Express 2015 Annual Report Download - page 24

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Table of Contents
• providing an exceptional brand and customer experience; and
• upgrading and enhancing our systems and processes to enable growth.
We believe that successful execution against these objectives will position Express for future growth.
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In assessing the performance of our business, we consider a variety of performance and financial measures. These key measures include net sales, comparable
sales, cost of goods sold, buying and occupancy costs, gross profit/gross margin, and selling, general, and administrative expenses. The following table
describes and discusses these measures.
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Net Sales Revenue from the sale of merchandise, less returns and discounts, as
well as shipping and handling revenue related to e-commerce,
revenue from rental of our LED sign in Times Square, gift card
breakage, and revenue earned from our franchise agreements.
Our business is seasonal, and we have historically
realized a higher portion of our net sales in the third
and fourth quarters due primarily to the impact of the
holiday season. Generally, approximately 45% of our
annual net sales occur in the Spring season (first and
second quarters) and 55% occur in the Fall season
(third and fourth quarters).
Comparable Sales Comparable sales is a measure of the amount of sales generated in a
period relative to the amount of sales generated in the comparable
prior year period.
Comparable sales includes:
Sales from stores that were open 12 months or more as of the
end of the reporting period, including conversions
E-commerce sales
Comparable sales excludes:
Sales from stores where the square footage has changed by
more than 20% due to remodel or relocation activity
Sales from stores in a phased remodel where a portion of the
store is under construction and therefore not productive selling space
Our business and our comparable sales are subject, at
certain times, to calendar shifts, which may occur
during key selling periods close to holidays such as
Easter, Thanksgiving, and Christmas, and regional
fluctuations for events such as sales tax holidays.
Cost of goods sold, buying
and occupancy costs
Includes the following:
Direct cost of purchased merchandise
Inventory shrink and other adjustments
Inbound and outbound freight
Merchandising, design, planning and allocation, and
manufacturing/production costs
Occupancy costs related to store operations (such as rent and
common area maintenance, utilities, and depreciation on assets)
Logistics costs associated with our e-commerce business
Our cost of goods sold typically increases in higher
volume quarters because the direct cost of purchased
merchandise is tied to sales.
The primary drivers of the costs of individual goods are
raw materials, labor in the countries where our
merchandise is sourced, and logistics costs associated
with transporting our merchandise.
Buying and occupancy costs related to stores are
largely fixed and do not necessarily increase as volume
increases.
Changes in the mix of our products may also impact
our overall cost of goods sold, buying and occupancy
costs.
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