Express 2014 Annual Report Download - page 9

Go-To-Market Strategy. We design the majority of our product assortment in our New York City design
studio based on extensive review and consideration of fashion trends, styles, fabrics, colors, fits, and prices.
Our product testing processes allow us to test approximately three-quarters of our merchandise in select
stores before placing orders for our broader store base. In addition, we assess sales data and new product
development on a weekly basis in order to make in-season inventory adjustments where possible, which
allows us to respond to the latest trends. We believe that we have an efficient, diversified, and flexible
supply chain, including a network of buying agents and third-party manufacturers located throughout the
world, that allows us to quickly identify and respond to trends and bring a tested assortment of high quality
products at competitive prices to our stores.
Proven and Experienced Team. Our leadership team has extensive experience in the specialty retail apparel
business, including in the areas of fashion design and merchandising, manufacturing, marketing, customer
experience, e-commerce, store operations, technology, planning and allocation, and real estate, as well as other
diverse business experiences that we believe are valuable to us as we continue to execute our growth strategy.
Experience and tenure with Express extends deep into our organization, including district and store managers.
Growth Strategy
Key elements of our business and growth strategies include the following company-defined growth pillars:
Improve Sales and Margins of Our Existing Retail Stores. We seek to grow our comparable sales and operating
margins by focusing on execution of our go-to-market strategy, sharpening our brand positioning through new
marketing initiatives, creating a seamless omni-channel customer experience, introducing new product
categories, and elevating the customer experience we offer within our stores, among other things. Our go-to-
market strategy is designed to allow us to offer a product assortment that is more appealing to our customers,
which allows us to reduce inventory risk and improve product margins through reduced markdowns.
Optimization and Strategic Expansion of Our Store Base. We remain committed to optimizing our existing store
base, including through store closures where appropriate, and opening new factory outlet stores, which we
believe to be a significant growth opportunity for us. During 2014, we performed a strategic review of our
current store base and determined that to begin optimizing our store base, we would close approximately 50 retail
stores through 2017, primarily when these stores’ leases expire. We expect these store closures to result in annual
incremental profit of approximately $5 to $8 million once all stores are closed depending upon the amount of
sales that transfer to other stores and e-commerce. In 2015, we plan to close 22 stores in the United States. We
believe there are attractive, high-traffic locations that present opportunities for us to expand our factory outlet
store base, and we currently plan to open approximately 35 factory outlet stores in 2015. During 2014, we opened
nine retail stores in the United States and Canada and 41 factory outlet stores, which included 22 retail stores that
were converted to outlet stores. These openings, partially offset by closures in the United States, led to an
increase in our total square footage of approximately 2%.
Expand Our e-Commerce Platform. Our target customer regularly shops online, and we see continued opportunity
to grow our e-commerce business by providing our customers with a seamless retailing experience in-store or
online. We are currently investing in information technology to enable us to grow our online business, and we
believe our e-commerce initiatives will allow us to continue to improve overall profit margins as our e-commerce
business becomes a greater percentage of our sales. In 2014, e-commerce represented 16% of our total sales.
Expand Internationally. We believe Express has the potential to be a successful global brand. We ended the year
with 19 franchisee-operated stores in Latin America, 12 franchisee-operated stores in the Middle East, and three
franchisee-operated shop-in-shops within certain Edgars department stores in South Africa. Over the next five
years, we believe there are opportunities to expand the Express brand internationally through additional franchise
agreements, joint venture relationships, and company-owned stores in targeted countries.
See Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional
information regarding progress against our growth pillars in the current year.
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