Express 2013 Annual Report Download - page 28

Table of Contents
comparable sales were calculated based on the 53-week period ended February 2, 2013 compared to the 53-week period ended February 4, 2012. The flat
comparable sales resulted from decreases in both transactions and average dollar sales, offset by growth in e-commerce sales. We attribute the decrease in
transactions to lower traffic in our stores and a lesser acceptance of product in certain women's categories during the second and third quarters. Non-
comparable sales increased $35.8 million, equally driven by new store openings and remodels.
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The following table shows cost of goods sold, buying and occupancy costs, and gross profit in dollars for the stated periods:
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Cost of goods sold, buying and occupancy costs $1,501,418
$1,414,588
$1,325,998
Gross profit $ 717,707
$742,639
$754,461
The 210 basis point decrease in gross margin, or gross profit as a percentage of net sales, in 2013 compared to 2012 was comprised of a 120 basis point
deterioration in merchandise margin and a 90 basis point increase in buying and occupancy costs. The decrease in merchandise margin was primarily driven
by increased promotional activity throughout the year, which continued through the holiday selling season. The increase in buying and occupancy costs was
primarily driven by rent, including the incremental impact of approximately $9.0 million of pre-opening rent expense associated with the construction of two
flagship stores, as well as increased e-commerce fulfillment costs resulting from additional e-commerce sales.
From 2011 to 2012, we had a 180 basis point decrease in gross margin. The decrease was comprised of a 140 basis point deterioration in merchandise margin
and a 40 basis point increase in buying and occupancy costs. The decrease in merchandise margin was primarily driven by higher product costs and
increased promotional activity in the latter part of the second quarter and into the fall season. The increase in buying and occupancy costs was primarily
driven by increased rent, including the impact of $7.8 million of pre-opening rent expense for the 2 flagship stores under construction.
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The following table shows selling, general, and administrative expenses in dollars for the stated periods:
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Selling, general, and administrative expenses $ 504,277
$491,599
$483,823
The $12.7 million increase in selling, general, and administrative expenses in 2013 compared to 2012 was driven by a $12.4 million increase in payroll
primarily related to increased stock compensation expense, merit increases, and additional headcount at our home office to support our outlet business and our
international expansion and e-commerce growth pillars. There was also a $1.9 million increase in information technology expenses primarily in support of the
two aforementioned growth pillars. These increases were partially offset by a $2.1 million decrease in incentive compensation in the current year.
The $7.8 million increase in selling, general, and administrative expenses in 2012 compared to 2011 was driven by a $4.7 million increase in information
technology expenses to support international expansion and e-commerce growth, a $2.8 million increase in payroll primarily related to additional headcount at
our home office to support our international expansion and e-commerce growth pillars, merit increases, and increased stock compensation expense, and a $2.5
million increase in marketing expense, primarily related to e-commerce activities. These increases were partially offset by a $2.3 million decrease in
professional fees due to the secondary stock offerings in 2011 and hiring internal heads versus outsourcing labor needs in 2012.
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