Express 2012 Annual Report Download - page 13

Go-To-Market Strategy. We design the majority of our product assortment in our New York City design
studio based on an extensive review of fashion trends, styles, fabrics, colors, fits, and prices for the
upcoming season. 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 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. We believe our model allows us to better meet customer
demand and enables us to reduce inventory risk and improve product margins through reduced markdowns.
Optimized Real Estate Portfolio. Our stores are located in high-traffic shopping malls, lifestyle centers, and
street locations in 47 states across the United States, as well as in the District of Columbia, Puerto Rico, and
two provinces in Canada. As a result of our strong brand and established retail presence of over 30 years, we
have been able to acquire high-traffic locations in most retail centers in which we operate. Substantially all
of our stores were profitable in 2012.
Proven and Experienced Team. Michael Weiss, our Chief Executive Officer, has more than 40 years of
experience in the fashion industry and has served as our Chief Executive Officer for over 20 years. In
addition, our senior management team has an extensive amount of experience across a broad range of
disciplines in the specialty retail industry, including design, sourcing, merchandising, planning and
allocation, and real estate. Experience and tenure with Express extends deep into our organization, including
district and store managers, who have been with Express for a number of years.
Growth Strategy
Key elements of our business and growth strategies include the following:
Improve Sales and Margins of Our Existing Retail Stores. We seek to grow our comparable sales and operating
margins through execution of our go-to-market strategy. 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. Additionally, we have modified our promotional pricing
to provide more clarity to our customers and have also introduced additional women’s and men’s fragrances and
women’s and men’s watches.
Expand Our Store Base. We believe there are attractive, high-traffic locations that present opportunities for us to
expand our store base. We currently plan to open approximately 7 stores, net of closures, in 2013, including
4 stores in Canada, representing a 2 % increase in square footage. We also have plans to open 2 flagship
locations, one in Union Square in San Francisco and the other in Times Square in New York. The Union Square
location, which is approximately 16,000 square feet, is expected to open in late fall 2013, while the Times Square
location, which is approximately 30,000 square feet, is expected to open in spring 2014. During 2012, we opened
16 stores in the United States and Canada, net of closures, growing our square footage by 3%.
Expand Our e-Commerce Platform. 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 2012, e-commerce
represented 13% of our total sales.
Expand Internationally. We believe Express has the potential to be a successful global brand. During 2012, we
entered into new franchise agreements covering portions of Latin America and ended the year with 11
franchisee-operated stores in the Middle East and 4 franchisee-operated stores in Latin America. Over the next
5 years, we believe there are opportunities to expand the Express brand internationally through additional
franchise agreements with local partners across the globe, joint venture relationships, and company-owned stores
in targeted countries.
5