Express 2010 Annual Report Download - page 22

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•Recapture Market Share in Our Core Product Categories. Approximately six years ago, we shifted our
product mix, which included a high percentage of tops, casual bottoms, and denim, to increase our
focus on a more premium wear-to-work assortment. In the last several years we have re-focused on a
broader lifestyle clothing mix consistent with our brand heritage. Based on our historical peak sales
levels across product categories, we believe there is opportunity for us to recapture sales as our
customers re-discover Express in certain product categories, specifically casual and party tops, dresses,
and denim. We believe our efforts to deliver a clear and consistent brand message provides us with
additional opportunities to increase sales in core categories that will allow us to return to historical
volumes; and
•Improve Profit Margins. We believe we have the opportunity to continue to improve margins through
further efficiencies in sourcing and continued refinement of our merchandising strategy. We plan to
leverage our infrastructure, corporate overhead, and fixed costs through our converted dual-gender
store format.
Expand Our Store Base. While there has been significant growth in retail shopping centers during the last decade,
we have focused on converting our existing store base to a dual-gender format and have opened few new stores
over this time period. As a result, we believe there are numerous attractive, high-traffic locations that present
opportunities for us to expand our store base. We currently plan to open an average of 30 stores across the United
States and Canada over each of the next five years, which represents annual store growth of approximately 3-5%,
with slightly less than 30 stores in the earlier years and slightly more than 30 stores in the later years.
Expand Our e-Commerce Platform. In July 2008, we launched our e-commerce platform at express.com,
providing us with a direct-to-consumer sales channel. We believe that 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 addition, we believe our multi-channel platform will allow us to continue to improve
overall profit margins as our e-commerce business becomes an increased percentage of our sales. In the third
quarter of 2010, we added a mobile application to allow customers to scan merchandise bar codes from their
mobile devices, to view product reviews and information in store, and to make purchases.
Expand Internationally with Development Partners. We believe Express has the potential to be a successful
global brand. We recently began to bolster our brand image and awareness outside of the United States. As of
January 29, 2011, there were seven Express stores in the Middle East, which were constructed through a
development agreement (“Development Agreement”) with Alshaya Trading Co. (“Alshaya”). Through our
Development Agreement, we earn royalties from the sales in these stores with no capital investment or inventory
risk. The agreement allows us to control our brand image, store design, and product assortment offered in these
stores. Over the next five years, we believe there are additional opportunities to expand the Express brand
internationally through additional agreements with local partners across the globe.
Our Industry
According to the NPD Group, a leading provider of global market information, retail sales of domestic apparel
totaled $192 billion in the United States in the twelve months ended January 31, 2011. We operate primarily in
the specialty retail distribution channel of this market, which represented 32.2% of the total industry, or $61.9
billion in retail sales, in the twelve months ended January 31, 2011.
Our Products
As noted previously, we offer our customers an edited assortment of fashionable merchandise to address multiple
aspects of their lifestyle, including work, casual, jeanswear, and going-out occasions. Our products are created by
our in-house design team and range from core styles to the latest fashions. With over 30 years of brand heritage,
we have developed a distinct and widely recognized brand that we believe fosters loyalty and credibility among
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