Express 2014 Annual Report Download - page 32

Optimization and Strategic Expansion of Our Store Base.
In 2014, we opened nine new company-operated retail stores, including two stores in Canada and one new flagship
store in Times Square in New York City, and closed 19 stores in the United States. In addition we opened 41 factory
outlet stores in the United States, which included 22 stores that were converted from retail stores. As of January 31,
2015, we operated 641 locations. In 2015, we expect to open one retail store in the United States and approximately
35 new factory outlet stores in the United States. We plan to close 22 retail stores in the United States in 2015 and to
close approximately 50 stores in total through 2017, primarily as these leases expire. The stores we plan to close are
primarily under-performing stores where we believe some sales volume will transfer to other nearby stores.
Expand Our e-Commerce Platform
In 2014, our e-commerce sales increased 4% over 2013, which was on top of a 25% increase over 2012.
E-commerce sales represented 16% of our total net sales in 2014. We made significant enhancements to our
online shopping experience in 2014, including a more streamlined checkout process, bolder images that
showcase our product features and styling, and integration of social content to give our customers greater
confidence in their selections. We also made improvements to our mobile experience because our customers are
spending more and more time on their mobile devices and modified our shipping and return policies to be more
customer friendly and competitive. We believe that these changes contributed to an increase in site conversion
rates which led to improved e-commerce performance in 2014. Going forward, we plan to continue to invest in
our digital to store connections, starting with features like in-store product availability along with enhancements
to our mobile app companion shopping experiences, which we believe will allow us to further advance the omni-
channel performance of the brand.
Expand Internationally
In 2014, we made steady progress on our international expansion strategy with the opening of five franchise
stores in Latin America as well as one additional franchise store in the Middle East. In addition, the first Express
locations also opened in South Africa, as shop-in-shops within Edgars department stores. At year end, we were
earning revenue from 34 franchise locations, a net increase of eight stores compared to the end of 2013. In 2015,
we expect our franchisees to open three to six additional store locations.
How We Assess the Performance of Our Business
In assessing the performance of our business, we consider a variety of performance and financial measures.
These key measures include net sales, comparable sales and other individual store performance factors, gross
profit, and selling, general, and administrative expenses.
Net Sales. Net sales reflects revenues from the sale of our merchandise, less returns and discounts, as well as
shipping and handling revenue related to e-commerce, sell-off revenue, gift card breakage, and revenue earned
from our franchise agreements.
Comparable Sales and Other Individual Store Performance Factors. Comparable sales are calculated based upon
stores that were open at least thirteen full months as of the end of the reporting period. We include e-commerce
in our comparable sales because we view and manage our business this way. We also believe it provides a more
comprehensive view of our year over year performance. In addition, store conversions that do not meet any of the
criteria for exclusion that follow, are included in our comparable sales. In 2013, comparable sales were
calculated based upon the 52-week period ended February 1, 2014 compared to the 52-week period ended
February 2, 2013. Comparable sales for 2012 were calculated based on the 53-week period ended February 2,
2013 compared to the 53-week period ended February 4, 2012. A store is not considered a part of the comparable
sales base if the square footage of the store changed by more than 20% due to remodel or relocation activities or
if we execute a phased remodel whereby a portion of the store is under construction and, therefore, that portion of
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