balance, at start of period at Feb. 02, 2019	$ 585,178	$ (5,482)	$ 936	$ 211,981	$ 713,864	$ (5,482)	$ 0	$ (341,603)
Balance, at start of period, treasury stock (in shares) at Feb. 02, 2019								26,208
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(9,934)				(9,934)
Exercise of stock options and restricted stock (in shares)			1,024					1,024
Exercise of stock options and restricted stock	0			(4,316)	(8,735)			$ 13,051
Share-based compensation	2,372			2,372
Repurchase of common stock (in shares)			1,273					1,273
Repurchase of common stock	(6,387)							$ (6,387)
Balance, at end of period (in shares) at May. 04, 2019			67,175
Balance, at end of period at May. 04, 2019	$ 565,747		$ 936	210,037	689,713		0	$ (334,939)
Balance, at end of period, treasury stock (in shares) at May. 04, 2019								26,457
Balance, at start of period (in shares) at Feb. 01, 2020	63,922		63,922
Balance, at start of period at Feb. 01, 2020	$ 406,302		$ 936	215,207	533,690		0	$ (343,531)
Balance, at start of period, treasury stock (in shares) at Feb. 01, 2020	29,710							29,710
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	$ (154,050)				(154,050)
Exercise of stock options and restricted stock (in shares)			802					802
Exercise of stock options and restricted stock	0			(1,609)	(7,659)			$ 9,268
Share-based compensation	2,502			2,502
Repurchase of common stock (in shares)			268					268
Repurchase of common stock	$ (540)							$ (540)
Balance, at end of period (in shares) at May. 02, 2020	64,456		64,456
Balance, at end of period at May. 02, 2020	$ 254,214		$ 936	$ 216,100	$ 371,981		$ 0	$ (334,803)
Balance, at end of period, treasury stock (in shares) at May. 02, 2020	29,176							29,176

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Cover Page - shares	3 Months Ended
	May 02, 2020	May 30, 2020
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	May 02, 2020
Document Transition Report	false
Entity File Number	001-34742
Entity Registrant Name	EXPRESS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	26-2828128
Entity Address, Address Line One	1 Express Drive
Entity Address, City or Town	Columbus
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	43230
City Area Code	614
Local Phone Number	474-4001
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Outstanding (in shares)		64,459,170
Entity Central Index Key	0001483510
Current Fiscal Year End Date	--01-30
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false
Common Stock, $.01 par value
Document Information [Line Items]
Title of 12(b) Security	Common Stock, $.01 par value
Trading Symbol	EXPR
Security Exchange Name	NYSE
Preferred Stock Purchase Rights
Document Information [Line Items]
Title of 12(b) Security	Preferred Stock Purchase Rights
Trading Symbol	EXPR
Security Exchange Name	NYSE

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Leases

3 Months Ended

May 02, 2020

Leases [Abstract]

Leases

NOTE 6 | LEASES

The Company leases all of its store locations and its corporate headquarters, which also includes its distribution center, under operating leases. The store leases typically have initial terms of 5 to 10 years. The current lease term for the corporate headquarters expires in 2026, with one optional five-year extension period. The Company also leases certain equipment and other assets under operating leases, typically with initial terms of 3 to 5 years. The lease term includes the initial contractual term as well as any options to extend the lease when it is reasonably certain that the Company will exercise that option. Leases with an initial term of 12 months or less (short-term

leases) are not recorded on the balance sheet. The Company does not currently have any material short-term leases. The Company is generally obligated for the cost of property taxes, insurance and other landlord costs, including common area maintenance charges, relating to its leases. If these charges are fixed, they are combined with lease payments in determining the lease liability; however, if such charges are not fixed, they are considered variable lease costs and are expensed as incurred. The variable payments are not included in the measurement of the lease liability or asset. The Company’s finance leases are immaterial.

Certain lease agreements include rental payments based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company’s lease agreements do not provide an implicit rate, so the Company uses an estimated incremental borrowing rate, which is derived from third-party information available at the lease commencement date, in determining the present value of lease payments. The rate used is for a secured borrowing of a similar term as the lease.

As a result of the impact of the COVID-19 pandemic, the Company did not make its store rent payments for April 2020. The Company has continued to recognize expense and has established an accrual for the payments that were not made. The accrued rent is within accrued expenses on the unaudited Consolidated Balance Sheets. Accrued minimum rent as of May 2, 2020 and February 1, 2020, was $30.3 million and $3.2 million, respectively.

Supplemental cash flow information related to leases is as follows:

	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	41,467	$	70,832
Right-of-use assets obtained in exchange for operating lease liabilities	$	15,243	$	3,717

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Earnings Per Share

3 Months Ended

May 02, 2020

Earnings Per Share [Abstract]

Earnings Per Share

NOTE 3 | EARNINGS PER SHARE

The following table provides a reconciliation between basic and diluted weighted-average shares used to calculate basic and diluted earnings per share:

	Thirteen Weeks Ended
	May 2, 2020	May 4, 2019
	(in thousands)
Weighted-average shares - basic	64,030	66,845
Dilutive effect of stock options and restricted stock units	—	—
Weighted-average shares - diluted	64,030	66,845

Equity awards representing 9.6 million shares of common stock were excluded from the computation of diluted earnings per share for the thirteen weeks ended May 2, 2020, as the inclusion of these awards would have been

anti-dilutive. Equity awards representing 5.9 million shares of common stock were excluded from the computation of diluted earnings per share for the thirteen weeks ended May 4, 2019, as the inclusion of these awards would have been anti-dilutive.

Additionally, for the thirteen weeks ended May 2, 2020, approximately 0.2 million shares were excluded from the computation of diluted weighted average shares because the number of shares that will ultimately be issued is contingent on the Company’s performance compared to pre-established performance goals which have not been achieved as of May 2, 2020.

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Investment in Equity Interests

3 Months Ended

May 02, 2020

Equity Method Investments and Joint Ventures [Abstract]

Investment in Equity Interests

NOTE 10 | INVESTMENT IN EQUITY INTERESTS

In 2016, the Company made a $10.1 million investment in Homage, LLC, a privately held retail company based in Columbus, Ohio. The non-controlling investment in the entity is being accounted for under the equity method. Under the terms of the agreement governing the investment, the Company's investment was increased by $0.5 million during 2018 and 2019 as the result of an accrual of a non-cash preferred yield. This investment is assessed for impairment whenever factors indicate an other-than-temporary loss in value. Factors providing evidence of such a loss include the fair value of an investment that is less than its carrying value, absence of an ability to recover the carrying value or the investee’s inability to generate income sufficient to justify the carrying value. As a result of this assessment in 2018, the Company determined the carrying value exceeded the fair value and recognized an $8.4 million impairment charge within other expense/(income), net in the Consolidated Statements of Income and Comprehensive Income. In addition, during 2019, the Company recognized an additional $0.5 million impairment charge within other expense/(income), net in the Consolidated Statements of Income and Comprehensive Income. During the first quarter of 2020, the Company wrote off its remaining $2.7 million investment, inclusive of the $1.5 million preferred yield within other expense/(income), net in the unaudited Consolidated Statements of Income and Comprehensive Income. The fair value of the equity method investment was determined based on applying income and market approaches. The income approach relied on the discounted cash flow method and the market approach relied on a market multiple approach considering historical and projected financial results.

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Share-Based Compensation - Schedule of Stock Options Activity (Details) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	May 02, 2020 USD ($) $ / shares shares
Number of Shares
Outstanding at beginning of period (in shares) | shares	3,650
Granted (in shares) | shares	0
Exercised (in shares) | shares	0
Forfeited or expired (in shares) | shares	(69)
Outstanding at end of period (in shares) | shares	3,581
Expected to vest at end of period (in shares) | shares	2,267
Exercisable at end of period (in shares) | shares	1,225
Grant Date Weighted Average Exercise Price Per Share
Outstanding at beginning of period (in USD per share) | $ / shares	$ 7.67
Granted (in USD per share) | $ / shares	0
Exercised (in USD per share) | $ / shares	0
Forfeited or expired (in USD per share) | $ / shares	18.84
Outstanding at end of period (in USD per share) | $ / shares	7.46
Expected to vest at end of period (in USD per share) | $ / shares	2.70
Exercisable at end of period (in USD per share) | $ / shares	$ 16.63
Weighted-Average Remaining Contractual Life (in years)
Outstanding at end of period	7 years 2 months 12 days
Expected to vest at end of period	9 years 2 months 12 days
Exercisable at end of period	3 years 6 months
Aggregate Intrinsic Value
Outstanding at end of period | $	$ 0
Expected to vest at end of period | $	0
Exercisable at end of period | $	$ 0

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Debt (Details) - Line of Credit - First Amendment to the Second Amended and Restated Asset-Based Loan Credit Agreement - USD ($)	Mar. 17, 2020	May 24, 2019	May 02, 2020	Feb. 01, 2020
Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 250,000,000.0
Proceeds from lines of credit	$ 165,000,000.0
Amount outstanding			$ 165,000,000.0
Remaining borrowing capacity			$ 67,800,000
Percent per annum above federal funds rate		0.50%
Percent above Eurodollar rate		1.00%
Minimum percentage margin for Eurodollar rate-based advances		1.25%
Maximum percentage margin for Eurodollar rate-based advances		1.50%
Minimum percentage margin for base rate-based advances		0.25%
Maximum percentage margin for base rate-based advances		0.50%
Existence of event of default percentage per annum		2.00%
Over due principal interest rate		2.00%
Effective interest rate			2.40%
Fixed charge ratio, numerator		1.0
Fixed charge ratio, denominator		1.0
Percent of borrowing base in fixed charge coverage ratio restriction, less than		10.00%
Number of days in fixed charge coverage ratio restriction		15 days
Excess availability percentage (above)			10.00%
Letter of Credit
Debt Instrument [Line Items]
Letters of credit outstanding			$ 17,200,000	$ 12,700,000
Eurodollar | Revolving Credit Facility
Debt Instrument [Line Items]
Basis rate, floor		0.00%
Prime Rate | Revolving Credit Facility
Debt Instrument [Line Items]
Basis rate, floor		0.00%
Fed Funds Effective Rate Overnight Index Swap Rate | Revolving Credit Facility
Debt Instrument [Line Items]
Basis rate, floor		0.00%

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Fair Value Measurements (Details) - USD ($)	3 Months Ended
	May 02, 2020	May 04, 2019	Feb. 01, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impairment of property, equipment and lease assets	$ 14,678,000	$ 0
Recurring | Level 1 | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	231,476,000		$ 188,182,000
Recurring | Level 2 | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	0		0
Recurring | Level 3 | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	$ 0		$ 0