Express 2012 Annual Report Download - page 5

hone their selling skills and to drive awareness of our EXPRESS NEXT Loyalty Program. We are also
continuing to expand our product offering, and our early success with watches, personal care items and
other accessories tells us we are on the right path. We have some exciting marketing initiatives in place
for 2013, including a collaboration with the NBC prime-time show Fashion Star®, which prominently
features the Express brand. It’s gratifying to report that a large percentage of people clicking the
Fashion Star icon on our website are first time visitors and more than half of the people purchasing
Fashion Star designs are making their first purchases on express.com. We know we have loyal
customers, so one of the keys to productivity gains is steadily expanding our customer base.
E-commerce represents another growth pillar. This business continued to exceed our expectations,
increasing 32% in 2012 and representing approximately 13% of our net sales. Our customers use this
channel to browse as well as to make purchases and we will continue to evolve the online experience.
Earlier this year we brought our website hosting in-house and over the next year or so, we will be
introducing exciting new enhancements that will make it easier for our customers to find and purchase
products they want.
A third growth pillar calls for expansion of our store base. In 2012, we added 16 net new stores in the
United States and Canada collectively, ending the year with 625 locations. In 2013, we anticipate
opening seven new stores, net of closures. I mentioned the concept of concentration earlier, and
it’s particularly important in this context. We aren’t just opening new stores. We are expanding our
presence in certain key malls that are doing the best job of increasing their traffic. They are social
hubs where people go–not just to shop, but to dine and be entertained. While certain malls are seeing
declining traffic trends, these hub locations are thriving, so that is where we are concentrating a
significant portion of our efforts. We don’t think our focus should be on store count; we think it should be
on expanding our presence in locations that count.
I’m also very excited about another recently announced initiative, which calls for us to open Express
outlet stores, selling merchandise made specifically for those stores. While it represents a significant
growth opportunity for us, we plan to report more fully on this later in the year when we can provide some
substantive details.
The last of our four growth pillars to be addressed, although by no means any less important than
the other three, is international expansion. We’re pleased with the progress being made. In 2012, our
Middle East franchisee added four stores, and our brand continues to do very well in that region. We
also announced two new franchise agreements, one covering Mexico and the other covering a variety
of other Latin American countries. We ended the year with 15 franchised stores in operation, up from
seven in 2011. Our 2013 objective is to enter into arrangements with two new franchisees successfully
operating in other parts of the world. This approach enables us to continue to introduce the Express
brand abroad without committing significant amounts of financial or human capital.
I continue to be profoundly grateful for the opportunity to work with a talented and dedicated team of
professionals at Express. Their passion for the brand inspires me and I feel confident that this year’s
designs will surpass those of the preceding year. In addition, we are fortunate to be in an extremely
strong financial position. We ended the year with $256 million of cash and cash equivalents, which
was up significantly from $152 million at the end of 2011. This increase was accomplished while also
repurchasing approximately $65 million of our common stock, representing a major portion of our
$100 million repurchase program. While we continually assess with our Board of Directors the most
productive means of deploying our cash, investment in our growth pillars remains our key priority. We
are confident in our ability to drive results that will, in turn, increase stockholder value. Thank you for your
ongoing support of Express.
Most sincerely,
Michael Weiss
Chairman & CEO