Express 2014 Annual Report Download - page 3

As you read this letter, much of the year still lies ahead. I want to share with you my thoughts
on our priorities as we move forward, which fall into five categories.
First is increasing profitability. This lies at the heart of creating stockholder value. Our focus
is on delivering predictable, sustainable, and profitable growth by managing the business in a
balanced fashion.
Revenue gains across all of our channels – retail stores, outlets, e-commerce, and
international – are at the heart of increasing profitability and we believe that as we deliver stronger
assortments and increase our connection with our customers through our high impact marketing this
growth is possible. So, as you can see, our commitment to our growth pillars remains intact.
It is also imperative that we improve our merchandise margins. Tighter inventory discipline is
central to this initiative and various measures have been put in place to help us buy smarter, turn
goods faster, and optimize onhand inventory. Equally essential to this effort is pulling back on
promotions, as the excessive discounting of the past few years cut into both our merchandise and
operating margins. We began to do so shortly after Christmas 2014. We held our course during this
year’s first quarter by not repeating some of the February and March 2014 all store promotions. The
extent to which we will be able to maintain this discipline throughout the balance of the year will
depend in part on the actions of our industry peers, but our resolve is firm.
The final component in our balanced growth equation is better leveraging of expenses. We
have the ability to do so as our comparable sales recover and as we continue to manage both our
buying and occupancy and our selling, general, and administrative expenditures with discipline. I do
want to note that we are not reducing expenses in a manner that will impede future growth. We will
continue to invest in high return growth initiatives such as the opening of new outlet stores, and will
continue the work of upgrading our IT systems to enable enhanced omni-channel capabilities.
Second is elevating the customer experience. While exemplary customer service has always
been a priority, we are striving to provide an exceptional customer experience across all touch points.
To do so, we will evolve from our current service model to a service and selling model. This involves
increased emphasis on helping our customers find the apparel and accessories right for each of them
while lessening the time spent highlighting the latest promotional offering. This in-store migration
will be mirrored in our marketing communications, as we supplant promotional messages with those
focusing on our brand and fashion storytelling messages.
Third is sharpening our brand position. The Express brand is strong, but it can be even
stronger. The brand work we are currently engaged in will lead to a sharpening of our brand essence,
vision, and promise so that we better differentiate ourselves from others in our space. By more
clearly articulating our unique brand proposition, we believe we will deepen our emotional
connection with our customer and deepen brand loyalty, in turn driving growth.
Fourth is systems enhancements. Legacy systems are being replaced and new capabilities
are being added to support our transformation to an omni-channel retailer truly global in scale. The
magnitude of the investment is large, but also central to achieving our growth objectives. We are
currently implementing new retail management and enterprise planning systems and are bringing
our order management system in house. This will enable key capabilities such as a single view of the
customer to drive real time interaction and better personalization of messages, global inventory
visibility, ship-from-store, buy online and pick-up in store, along with same day delivery.