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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended November 2, 2019
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______ TO ______
Commission File Number 001-34742
EXPRESS, INC.
(Exact name of registrant as specified in its charter)
Delaware 26-2828128
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
1 Express Drive
Columbus, Ohio
 43230
(Address of principal executive offices) (Zip Code)
Telephone: (614474-4001
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $.01 par valueEXPRThe New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes     No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes      No  
The number of outstanding shares of the registrant’s common stock was 63,907,212 as of November 30, 2019.
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FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements within the “safe harbor” provisions of the Private Securities Reform Act of 1995 that are subject to risks and uncertainties. All statements other than statements of historical fact included in this Quarterly Report are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance, and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “potential,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely,” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated and projected costs, expenditures, cash flows, and financial results, our plans and objectives for future operations, growth, initiatives, or strategies, plans to repurchase shares of our common stock, or the expected outcome or impact of pending or threatened litigation are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including:
External Risks such as:
changes in consumer spending and general economic conditions;
customer traffic at malls, shopping centers, and at our stores;
competition from other retailers;
our dependence upon independent third parties to manufacture all of our merchandise;
changes in the cost of raw materials, labor, and freight;
supply chain disruption and increased tariffs;
difficulties associated with our distribution facilities;
natural disasters, extreme weather, public health issues, fire, and other events that cause business interruption; and
our reliance on third parties to provide us with certain key services for our business.
Strategic Risks such as:
our ability to identify and respond to new and changing fashion trends, customer preferences, and other related factors;
fluctuations in our sales, results of operations, and cash levels on a seasonal basis and due to a variety of other factors, including our product offerings relative to customer demand, the mix of merchandise we sell, promotions, inventory levels, and sales mix between stores and e-commerce;
our dependence on a strong brand image;
our ability to adapt to changes in consumer behavior and develop and maintain a relevant and reliable omni-channel experience for our customers;
our dependence upon key executive management; and
our ability to execute our growth strategy, including but not limited to, improving brand articulation and customer retention and identifying cost savings opportunities.
Information Technology Risks such as:
the failure or breach of information systems upon which we rely; and
our ability to protect our customer data from fraud and theft.
Financial Risks such as:
our substantial lease obligations;
restrictions imposed on us under the terms of our asset-based loan facility, including restrictions on our ability to repurchase shares of our common stock; and
impairment charges on long-lived assets, inclusive of intangible assets.
Legal, Regulatory, and Compliance Risks such as:
claims made against us resulting in litigation or changes in laws and regulations applicable to our business;
our inability to protect our trademarks or other intellectual property rights that may preclude the use of our trademarks or other intellectual property around the world;
changes in tax requirements, results of tax audits, and other factors that may cause fluctuations in our effective tax rate; and
our failure to maintain adequate internal controls.
We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. For a discussion of these risks and other risks and uncertainties that could cause actual results to differ materially from those contained in our forward-looking statements, please refer to “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended February 2, 2019 (“Annual Report”), filed with the Securities and Exchange Commission (“SEC”) on March 19, 2019. The forward-looking statements included in this Quarterly Report are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events, or otherwise, except as required by law.
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INDEX

PART I
ITEM 1.
ITEM 2.
ITEM 3.
ITEM 4.
PART II
ITEM 1.
ITEM 1A.
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 5.
ITEM 6.



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PART I – FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS.
EXPRESS, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)
 November 2, 2019February 2, 2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$167,915  $171,670  
Receivables, net12,199  17,369  
Inventories345,931  267,766  
Prepaid rent6,905  30,047  
Other33,387  25,176  
Total current assets566,337  512,028  
RIGHT OF USE ASSET, NET1,043,874  —  
PROPERTY AND EQUIPMENT991,550  1,083,347  
Less: accumulated depreciation(734,556) (719,068) 
Property and equipment, net256,994  364,279  
TRADENAME/DOMAIN NAMES/TRADEMARKS197,618  197,618  
DEFERRED TAX ASSETS6,379  5,442  
OTHER ASSETS6,712  7,260  
Total assets$2,077,914  $1,086,627  
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Short-term lease liability$222,439  $—  
Accounts payable221,721  155,913  
Deferred revenue32,394  40,466  
Accrued expenses93,504  78,313  
Total current liabilities570,058  274,692  
LONG-TERM LEASE LIABILITY936,547  —  
DEFERRED LEASE CREDITS2,258  129,505  
OTHER LONG-TERM LIABILITIES20,049  97,252  
Total liabilities1,528,912  501,449  
COMMITMENTS AND CONTINGENCIES (Note 10)
STOCKHOLDERS’ EQUITY:
Preferred stock – $0.01 par value; 10,000 shares authorized; no shares issued or outstanding
    
Common stock – $0.01 par value; 500,000 shares authorized; 93,632 shares and 93,632 shares issued at November 2, 2019 and February 2, 2019, respectively, and 64,501 shares and 67,424 shares outstanding at November 2, 2019 and February 2, 2019, respectively
936  936  
Additional paid-in capital214,389  211,981  
Retained earnings675,539  713,864  
Treasury stock – at average cost; 29,131 shares and 26,208 shares at November 2, 2019 and February 2, 2019, respectively
(341,862) (341,603) 
Total stockholders’ equity549,002  585,178  
Total liabilities and stockholders’ equity$2,077,914  $1,086,627  
See Notes to Unaudited Consolidated Financial Statements.
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EXPRESS, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Amounts in Thousands, Except Per Share Amounts) (Unaudited)

Thirteen Weeks EndedThirty-Nine Weeks Ended
 November 2, 2019November 3, 2018November 2, 2019November 3, 2018
NET SALES$488,483  $514,961  $1,412,469  $1,487,918  
COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS350,810  356,812  1,025,795  1,046,204  
Gross profit137,673  158,149  386,674  441,714  
OPERATING EXPENSES:
Selling, general, and administrative expenses144,301  148,294  415,391  426,583  
Restructuring costs  166    166  
Other operating expense/(income), net47  (513) (728) (689) 
Total operating expenses144,348  147,947  414,663  426,060  
OPERATING (LOSS)/INCOME(6,675) 10,202  (27,989) 15,654  
INTEREST (INCOME)/EXPENSE, NET(690) 32  (2,185) 168  
OTHER INCOME, NET      (500) 
(LOSS)/INCOME BEFORE INCOME TAXES(5,985) 10,170  (25,804) 15,986  
INCOME TAX (BENEFIT)/EXPENSE(2,880) 2,203  (3,062) 5,268  
NET (LOSS)/INCOME$(3,105) $7,967  $(22,742) $10,718  
COMPREHENSIVE (LOSS)/INCOME$(3,105) $7,967  $(22,742) $10,718  
EARNINGS PER SHARE:
Basic$(0.05) $0.11  $(0.34) $0.14  
Diluted$(0.05) $0.11  $(0.34) $0.14  
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic66,438  72,512  66,845  73,959  
Diluted66,438  73,473  66,845  74,757  
See Notes to Unaudited Consolidated Financial Statements.
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EXPRESS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Amounts in Thousands) (Unaudited) 
Common StockTreasury Stock
 Shares OutstandingPar ValueAdditional
Paid-in
Capital
Retained
Earnings
Accumulated Other Comprehensive LossSharesAt Average CostTotal
BALANCE, February 3, 201876,724  $926  $199,099  $704,395  $  15,923  $(256,106) $648,314  
Net income—  —  —  517  —  —  —  517  
Exercise of stock options and restricted stock854  9  (9) —  —  —  —    
Share-based compensation—  —  3,814  —  —  —  —  3,814  
Repurchase of common stock(2,519) —  —  —  —  2,519  (18,245) (18,245) 
BALANCE, May 5, 201875,059  $935  $202,904  $704,912  $  18,442  $(274,351) $634,400  
Net income—  —  —  2,234  —  —  —  2,234  
Exercise of stock options and restricted stock131  1  (1) —  —  —  —    
Share-based compensation—  —  3,452  —  —  —  —  3,452  
Repurchase of common stock(1,809) —  —  —  —  1,809  (16,396) (16,396) 
BALANCE, August 4, 201873,381  $936  $206,355  $707,146  $  20,251  $(290,747) $623,690  
Net income—  —  —  7,967  —  —  —  7,967  
Exercise of stock options and restricted stock3  —  (29) (14) —  (3) 43    
Share-based compensation—  —  3,550  —  —  —  —  3,550  
Repurchase of common stock(2,480) —  —  —  —  2,480  (24,170) (24,170) 
BALANCE, November 3, 201870,904  $936  $209,876  $715,099  $  22,728  $(314,874) $611,037  

Common StockTreasury Stock
 Shares OutstandingPar ValueAdditional
Paid-in
Capital
Retained
Earnings
Accumulated Other Comprehensive LossSharesAt Average CostTotal  
BALANCE, February 2, 201967,424  $936  $211,981  $713,864  $  26,208  $(341,603) $585,178  
Adoption of ASC Topic 842—  —  —  (5,482) —  —  —  (5,482) 
Net loss—  —  —  (9,934) —  —  —  (9,934) 
Exercise of stock options and restricted stock1,024  —  (4,316) (8,735) —  (1,024) 13,051    
Share-based compensation—  —  2,372  —  —  —  —  2,372  
Repurchase of common stock(1,273) —  —  —  —  1,273  (6,387) (6,387) 
BALANCE, May 4, 201967,175  $936  $210,037  $689,713  $  26,457  $(334,939) $565,747  
Net loss—  —  —  (9,703) —  —  —  (9,703) 
Exercise of stock options and restricted stock93  —  (311) (867) —  (93) 1,178    
Share-based compensation—  —  2,424  —  —  —  —  2,424  
Repurchase of common stock(1) —  —  —  —  1  (4) (4) 
BALANCE, August 3, 201967,267  $936  $212,150  $679,143  $  26,365  $(333,765) $558,464  
Net loss—  —  —  (3,105) —  —  —  (3,105) 
Exercise of stock options and restricted stock55  —  (169) (499) —  (55) 668    
Share-based compensation—  —  2,408  —  —  —  —  2,408  
Repurchase of common stock(2,821) —  —  —  —  2,821  (8,765) (8,765) 
BALANCE, November 2, 201964,501  $936  $214,389  $675,539  $  29,131  $(341,862) $549,002  
See Notes to Unaudited Consolidated Financial Statements.
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EXPRESS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands) (Unaudited)
Thirty-Nine Weeks Ended
 November 2, 2019November 3, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)/income$(22,742) $10,718  
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:
Depreciation and amortization64,121  64,099  
Loss on disposal of property and equipment1,098  303  
Impairment charge2,282    
Impairment of equity method investment500    
Share-based compensation7,204  10,816  
Deferred taxes212  (42) 
Landlord allowance amortization(1,782) (8,702) 
Other non-cash adjustments(500) (500) 
Changes in operating assets and liabilities:
Receivables, net5,169  (3,412) 
Inventories(78,165) (102,039) 
Accounts payable, deferred revenue, and accrued expenses71,891  52,187  
Other assets and liabilities(16,454) (5,113) 
Net cash provided by operating activities32,834  18,315  
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures(20,503) (32,402) 
Net cash used in investing activities(20,503) (32,402) 
CASH FLOWS FROM FINANCING ACTIVITIES:
Costs incurred in connection with debt arrangements(849)   
Payments on lease financing obligations(81) (1,385) 
Repayments of financing arrangements  (750) 
Repurchase of common stock under share repurchase program(13,603) (56,161) 
Repurchase of common stock for tax withholding obligations(1,553) (2,650) 
Net cash used in financing activities(16,086) (60,946) 
NET DECREASE IN CASH AND CASH EQUIVALENTS(3,755) (75,033) 
CASH AND CASH EQUIVALENTS, Beginning of period171,670  236,222  
CASH AND CASH EQUIVALENTS, End of period$167,915  $161,189  
See Notes to Unaudited Consolidated Financial Statements.
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Notes to Unaudited Consolidated Financial Statements

1. Description of Business and Basis of Presentation
Business Description
Express, Inc., together with its subsidiaries (“Express” or the “Company”), is a leading fashion brand for women and men. Since 1980, Express has provided the latest apparel and accessories to help customers build a wardrobe for every occasion, offering fashion and quality at an attractive value. As of November 2, 2019, Express operated 411 primarily mall-based retail stores in the United States and Puerto Rico as well as 215 factory outlet stores. Additionally, as of November 2, 2019, the Company earned revenue from 13 franchise stores in Latin America. These franchise stores are operated by franchisees pursuant to franchise agreements. Under the franchise agreements, the franchisees operate stand-alone Express stores that sell Express-branded apparel and accessories purchased directly from the Company.
Fiscal Year
The Company’s fiscal year ends on the Saturday closest to January 31. Fiscal years are referred to by the calendar year in which the fiscal year commences. References herein to “2019” and “2018” represent the 52-week period ended February 1, 2020 and the 52-week period ended February 2, 2019, respectively. All references herein to “the third quarter of 2019” and “the third quarter of 2018” represent the thirteen weeks ended November 2, 2019 and November 3, 2018, respectively.
Basis of Presentation
The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and therefore do not include all of the information or footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited Consolidated Financial Statements reflect all adjustments (which are of a normal recurring nature) necessary to state fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for 2019. Therefore, these statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto for the year ended February 2, 2019, included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 19, 2019.
Principles of Consolidation
The unaudited Consolidated Financial Statements include the accounts of Express, Inc. and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
Segment Reporting 
The Company defines an operating segment on the same basis that it uses to evaluate performance internally. The Company has determined that, together, its Chief Executive Officer and its President and Chief Operating Officer are the Chief Operating Decision Maker, and that there is one operating segment. Therefore, the Company reports results as a single segment, which includes the operation of its Express brick-and-mortar retail and outlet stores, e-commerce operations, and franchise operations.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited Consolidated Financial Statements and the reported amounts of revenue and expense during the reporting period, as well as the related disclosure of contingent assets and liabilities as of the date of the unaudited Consolidated Financial Statements. Actual results may differ from those estimates. The Company revises its estimates and assumptions as new information becomes available.
Recently Issued Accounting Pronouncements - Adopted
Leases
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)” (“ASC 842”). This ASU is a comprehensive new standard that amends various aspects of existing guidance for leases and requires additional disclosures about leasing arrangements. It requires lessees to recognize lease assets and lease liabilities for most leases, including those leases previously classified as operating leases. ASC 842 requires a modified retrospective transition for leases existing at or entered into after the beginning of the earliest comparative
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period presented in the financial statements. In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements,” that allows entities to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without adjustment to the financial statements for periods prior to adoption.

The Company adopted ASC 842 on February 3, 2019 on a modified retrospective basis and applied the new standard to all leases through a cumulative-effect adjustment to beginning retained earnings. As a result, comparative financial information has not been restated and continues to be reported under the accounting standards in effect for the respective periods. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which permitted companies not to reassess prior conclusions on lease identification, lease classification and initial direct costs. The Company did not elect the hindsight practical expedient.

On February 3, 2019, the Company recognized leases, primarily related to its stores and corporate headquarters, on its unaudited Consolidated Balance Sheet, as right-of-use assets of $1.2 billion with corresponding lease liabilities of $1.3 billion and eliminated certain existing lease-related assets and liabilities as a net adjustment to the right-of-use assets. The Company’s right-of-use assets represent a right to use underlying assets for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease assets and liabilities are recognized at the lease commencement date (date on which the Company gains access to the property) based on the estimated present value of lease payments over the lease term, net of landlord allowances to be received. The Company accounts for the lease and non-lease components as a single lease component for all current classes of leases. In connection with this adoption, the Company recorded a transition adjustment, which was a net reduction of retained earnings of $5.5 million. This adjustment primarily reflects the difference between the right-of-use assets and lease liabilities recorded upon adoption, the elimination of the lease financing obligations and related assets described in Note 7, including the related put option, and the recognition of the impairment, upon adoption, of certain right-of-use assets totaling $1.2 million. The adoption of the new standard had no material impact on the unaudited Consolidated Statements of Income and Comprehensive Income, the unaudited Consolidated Statements of Cash Flows, and did not impact the Company's compliance with debt covenants.

2. Revenue Recognition
The following is information regarding the Company’s major product categories and sales channels:

Thirteen Weeks EndedThirty-Nine Weeks Ended
 November 2, 2019November 3, 2018November 2, 2019November 3, 2018
(in thousands)
Apparel$422,468  $446,395  $1,219,628  $1,292,029  
Accessories and other48,355  50,860  144,846  151,007  
Other revenue17,660  17,706  47,995  44,882  
Total net sales$488,483  $514,961  $1,412,469  $1,487,918  

Thirteen Weeks EndedThirty-Nine Weeks Ended
 November 2, 2019November 3, 2018November 2, 2019November 3, 2018
(in thousands)
Retail$356,758  $388,830  $1,022,703  $1,137,092  
Outlet114,065  108,425  341,771  305,944  
Other revenue17,660  17,706  47,995  44,882  
Total net sales$488,483  $514,961  $1,412,469  $1,487,918  
In light of the progress made in transforming into an omni-channel business model and the growth of the outlet channel, during the first quarter of 2019, the Company began providing sales channel information for retail, which includes retail store and e-commerce sales, outlets, and other revenue. Historically, the Company provided sales data for stores, which included both retail and outlet stores, and e-commerce. Other revenue is unchanged from the Company’s prior classification.

Other revenue consists primarily of sell-off revenue related to mark-out-of-stock inventory sales to third parties, shipping and handling revenue related to e-commerce activity, revenue earned from our private label credit card agreement, revenue from gift card breakage, and revenue from franchise agreements.
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Revenue related to the Company’s international franchise operations were not material for any period presented and, therefore, are not reported separately from domestic revenue.
Revenue Recognition Policies
Merchandise Sales
The Company recognizes sales for in-store purchases at the point-of-sale. Revenue related to e-commerce transactions is recognized upon shipment based on the fact that control transfers to the customer at that time. The Company has made a policy election to treat shipping and handling as costs to fulfill the contract and as a result any amounts received from customers are included in the transaction price allocated to the performance obligation of providing goods with a corresponding amount accrued within cost of goods sold, buying and occupancy costs in the unaudited Consolidated Statements of Income and Comprehensive Income for amounts paid to applicable carriers. Associate discounts on merchandise purchases are classified as a reduction of net sales. Net sales excludes sales tax collected from customers and remitted to governmental authorities.
Loyalty Program
The Company maintains a customer loyalty program in which customers earn points toward rewards for qualifying purchases and other marketing activities. Upon reaching specified point values, customers are issued a reward, which they may redeem on merchandise purchases at the Company’s stores or on its website. Generally, rewards earned must be redeemed within 60 days from the date of issuance. The Company defers a portion of merchandise sales based on the estimated standalone selling price of the points earned. This deferred revenue is recognized as certificates are redeemed or expire. To calculate this deferral, the Company makes assumptions related to card holder redemption rates based on historical experience. The loyalty liability is included in deferred revenue on the unaudited Consolidated Balance Sheets.

Thirteen Weeks EndedThirty-Nine Weeks Ended
 November 2, 2019November 3, 2018November 2, 2019November 3, 2018
(in thousands)
Beginning balance loyalty deferred revenue$14,766  $18,313  $15,319  $14,186  
Reduction in revenue/(revenue recognized)(1,313) (2,843) (1,866) 1,284  
Ending balance loyalty deferred revenue$13,453  $15,470  $13,453  $15,470  
Sales Returns Reserve
The Company reduces net sales and provides a reserve for projected merchandise returns based on prior experience. Merchandise returns are often resalable merchandise and are refunded by issuing the same payment tender as the original purchase. The sales returns reserve was $11.8 million and $9.9 million as of November 2, 2019 and February 2, 2019, respectively, and is included in accrued expenses on the unaudited Consolidated Balance Sheets. The asset related to projected returned merchandise is included in other assets on the unaudited Consolidated Balance Sheets.
Gift Cards
The Company sells gift cards in its stores, on its e-commerce website, and through third parties. These gift cards do not expire or lose value over periods of inactivity. The Company accounts for gift cards by recognizing a liability at the time a gift card is sold. The gift card liability balance was $18.8 million and $25.1 million, as of November 2, 2019 and February 2, 2019, respectively, and is included in deferred revenue on the Consolidated Balance Sheets. The Company recognizes revenue from gift cards when they are redeemed by the customer. The Company also recognizes income on unredeemed gift cards, referred to as “gift card breakage.” Gift card breakage is recognized proportionately using a time-based attribution method from issuance of the gift card to the time when it can be determined that the likelihood of the gift card being redeemed is remote and that there is no legal obligation to remit unredeemed gift cards to relevant jurisdictions. The gift card breakage rate is based on historical redemption patterns. Gift card breakage is included in net sales in the unaudited Consolidated Statements of Income and Comprehensive Income.
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Thirteen Weeks EndedThirty-Nine Weeks Ended
 November 2, 2019November 3, 2018November 2, 2019November 3, 2018
(in thousands)
Beginning gift card liability$19,966  $20,335  $25,133  $26,737  
Issuances7,157  7,393  22,826  24,376  
Redemptions(7,699) (8,241) (26,617) (29,681) 
Gift card breakage(623) (616) (2,541) (2,561) 
Ending gift card liability$18,801  $18,871  $18,801  $18,871  
Private Label Credit Card
The Company has an agreement with Comenity Bank (the “Bank”) to provide customers with private label credit cards (the “Card Agreement”) which was amended on August 28, 2017 to extend the term of the arrangement through December 31, 2024. Each private label credit card bears the logo of the Express brand and can only be used at the Company’s store locations and e-commerce channel. The Bank is the sole owner of the accounts issued under the private label credit card program and absorbs the losses associated with non-payment by the private label card holders and a portion of any fraudulent usage of the accounts.
Pursuant to the Card Agreement, the Company receives amounts from the Bank during the term based on a percentage of private label credit card sales and is also eligible to receive incentive payments for the achievement of certain performance targets. These funds are recorded as net sales in the unaudited Consolidated Statements of Income and Comprehensive Income. The Company also receives reimbursement funds from the Bank for expenses the Company incurs. These reimbursement funds are used by the Company to fund marketing and other programs associated with the private label credit card. The reimbursement funds received related to private label credit cards are recorded as net sales in the unaudited Consolidated Statements of Income and Comprehensive Income.

In connection with the Card Agreement, the Bank agreed to pay the Company a $20.0 million refundable payment which the Company recognized upon receipt as deferred revenue within other long-term liabilities in the Consolidated Balance Sheets and began to recognize into income on a straight-line basis commencing January of 2018. As of November 2, 2019, the deferred revenue balance of $14.9 million will be recognized over the remaining term of the amended Card Agreement within the other revenue component of net sales.
Thirteen Weeks EndedThirty-Nine Weeks Ended
 November 2, 2019November 3, 2018November 2, 2019November 3, 2018
(in thousands)
Beginning balance refundable payment liability$15,589  $18,467  $17,028  $19,906  
Recognized in revenue(719) (719) (2,158) (2,158) 
Ending balance refundable payment liability $14,870  $17,748  $14,870  $17,748  

3. Earnings Per Share
The following table provides a reconciliation between basic and diluted weighted-average shares used to calculate basic and diluted earnings per share:

Thirteen Weeks EndedThirty-Nine Weeks Ended
November 2, 2019November 3, 2018November 2, 2019November 3, 2018
(in thousands) 
Weighted-average shares - basic66,438  72,512  66,845  73,959  
Dilutive effect of stock options and restricted stock units  961    798  
Weighted-average shares - diluted66,438  73,473  66,845  74,757  
Equity awards representing 8.9 million and 7.2 million shares of common stock were excluded from the computation of diluted earnings per share for the thirteen and thirty-nine weeks ended November 2, 2019, as the inclusion of these awards would have been anti-dilutive. Equity awards representing 2.5 million and 3.4 million shares of common stock were excluded from the
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computation of diluted earnings per share for the thirteen and thirty-nine weeks ended November 3, 2018, as the inclusion of these awards would have been anti-dilutive.
Additionally, for the thirteen weeks ended November 2, 2019, approximately 0.4 million shares were excluded from the computation of diluted weighted average shares because the number of shares that will ultimately be issued is contingent on the Company’s performance compared to pre-established performance goals which have not been achieved as of November 2, 2019.

4. Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date.
Level 1-Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2-Valuation is based upon quoted prices for similar assets and liabilities in active markets or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3-Valuation is based upon other unobservable inputs that are significant to the fair value measurement.
Financial Assets
The following table presents the Company’s financial assets, recorded in cash and cash equivalents on the unaudited Consolidated Balance Sheets, measured at fair value on a recurring basis as of November 2, 2019 and February 2, 2019, aggregated by the level in the fair value hierarchy within which those measurements fall.

November 2, 2019
Level 1Level 2Level 3
(in thousands)
Money market funds$139,226  $  $  
February 2, 2019
Level 1Level 2Level 3
(in thousands)
Money market funds$155,014  $  $  
The money market funds are valued using quoted market prices in active markets.
The carrying amounts reflected on the unaudited Consolidated Balance Sheets for the remaining cash and cash equivalents, receivables, prepaid expenses, and payables as of November 2, 2019 and February 2, 2019 approximated their fair values.
Non-Financial Assets
The Company’s non-financial assets, which include fixtures, equipment, improvements, right of use assets, and intangible assets, are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur indicating the carrying value of these assets may not be recoverable, or annually in the case of indefinite-lived intangibles, an impairment test is required. The impairment test requires the Company to estimate the fair value of the assets and compare this to the carrying value of the assets. If the fair value of the asset is less than the carrying value, then an impairment charge is recognized, and the non-financial assets are recorded at fair value. The Company estimates the fair value using a discounted cash flow model or other fair value models as appropriate. Factors used in the evaluation include, but are not limited to, management’s plans for future operations, recent operating results, and projected cash flows. During the thirteen weeks ended November 2, 2019, the Company did not recognize any impairment charges. During the thirty-nine weeks ended November 2, 2019, the Company recognized impairment charges of approximately $2.3 million. During the thirteen and thirty-nine weeks ended November 3, 2018, the Company did not recognize any impairment charges. Impairment charges are recorded in cost of goods sold, buying and occupancy costs in the unaudited Consolidated Statements of Income and Comprehensive Income. 

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5. Intangible Assets
The following table provides the significant components of intangible assets:

 November 2, 2019
Cost
Accumulated
Amortization 
Ending Net Balance
(in thousands)
Tradename/domain names/trademarks$197,618  $—  $197,618  
Licensing arrangements425  356  69  
 $198,043  $356  $197,687  

 February 2, 2019
Cost
Accumulated
Amortization 
Ending Net Balance
(in thousands)
Tradename/domain names/trademarks$197,618  $—  $197,618  
Licensing arrangements425  319  106  
 $198,043  $319  $197,724  
The Company’s tradename, internet domain names, and trademarks have indefinite lives. Licensing arrangements are amortized over a period of ten years and are included in other assets on the unaudited Consolidated Balance Sheets.
In 2018, the Company performed a quantitative analysis and determined that no impairment was necessary on its intangible assets with indefinite lives. This analysis resulted in estimated fair values that exceeded the carrying values by a more than an insignificant amount; however, the estimated fair values decreased compared to the prior year due to decreased financial results. During the thirty-nine weeks ended November 2, 2019, the Company continued to experience negative comparable sales and a stock price below historic levels. The Company has evaluated whether these indicate a potential impairment of intangible assets with indefinite lives as of November 2, 2019. Additionally, the Company has considered, among other factors, the 2019 full year forecast, whether the results for the thirty-nine week period ended November 2, 2019 were consistent with the forecast, and expected future expense reductions. Based on these factors, the Company determined there were no events or circumstances that indicate it is more likely than not that the fair value of its intangible assets with indefinite lives is less than the carrying value. However, the intangible assets with indefinite lives are at risk of impairment if comparable sales continue to decline more than our expectations, future expense reductions are not achieved, or the Company does not meet its forecasted financial results.

6. Income Taxes
The provision for income taxes is based on a current estimate of the annual effective tax rate, adjusted to reflect the effect of discrete items. The Company’s effective income tax rate may fluctuate from quarter to quarter as a result of a variety of factors, including the estimate of annual pre-tax income, the related changes in the estimate, and the effect of discrete items. The impact of these items on the effective tax rate will be greater at lower levels of pre-tax earnings.
For 2019, the Company's estimated annual effective tax rate has fluctuated with small changes in the estimated full-year pre-tax income due to near break-even forecasted pre-tax earnings. Differences between pre-tax book and taxable income, such as non-deductible executive compensation, cause the effective income tax rate to vary significantly. Accordingly, the Company does not believe that it can estimate the annual effective tax rate for 2019 with sufficient precision and, as permitted by GAAP, has determined the income tax benefit for the thirty-nine weeks ended November 2, 2019 based upon year-to-date pre-tax loss and the effect of differences between book and taxable loss.
The Company’s effective tax rate was 48.1% and 21.7% for the thirteen weeks ended November 2, 2019 and November 3, 2018, respectively. The effective tax rate for the thirteen weeks ended November 2, 2019 reflects a $1.4 million change in estimate from the second quarter provision due to a change in the previously forecasted annual effective tax rate.
The Company’s effective tax rate was 11.9% and 33.0% for the thirty-nine weeks ended November 2, 2019 and November 3, 2018, respectively. The effective tax rate for the thirty-nine weeks ended November 2, 2019 reflects a tax benefit from a pre-tax loss offset by $2.6 million of discrete tax expense related to a tax shortfall for share-based compensation. The effective tax rate
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for the thirty-nine weeks ended November 3, 2018 reflects $1.3 million of discrete tax expense related to a tax shortfall for share-based compensation partially offset by a net discrete tax benefit of $0.6 million.

7. Leases
The Company leases all of its store locations and its corporate headquarters, which also includes its distribution center, under operating leases. The store leases typically have initial terms of 5 to 10 years. The current lease term for the corporate headquarters expires in 2026, with one optional five-year extension period. The Company also leases certain equipment and other assets under operating leases, typically with initial terms of 3 to 5 years. The lease term includes the initial contractual term as well as any options to extend the lease when it is reasonably certain that the Company will exercise that option. Leases with an initial term of 12 months or less (short-term leases) are not recorded on the balance sheet. The Company does not currently have any material short-term leases. The Company is generally obligated for the cost of property taxes, insurance and other landlord costs, including common area maintenance charges, relating to its leases. If these charges are fixed, they are combined with lease payments in determining the lease liability; however, if such charges are not fixed, they are considered variable lease costs and are expensed as incurred. The variable payments are not included in the measurement of the lease liability or asset. The Company’s finance leases are immaterial.

Certain lease agreements include rental payments based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The following table is a summary of the Company’s components of net lease cost, which is included in cost of goods sold, buying and occupancy costs, on the unaudited Consolidated Statements of Income and Comprehensive Income:

Thirty-Nine Weeks Ended
November 2, 2019
(in thousands)
Operating lease costs$206,672  
Variable and short-term lease costs53,375  
Total lease costs$260,047  
 
Supplemental cash flow information related to leases is as follows:

Thirty-Nine Weeks Ended
November 2, 2019
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases$214,609  
Right-of-use assets obtained in exchange for operating lease liabilities$11,491  

Supplemental balance sheet information related to leases as of November 2, 2019 is as follows:

Thirty-Nine Weeks Ended
November 2, 2019
Operating leases:
Weighted average remaining lease term (in years)5.8
Weighted average discount rate4.8 %

The Company’s lease agreements do not provide an implicit rate, so the Company uses an estimated incremental borrowing rate, which is derived from third-party information available at the lease commencement date, in determining the present value of lease payments. The rate used is for a secured borrowing of a similar term as the lease.

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The following table reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities recorded on the unaudited Consolidated Balance Sheets as of November 2, 2019:

November 2, 2019
(in thousands)
2019 (remaining)$67,114  
2020272,902  
2021236,660  
2022217,736  
2023193,253  
Thereafter394,877  
Total minimum lease payments1,382,542  
Less: amount of lease payments representing interest223,556  
Present value of future minimum lease payments1,158,986  
Less: current obligations under leases222,439  
Long-term lease obligations$936,547  

As previously disclosed in the Company's Consolidated Financial Statements for the year ending February 2, 2019, future minimum lease payments for noncancelable operating leases, under the previous lease accounting standard, were as follows at February 2, 2019 (in thousands):

2019$221,816  
2020189,285  
2021163,748  
2022151,718  
2023135,345  
Thereafter290,790  
Total$1,152,702  
Lease Financing Obligations
Prior to the adoption of ASC 842, in certain lease arrangements, the Company was involved in the construction of the building. To the extent the Company was involved in the construction of structural improvements or took construction risk prior to commencement of a lease, it was deemed the owner of the project for accounting purposes. Therefore, the Company recorded an asset in property and equipment on the unaudited Consolidated Balance Sheets, including any capitalized interest costs, and related liabilities in accrued interest and lease financing obligations in other long-term liabilities on the unaudited Consolidated Balance Sheets, for the replacement cost of the Company’s portion of the pre-existing building plus the amount of construction costs incurred by the landlord as of the balance sheet date.
The initial terms of the lease arrangements for which the Company was considered the owner are expected to expire in 2023 and 2029. The net book value of landlord-funded construction, replacement cost of pre-existing property, and capitalized interest in property and equipment on the unaudited Consolidated Balance Sheets was $56.6 million as of February 2, 2019. There was also $65.1 million of lease financing obligations as of February 2, 2019 in other long-term liabilities on the unaudited Consolidated Balance Sheets. These amounts were eliminated as part of the adoption of ASC 842.
Rent expense relating to the land was recognized on a straight-line basis. The Company did not report rent expense for the portion of the rent payment determined to be related to the buildings which were owned for accounting purposes. Rather, this
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portion of the rent payment under the lease was recognized as interest expense and a reduction of the lease financing obligations.
In February 2016, the Company amended its lease arrangement with the landlord of the Times Square Flagship store. The amendment provided the landlord with the option to cancel the lease upon sufficient notice through December 31, 2016. The option was never exercised and therefore expired on December 31, 2016. In conjunction with amending the lease, the Company recognized an $11.4 million put option liability that was being amortized through interest expense over the remaining lease term. As of February 2, 2019, the remaining balance related to the put option was $7.5 million of which $6.7 million was included within other long-term liabilities on the Consolidated Balance Sheets. These amounts were eliminated as part of the adoption of ASC 842.

8. Debt
A summary of the Company’s financing activities are as follows:
Revolving Credit Facility
On May 24, 2019, Express Holding, LLC, a wholly-owned subsidiary of the Company (“Express Holding”), and its subsidiaries entered into a First Amendment to the Second Amended and Restated $250.0 million Asset-Based Loan Credit Agreement (“Revolving Credit Facility”). The expiration date of the Revolving Credit Facility is May 24, 2024. As of November 2, 2019, there were no borrowings outstanding and approximately $247.3 million was available for borrowing under the Revolving Credit Facility.
Under the Revolving Credit Facility, revolving loans may be borrowed, repaid, and reborrowed until May 24, 2024, at which time all amounts borrowed must be repaid. Borrowings under the Revolving Credit Facility bear interest at a rate equal to either the rate published by ICE Benchmark Administration Limited (with a floor of 0%) (the “Eurodollar Rate”) plus an applicable margin rate or the highest of (1) Wells Fargo Bank, National Association’s prime lending rate (with a floor of 0%), (2) 0.50% per annum above the federal funds rate (with a floor of 0%) or (3) 1% above the Eurodollar Rate (the “Base Rate”), in each case plus an applicable margin rate. The applicable margin rate is determined based on excess availability as determined by reference to the borrowing base. The applicable margin rate for Eurodollar Rate-based advances is 1.25% or 1.50% and the applicable margin rate for Base Rate-based advances is 0.25% or 0.50%, in each case, based on the borrowing base. Under certain circumstances, a default interest rate will apply on any overdue amount payable under the Revolving Credit Facility during the existence of an event of default at a per annum rate equal to 2.00% above the applicable interest rate for any overdue principal and 2.0% above the rate applicable for Base Rate-based advances for any other overdue interest.
The unused line fee payable under the Revolving Credit Facility is incurred at 0.20% per annum of the average daily unused revolving commitment during each quarter, payable quarterly in arrears on the first day of each May, August, November, and February. In the event that (1) an event of default has occurred and is continuing or (2) excess availability plus eligible cash collateral is less than 10.0% of the borrowing base for 5 consecutive days, such unused line fees are payable on the first day of each month.
Interest payments under the Revolving Credit Facility are due quarterly on the first day of each May, August, November, and February for Base Rate-based advances, provided, however, in the event that (1) an event of default has occurred and is continuing or (2) excess availability plus eligible cash collateral is less than 10.0% of the borrowing base for 5 consecutive days, interest payments are due on the first day of each month. Interest payments under the Revolving Credit Facility are due on the last day of the interest period for Eurodollar Rate-based advances for interest periods of 1, 2, and 3 months, and additionally every 3 months after the first day of the interest period for Eurodollar Rate-based advances for interest periods of greater than 3 months.
The Revolving Credit Facility requires Express Holding and its subsidiaries to maintain a fixed charge coverage ratio of at least 1.0:1.0 if excess availability plus eligible cash collateral is less than 10.0% of the borrowing base for 15 consecutive days. In addition, the Revolving Credit Facility contains customary covenants and restrictions on Express Holding’s and its subsidiaries’ activities, including, but not limited to, limitations on the incurrence of additional indebtedness, liens, negative pledges, guarantees, investments, loans, asset sales, mergers, acquisitions, prepayment of other debt, distributions, dividends, the repurchase of capital stock, transactions with affiliates, the ability to change the nature of its business or fiscal year, and permitted business activities. All obligations under the Revolving Credit Facility are guaranteed by Express Holding and its domestic subsidiaries (that are not borrowers) and secured by a lien on, among other assets, substantially all working capital assets including cash, accounts receivable, and inventory of Express Holding and its domestic subsidiaries.
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Letters of Credit
The Company may enter into stand-by letters of credit (“stand-by LCs”) on an as-needed basis to secure payment obligations for merchandise purchases and other general and administrative expenses. As of November 2, 2019 and February 2, 2019, outstanding stand-by LCs totaled $2.7 million and $3.0 million, respectively.

9. Share-Based Compensation
The Company records the fair value of share-based payments to employees in the unaudited Consolidated Statements of Income and Comprehensive Income as compensation expense, net of forfeitures, over the requisite service period. The Company issues shares of common stock from treasury stock upon exercise of stock options and vesting of restricted stock units, including those with performance conditions.
Share-Based Compensation Plans
In 2010, the Board approved, and the Company implemented, the Express, Inc. 2010 Incentive Compensation Plan (as amended, the "2010 Plan"). The 2010 Plan authorized the Compensation Committee (the "Committee") of the Board and its designees to offer eligible employees and directors cash and stock-based incentives as deemed appropriate in order to attract, retain, and reward such individuals.

As of April 30, 2018, upon the recommendation of the Committee, the Board unanimously approved and adopted, subject to stockholder approval, the Express, Inc. 2018 Incentive Compensation Plan (the “2018 Plan”) to replace the 2010 Plan. On June 13, 2018, stockholders of the Company approved the 2018 Plan and all grants made subsequent to that approval will be made under the 2018 Plan, other than inducement grants made under the NYSE listing standards, which do not require stockholder approval but are otherwise subject to the terms and conditions of the 2018 Plan. In the third quarter of 2019, in connection with updates made by the Company to its policy regarding the clawback of incentive compensation awarded to associates, the Board approved an amendment to the 2018 Plan, solely for the purpose of updating the language regarding the recoupment of an Award granted under the 2018 Plan.

The following summarizes share-based compensation expense:

Thirteen Weeks EndedThirty-Nine Weeks Ended
November 2, 2019November 3, 2018November 2, 2019November 3, 2018
(in thousands)
Restricted stock units$2,088  $3,015  $6,417  $9,347  
Stock options304  255  468  842  
Performance-based restricted stock units16  280  319  627  
Total share-based compensation$2,408  $3,550  $7,204  $10,816  
The stock compensation related income tax benefit recognized by the Company during the thirteen and thirty-nine weeks ended November 2, 2019 was $0.1 million and $1.7 million, respectively. The stock compensation related income tax benefit recognized by the Company during the thirteen and thirty-nine weeks ended November 3, 2018 was negligible and $2.5 million, respectively.
Restricted Stock Units
During the thirty-nine weeks ended November 2, 2019, the Company granted restricted stock units (“RSUs”) under the terms of the 2018 Plan. The fair value of RSUs is determined based on the Company’s closing stock price on the day prior to the grant date in accordance with the 2018 Plan. The RSUs granted in 2019, in general, vest ratably over four years and the expense related to these RSUs will be recognized using the straight-line attribution method over this vesting period.
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The Company’s activity with respect to RSUs, including awards with performance conditions granted prior to 2018, for the thirty-nine weeks ended November 2, 2019 was as follows:

Number of
Shares
Grant Date
Weighted Average
Fair Value Per Share
(in thousands, except per share amounts)
Unvested, February 2, 2019
3,064  $8.95  
Granted3,830  $3.70  
Vested(1,172) $10.17  
Forfeited(1,052) $6.43  
Unvested, November 2, 2019
4,670  $4.91  
The total fair value of RSUs that vested during the thirty-nine weeks ended November 2, 2019 was $11.9 million. As of November 2, 2019, there was approximately $16.7 million of total unrecognized compensation expense related to unvested RSUs, which is expected to be recognized over a weighted-average period of approximately 1.8 years.
Stock Options
The Company’s activity with respect to stock options during the thirty-nine weeks ended November 2, 2019 was as follows:

Number of
Shares
Grant Date
Weighted Average
Exercise Price Per Share
Weighted-Average Remaining Contractual Life (in years)Aggregate Intrinsic Value
(in thousands, except per share amounts and years)
Outstanding, February 2, 20192,379  $16.40  
Granted2,320  $2.60  
Exercised  $  
Forfeited or expired(642) $15.09  
Outstanding, November 2, 2019
4,057  $8.71  7.0$1,624  
Expected to vest at November 2, 2019
2,268  $2.97  9.6$1,517  
Exercisable at November 2, 2019
1,634  $17.25  3.3$  
The following provides additional information regarding the Company's stock options:

Thirty-Nine Weeks Ended
November 2, 2019
(in thousands, except per share amounts)
Weighted average grant date fair value of options granted (per share)$1.25  
Total intrinsic value of options exercised$  
As of November 2, 2019, there was approximately $2.6 million of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted average period of approximately 1.9 years.
The Company uses the Black-Scholes-Merton option-pricing model to value stock options granted to employees. The Company's determination of the fair value of stock options is affected by the Company's stock price as well as a number of subjective and complex assumptions. These assumptions include the risk-free interest rate, the Company's expected stock price volatility over the term of the award, expected term of the award, and dividend yield.
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The fair value of stock options was estimated at the grant date using the Black-Scholes-Merton option pricing model with the following weighted-average assumptions:
Thirty-Nine Weeks Ended
November 2, 2019
Risk-free interest rate (1)
1.93 %
Price volatility (2)
47.27 %
Expected term (years) (3)
6.29
Dividend yield (4)
  
(1)Represents the yield on U.S. Treasury securities with a term consistent with the expected term of the stock options.
(2)Primarily based on the historical volatility of the Company's common stock over a period consistent with the expected term of the stock options.
(3)Calculated using the midpoint scenario, which combines historical exercise data with hypothetical exercise data for outstanding options. The Company believes this data currently represents the best estimate of the expected term of granted employee stock options.
(4)The Company does not currently plan on paying regular dividends.
Performance-based Restricted Stock Units
In the first quarter of 2018, the Company granted performance shares to a limited number of senior executive-level employees, which entitle these employees to receive a specified number of shares of the Company’s common stock upon vesting. The number of shares earned could range between 0% and 200% of the target amount depending upon performance achieved over a three-year vesting period. The performance conditions of the award include adjusted diluted earnings per share (EPS) targets and total shareholder return (TSR) of the Company’s common stock relative to a select group of peer companies. As of November 2, 2019, there were 0.2 million shares outstanding of the 2018 performance grant with a grant date fair value of $7.54 per share.
Cash-Settled Awards

In 2019 and 2018, the Company granted cash-settled awards to a limited number of senior executive-level employees. These awards are classified as liabilities, are valued based on the fair value of the award at the grant date and are remeasured at each reporting date until settlement with compensation expense being recognized in proportion to the completed requisite period up until date of settlement. The amount of cash earned could range between 0% and 200% of the target amount depending upon performance achieved over the three-year vesting period. The performance conditions of the award include EPS targets and TSR of the Company’s common stock relative to a select group of peer companies. A Monte Carlo valuation model is used to determine the fair value of the awards. As of November 2, 2019, $1.4 million of total unrecognized compensation cost is expected to be recognized on cash-settled awards over a weighted-average period of 2.1 years.

10. Commitments and Contingencies
In a complaint filed in January 2017 by Mr. Jorge Chacon in the Superior Court for the State of California for the County of Orange, certain subsidiaries of the Company were named as defendants in a representative action alleging violations of California state wage and hour statutes and other labor standards. The lawsuit seeks unspecified monetary damages and attorneys’ fees. In July 2018, former associate Ms. Christie Carr filed suit in Alameda County Superior Court for the State of California naming certain subsidiaries of the Company in a representative action alleging violations of California State wage and hour statutes and other labor standard violations. The lawsuit seeks unspecified monetary damages and attorneys’ fees. On January 28, 2019, Jorge Chacon filed a second representative action in the Superior Court for the State of California for the County of Orange alleging violations of California state wages and hour statutes and other labor standard violations. The lawsuit seeks unspecified monetary damages and attorneys' fees. The Company is vigorously defending itself against these claims and, as of November 2, 2019, has established an estimated liability based on its best estimate of the outcome of the matters.

The Company is subject to various other claims and contingencies arising out of the normal course of business. Management believes that the ultimate liability arising from such claims and contingencies, if any, is not likely to have a material adverse effect on the Company’s results of operations, financial condition, or cash flows.

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11. Investment in Equity Interests
In 2016, the Company made a $10.1 million investment in Homage, LLC, a privately held retail company based in Columbus, Ohio. The non-controlling investment in the entity is being accounted for under the equity method. Under the terms of the agreement governing the investment, the Company’s investment was increased by $0.5 million during the second quarter of both 2018 and 2019, as the result of an accrual of a non-cash preferred yield. This investment is assessed for impairment whenever factors indicate an other than temporary loss in value. Factors providing evidence of such a loss include the fair value of an investment that is less than its carrying value, absence of an ability to recover the carrying value or the investee’s inability to generate income sufficient to justify the carrying value. As a result of this assessment in 2018, the Company determined the carrying value exceeded the fair value and recognized an $8.4 million impairment charge within other expense/(income), net in the Consolidated Statements of Income and Comprehensive Income. In addition, during the second quarter of 2019, the Company recognized an additional $0.5 million impairment charge within other expense/(income), net in the unaudited Consolidated Statements of Income and Comprehensive Income. The remaining $2.7 million investment, inclusive of the $1.5 million preferred yield, is included in other assets on the unaudited Consolidated Balance Sheets. The fair value of the equity method investment was determined based on applying income and market approaches. The income approach relied on the discounted cash flow method and the market approach relied on a market multiple approach considering historical and projected financial results.
12. Stockholders’ Equity
On November 28, 2017, the Board approved a new share repurchase program that authorized the Company to repurchase up to $150.0 million of the Company’s outstanding common stock using available cash (the “2017 Repurchase Program”). Under the 2017 Repurchase Program, the Company may repurchase shares on the open market, including through Rule 10b5-1 plans, in privately negotiated transactions, through block purchases, or otherwise in compliance with applicable laws, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The timing and amount of stock repurchases will depend on a variety of factors, including business and market conditions as well as corporate and regulatory considerations. The share repurchase program may be suspended, modified, or discontinued at any time and the Company has no obligation to repurchase any amount of its common stock under the program. In 2018, the Company repurchased 10.0 million shares of its common stock under the 2017 Repurchase Program for an aggregate amount equal to $83.2 million, including commissions. During the thirteen weeks ended November 2, 2019, the Company repurchased 2.8 million shares of its common stock under the 2017 Repurchase Program for an aggregate amount equal to $8.7 million, including commissions. During the thirty-nine weeks ended November 2, 2019, the Company repurchased 3.7 million shares of its common stock under the 2017 Repurchase Program for an aggregate amount equal to $13.6 million, including commissions. As of November 2, 2019, the Company had approximately $36.2 million remaining under this authorization. In addition, subsequent to November 2, 2019 through December 10, 2019, the Company repurchased an additional 0.6 million shares of its common stock under the 2017 Repurchase Program for an aggregate amount equal to $2.0 million, including commissions.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity, and cash flows of the Company as of the dates and for the periods presented below. The following discussion and analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended February 2, 2019 and our unaudited Consolidated Financial Statements and the related notes included in Item 1 of this Quarterly Report. This discussion contains forward-looking statements that are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors. See “Forward-Looking Statements.”
Overview
Express is a leading fashion brand for women and men. Since 1980, Express has provided the latest apparel and accessories to help customers build a wardrobe for every occasion, offering fashion and quality at an attractive value. The Company operates more than 600 retail and factory outlet stores in the United States and Puerto Rico, as well as an online destination.

Q3 2019 vs. Q3 2018
Net sales decreased 5.1% to $488.5 million
Comparable sales decreased 5%
Comparable retail sales (includes both retail stores and e-commerce sales) decreased 5%
Comparable outlet sales decreased 5%
Gross margin percentage decreased 250 basis points to 28.2%
Operating (loss)/income decreased $16.9 million to a loss of $6.7 million
Net (loss)/income decreased $11.1 million to a loss of $3.1 million
Diluted earnings per share (EPS) decreased $0.16 to a loss of $0.05

The following charts show key performance metrics for the third quarter of 2019 compared to the third quarter of 2018.
 
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Outlook & Third Quarter Update
As we move forward, we will be focused on four foundational elements: product, brand, customer and execution. While we expect our results to remain challenging in the near-term, we believe that by focusing on these foundational elements we have a significant opportunity to improve the trend of the business and return the business to long term profitable growth. The following defines each area and provides an update on each priority for the third quarter:
Product
Express was once seen as a fashion authority and a trusted resource to help customers build their wardrobe. We’ve lost some of that credibility due to product misses. While there are areas of strength in our women’s and men’s assortment, we need to be winning in key categories. To accomplish this, we have identified and taken action in the following areas during the quarter:

Women’s Tops. We’ve had too much depth in older key items and not enough breadth and style diversity. We are conducting tests to understand the impact of optimizing our tops assortment by adding different colors, fabrics, prints and silhouettes and will apply these learnings going forward.

Speed to market. In order to move faster and get more newness in our assortment, we have implemented a new InstaBuy process for both Women’s and Men’s. In addition, we have re-engineered our product development calendar to ensure we can deliver more newness, more often.

Product categorization. We are rethinking the brand’s traditional approach to categorizing our product into four lifestyles based on wearing occasions. Our floorsets now reflect a more edited, integrated, modern approach and provide more inspiration for the customer. Moving forward we will offer more versatility to our customers in building their wardrobes.

Brand
We believe we have an opportunity to clarify our brand purpose and message and more closely connect it to our product strategy to tell our story in a more powerful and consistent way. We have begun work around the articulation of our brand as well as engaging our customers in different and more impactful ways.

Customer
We need to be more effective at retaining existing customers and attracting new ones. We are using a marketing mix model tool to assess where we are spending our marketing dollars and which channels deliver the best return on investment and we are also using multi-touch attribution tool to evaluate the real-time performance of our in-market messages and track the customer’s journey to purchase, both online and offline. In addition, we are enhancing our customer contact strategy with a more personalized approach to email and utilizing advanced analytics to help drive customer retention.

Execution
We need to deliver a better and more consistent experience across channels, and we must reduce our operating expenses. We are in the process of identifying cost savings opportunities, right sizing our expenses and finalizing our fleet rationalization plans. We are also focused on improving the performance of our brick and mortar stores by reducing time spent on non-selling activities and improving conversion and other metrics through improved merchandise flow and a better customer experience.
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Additionally, we have thoroughly assessed our go-to-market strategy and identified a number of opportunities for improvement that we plan to implement going forward, as well as working to right size our inventory and improve turns.

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, 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.

Financial MeasuresDescriptionDiscussion
Net SalesRevenue from the sale of merchandise, less returns and discounts, as well as shipping and handling revenue related to e-commerce, revenue from the rental of our LED sign in Times Square, gift card breakage, revenue earned from our private label credit card agreement, 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 for the third quarter of 2019 were calculated using the 13-week period ended November 2, 2019 as compared to the 13-week period ended November 3, 2018.

Comparable retail sales includes:
Sales from retail stores that were open 12 months or more as of the end of the reporting period
E-commerce sales

Comparable outlet sales includes:
Sales from outlet stores that were open 12 months or more as of the end of the reporting period, including conversions

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
Sales from stores where the store cannot open due to weather damage or other catastrophe

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 products sold by type of product or by channel may also impact our overall cost of goods sold, buying and occupancy costs.
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Financial MeasuresDescriptionDiscussion
Gross Profit/Gross MarginGross profit is net sales minus cost of goods sold, buying and occupancy costs. Gross margin measures gross profit as a percentage of net sales.Gross profit/gross margin is impacted by the price at which we are able to sell our merchandise and the cost of our product.

We review our inventory levels on an on-going basis in order to identify slow-moving merchandise and generally use markdowns to clear such merchandise. The timing and level of markdowns are driven primarily by seasonality and customer acceptance of our merchandise and have a direct effect on our gross margin.

Any marked down merchandise that is not sold is marked-out-of-stock. We use third-party vendors to dispose of this marked-out-of-stock merchandise.
Selling, General, and Administrative Expenses
Includes operating costs not included in cost of goods sold, buying and occupancy costs such as:
Payroll and other expenses related to operations at our corporate offices
Store expenses other than occupancy costs
Marketing expenses, including production, mailing, print, and digital advertising costs, among other things
With the exception of store payroll, certain marketing expenses, and incentive compensation, selling, general, and administrative expenses generally do not vary proportionally with net sales. As a result, selling, general, and administrative expenses as a percentage of net sales are usually higher in lower volume quarters and lower in higher volume quarters.

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Results of Operations
The Third Quarter of 2019 compared to the Third Quarter of 2018
Net Sales
 Thirteen Weeks Ended
 November 2, 2019November 3, 2018
Net sales (in thousands)$488,483  $514,961  
Comparable retail sales (5)%%
Comparable outlet sales(5)%(1)%
Total comparable sales percentage change(5)%— %
Gross square footage at end of period (in thousands)5,319  5,400  
Number of:
Stores open at beginning of period626  631  
New retail stores—  —  
New outlet stores  
Retail stores converted to outlets(3) (2) 
Closed stores(3) —  
Stores open at end of period626  634  
Net sales in the third quarter of 2019 decreased approximately $26.5 million compared to the third quarter of 2018. The decrease was primarily attributable to decreases in retail and outlet comparable sales. The decrease in retail comparable sales was the result of decreased traffic at our retail stores and a decrease in the number of transactions. In addition, our retail sales were negatively impacted by our decision to strategically reduce the number of store-wide and site-wide promotions. The decrease in our outlet comparable sales was the result of decreased traffic and a lower average selling price.
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Gross Profit
The following table shows cost of goods sold, buying and occupancy costs, gross profit in dollars, and gross margin percentage for the stated periods:

 Thirteen Weeks Ended
November 2, 2019November 3, 2018
(in thousands, except percentages)
Cost of goods sold, buying and occupancy costs$350,810  $356,812  
Gross profit$137,673  $158,149  
Gross margin percentage28.2 %30.7 %
The 250 basis point decrease in gross margin percentage, or gross profit as a percentage of net sales, in the third quarter of 2019 compared to the third quarter of 2018 was comprised of a 140 basis point decrease in merchandise margin and a 110 basis point increase in buying and occupancy costs as a percentage of net sales. The decrease in merchandise margin was primarily driven by actions to move through clearance inventory and product that did not fit with our evolving product strategy. This was partially offset by being more strategic with our promotional activity during the quarter. The increase in buying and occupancy costs as a percentage of net sales was primarily the result of the decrease in sales.
Selling, General, and Administrative Expenses
The following table shows selling, general, and administrative expenses in dollars and as a percentage of net sales for the stated periods:

 Thirteen Weeks Ended
November 2, 2019November 3, 2018
(in thousands, except percentages)
Selling, general, and administrative expenses$144,301  $148,294  
Selling, general, and administrative expenses, as a percentage of net sales29.5 %28.8 %
The $4.0 million decrease in selling, general, and administrative expenses in the third quarter of 2019 as compared to the third quarter of 2018 was the result of decreased store payroll of $2.1 million, marketing expenses of $2.0 million and home office payroll, including incentive and stock-based compensation, of $1.2 million. These decreases were partially offset by a $1.8 million increase in professional fees.
Income Tax (Benefit)/Expense
The following table shows income tax (benefit)/expense in dollars for the stated periods:

 Thirteen Weeks Ended
 November 2, 2019November 3, 2018
 (in thousands)
Income tax (benefit)/expense$(2,880) $2,203  
The effective tax rate was 48.1% for the thirteen weeks ended November 2, 2019 compared to 21.7% for the thirteen weeks ended November 3, 2018. The effective tax rate for the thirteen weeks ended November 2, 2019 reflects a $1.4 million change in estimate from the second quarter provision due to an increase from the previously forecasted annual effective tax rate. The effective tax rate, excluding discrete items, was 44.0% and 28.1% for the thirteen weeks ended November 2, 2019 and November 3, 2018, respectively. The effective tax rate in the third quarter of 2019 was higher than the statutory tax rate primarily due to the previously mentioned change in estimate from the second quarter provision. Refer to Note 6 in our unaudited Consolidated Financial Statements for further discussion regarding the method for determining the income tax benefit for the thirteen weeks ended November 2, 2019.
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The Thirty-Nine Weeks Ended November 2, 2019 compared to the Thirty-Nine Weeks Ended November 3, 2018
Net Sales
 Thirty-Nine Weeks Ended
 November 2, 2019November 3, 2018
Net sales (in thousands)$1,412,469  $1,487,918  
Comparable retail sales (7)%%
Comparable outlet sales(3)%%
Total comparable sales percentage change(6)%%
Gross square footage at end of period (in thousands)5,319  5,400  
Number of:
Stores open at beginning of period631  635  
New retail stores—  —  
New outlet stores31  36  
Retail stores converted to outlets(27) (29) 
Closed stores(9) (8) 
Stores open at end of period626  634  
Net sales during the thirty-nine weeks ended November 2, 2019 decreased approximately $75.4 million compared to the thirty-nine weeks ended November 3, 2018. The decrease was primarily attributable to decreases in retail and outlet comparable sales, offset in part by increases in non-comparable sales and other revenue in the thirty-nine weeks ended November 2, 2019 compared to the thirty-nine weeks ended November 3, 2018. The decrease in retail comparable sales was the result of decreased traffic at our retail and outlet stores, as well as increased promotional activity at our stores and on our website.
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Gross Profit
The following table shows cost of goods sold, buying and occupancy costs, gross profit in dollars, and gross margin percentage for the stated periods:

 Thirty-Nine Weeks Ended
November 2, 2019November 3, 2018
(in thousands, except percentages)
Cost of goods sold, buying and occupancy costs$1,025,795  $1,046,204  
Gross profit$386,674  $441,714  
Gross margin percentage27.4 %29.7 %
The 230 basis point decrease in gross margin percentage, or gross profit as a percentage of net sales, in the thirty-nine weeks ended November 2, 2019 compared to the thirty-nine weeks ended November 3, 2018 was comprised of a 100 basis point decrease in merchandise margin and a 130 basis point increase in buying and occupancy costs as a percentage of net sales. The decrease in merchandise margin was primarily driven by valuation reserves on slow moving inventory and the actions we took during the first three quarters to sell through clearance inventory and inventory not aligned with our product strategy going forward. The reduction in store-wide and site-wide promotional activity in the latter half of the first quarter of 2019 that continued through the third quarter partially offset this decrease. The increase in buying and occupancy costs as a percentage of net sales was primarily the result of the decrease in sales.
Selling, General, and Administrative Expenses
The following table shows selling, general, and administrative expenses in dollars and as a percentage of net sales for the stated periods:

 Thirty-Nine Weeks Ended
November 2, 2019November 3, 2018
(in thousands, except percentages)
Selling, general, and administrative expenses$415,391  $426,583  
Selling, general, and administrative expenses, as a percentage of net sales29.4 %28.7 %
The $11.2 million decrease in selling, general, and administrative expenses in the thirty-nine weeks ended November 2, 2019 as compared to the thirty-nine weeks ended November 3, 2018 was the result of decreased home office payroll, including incentive compensation, of $7.5 million. In addition, there was a decrease in marketing costs of $5.3 million. These decreases were partially offset by a $5.6 million increase in professional fees.
Income Tax (Benefit)/Expense
The following table shows income tax (benefit)/expense in dollars for the stated periods:

 Thirty-Nine Weeks Ended
 November 2, 2019November 3, 2018
 (in thousands)
Income tax (benefit)/expense$(3,062) $5,268  
The effective tax rate was 11.9% for the thirty-nine weeks ended November 2, 2019 compared to 33.0% for the thirty-nine weeks ended November 3, 2018. The effective tax rate for the thirty-nine weeks ended November 2, 2019 reflects a tax benefit from a pre-tax loss offset by $2.6 million of discrete tax expense related to a tax shortfall for share-based compensation. The effective tax rate for the thirty-nine weeks ended November 3, 2018 reflects $1.3 million of discrete tax expense related to a tax shortfall for share-based compensation. The effective tax rate, excluding discrete items, was 20.5% and 28.4% for the thirty-nine weeks ended November 2, 2019 and November 3, 2018, respectively. The effective tax rate for the current year is lower than the statutory tax rate primarily due to non-deductible executive compensation. Refer to Note 6 in our unaudited Consolidated Financial Statements for further discussion regarding the method for determining the income tax benefit for the thirty-nine weeks ended November 2, 2019.

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Non-GAAP Financial Measures
We supplement the reporting of our financial information determined under United States generally accepted accounting principles (GAAP) with certain non-GAAP financial measures: adjusted net loss, adjusted operating loss, and adjusted diluted earnings per share. We believe that these non-GAAP measures provide additional useful information to assist stockholders in understanding our financial results and assessing our prospects for future performance. Management believes adjusted net loss, adjusted operating loss, and adjusted diluted earnings per share are important indicators of our business performance because they exclude items that may not be indicative of, or are unrelated to, our underlying operating results, and provide a better baseline for analyzing trends in our business. In addition, adjusted diluted earnings per share is used as a performance measure in our long-term executive compensation program for purposes of determining the number of equity awards that are ultimately earned and adjusted operating loss is a metric used in our short-term cash incentive compensation plan. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. These adjusted financial measures should not be considered in isolation or as a substitute for reported net loss, operating loss or diluted earnings per share. These non-GAAP financial measures reflect an additional way of viewing our operations that, when viewed with the GAAP results and the below reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of our business. Management strongly encourages investors and stockholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

The tables below reconcile the non-GAAP financial measures, adjusted net loss, adjusted operating loss, and adjusted diluted earnings per share, with the most directly comparable GAAP financial measures, net loss, operating loss, and diluted earnings per share for the thirteen and thirty-nine weeks ended November 2, 2019.

Thirteen Weeks Ended November 2, 2019
(in thousands, except per share amounts)Operating LossIncome Tax ImpactNet LossDiluted Earnings per ShareWeighted Average Diluted Shares Outstanding
Reported GAAP Measure$(6,675) $(3,105) $(0.05) 66,438  
Impact of Executive Departures1,716  (401) 1,315  0.02  
Adjusted Non-GAAP Measure$(4,959) $(1,790) $(0.03) 66,438  


Thirty-Nine Weeks Ended November 2, 2019
(in thousands, except per share amounts)Operating LossIncome Tax ImpactNet LossDiluted Earnings per ShareWeighted Average Diluted Shares Outstanding
Reported GAAP Measure$(27,989) $(22,742) $(0.34) 66,845  
Impact of CEO Departure—  822  (a) 822  0.01  
Impact of Executive Departures1,716  (401) 1,315  0.02  
Adjusted Non-GAAP Measure$(26,273) $(20,605) $(0.31) 66,845  
(a)Represents the tax impact of the expiration of the former CEO's non-qualified stock options.
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Liquidity and Capital Resources
A summary of cash provided by or used in operating, investing, and financing activities is shown in the following table:

 Thirty-Nine Weeks Ended
November 2, 2019November 3, 2018
 (in thousands)
Provided by operating activities  $32,834  $18,315  
Used in investing activities  (20,503) (32,402) 
Used in financing activities  (16,086) (60,946) 
Decrease in cash and cash equivalents(3,755) (75,033) 
Cash and cash equivalents at end of period$167,915  $161,189  
Our business relies on cash flows from operations as our primary source of liquidity, with the majority of those cash flows being generated in the fourth quarter of the year. Our primary operating cash needs are for merchandise inventories, payroll, store rent and marketing. For the thirty-nine weeks ended November 2, 2019, our cash flows provided by operating activities were $32.8 million compared to $18.3 million provided by operating activities for the thirty-nine weeks ended November 3, 2018. This $14.5 million increase in cash flows from operating activities for the thirty-nine weeks ended November 2, 2019 was primarily driven by lower inventory purchases in 2019 and the timing of payments on accounts payable balances, partially offset by $33.5 million lower net income for the thirty-nine weeks ended November 2, 2019.
In addition to cash flows from operations, we have access to additional liquidity, if needed, through borrowings under our Revolving Credit Facility. As of November 2, 2019, we had $247.3 million available for borrowing under our Revolving Credit Facility. On May 24, 2019, we amended and restated our Revolving Credit Facility. The borrowing capacity under the facility remains at $250.0 million but the expiration date of the facility has been extended to May 24, 2024. Refer to Note 8 to our unaudited Consolidated Financial Statements for additional information on our Revolving Credit Facility.
We also use cash for capital expenditures and financing transactions. For the thirty-nine weeks ended November 2, 2019, we had capital expenditures of approximately $20.5 million. These relate primarily to store remodels, new outlet stores, and information technology projects to support our strategic business initiatives. We expect capital expenditures for the remainder of 2019 to be approximately $15.0 million to $18.0 million, primarily driven by store remodels and investments in information technology. These capital expenditures do not include the impact of landlord allowances, which are expected to be approximately $0.4 million for the remainder of 2019.
On November 28, 2017, the Board approved a new share repurchase program that authorizes us to repurchase up to $150.0 million of our outstanding common stock using available cash. During the thirty-nine weeks ended November 2, 2019 and the thirty-nine weeks ended November 3, 2018, we repurchased 3.7 million shares and 6.5 million shares under the share repurchase program, respectively, for aggregate amounts equal to $13.6 million and $56.2 million, including commissions, respectively. As of November 2, 2019, we had approximately $36.2 million remaining under the share repurchase program. In addition, subsequent to November 2, 2019 through December 10, 2019, the Company repurchased an additional 0.6 million shares of its common stock under the 2017 Repurchase Program for an aggregate amount equal to $2.0 million, including commissions.

Our liquidity position benefits from the fact that we generally collect cash from sales to customers the same day or, in the case of credit or debit card transactions, within three to five days of the related sale, and we have up to 75 days to pay certain merchandise vendors and 45 days to pay the majority of our non-merchandise vendors.
We believe that cash generated from future operations and the availability of borrowings under our Revolving Credit Facility will be sufficient to meet working capital requirements and anticipated capital expenditures for at least the next 12 months.
Contractual Obligations
Our contractual obligations and other commercial commitments did not change materially between February 2, 2019 and November 2, 2019. For additional information regarding our contractual obligations as of February 2, 2019, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended February 2, 2019.
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Critical Accounting Policies
Management has determined that our most critical accounting policies are those related to revenue recognition, merchandise inventory valuation, long-lived asset valuation, claims and contingencies, and income taxes. We continue to monitor our accounting policies to ensure proper application of current rules and regulations. Other than the adoption of the new leasing standard discussed in Note 7 to our unaudited Consolidated Financial Statements, there have been no significant changes to the policies discussed in our Annual Report on Form 10-K for the year ended February 2, 2019.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
Our Revolving Credit Facility bears interest at variable rates, however, we did not borrow any amounts under the Revolving Credit Facility during the thirty-nine weeks ended November 2, 2019. Changes in interest rates are not expected to have a material impact on our future earnings or cash flows given our limited exposure to such changes.

ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934) that are designed to provide reasonable assurance that information required to be disclosed in our Securities Exchange Act of 1934 reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost benefit relationship of possible controls and procedures.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation prior to filing this report of our disclosure controls and procedures. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of November 2, 2019.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) that occurred during the third quarter of 2019 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.
Information relating to legal proceedings is set forth in Note 10 to our unaudited Consolidated Financial Statements included in Part I of this Quarterly Report and is incorporated herein by reference.

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ITEM 1A.RISK FACTORS.
In addition to the other information set forth in this Quarterly Report, careful consideration should be given to the risk factors set forth in “Item 1A. Risk Factors”, of our Annual Report on Form 10-K for the year ended February 2, 2019, any of which could materially affect our business, operations, financial position, stock price, or future results. The risks described herein and in our Annual Report on Form 10-K for the year ended February 2, 2019, are important to an understanding of the statements made in this Quarterly Report, in our other filings with the SEC, and in any other discussion of our business. These risk factors, which contain forward-looking information, should be read in conjunction with “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and the unaudited Consolidated Financial Statements and related notes included in this Quarterly Report.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
The following table provides information regarding the purchase of shares of our common stock made by or on behalf of the Company or any “affiliated purchaser” as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, during each month of the quarterly period ended November 2, 2019:

Month
Total Number of Shares Purchased(1)
Average Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs(2)
(in thousands, except per share amounts) 
August 4, 2019 - August 31, 2019 $1.86  —  $44,885  
September 1, 2019 - October 5, 20191,535  $2.99  1,535  $40,316  
October 6, 2019 - November 2, 20191,285  $3.24  1,269  $36,213  
Total2,821  2,804  
(1) Includes shares purchased in connection with employee tax withholding obligations and shares issued under the 2010 Plan.
(2) On November 28, 2017, the Board approved a share repurchase program that authorizes the Company to repurchase up to $150 million of the Company’s outstanding common stock using available cash. The Company may repurchase shares on the open market, including through Rule 10b5-1 plans, in privately negotiated transactions, through block purchases, or otherwise in compliance with applicable laws, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The timing and amount of stock repurchases will depend on a variety of factors, including business and market conditions as well as corporate and regulatory considerations. The share repurchase program may be suspended, modified, or discontinued at any time and the Company has no obligation to repurchase any amount of its common stock under the program.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.

ITEM 5.  OTHER INFORMATION.
None.

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ITEM 6. EXHIBITS.
Exhibits. The following exhibits are filed or furnished with this Quarterly Report:
Exhibit
Number
Exhibit Description
 10.1*
Amended and Restated Express, Inc. 2018 Incentive Compensation Plan.
 10.2
Letter Agreement, dated as of September 23, 2019, between Express and Matthew Moellering (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on September 23, 2019).
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH*Inline XBRL Taxonomy Extension Schema Document.
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
* Filed herewith.



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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
Date:December 11, 2019EXPRESS, INC.
By:/s/ Periclis Pericleous  
Periclis Pericleous
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)


34
Document

EXHIBIT 10.1

AMENDED AND RESTATED EXPRESS, INC. 2018 INCENTIVE COMPENSATION PLAN

ARTICLE I
PURPOSE

The purpose of this Express, Inc. 2018 Incentive Compensation Plan is to enhance the profitability and value of the Company for the benefit of its stockholders by enabling the Company to offer Eligible Individuals cash and stock-based incentives in order to attract, retain and reward such individuals and strengthen the mutuality of interests between such individuals and the Company’s stockholders. The Plan is effective as of the date set forth in Article XV.

ARTICLE II
DEFINITIONS

For purposes of this Plan, the following terms shall have the following meanings:

2.1 “Acquisition Event has the meaning set forth in Section 4.2(d).

2.2 “Affiliate means each of the following: (a) any Subsidiary; (b) any Parent; (c) any corporation, trade or business (including, without limitation, a partnership or limited liability company) which is directly or indirectly controlled 50% or more (whether by ownership of stock, assets or an equivalent ownership interest or voting interest) by the Company or one of its Affiliates; (d) any trade or business (including, without limitation, a partnership or limited liability company) which directly or indirectly controls 50% or more (whether by ownership of stock, assets or an equivalent ownership interest or voting interest) of the Company; and (e) any other entity in which the Company or any of its Affiliates has a material equity interest and which is designated as an “Affiliate” by resolution of the Committee; provided that, unless otherwise determined by the Committee, the Common Stock subject to any Award constitutes “service recipient stock” for purposes of Section 409A of the Code or otherwise does not subject the Award to Section 409A of the Code.

2.3 “Award means any award under the Plan of any Stock Option, Stock Appreciation Right, Restricted Stock, Performance Award or Other Stock-Based Award or Other Cash-Based Award. All Awards shall be granted by, confirmed by, and subject to the terms of, a written agreement executed by the Company and the Participant.

2.4 “Award Agreement means the written or electronic agreement setting forth the terms and conditions applicable to an Award. Evidence of an Award may be limited to notation on the books and records of the Company and, with the approval of the Board, need not be signed by a representative of the Company or a Participant.

2.5 “Board means the Board of Directors of the Company.

2.6 “Cause means, unless otherwise determined by the Committee in the applicable Award Agreement, with respect to a Participant’s Termination of Employment or Termination of Consultancy, the following: (a) in the case where there is no employment agreement, consulting agreement, change in control agreement or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award (or where there is such an agreement but it does not define “cause” (or words of like import)), termination due to a Participant’s, dishonesty, fraud, moral turpitude, willful misconduct or refusal to perform his or her duties or responsibilities for any reason other than illness or incapacity, as determined by the Committee in its sole discretion; or (b) in the case where there is an employment agreement, consulting agreement, change in control agreement or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award that defines “cause” (or words of like import), “cause” as defined under such agreement; provided, however, that with regard to any agreement under which the definition of “cause” only applies on occurrence of a change in control, such definition of “cause” shall not apply until a change in control actually takes place and then only with regard to a termination thereafter. With respect to a Participant’s Termination of Directorship, “cause” means an act or failure to act that constitutes cause for removal of a director under applicable Delaware law.

2.7 “Change in Control has the meaning set forth in 11.2.

2.8 “Change in Control Price has the meaning set forth in Section 11.1.




2.9 “Codemeans the Internal Revenue Code of 1986, as amended. Any reference to any section of the Code shall also be a reference to any successor provision and any Treasury Regulation promulgated thereunder.

2.10 “Committeemeans any committee of the Board duly authorized by the Board to administer the Plan. If no committee is duly authorized by the Board to administer the Plan, the term “Committee” shall be deemed to refer to the Board for all purposes under the Plan.

2.11 “Common Stockmeans the Common Stock, $0.01 par value per share, of the Company.

2.12 “Companymeans Express, Inc., a Delaware corporation, and its successors by operation of law.

2.13 “Consultantmeans any natural person who is an advisor or consultant to the Company or its Affiliates; provided that such person satisfies the Form S-8 definition of an “employee.”

2.14 “Detrimental Activity means, unless otherwise determined by the Committee, in the applicable Award Agreement: (a) the disclosure to anyone outside the Company or its Affiliates, or the use in any manner other than in the furtherance of the Company’s or its Affiliate’s business, without written authorization from the Company, of any confidential information, trade secrets or proprietary information, relating to the business of the Company or its Affiliates that is acquired by a Participant prior to the Participant’s Termination; (b) activity while employed or performing services that results, or if known could result, in the Participant’s Termination that is classified by the Company as a termination for Cause; (c) any attempt, directly or indirectly, to solicit, induce or hire (or the identification for solicitation, inducement or hiring of) any employee of the Company or its Affiliates to be employed by, or to perform services for, the Participant or any person or entity with which the Participant is associated (including, but not limited to, due to the Participant’s employment by, consultancy for, equity interest in, or creditor relationship with such person or entity) or any person or entity from which the Participant receives direct or indirect compensation or fees as a result of such solicitation, inducement or hire (or the identification for solicitation, inducement or hire) without, in all cases, written authorization from the Company; (d) any attempt, directly or indirectly, to solicit in a competitive manner any customer or prospective customer of the Company or its Affiliates at the time of a Participant’s Termination, without, in all cases, written authorization from the Company; (e) the Participant’s Disparagement, or inducement of others to do so, of the Company or its Affiliates or their past and present officers, directors, employees or products; or (f) breach of any agreement between the Participant and the Company or an Affiliate (including, without limitation, any employment agreement or noncompetition or nonsolicitation agreement). For purposes of sub-sections (a), (c), and (d) above, the General Counsel, Chief Operating Officer, Senior Vice President of Human Resources or the Chief Executive Officer of the Company shall have authority to provide the Participant, except for himself or herself, with written authorization to engage in the activities contemplated thereby and no other person shall have authority to provide the Participant with such authorization.

2.15 “Disabilitymeans, unless otherwise determined by the Committee in the applicable Award Agreement, with respect to a Participant’s Termination, a permanent and total disability as defined in Section 22(e)(3) of the Code. A Disability shall only be deemed to occur at the time of the determination by the Committee of the Disability. Notwithstanding the foregoing, for Awards that are subject to Section 409A of the Code, Disability shall mean that a Participant is disabled under Section 409A(a)(2)(C)(i) or (ii) of the Code.

2.16 “Disparagementmeans making comments or statements to the press, the Company’s or its Affiliates’ employees, consultants or any individual or entity with whom the Company or its Affiliates has a business relationship which could reasonably be expected to adversely affect in any manner: (a) the conduct of the business of the Company or its Affiliates (including, without limitation, any products or business plans or prospects); or (b) the business reputation of the Company or its Affiliates, or any of their products, or their past or present officers, directors or employees.

2.17 “Effective Datemeans the effective date of the Plan as defined in Article XV.

2.18 “Eligible Employeemeans each employee of the Company or an Affiliate.

2.19 “Eligible Individualmeans an Eligible Employee, Non-Employee Director or Consultant who is designated by the Committee in its discretion as eligible to receive Awards subject to the conditions set forth herein.

2.20 “Exchange Actmeans the Securities Exchange Act of 1934, as amended. Reference to a specific section of the Exchange Act or regulation thereunder shall include such section or regulation, any valid regulation or



interpretation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.

2.21 “Fair Market Valuemeans, for purposes of the Plan, unless otherwise required by any applicable provision of the Code or any regulations issued thereunder, as of any date and except as provided below, the last sales price reported for the Common Stock on the applicable date: (a) as reported on the principal national securities exchange in the United States on which it is then traded or (b) if the Common Stock is not traded, listed or otherwise reported or quoted, the Committee shall determine in good faith the Fair Market Value in whatever manner it considers appropriate taking into account the requirements of Section 409A of the Code. For purposes of the grant of any Award, the applicable date shall be the trading day immediately prior to the date on which the Award is granted. For purposes of the exercise of any Award, the applicable date shall be the date a notice of exercise is received by the Committee or, if not a day on which the applicable market is open, the next day that it is open.

2.22 “Family Membermeans “family member” as defined in Section A.1.(5) of the general instructions of Form S-8.

2.23 “Incentive Stock Optionmeans any Stock Option awarded to an Eligible Employee of the Company, its Subsidiaries and its Parents (if any) under this Plan intended to be and designated as an “Incentive Stock Option” within the meaning of Section 422 of the Code.

2.24 “Merger Eventhas the meaning set forth in Section 4.2(b).

2.25 “Non-Employee Directormeans a director or a member of the Board of the Company or any Affiliate who is not an active employee of the Company or any Affiliate.

2.26 “Non-Qualified Stock Optionmeans any Stock Option awarded under the Plan that is not an Incentive Stock Option.

2.27 “Non-Tandem Stock Appreciation Rightshall mean the right to receive an amount in cash and/or stock equal to the difference between (x) the Fair Market Value of a share of Common Stock on the date such right is exercised, and (y) the aggregate exercise price of such right, otherwise than on surrender of a Stock Option.

2.28 “Other Cash-Based Award means an Award granted pursuant to Section 10.3 of the Plan and payable in cash at such time or times and subject to such terms and conditions as determined by the Committee in its sole discretion.

2.29 “Other Stock-Based Awardmeans an Award under Article X of the Plan that is valued in whole or in part by reference to, or is payable in or otherwise based on, Common Stock, including, without limitation, an Award valued by reference to an Affiliate.

2.30 “Parentmeans any parent corporation of the Company within the meaning of Section 424(e) of the Code.

2.31 “Participantmeans an Eligible Individual to whom an Award has been granted pursuant to the Plan.

2.32 “Performance Awardmeans an Award granted to a Participant pursuant to Article IX hereof contingent upon achieving certain Performance Goals.

2.33 “Performance Goalsmeans goals established by the Committee as contingencies for Awards to vest and/or become exercisable or distributable based on one or more of the performance goals set forth in Exhibit A hereto.

2.34 “Performance Periodmeans the designated period during which the Performance Goals must be satisfied with respect to the Award to which the Performance Goals relate.

2.35 “Planmeans this Express, Inc. 2018 Incentive Compensation Plan, as amended from time to time.

2.36 “Prior Planmeans the Express, Inc. 2010 Incentive Compensation Plan, as amended and restated from time to time.




2.37 “Reference Stock Optionhas the meaning set forth in Section 7.1.

2.38 “Restricted Stockmeans an Award of shares of Common Stock under the Plan that is subject to restrictions under Article VIII.

2.39 “Restriction Periodhas the meaning set forth in Section 8.3(a) with respect to Restricted Stock.

2.40 “Rule 16b-3means Rule 16b-3 under Section 16(b) of the Exchange Act as then in effect or any successor provision.

2.41 “Section 409A of the Codemeans the nonqualified deferred compensation rules under Section 409A of the Code and any applicable treasury regulations and other official guidance thereunder.

2.42 “Securities Actmeans the Securities Act of 1933, as amended and all rules and regulations promulgated thereunder. Reference to a specific section of the Securities Act or regulation thereunder shall include such section or regulation, any valid regulation or interpretation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.

2.43 “Stock Appreciation Rightshall mean the right pursuant to an Award granted under Article VII.

2.44 “Stock Option” or “Optionmeans any option to purchase shares of Common Stock granted to Eligible Individuals granted pursuant to Article VI.

2.45 “Subsidiarymeans any subsidiary corporation of the Company within the meaning of Section 424(f) of the Code.

2.46 “Substitute Awardhas the meaning set forth in Section 4.4.

2.47 “Tandem Stock Appreciation Rightshall mean the right to surrender to the Company all (or a portion) of a Stock Option in exchange for an amount in cash and/or stock equal to the difference between (i) the Fair Market Value on the date such Stock Option (or such portion thereof) is surrendered, of the Common Stock covered by such Stock Option (or such portion thereof), and (ii) the aggregate exercise price of such Stock Option (or such portion thereof).

2.48 “Ten Percent Stockholdermeans a person owning stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company, its Subsidiaries or its Parent.

2.49 “Terminationmeans a Termination of Consultancy, Termination of Directorship or Termination of Employment, as applicable.

2.50 “Termination of Consultancymeans: (a) that the Consultant is no longer acting as a consultant to the Company or an Affiliate; or (b) when an entity which is retaining a Participant as a Consultant ceases to be an Affiliate unless the Participant otherwise is, or thereupon becomes, a Consultant to the Company or another Affiliate at the time the entity ceases to be an Affiliate. In the event that a Consultant becomes an Eligible Employee or a Non-Employee Director upon the termination of his or her consultancy, unless otherwise determined by the Committee, in its sole discretion, no Termination of Consultancy shall be deemed to occur until such time as such Consultant is no longer a Consultant, an Eligible Employee or a Non-Employee Director. Notwithstanding the foregoing, the Committee may otherwise define Termination of Consultancy in the Award Agreement or, if no rights of a Participant are reduced, may otherwise define Termination of Consultancy thereafter, provided that any such change to the definition of the term “Termination of Consultancy” does not subject the applicable Stock Option to Section 409A of the Code.

2.51 “Termination of Directorshipmeans that the Non-Employee Director has ceased to be a director of the Company; except that if a Non-Employee Director becomes an Eligible Employee or a Consultant upon the termination of his or her directorship, his or her ceasing to be a director of the Company shall not be treated as a Termination of Directorship unless and until the Participant has a Termination of Employment or Termination of Consultancy, as the case may be.

2.52 “Termination of Employmentmeans: (a) a termination of employment (for reasons other than a military or personal leave of absence granted by the Company) of a Participant from the Company and its Affiliates; or (b) when an entity which is employing a Participant ceases to be an Affiliate, unless the Participant otherwise is, or



thereupon becomes, employed by the Company or another Affiliate at the time the entity ceases to be an Affiliate. In the event that an Eligible Employee becomes a Consultant or a Non-Employee Director upon the termination of his or her employment, unless otherwise determined by the Committee, in its sole discretion, no Termination of Employment shall be deemed to occur until such time as such Eligible Employee is no longer an Eligible Employee, a Consultant or a Non-Employee Director. Notwithstanding the foregoing, the Committee may otherwise define Termination of Employment in the Award Agreement or, if no rights of a Participant are reduced, may otherwise define Termination of Employment thereafter, provided that any such change to the definition of the term “Termination of Employment” does not subject the applicable Stock Option to Section 409A of the Code.

2.53 “Transfermeans: (a) when used as a noun, any direct or indirect transfer, sale, assignment, pledge, hypothecation, encumbrance or other disposition (including the issuance of equity in any entity), whether for value or no value and whether voluntary or involuntary (including by operation of law), and (b) when used as a verb, to directly or indirectly transfer, sell, assign, pledge, encumber, charge, hypothecate or otherwise dispose of (including the issuance of equity in any entity) whether for value or for no value and whether voluntarily or involuntarily (including by operation of law). “Transferred” and “Transferable” shall have a correlative meaning.

ARTICLE III
ADMINISTRATION

3.1 The Committee. The Plan shall be administered and interpreted by the Committee. To the extent required by applicable law, rule or regulation, each member of the Committee shall qualify as (a) a “non-employee director” under Rule 16b-3, and (b) an “independent director” under the rules of any national securities exchange or national securities association, as applicable. If it is later determined that one or more members of the Committee do not so qualify, actions taken by the Committee prior to such determination shall be valid despite such failure to qualify. In the event that any member of the Committee does not qualify as a “non-employee director” for purposes of Section 16 of the Exchange Act, then all compensation that is intended to be exempt from Section 16 will also be approved by the Board or a subcommittee made up of members of the Board who qualify as non-employee directors.

3.2 Grants of Awards. The Committee shall have full authority to grant, pursuant to the terms of this Plan, to Eligible Individuals: (i) Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock, (iv) Performance Awards; (v) Other Stock-Based Awards; and (vi) Other Cash-Based Awards. In particular, the Committee shall have the authority:

(a) to select the Eligible Individuals to whom Awards may from time to time be granted hereunder;

(b) to determine whether and to what extent Awards, or any combination thereof, are to be granted hereunder to one or more Eligible Individuals;

(c) to determine the number of shares of Common Stock or the amount of cash to be covered by each Award granted hereunder;

(d) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder (including, but not limited to, the exercise or purchase price (if any), any restriction or limitation, any vesting schedule or acceleration thereof, or any forfeiture restrictions or waiver thereof, regarding any Award and the shares of Common Stock relating thereto, based on such factors, if any, as the Committee shall determine, in its sole discretion);

(e) to determine whether, to what extent and under what circumstances grants of Options and other Awards under the Plan are to operate on a tandem basis and/or in conjunction with or apart from other awards made by the Company outside of this Plan;

(f) to determine whether and under what circumstances a Stock Option may be settled in cash, Common Stock and/or Restricted Stock under Section 6.4(d);

(g) to determine whether a Stock Option is an Incentive Stock Option or Non-Qualified Stock Option;

(h) to determine whether to require a Participant, as a condition of the granting of any Award, to not sell or otherwise dispose of shares acquired pursuant to the exercise of an Award for a period of time as determined by the Committee, in its sole discretion, following the date of the acquisition of such Award;




(i) to modify, extend or renew an Award, subject to Article XII and Section 6.4(l), provided, however, that such action does not subject the Award to Section 409A of the Code without the consent of the Participant; and

(j) solely to the extent permitted by applicable law, to determine whether, to what extent and under what circumstances to provide loans (which may be on a recourse basis and shall bear interest at the rate the Committee shall provide) to Participants in order to exercise Options under the Plan.

3.3 Guidelines. Subject to Article XII hereof, the Committee shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan and perform all acts, including the delegation of its responsibilities (to the extent permitted by applicable law and applicable stock exchange rules), as it shall, from time to time, deem advisable; to construe and interpret the terms and provisions of the Plan and any Award issued under the Plan (and any agreements relating thereto); and to otherwise supervise the administration of the Plan. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any agreement relating thereto in the manner and to the extent it shall deem necessary to effectuate the purpose and intent of the Plan. The Committee may adopt special guidelines and provisions for persons who are residing in or employed in, or subject to, the taxes of, any domestic or foreign jurisdictions to comply with applicable tax and securities laws of such domestic or foreign jurisdictions. Notwithstanding the foregoing, no action of the Committee under this Section 3.3 shall impair the rights of any Participant without the Participant’s consent. To the extent applicable, this Plan is intended to comply with the applicable requirements of Rule 16b-3 and the Plan shall be limited, construed and interpreted in a manner so as to comply therewith.

3.4 Decisions Final. Any decision, interpretation or other action made or taken in good faith by or at the direction of the Company, the Board or the Committee (or any of its members) arising out of or in connection with the Plan shall be within the absolute discretion of all and each of them, as the case may be, and shall be final, binding and conclusive on the Company and all employees and Participants and their respective heirs, executors, administrators, successors and assigns.

3.5 Procedures. If the Committee is appointed, the Board shall designate one of the members of the Committee as chair and the Committee shall hold meetings, subject to the By-Laws of the Company, at such times and places as it shall deem advisable, including, without limitation, by telephone conference or by written consent to the extent permitted by applicable law. A majority of the Committee members shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members. Any decision or determination reduced to writing and signed by all of the Committee members in accordance with the By-Laws of the Company, shall be fully effective as if it had been made by a vote at a meeting duly called and held. The Committee shall keep minutes of its meetings and shall make such rules and regulations for the conduct of its business as it shall deem advisable.

3.6 Designation of Consultants/Liability.

(a) The Committee may designate employees of the Company and professional advisors to assist the Committee in the administration of the Plan and (to the extent permitted by applicable law and applicable exchange rules) may grant authority to officers to grant Awards and/or execute agreements or other documents on behalf of the Committee.

(b) The Committee may employ such legal counsel, consultants and agents as it may deem desirable for the administration of the Plan and may rely upon any opinion received from any such counsel or consultant and any computation received from any such consultant or agent. Expenses incurred by the Committee or the Board in the engagement of any such counsel, consultant or agent shall be paid by the Company. The Committee, its members and any person designated pursuant to sub-section (a) above shall not be liable for any action or determination made in good faith with respect to the Plan. To the maximum extent permitted by applicable law, no officer of the Company or member or former member of the Committee or of the Board shall be liable for any action or determination made in good faith with respect to the Plan or any Award granted under it.

3.7 Indemnification. To the maximum extent permitted by applicable law and the Certificate of Incorporation and By-Laws of the Company and to the extent not covered by insurance directly insuring such person, each officer or employee of the Company or any Affiliate and member or former member of the Committee or the Board shall be indemnified and held harmless by the Company against any cost or expense (including reasonable fees of counsel reasonably acceptable to the Committee) or liability (including any sum paid in settlement of a claim with the approval of the Committee), and advanced amounts necessary to pay the foregoing at the earliest time and to the fullest extent permitted, arising out of any act or omission to act in connection with the administration of the Plan, except to the extent arising out of such officer’s, employee’s, member’s or former member’s own fraud or bad faith. Such



indemnification shall be in addition to any right of indemnification the employees, officers, directors or members or former officers, directors or members may have under applicable law or under the Certificate of Incorporation or By-Laws of the Company or any Affiliate. Notwithstanding anything else herein, this indemnification will not apply to the actions or determinations made by an individual with regard to Awards granted to such individual under the Plan.

ARTICLE IV
SHARE LIMITATION

4.1 Shares.

(a) Subject to any increase or decrease pursuant to Section 4.2, the aggregate number of shares of Common Stock that may be issued with respect to Awards granted under the Plan shall not exceed 2,400,000, plus (i) any shares of Common Stock that are available under the Prior Plan as of the Effective Date, plus (ii) any shares of Common Stock that are subject to an award under the Prior Plan that lapses, expires, terminates, or is canceled on or following the Effective Date. No additional awards shall be made under the Prior Plan on or after the Effective Date. The shares may be either authorized and unissued Common Stock or Common Stock held in or acquired for the treasury of the Company or both. The maximum number of shares of Common Stock with respect to which Incentive Stock Options may be granted under the Plan shall be 2,400,000 shares.

(b) If any Option, Stock Appreciation Right or Other Stock-Based Award granted under the Plan or any award under the Prior Plan expires, terminates or is canceled for any reason without having been exercised in full, the number of shares of Common Stock underlying any such unexercised Award shall be available for the purpose of Awards under the Plan; provided, however, that (i) in the case of Incentive Stock Options, the foregoing shall be subject to any limitations under the Code, and (ii) in the case of the exercise of Stock Appreciation Rights, the number of shares counted against the aggregate share limitations set forth under Sections 4.1(a) shall be the full number of shares subject to the Stock Appreciation Right multiplied by the percentage of the Stock Appreciation Right actually exercised, regardless of the number of shares actually used to settle such Stock Appreciation Right.

(c) If any Restricted Stock, Performance Awards or Other Stock-Based Awards denominated in shares of Common Stock awarded under the Plan to a Participant or similar awards under the Prior Plan expire or are terminated, surrendered or canceled, or are forfeited in whole or in part for any reason, the number of forfeited shares of Restricted Stock, Performance Awards or Other Stock-Based Awards denominated in shares of Common Stock shall again be available for purposes of Awards under the Plan.

(d) If a Tandem Stock Appreciation Right or a Limited Stock Appreciation Right is granted in tandem with an Option, only the shares covered by the Option, and not the shares covered by the Tandem Stock Appreciation Right or the Limited Stock Appreciation Right, shall be so counted against the maximum number of shares of Common Stock which may be issued under the Plan, and the expiration of one in connection with the other’s exercise will not restore shares to the Plan.

(e) Except as provided herein, any Award under the Plan settled in cash shall not be counted against the foregoing maximum share limitations.

(f) Shares of Common Stock delivered (either by actual delivery, attestation, or net exercise) to the Company by a Participant to (i) purchase shares of Common Stock upon the exercise of an Award or (ii) satisfy tax withholding obligations (including shares retained from the Award creating the tax obligation) shall not increase the number of shares available for future grant of Awards.

(g) Shares of Common Stock repurchased by the Company on the open market using the proceeds from the exercise of an Award shall not increase the number of shares available for future grant of Awards.

(h) With respect to Non-Employee Directors, the aggregate value of all compensation paid or granted to any individual for service as a Non-Employee Director with respect to any calendar year, including Awards granted under this Plan and cash fees paid by the Company to such Non-Employee Director outside of the Plan, shall not exceed six hundred thousand dollars ($600,000), calculating the value of any Awards granted during such calendar year based on the grant date fair value of such Awards for financial reporting purposes, excluding special compensation paid to any Non-Employee Director when serving as Chairman of the Board.






4.2 Changes.

(a) The existence of the Plan and the Awards granted hereunder shall not affect in any way the right or power of the Board or the stockholders of the Company to make or authorize (i) any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, (ii) any merger or consolidation of the Company or any Affiliate, (iii) any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock, (iv) the dissolution or liquidation of the Company or any Affiliate, (v) any sale or transfer of all or part of the assets or business of the Company or any Affiliate or (vi) any other corporate act or proceeding.

(b) Subject to the provisions of Section 4.2(d), in the event of a dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property) other than regular cash dividends, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, Change in Control or exchange of Common Stock or other securities of the Company, or other corporate transaction or event that affects the Common Stock such that an adjustment is necessary or appropriate in order to prevent dilution or enlargement of benefits or potential benefits intended to be made available under the Plan (a “Section 4.2 Event”), the Committee shall equitably adjust (i) the number of shares of Common Stock or other securities of the Company (or number and kind of other securities or property) with respect to which Awards may be granted under the Plan, (ii) the number of shares of Common Stock or other securities of the Company (or number and kind of other securities or property) subject to outstanding Awards, and (iii) the exercise price with respect to any Stock Option or any Stock Appreciation Right. Any such adjustment determined by the Committee shall be final, binding and conclusive on the Company and all Participants and their respective heirs, executors, administrators, successors and permitted assigns. If the Company enters into or is involved in any merger, reorganization, Change in Control or other business combination with any person or entity (a “Merger Event”), the Committee may, prior to such Merger Event and effective upon such Merger Event, take such action as it deems appropriate, including, but not limited to, replacing Awards with substitute Awards in respect of the shares, other securities or other property of the surviving corporation or any affiliate of the surviving corporation on such terms and conditions, as to the number of shares, pricing and otherwise, which shall substantially preserve the value, rights and benefits of any affected Awards granted hereunder as of the date of the consummation of the Merger Event. Upon receipt by any affected Participant of any such substitute Award (or payment) as a result of any such Merger Event, such Participant’s affected Awards for which such substitute Awards (or payment) were received shall be thereupon cancelled without the need for obtaining the consent of any such affected Participant. In addition, subject to Section 4.2(d), if there shall occur any change in the capital structure or the business of the Company that is not a Section 4.2 Event or Merger Event (an “Other Extraordinary Event”), then the Committee, in its sole discretion, may adjust any Award and make such other adjustments to the Plan. Except as expressly provided in this Section 4.2 or in the applicable Award Agreement, a Participant shall have no rights by reason of any Section 4.2 Event, Merger Event, or any Other Extraordinary Event.

(c) Fractional shares of Common Stock resulting from any adjustment in Awards pursuant to Section 4.2(a) or 4.2(b) shall be aggregated until, and eliminated at, the time of exercise by rounding-down for fractions less than one-half and rounding-up for fractions equal to or greater than one-half. No cash settlements shall be made with respect to fractional shares eliminated by rounding. Notice of any adjustment shall be given by the Committee to each Participant whose Award has been adjusted and such adjustment (whether or not such notice is given) shall be effective and binding for all purposes of the Plan.

(d) In the event of a Merger Event in which the Company is not the surviving entity or in the event of any transaction that results in the acquisition of substantially all of the Company’s outstanding Common Stock by a single person or entity or by a group of persons and/or entities acting in concert, or in the event of the sale or transfer of all or substantially all of the Company’s assets (all of the foregoing being referred to as an “Acquisition Event”), then the Committee may, in its sole discretion, in addition to its rights under Article XI herein, terminate all outstanding and unexercised Stock Options, Stock Appreciation Rights, or any Other Stock-Based Awards that provide for a Participant elected exercise, effective as of the date of the Acquisition Event, by delivering notice of termination to each Participant at least 10 days prior to the date of consummation of the Acquisition Event, in which case during the period from the date on which such notice of termination is delivered to the consummation of the Acquisition Event, each such Participant shall have the right to exercise in full all of his or her vested Awards that are then outstanding, but any such exercise shall be contingent on the consummation of the Acquisition Event, and, provided that, if the Acquisition Event does not take place within a specified period after giving such notice for any reason whatsoever, the notice and exercise pursuant thereto shall be null and void.

If an Acquisition Event occurs but the Committee does not terminate the outstanding Awards pursuant to this Section 4.2(d), then the provisions of Section 4.2(b) and Article XI shall apply.




4.3 Minimum Purchase Price. Notwithstanding any provision of the Plan to the contrary, if authorized but previously unissued shares of Common Stock are issued under the Plan, such shares shall not be issued for a consideration that is less than as permitted under applicable law.

4.4 Substitute Awards and Shares Issuable Under Acquired Company Plans.

(a) The Committee may, in its discretion and on such terms and conditions as the Committee considers appropriate in the circumstances, grant Substitute Awards under the Plan. Substitute Awards shall not be counted against or otherwise reduce the number of Available Shares under the Plan. For purposes of this Section 4.4, “Substitute Award” means an Award granted under the Plan in substitution for stock and stock-based awards (“Acquired Entity Awards”) held by current and former employees or non-employee directors of, or consultants to, another corporation or entity who become Eligible Individuals or whose awards are assumed or substituted as the result of a merger, consolidation or combination of the employing corporation or other entity (the “Acquired Entity”) with the Company or an Affiliate or the acquisition by the Company or an Affiliate of property or stock of the Acquired Entity immediately prior to such merger, consolidation, acquisition or combination (“Acquisition Date”) in order to preserve for the Participant the economic value of all or a portion of such Acquired Entity Award at such price as the Committee determines necessary to achieve preservation of economic value.

(b) If a company acquired by the Company or any Affiliate or with which the Company or any Affiliate combines has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards and shall not reduce the Available Shares under the Plan. Awards using such available shares under acquired plans shall not be made after the date awards could have been made under the terms of the acquired plan, absent the acquisition or combination, and shall only be made to individuals who were not eligible to participate in the Plan prior to such acquisition or combination.

ARTICLE V
ELIGIBILITY AND MINIMUM VESTING

5.1 General Eligibility. All current and prospective Eligible Individuals are eligible to be granted Awards. Eligibility for the grant of Awards and actual participation in the Plan shall be determined by the Committee in its sole discretion.

5.2 Incentive Stock Options. Notwithstanding the foregoing, only Eligible Employees of the Company, its Subsidiaries and its Parent (if any) are eligible to be granted Incentive Stock Options under the Plan. Eligibility for the grant of an Incentive Stock Option and actual participation in the Plan shall be determined by the Committee in its sole discretion.

5.3 General Requirement. The vesting and exercise of Awards granted to a prospective Eligible Individual are conditioned upon such individual actually becoming an Eligible Employee, Consultant or Non- Employee Director, respectively.

5.4 Minimum Vesting. Notwithstanding any provision of the Plan to the contrary, except with respect to a maximum of five percent (5%) of the aggregate number of available shares initially reserved for issuance under the Plan, subject to adjustment as provided in Section 4.2, no Award payable in Common Stock (other than a Substitute Award and Awards a non-employee director elects to receive at Fair Market Value in lieu of all or a portion of such non-employee director’s cash compensation) may provide for vesting sooner than twelve (12) months from the grant date thereof or may be subject to a Performance Period that is less than twelve (12) months, as applicable, other than in connection with a Change in Control or, with respect to any Participant, in connection with the death or Disability of such Participant.

5.5 Dividends and Dividend Equivalents on Unvested Awards. To the extent any Award provides for the payment of dividends or crediting of dividend equivalents, in no event will such dividends or dividend equivalents attributable to unvested Awards be paid unless and before the underlying Award has become vested pursuant to its terms.






ARTICLE VI
STOCK OPTIONS

6.1 Options. Stock Options may be granted alone or in addition to other Awards granted under the Plan. Each Stock Option granted under the Plan shall be of one of two types: (a) an Incentive Stock Option or (b) a Non-Qualified Stock Option.

6.2 Grants. The Committee shall have the authority to grant to any Eligible Employee one or more Incentive Stock Options, Non-Qualified Stock Options, or both types of Stock Options. The Committee shall have the authority to grant any Consultant or Non-Employee Director one or more Non-Qualified Stock Options. To the extent that any Stock Option does not qualify as an Incentive Stock Option (whether because of its provisions or the time or manner of its exercise or otherwise), such Stock Option or the portion thereof which does not so qualify shall constitute a separate Non-Qualified Stock Option.

6.3 Incentive Stock Options. Notwithstanding anything in the Plan to the contrary, no term of the Plan relating to Incentive Stock Options shall be interpreted, amended or altered, nor shall any discretion or authority granted under the Plan be so exercised, so as to disqualify the Plan under Section 422 of the Code, or, without the consent of the Participants affected, to disqualify any Incentive Stock Option under such Section 422.

6.4 Terms of Options. Options granted under the Plan shall be subject to the following terms and conditions and shall be in such form and contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable:

(a) Exercise Price. The exercise price per share of Common Stock subject to a Stock Option (other than a Substitute Award) shall be determined by the Committee at the time of grant, provided that the per share exercise price of a Stock Option shall not be less than 100% (or, in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, 110%) of the Fair Market Value of the Common Stock at the time of grant.

(b) Stock Option Term. The term of each Stock Option shall be fixed by the Committee, provided that no Stock Option shall be exercisable more than 10 years after the date the Option is granted; and provided further that the term of an Incentive Stock Option granted to a Ten Percent Stockholder shall not exceed five years.

(c) Exercisability. Unless otherwise provided by the Committee in accordance with the provisions of this Section 6.4, Stock Options granted under the Plan shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at the time of grant. If the Committee provides, in its discretion, that any Stock Option is exercisable subject to certain limitations (including, without limitation, that such Stock Option is exercisable only in installments or within certain time periods), the Committee may waive such limitations on the exercisability at any time at or after the time of grant in whole or in part (including, without limitation, waiver of the installment exercise provisions or acceleration of the time at which such Stock Option may be exercised), based on such factors, if any, as the Committee shall determine, in its sole discretion. Unless otherwise determined by the Committee at the time of grant, the Option agreement shall provide that (i) in the event that the Participant engages in Detrimental Activity prior to any exercise of the Stock Option (whether vested or unvested), all Stock Options held by the Participant shall thereupon terminate and expire, (ii) as a condition of the exercise of a Stock Option, the Participant shall be required to certify (or shall be deemed to have certified) at the time of exercise in a manner acceptable to the Company that the Participant is in compliance with the terms and conditions of the Plan and that the Participant has not engaged in, and does not intend to engage in, any Detrimental Activity, and (iii) in the event that the Participant engages in Detrimental Activity during the one-year period commencing on the date that the Stock Option is exercised or becomes vested, the Company shall be entitled to recover from the Participant at any time within one year after such exercise or vesting, and the Participant shall pay over to the Company, an amount equal to any gain realized as a result of the exercise (whether at the time of exercise or thereafter).

(d) Method of Exercise. Subject to whatever installment exercise and waiting period provisions apply under Section 6.4(c), to the extent vested, Stock Options may be exercised in whole or in part at any time during the Option term, by giving written notice of exercise to the Company specifying the number of shares of Common Stock to be purchased. Such notice shall be accompanied by payment in full of the purchase price as follows: (i) in cash or by check, bank draft or money order payable to the order of the Company; (ii) solely to the extent permitted by applicable law, if the Common Stock is traded on a national securities exchange, and the Committee authorizes, through a procedure whereby the Participant delivers irrevocable instructions to a broker reasonably acceptable to the Committee to deliver promptly to the Company an amount equal to the purchase price; or (iii) on such other terms and conditions as may be acceptable to the Committee (including, without limitation, the relinquishment of Stock



Options or by payment in full or in part in the form of Common Stock owned by the Participant based on the Fair Market Value of the Common Stock on the payment date as determined by the Committee). No shares of Common Stock shall be issued until payment therefore, as provided herein, has been made or provided for.

(e) Non-Transferability of Options. No Stock Option shall be Transferable by the Participant otherwise than by will or by the laws of descent and distribution, and all Stock Options shall be exercisable, during the Participant’s lifetime, only by the Participant. Notwithstanding the foregoing, the Committee may determine, in its sole discretion, at the time of grant or thereafter that a Non-Qualified Stock Option that is otherwise not Transferable pursuant to this Section is Transferable to a Family Member in whole or in part and in such circumstances, and under such conditions, as specified by the Committee. A Non-Qualified Stock Option that is Transferred to a Family Member pursuant to the preceding sentence (i) may not be subsequently Transferred otherwise than by will or by the laws of descent and distribution and (ii) remains subject to the terms of this Plan and the applicable Award Agreement. Any shares of Common Stock acquired upon the exercise of a Non-Qualified Stock Option by a permissible transferee of a Non-Qualified Stock Option or a permissible transferee pursuant to a Transfer after the exercise of the Non- Qualified Stock Option shall be subject to the terms of this Plan and the applicable Award Agreement.

(f) Termination by Death or Disability. Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participant’s Termination is by reason of death or Disability, all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participant’s Termination may be exercised by the Participant at any time within a period of one year from the date of such Termination, but in no event beyond the expiration of the stated term of such Stock Options; provided, however, that if the Participant dies within such exercise period, all unexercised Stock Options held by such Participant shall thereafter be exercisable, to the extent to which they were exercisable at the time of death, for a period of one year from the date of such death, but in no event beyond the expiration of the stated term of such Stock Options.

(g) Involuntary Termination Without Cause. Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participant’s Termination is by involuntary termination without Cause, all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participant’s Termination may be exercised by the Participant at any time within a period of 90 days from the date of such Termination, but in no event beyond the expiration of the stated term of such Stock Options.

(h) Voluntary Termination. Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participant’s Termination is voluntary (other than a voluntary termination described in Section 6.4(i)(y) hereof), all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participant’s Termination may be exercised by the Participant at any time within a period of 90 days from the date of such Termination, but in no event beyond the expiration of the stated term of such Stock Options.

(i) Termination for Cause. Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participant’s Termination (x) is for Cause or (y) is a voluntary Termination (as provided in Section 6.4(h)) after the occurrence of an event that would be grounds for a Termination for Cause, all Stock Options, whether vested or not vested, that are held by such Participant shall thereupon terminate and expire as of the date of such Termination.

(j) Unvested Stock Options. Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, Stock Options that are not vested as of the date of a Participant’s Termination for any reason shall terminate and expire as of the date of such Termination.

(k) Incentive Stock Option Limitations. To the extent that the aggregate Fair Market Value (determined as of the time of grant) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by an Eligible Employee during any calendar year under this Plan and/or any other stock option plan of the Company, any Subsidiary or any Parent exceeds $100,000, such Options shall be treated as Non-Qualified Stock Options. Should any provision of this Plan not be necessary in order for the Stock Options to qualify as Incentive Stock Options, or should any additional provisions be required, the Committee may amend this Plan accordingly, without the necessity of obtaining the approval of the stockholders of the Company.

(l) Form, Modification, Extension and Renewal of Stock Options. Subject to the terms and conditions and within the limitations of the Plan, Stock Options shall be evidenced by such form of agreement or grant as is approved by the Committee. Notwithstanding anything herein to the contrary, without the consent of stockholders, the Committee may not (i) lower the strike price of a Stock Option after it is granted, or take any other action with the



effect of lowering the strike price of a Stock Option after it is granted, or (ii) permit the cancellation of a Stock Option in exchange for another Award.

(m) Deferred Delivery of Common Shares. The Committee may in its discretion permit Participants to defer delivery of Common Stock acquired pursuant to a Participant’s exercise of an Option in accordance with the terms and conditions established by the Committee in the applicable Award Agreement, which shall be intended to comply with the requirements of Section 409A of the Code.

(n) Early Exercise. The Committee may provide that a Stock Option include a provision whereby the Participant may elect at any time before the Participant’s Termination to exercise the Stock Option as to any part or all of the shares of Common Stock subject to the Stock Option prior to the full vesting of the Stock Option and such shares shall be subject to the provisions of Article VIII and be treated as Restricted Stock. Unvested shares of Common Stock so purchased may be subject to a repurchase option in favor of the Company or to any other restriction the Committee determines to be appropriate.

ARTICLE VII
STOCK APPRECIATION RIGHTS

7.1 Tandem Stock Appreciation Rights. Stock Appreciation Rights may be granted in conjunction with all or part of any Stock Option (a “Reference Stock Option”) granted under the Plan (“Tandem Stock Appreciation Rights”). In the case of a Non-Qualified Stock Option, such rights may be granted either at or after the time of the grant of such Reference Stock Option. In the case of an Incentive Stock Option, such rights may be granted only at the time of the grant of such Reference Stock Option.

7.2 Terms and Conditions of Tandem Stock Appreciation Rights. Tandem Stock Appreciation Rights granted hereunder shall be subject to such terms and conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to time by the Committee, and the following:

(a) Exercise Price. The exercise price per share of Common Stock subject to a Tandem Stock Appreciation Right (other than a Substitute Award) shall be determined by the Committee at the time of grant, provided that the per share exercise price of a Tandem Stock Appreciation Right shall not be less than 100% of the Fair Market Value of the Common Stock at the time of grant.

(b) Term. A Tandem Stock Appreciation Right or applicable portion thereof granted with respect to a Reference Stock Option shall terminate and no longer be exercisable upon the termination or exercise of the Reference Stock Option, except that, unless otherwise determined by the Committee, in its sole discretion, at the time of grant, a Tandem Stock Appreciation Right granted with respect to less than the full number of shares covered by the Reference Stock Option shall not be reduced until and then only to the extent that the exercise or termination of the Reference Stock Option causes the number of shares covered by the Tandem Stock Appreciation Right to exceed the number of shares remaining available and unexercised under the Reference Stock Option.

(c) Exercisability. Tandem Stock Appreciation Rights shall be exercisable only at such time or times and to the extent that the Reference Stock Options to which they relate shall be exercisable in accordance with the provisions of Article VI, and shall be subject to the provisions of Section 6.4(c).

(d) Method of Exercise. A Tandem Stock Appreciation Right may be exercised by the Participant by surrendering the applicable portion of the Reference Stock Option. Upon such exercise and surrender, the Participant shall be entitled to receive an amount determined in the manner prescribed in this Section 7.2. Stock Options which have been so surrendered, in whole or in part, shall no longer be exercisable to the extent that the related Tandem Stock Appreciation Rights have been exercised.

(e) Payment. Upon the exercise of a Tandem Stock Appreciation Right, a Participant shall be entitled to receive up to, but no more than, an amount in cash and/or Common Stock (as chosen by the Committee in its sole discretion) equal in value to the excess of the Fair Market Value of one share of Common Stock over the Option exercise price per share specified in the Reference Stock Option agreement multiplied by the number of shares of Common Stock in respect of which the Tandem Stock Appreciation Right shall have been exercised, with the Committee having the right to determine the form of payment.

(f) Deemed Exercise of Reference Stock Option. Upon the exercise of a Tandem Stock Appreciation Right, the Reference Stock Option or part thereof to which such Stock Appreciation Right is related shall be deemed to have



been exercised for the purpose of the limitation set forth in Article IV of the Plan on the number of shares of Common Stock to be issued under the Plan.

(g) Non-Transferability. Tandem Stock Appreciation Rights shall be Transferable only when and to the extent that the underlying Stock Option would be Transferable under Section 6.4(e) of the Plan.

7.3 Non-Tandem Stock Appreciation Rights. Non-Tandem Stock Appreciation Rights may also be granted without reference to any Stock Options granted under the Plan.

7.4 Terms and Conditions of Non-Tandem Stock Appreciation Rights. Non-Tandem Stock Appreciation Rights granted hereunder shall be subject to such terms and conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to time by the Committee, and the following:

(a) Exercise Price. The exercise price per share of Common Stock subject to a Non-Tandem Stock Appreciation Right (other than a Substitute Award) shall be determined by the Committee at the time of grant, provided that the per share exercise price of a Non-Tandem Stock Appreciation Right shall not be less than 100% of the Fair Market Value of the Common Stock at the time of grant.

(b) Term. The term of each Non-Tandem Stock Appreciation Right shall be fixed by the Committee, but shall not be greater than 10 years after the date the right is granted.

(c) Exercisability. Unless otherwise provided by the Committee in accordance with the provisions of this Section 7.4, Non-Tandem Stock Appreciation Rights granted under the Plan shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at the time of grant. If the Committee provides, in its discretion, that any such right is exercisable subject to certain limitations (including, without limitation, that it is exercisable only in installments or within certain time periods), the Committee may waive such limitations on the exercisability at any time at or after grant in whole or in part (including, without limitation, waiver of the installment exercise provisions or acceleration of the time at which such right may be exercised), based on such factors, if any, as the Committee shall determine, in its sole discretion. Unless otherwise determined by the Committee at grant, the Award Agreement shall provide that (i) in the event that the Participant engages in Detrimental Activity prior to any exercise of the Non-Tandem Stock Appreciation Right, all Non-Tandem Stock Appreciation Rights held by the Participant shall thereupon terminate and expire, (ii) as a condition of the exercise of a Non-Tandem Stock Appreciation Right, the Participant shall be required to certify (or shall be deemed to have certified) at the time of exercise in a manner acceptable to the Company that the Participant is in compliance with the terms and conditions of the Plan and that the Participant has not engaged in, and does not intend to engage in, any Detrimental Activity, and (iii) in the event that the Participant engages in Detrimental Activity during the one-year period commencing on the date the Non-Tandem Stock Appreciation Right is exercised or becomes vested, the Company shall be entitled to recover from the Participant at any time within one year after such exercise or vesting, and the Participant shall pay over to the Company, an amount equal to any gain realized as a result of the exercise (whether at the time of exercise or thereafter).

(d) Method of Exercise. Subject to whatever installment exercise and waiting period provisions apply under Section 7.4(c), Non-Tandem Stock Appreciation Rights may be exercised in whole or in part at any time in accordance with the applicable Award Agreement, by giving written notice of exercise to the Company specifying the number of Non-Tandem Stock Appreciation Rights to be exercised.

(e) Payment. Upon the exercise of a Non-Tandem Stock Appreciation Right a Participant shall be entitled to receive, for each right exercised, up to, but no more than, an amount in cash and/or Common Stock (as chosen by the Committee in its sole discretion) equal in value to the excess of the Fair Market Value of one share of Common Stock on the date that the right is exercised over the Fair Market Value of one share of Common Stock on the date that the right was awarded to the Participant.

(f) Termination. Unless otherwise determined by the Committee at grant or, if no rights of the Participant are reduced, thereafter, subject to the provisions of the applicable Award Agreement and the Plan, upon a Participant’s Termination for any reason, Non-Tandem Stock Appreciation Rights will remain exercisable following a Participant’s Termination on the same basis as Stock Options would be exercisable following a Participant’s Termination in accordance with the provisions of Sections 6.4(f) through 6.4(j).




(g) Non-Transferability. No Non-Tandem Stock Appreciation Rights shall be Transferable by the Participant otherwise than by will or by the laws of descent and distribution, and all such rights shall be exercisable, during the Participant’s lifetime, only by the Participant.

7.5 Limited Stock Appreciation Rights. The Committee may, in its sole discretion, grant Tandem and Non-Tandem Stock Appreciation Rights either as a general Stock Appreciation Right or as a Limited Stock Appreciation Right. Limited Stock Appreciation Rights may be exercised only upon the occurrence of a Change in Control or such other event as the Committee may, in its sole discretion, designate at the time of grant or thereafter. Upon the exercise of Limited Stock Appreciation Rights, except as otherwise provided in an Award Agreement, the Participant shall receive in cash and/or Common Stock, as determined by the Committee, an amount equal to the amount (i) set forth in Section 7.2(e) with respect to Tandem Stock Appreciation Rights, or (ii) set forth in Section 7.4(e) with respect to Non-Tandem Stock Appreciation Rights.
ARTICLE VIII
RESTRICTED STOCK

8.1 Awards of Restricted Stock. Shares of Restricted Stock may be issued either alone or in addition to other Awards granted under the Plan. The Committee shall determine the Eligible Individuals, to whom, and the time or times at which, grants of Restricted Stock shall be made, the number of shares to be awarded, the price (if any) to be paid by the Participant (subject to Section 8.2), the time or times within which such Awards may be subject to forfeiture, the vesting schedule and rights to acceleration thereof, and all other terms and conditions of the Awards.

Unless otherwise determined by the Committee at grant, each Award of Restricted Stock shall provide that in the event that the Participant engages in Detrimental Activity prior to, or during the one-year period after, any vesting of Restricted Stock, the Committee may direct that all unvested Restricted Stock shall be immediately forfeited to the Company and that the Participant shall pay over to the Company an amount equal to the Fair Market Value at the time of vesting of any Restricted Stock which had vested in the period referred to above.

The Committee may condition the grant or vesting of Restricted Stock upon the attainment of specified performance targets (including, the Performance Goals) or such other factor as the Committee may determine in its sole discretion.

8.2 Awards and Certificates. Eligible Individuals selected to receive Restricted Stock shall not have any right with respect to such Award, unless and until such Participant has delivered a fully executed copy of the agreement evidencing the Award to the Company and has otherwise complied with the applicable terms and conditions of such Award. Further, such Award shall be subject to the following conditions:

(a) Purchase Price. The purchase price of Restricted Stock shall be fixed by the Committee. Subject to Section 4.3, the purchase price for shares of Restricted Stock may be zero to the extent permitted by applicable law, and, to the extent not so permitted, such purchase price may not be less than par value.

(b) Acceptance. Awards of Restricted Stock must be accepted within a period of 60 days (or such shorter period as the Committee may specify at grant) after the grant date, by executing a Restricted Stock agreement and by paying whatever price (if any) the Committee has designated thereunder.

(c) Legend. Each Participant receiving Restricted Stock shall be issued a stock certificate in respect of such shares of Restricted Stock, unless the Committee elects to use another system, such as book entries by the transfer agent, as evidencing ownership of shares of Restricted Stock. Such certificate shall be registered in the name of such Participant, and shall, in addition to such legends required by applicable securities laws, bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award, substantially in the following form:

“The anticipation, alienation, attachment, sale, transfer, assignment, pledge, encumbrance or charge of the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the Express, Inc. (the “Company”) 2018 Incentive Compensation Plan (the “Plan”) and an Agreement entered into between the registered owner and the Company dated [_______]. Copies of such Plan and Agreement are on file at the principal office of the Company.”

(d) Custody. If stock certificates are issued in respect of shares of Restricted Stock, the Committee may require that any stock certificates evidencing such shares be held in custody by the Company until the restrictions thereon shall have lapsed, and that, as a condition of any grant of Restricted Stock, the Participant shall have



delivered a duly signed stock power or other instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate by the Company, which would permit transfer to the Company of all or a portion of the shares subject to the Restricted Stock Award in the event that such Award is forfeited in whole or part.

8.3 Restrictions and Conditions. The shares of Restricted Stock awarded pursuant to the Plan shall be subject to the following restrictions and conditions:

(a) Restriction Period.

(i) The Participant shall not be permitted to Transfer shares of Restricted Stock awarded under the Plan during the period or periods set by the Committee (the “Restriction Period”) commencing on the date of such Award, as set forth in the Restricted Stock Award Agreement and such agreement shall set forth a vesting schedule and any event that would accelerate vesting of the shares of Restricted Stock. Within these limits, based on service, attainment of Performance Goals pursuant to Section 8.3(a)(ii) and/or such other factors or criteria as the Committee may determine in its sole discretion, the Committee may condition the grant or provide for the lapse of such restrictions in installments in whole or in part, or may accelerate the vesting of all or any part of any Restricted Stock Award and/or waive the deferral limitations for all or any part of any Restricted Stock Award.

(ii) If the grant of shares of Restricted Stock or the lapse of restrictions is based on the attainment of Performance Goals, the Committee shall establish the objective Performance Goals and the applicable vesting percentage of the Restricted Stock applicable to each Participant or class of Participants in writing prior to the beginning of the applicable fiscal year or at such later date as otherwise determined by the Committee. Such Performance Goals may incorporate provisions for disregarding (or adjusting for) changes in accounting methods, corporate transactions (including, without limitation, dispositions and acquisitions) and other similar type events or circumstances.

(b) Rights as a Stockholder. Except as provided in Section 8.3(a) and this Section 8.3(b) and as otherwise determined by the Committee, the Participant shall have, with respect to the shares of Restricted Stock, all of the rights of a holder of shares of Common Stock of the Company including, without limitation, the right to vote such shares, subject to and conditioned upon the full vesting of shares of Restricted Stock, the right to tender such shares, and the right to receive all dividends and other distributions paid with respect to the Restricted Stock, provided that such dividends or other distributions will be subject to the same vesting requirements as the underlying Restricted Stock and shall be paid at the time the Restricted Stock becomes vested. If dividends or distributions are paid in shares of Common Stock, such shares shall be deposited with the Company and shall be subject to the same restrictions on transferability and forfeitability as the Restricted Stock with respect to which they were paid.

(c) Termination. Unless otherwise determined by the Committee at grant or, if no rights of the Participant are reduced, thereafter, subject to the applicable provisions of the Award Agreement and the Plan, upon a Participant’s Termination for any reason during the relevant Restriction Period, all Restricted Stock still subject to restriction will be forfeited in accordance with the terms and conditions established by the Committee at grant or thereafter.

(d) Lapse of Restrictions. If and when the Restriction Period expires without a prior forfeiture of the Restricted Stock, the certificates for such shares, if any, shall be delivered to the Participant. All legends shall be removed from said certificates at the time of delivery to the Participant, except as otherwise required by applicable law or other limitations imposed by the Committee.

ARTICLE IX
PERFORMANCE AWARDS

9.1 Performance Awards. The Committee may grant a Performance Award to a Participant payable upon the attainment of specific Performance Goals. If the Performance Award is payable in shares of Restricted Stock, such shares shall be transferable to the Participant upon attainment of the relevant Performance Goal in accordance with Article VIII. If the Performance Award is payable in cash, it may be paid upon the attainment of the relevant Performance Goals either in cash or in shares of Restricted Stock (based on the then current Fair Market Value of such shares), as determined by the Committee, in its sole and absolute discretion. Each Performance Award shall be evidenced by an Award Agreement in such form that is not inconsistent with the Plan and that the Committee may from time to time approve.




Unless otherwise determined by the Committee at grant, each Performance Award shall provide that in the event the Participant engages in Detrimental Activity prior to, or during the one-year period after, any vesting of the Performance Award, the Committee may direct (at any time within one year thereafter) that all of the unvested portion of the Performance Award shall be immediately forfeited to the Company and that the Participant shall pay over to the Company an amount equal to any gain that the Participant realized from any Performance Award that had vested in the period referred to above.

9.2 Terms and Conditions. Performance Awards awarded pursuant to this Article IX shall be subject to the following terms and conditions:

(a) Earning of Performance Award. At the expiration of the applicable Performance Period, the Committee shall determine the extent to which the Performance Goals established pursuant to Section 9.2 (c) are achieved and the percentage of each Performance Award that has been earned.

(b) Non-Transferability. Subject to the applicable provisions of the Award Agreement and the Plan, Performance Awards may not be Transferred during the Performance Period.

(c) Objective Performance Goals, Formulae or Standards. The Committee shall establish the objective Performance Goals for the earning of Performance Awards based on a Performance Period applicable to each Participant or class of Participants in writing prior to the beginning of the applicable Performance Period or at such later date as otherwise determined by the Committee. Such Performance Goals may incorporate provisions for disregarding (or adjusting for) changes in accounting methods, corporate transactions (including, without limitation, dispositions and acquisitions) and other similar type events or circumstances.
(d) Dividends. Amounts equal to dividends declared during the Performance Period with respect to the number of shares of Common Stock covered by a Performance Award will not be paid to the Participant unless otherwise determined by the Committee at the time of grant; provided, however, in all events any dividend or dividend equivalents attributable to such Performance Award will be subject to the same vesting requirements as the underlying Performance Award, and shall be paid only at the time the Performance Award becomes vested.

(e) Payment. Following the Committee’s determination in accordance with Section 9.2(a), the Company shall settle Performance Awards, in such form (including, without limitation, in shares of Common Stock or in cash) as determined by the Committee, in an amount equal to such Participant’s earned Performance Awards. Notwithstanding the foregoing, the Committee may, in its sole discretion, award an amount other than the earned Performance Awards and/or subject the payment of all or part of any Performance Award to additional vesting, forfeiture and deferral conditions as it deems appropriate.

(f) Termination. Subject to the applicable provisions of the Award Agreement and the Plan, upon a Participant’s Termination for any reason during the Performance Period for a given Performance Award, the Performance Award in question will vest or be forfeited in accordance with the terms and conditions established by the Committee at grant.

ARTICLE X
OTHER STOCK-BASED AND CASH-BASED AWARDS

10.1 Other Stock-Based Awards. The Committee is authorized to grant to Eligible Individuals Other Stock-Based Awards that are payable in, valued in whole or in part by reference to, or otherwise based on or related to shares of Common Stock, including but not limited to, shares of Common Stock awarded purely as a bonus and not subject to restrictions or conditions, shares of Common Stock in payment of the amounts due under an incentive or performance plan sponsored or maintained by the Company or an Affiliate, stock equivalent units, restricted stock units, and Awards valued by reference to book value of shares of Common Stock. Other Stock-Based Awards may be granted either alone or in addition to or in tandem with other Awards granted under the Plan.

Subject to the provisions of the Plan, the Committee shall have authority to determine the Eligible Individuals, to whom, and the time or times at which, such Awards shall be made, the number of shares of Common Stock to be awarded pursuant to such Awards, and all other conditions of the Awards. The Committee may also provide for the grant of Common Stock under such Awards upon the completion of a specified Performance Period.

The Committee may condition the grant or vesting of Other Stock-Based Awards upon the attainment of specified Performance Goals as the Committee may determine, in its sole discretion. Such Performance Goals may



incorporate provisions for disregarding (or adjusting for) changes in accounting methods, corporate transactions (including, without limitation, dispositions and acquisitions) and other similar type events or circumstances.
10.2 Terms and Conditions. Other Stock-Based Awards made pursuant to this Article X shall be subject to the following terms and conditions:

(a) Non-Transferability. Subject to the applicable provisions of the Award Agreement and the Plan, shares of Common Stock subject to Awards made under this Article X may not be Transferred prior to the date on which the shares are issued, or, if later, the date on which any applicable restriction, performance or deferral period lapses.

(b) Dividends. Subject to the provisions of the Award Agreement and the Plan, the recipient of an Award under this Article X shall not be entitled to receive, currently or on a deferred basis, dividends or dividend equivalents with respect to the number of shares of Common Stock covered by the Award (as determined at the time of the Award by the Committee in its sole discretion) unless otherwise determined by the Committee at the time of grant; provided, however, in all events any dividends or dividend equivalents attributable to such Award will be subject to the same vesting requirements as the underlying Award and shall only be paid at the time the Award becomes vested.

(c) Vesting. Any Award under this Article X and any Common Stock covered by any such Award shall vest or be forfeited to the extent so provided in the Award Agreement, as determined by the Committee, in its sole discretion.

(d) Price. Common Stock issued on a bonus basis under this Article X may be issued for no cash consideration. Common Stock purchased pursuant to a purchase right awarded under this Article X shall be priced, as determined by the Committee in its sole discretion.

10.3 Other Cash-Based Awards. The Committee may from time to time grant Other Cash-Based Awards to Eligible Individuals in such amounts, on such terms and conditions, and for such consideration, including no consideration or such minimum consideration as may be required by applicable law, as it shall determine in its sole discretion. Other Cash-Based Awards may be granted subject to the satisfaction of vesting conditions or may be awarded purely as a bonus and not subject to restrictions or conditions, and if subject to vesting conditions, the Committee may accelerate the vesting of such Awards at any time in its sole discretion. The grant of an Other Cash-Based Award shall not require a segregation of any of the Company’s assets for satisfaction of the Company’s payment obligation thereunder.

10.4 Detrimental Activity. Unless otherwise determined by the Committee at grant, the Award Agreement shall provide that (i) in the event that the Participant engages in Detrimental Activity prior to any exercise, distribution or settlement of any Other Stock-Based Award and/or Other Cash-Based Award, such Other Stock-Based Awards and/or Other Cash-Based Awards held by the Participant shall thereupon terminate and expire, (ii) as a condition of the exercise, distribution or settlement of an Other Stock-Based Award and/or Other Cash-Based Award, the Participant shall be required to certify (or shall be deemed to have certified) at the time of exercise in a manner acceptable to the Company that the Participant is in compliance with the terms and conditions of the Plan and that the Participant has not engaged in, and does not intend to engage in, any Detrimental Activity, and (iii) in the event that the Participant engages in Detrimental Activity during the one-year period commencing on the date of exercise, distribution, or settlement of an Other Stock-Based Award and/or Other Cash-Based Award, the Company shall be entitled to recover from the Participant at any time within one year after such exercise, settlement, or distribution, and the Participant shall pay over to the Company, an amount equal to any gain realized as a result of the exercise, distribution or settlement (whether at the time of exercise, distribution or settlement or thereafter).

ARTICLE XI
CHANGE IN CONTROL PROVISIONS

11.1 Benefits. In the event of a Change in Control of the Company (as defined below), and except as otherwise provided by the Committee in an Award Agreement, a Participant’s unvested Award shall not vest and a Participant’s Award shall be treated in accordance with one of the following methods as determined by the Committee:

(a) Awards, whether or not then vested, shall be continued, assumed, have new rights substituted therefore or be treated in accordance with Section 4.2(d) hereof, as determined by the Committee, and restrictions to which shares of Restricted Stock or any other Award granted prior to the Change in Control are subject shall not lapse upon a Change in Control and the Restricted Stock or other Award shall, where appropriate in the sole discretion of the Committee, receive the same amount and form distribution as other Common Stock on such terms as determined by



the Committee; provided that the Committee may decide to award additional Restricted Stock or other Awards in lieu of any cash distribution. Notwithstanding anything to the contrary herein, for purposes of Incentive Stock Options, any assumed or substituted Stock Option shall comply with the requirements of Treasury Regulation Section 1.424-1 (and any amendment thereto).

(b) The Committee, in its sole discretion, may provide for the purchase of any Awards by the Company or an Affiliate for an amount of cash equal to the excess (if any) of the Change in Control Price (as defined below) of the shares of Common Stock covered by such Awards, over the aggregate exercise price of such Awards (if applicable). For purposes of this Section 11.1, “Change in Control Price” shall mean the highest price per share of Common Stock paid in any transaction related to a Change in Control of the Company.

(c) Notwithstanding any other provision herein to the contrary, the Committee may, in its sole discretion, provide for accelerated vesting or lapse of restrictions, of an Award at any time.

11.2 Change in Control. Unless otherwise determined by the Committee in the applicable Award Agreement or other written agreement approved by the Committee, a “Change in Control” shall be deemed to occur if:

(a) any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, any trustee or other fiduciary holding securities under any employee benefit plan of the Company, or any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of Common Stock of the Company), becoming the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities;

(b) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in paragraph (a), (c), or (d) of this Section 11.2 or a director whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such term is used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board;

(c) a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; provided, however, that a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person (other than those covered by the exceptions in Section 11.2(a)) acquires more than 50% of the combined voting power of the Company’s then outstanding securities shall not constitute a Change in Control of the Company; or

(d) a complete liquidation or dissolution of the Company or the consummation of a sale or disposition by the Company of all or substantially all of the Company’s assets other than the sale or disposition of all or substantially all of the assets of the Company to a person or persons who beneficially own, directly or indirectly, 50% or more of the combined voting power of the outstanding voting securities of the Company at the time of the sale.

Notwithstanding the foregoing, with respect to any Award that is characterized as “non-qualified deferred compensation” within the meaning of Section 409A of the Code, an event shall not be considered to be a Change in Control under the Plan for purposes of payment of any such award unless such event is also a “change in ownership,” a “change in effective control” or a “change in the ownership of a substantial portion of the assets” of the Company within the meaning of Section 409A of the Code.

ARTICLE XII
TERMINATION OR AMENDMENT OF PLAN

12.1 Termination or Amendment. Notwithstanding any other provision of the Plan, the Board may at any time, and from time to time, amend, in whole or in part, any or all of the provisions of the Plan (including any amendment deemed necessary to ensure that the Company may comply with any regulatory requirement referred to



in Article XIV or Section 409A of the Code), or suspend or terminate it entirely, retroactively or otherwise; provided, however, that, unless otherwise required by law or specifically provided herein, the rights of a Participant with respect to Awards granted prior to such amendment, suspension or termination, may not be impaired without the consent of such Participant and, provided further, that without the approval of the holders of the Company’s Common Stock entitled to vote in accordance with applicable law, no amendment may be made that would (i) increase the aggregate number of shares of Common Stock that may be issued under the Plan (except by operation of Section 4.2); (ii) change the classification of individuals eligible to receive Awards under the Plan; (iii) decrease the minimum option price of any Stock Option or Stock Appreciation Right; (iv) extend the maximum option period under Section 6.4; (v) award any Stock Option or Stock Appreciation Right in replacement of a canceled Stock Option or Stock Appreciation Right with a higher exercise price than the replacement award;(vi) cancel any Stock Options or Stock Appreciation Rights at a time when its Exercise Price exceeds Fair Market Value in exchange for cash, shares of Common Stock, or other Awards or (vii) require stockholder approval in order for the Plan to continue to comply with the provisions of Section 422 of the Code applicable to Incentive Stock Options. In no event may the Plan be amended without the approval of the stockholders of the Company in accordance with the applicable laws of the State of Delaware to increase the aggregate number of shares of Common Stock that may be issued under the Plan, decrease the minimum exercise price of any Award, or to make any other amendment that would require stockholder approval under Financial Industry Regulatory Authority (FINRA) rules and regulations or the rules of any exchange or system on which the Company’s securities are listed or traded at the request of the Company. Notwithstanding anything herein to the contrary, the Board may amend the Plan or any Award Agreement at any time without a Participant’s consent to comply with applicable law including Section 409A of the Code.

The Committee may amend the terms of any Award theretofore granted, prospectively or retroactively, but, subject to Article IV or as otherwise specifically provided herein, no such amendment or other action by the Committee shall impair the rights of any holder without the holder’s consent.

ARTICLE XIII
UNFUNDED STATUS OF PLAN

The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payment as to which a Participant has a fixed and vested interest but which are not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any right that is greater than those of a general unsecured creditor of the Company.

ARTICLE XIV
GENERAL PROVISIONS

14.1 Legend. The Committee may require each person receiving shares of Common Stock pursuant to a Stock Option or other Award under the Plan to represent to and agree with the Company in writing that the Participant is acquiring the shares without a view to distribution thereof. In addition to any legend required by the Plan, the certificates for such shares may include any legend that the Committee deems appropriate to reflect any restrictions on Transfer. All certificates for shares of Common Stock delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Common Stock is then listed or any national securities exchange system upon whose system the Common Stock is then quoted, any applicable federal or state securities law, and any applicable corporate law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

14.2 Other Plans. Nothing contained in the Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required, and such arrangements may be either generally applicable or applicable only in specific cases.

14.3 No Right to Employment/Directorship/Consultancy. Neither the Plan nor the grant of any Option or other Award hereunder shall give any Participant or other employee, Consultant or Non-Employee Director any right with respect to continuance of employment, consultancy or directorship by the Company or any Affiliate, nor shall there be a limitation in any way on the right of the Company or any Affiliate by which an employee is employed or a Consultant or Non-Employee Director is retained to terminate his or her employment, consultancy or directorship at any time.

14.4 Withholding of Taxes. The Company shall have the right to deduct from any payment to be made pursuant to the Plan, or to otherwise require, prior to the issuance or delivery of shares of Common Stock or the



payment of any cash hereunder, payment by the Participant of, any federal, state or local taxes required by law to be withheld. Upon the vesting of Restricted Stock (or other Award that is taxable upon vesting), or upon making an election under Section 83(b) of the Code, a Participant shall pay all required withholding to the Company. Unless not permitted by the Committee at the time of grant of an Award or thereafter, and subject to any rules established by the Committee, the Participant shall be able to satisfy any statutorily required withholding obligation by reducing the number of shares of Common Stock otherwise deliverable or by delivering shares of Common Stock already owned, and shall be permitted similarly to satisfy additional tax withholding above the statutory minimum applicable withholding amounts; provided, however, that the Participant shall not be entitled to deliver such additional shares if it would cause adverse accounting or tax consequences for the Company.

14.5 No Assignment of Benefits. No Award or other benefit payable under the Plan shall, except as otherwise specifically provided by law or permitted by the Committee, be Transferable in any manner, and any attempt to Transfer any such benefit shall be void, and any such benefit shall not in any manner be liable for or subject to the debts, contracts, liabilities, engagements or torts of any person who shall be entitled to such benefit, nor shall it be subject to attachment or legal process for or against such person.

14.6 Listing and Other Conditions.

(a) Unless otherwise determined by the Committee, as long as the Common Stock is listed on a national securities exchange or system sponsored by a national securities association, the issuance of shares of Common Stock pursuant to an Award shall be conditioned upon such shares being listed on such exchange or system. The Company shall have no obligation to issue such shares unless and until such shares are so listed, and the right to exercise any Option or other Award with respect to such shares shall be suspended until such listing has been effected.

(b) If at any time counsel to the Company shall be of the opinion that any sale or delivery of shares of Common Stock pursuant to an Option or other Award is or may in the circumstances be unlawful or result in the imposition of excise taxes on the Company under the statutes, rules or regulations of any applicable jurisdiction, the Company shall have no obligation to make such sale or delivery, or to make any application or to effect or to maintain any qualification or registration under the Securities Act or otherwise, with respect to shares of Common Stock or Awards, and the right to exercise any Option or other Award shall be suspended until, in the opinion of said counsel, such sale or delivery shall be lawful or will not result in the imposition of excise taxes on the Company.

(c) Upon termination of any period of suspension under this Section 14.6, any Award affected by such suspension which shall not then have expired or terminated shall be reinstated as to all shares available before such suspension and as to shares which would otherwise have become available during the period of such suspension, but no such suspension shall extend the term of any Award.

(d) A Participant shall be required to supply the Company with certificates, representations and information that the Company requests and otherwise cooperate with the Company in obtaining any listing, registration, qualification, exemption, consent or approval the Company deems necessary or appropriate.

14.7 Stockholders Agreement and Other Requirements. Notwithstanding anything herein to the contrary, as a condition to the receipt of shares of Common Stock pursuant to an Award under the Plan, to the extent required by the Committee, the Participant shall execute and deliver a stockholder’s agreement or such other documentation that shall set forth certain restrictions on transferability of the shares of Common Stock acquired upon exercise or purchase, and such other terms as the Board or Committee shall from time to time establish. Such stockholder’s agreement or other documentation shall apply to the Common Stock acquired under the Plan and covered by such stockholder’s agreement or other documentation. The Company may require, as a condition of exercise, the Participant to become a party to any other existing stockholder agreement (or other agreement).

14.8 Governing Law. The Plan and actions taken in connection herewith shall be governed and construed in accordance with the laws of the State of Delaware (regardless of the law that might otherwise govern under applicable Delaware principles of conflict of laws).

14.9 Jurisdiction; Waiver of Jury Trial. Any suit, action or proceeding with respect to the Plan or any Award Agreement, or any judgment entered by any court of competent jurisdiction in respect of any thereof, shall be resolved only in the courts of the State of Delaware or the United States District Court for the District of Delaware and the appellate courts having jurisdiction of appeals in such courts. In that context, and without limiting the generality of the foregoing, the Company and each Participant shall irrevocably and unconditionally (a) submit in any proceeding



relating to the Plan or any Award Agreement, or for the recognition and enforcement of any judgment in respect thereof (a “Proceeding”), to the exclusive jurisdiction of the courts of the State of Delaware, the court of the United States of America for the District of Delaware, and appellate courts having jurisdiction of appeals from any of the foregoing, and agree that all claims in respect of any such Proceeding shall be heard and determined in such Delaware State court or, to the extent permitted by law, in such federal court, (b) consent that any such Proceeding may and shall be brought in such courts and waives any objection that the Company and each Participant may now or thereafter have to the venue or jurisdiction of any such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agree not to plead or claim the same, (c) waive all right to trial by jury in any Proceeding (whether based on contract, tort or otherwise) arising out of or relating to the Plan or any Award Agreement, (d) agree that service of process in any such Proceeding may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party, in the case of a Participant, at the Participant’s address shown in the books and records of the Company or, in the case of the Company, at the Company’s principal offices, attention General Counsel, and (e) agree that nothing in the Plan shall affect the right to effect service of process in any other manner permitted by the laws of the State of Delaware.

14.10 Construction. Wherever any words are used in the Plan in the masculine gender they shall be construed as though they were also used in the feminine gender in all cases where they would so apply, and wherever words are used herein in the singular form they shall be construed as though they were also used in the plural form in all cases where they would so apply.

14.11 Other Benefits. No Award granted or paid out under the Plan shall be deemed compensation for purposes of computing benefits under any retirement plan of the Company or its Affiliates nor affect any benefit under any other benefit plan now or subsequently in effect under which the availability or amount of benefits is related to the level of compensation.

14.12 Costs. The Company shall bear all expenses associated with administering this Plan, including expenses of issuing Common Stock pursuant to Awards hereunder.

14.13 No Right to Same Benefits. The provisions of Awards need not be the same with respect to each Participant, and such Awards to individual Participants need not be the same in subsequent years.

14.14 Death/Disability. The Committee may in its discretion require the transferee of a Participant to supply it with written notice of the Participant’s death or Disability and to supply it with a copy of the will (in the case of the Participant’s death) or such other evidence as the Committee deems necessary to establish the validity of the transfer of an Award. The Committee may also require that the agreement of the transferee to be bound by all of the terms and conditions of the Plan.

14.15 Section 16(b) of the Exchange Act. All elections and transactions under the Plan by persons subject to Section 16 of the Exchange Act involving shares of Common Stock are intended to comply with any applicable exemptive condition under Rule 16b-3. The Committee may establish and adopt written administrative guidelines, designed to facilitate compliance with Section 16(b) of the Exchange Act, as it may deem necessary or proper for the administration and operation of the Plan and the transaction of business thereunder.

14.16 Section 409A of the Code. The Plan is intended to comply with the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in accordance with such intent. To the extent that any Award is subject to Section 409A of the Code, it shall be paid in a manner that will comply with Section 409A of the Code, including proposed, temporary or final regulations or any other guidance issued by the Secretary of the Treasury and the Internal Revenue Service with respect thereto. Notwithstanding anything herein to the contrary, any provision in the Plan that is inconsistent with Section 409A of the Code shall be deemed to be amended to comply with Section 409A of the Code and to the extent such provision cannot be amended to comply therewith, such provision shall be null and void. The Company shall have no liability to a Participant, or any other party, if an Award that is intended to be exempt from, or compliant with, Section 409A of the Code is not so exempt or compliant or for any action taken by the Committee or the Company and, in the event that any amount or benefit under the Plan becomes subject to penalties under Section 409A of the Code, responsibility for payment of such penalties shall rest solely with the affected Participants and not with the Company. Notwithstanding any contrary provision in the Plan or Award Agreement, any payment(s) of “nonqualified deferred compensation” (within the meaning of Section 409A of the Code) that are otherwise required to be made under the Plan to a “specified employee” (as defined under Section 409A of the Code) as a result of his or her separation from service (other than a payment that is not subject to Section 409A of the Code) shall be delayed for the first six (6) months following such separation from service (or, if earlier, the date of death of the specified employee) and shall instead be paid (in a manner set forth in the Award Agreement) on



the payment date that immediately follows the end of such six-month period or as soon as administratively practicable thereafter.

14.17 Successor and Assigns. The Plan shall be binding on all successors and permitted assigns of a Participant, including, without limitation, the estate of such Participant and the executor, administrator or trustee of such estate.

14.18 Severability of Provisions. If any provision of the Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the Plan shall be construed and enforced as if such provisions had not been included.

14.19 Payments to Minors, Etc. Any benefit payable to or for the benefit of a minor, an incompetent person or other person incapable of receipt thereof shall be deemed paid when paid to such person’s guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge the Committee, the Board, the Company, its Affiliates and their employees, agents and representatives with respect thereto.

14.20 Agreement. As a condition to the grant of an Award, if requested by the Company and the lead underwriter of any public offering of the Common Stock (the “Lead Underwriter”), a Participant shall irrevocably agree not to sell, contract to sell, grant any option to purchase, transfer the economic risk of ownership in, make any short sale of, pledge or otherwise transfer or dispose of, any interest in any Common Stock or any securities convertible into, derivative of, or exchangeable or exercisable for, or any other rights to purchase or acquire Common Stock (except Common Stock included in such public offering or acquired on the public market after such offering) during such period of time following the effective date of a registration statement of the Company filed under the Securities Act that the Lead Underwriter shall specify (the “Lock-Up Period”). The Participant shall further agree to sign such documents as may be requested by the Lead Underwriter to effect the foregoing and agree that the Company may impose stop-transfer instructions with respect to Common Stock acquired pursuant to an Award until the end of such Lock-Up Period.

14.21 Headings and Captions. The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Plan, and shall not be employed in the construction of the Plan.

14.22 Special Rule Related to Securities Trading Policy. The Company has established (or may from time to time establish) a securities trading policy (the ‘‘Policy’’) relative to disclosure and trading on inside information as described in the Policy. Under the Policy, certain Participants are or may be prohibited from trading Common Stock or other securities of the Company except during certain ‘‘window periods’’ as described in the Policy. If, under the terms of an Agreement, the last day on which a Stock Option or Stock Appreciation Right can be exercised falls on a date that is not, in the opinion of counsel to the Company, within a window period permitted by the Policy, the applicable exercise period shall automatically be extended by this Section 14.22 until the second business day of, in the opinion of counsel to the Company, a window period under the Policy, but in no event beyond the expiration date of the Stock Option or Stock Appreciation Right. The Committee shall interpret and apply the extension automatically provided by the preceding sentence to ensure when possible without extending the exercise period beyond the expiration date that in no event shall the term of any Stock Option or Stock Appreciation Right expire except during a window period.

14.23 Clawback. All Awards, amounts, or benefits received or outstanding under the Plan shall be subject to clawback, cancellation, recoupment, rescission, payback, reduction, or other similar action in accordance with the terms of any Company clawback or similar policy or any applicable law related to such actions, as may be in effect from time to time. A Participant’s acceptance of an Award shall be deemed to constitute the Participant’s acknowledgement of and consent to the Company’s application, implementation, and enforcement of any applicable Company clawback or similar policy that may apply to the Participant, whether adopted before or after September 9, 2019 and any provision of applicable law relating to clawback, cancellation, recoupment, rescission, payback, or reduction of compensation, and the Participant’s agreement that the Company may take such actions as may be necessary to effectuate any such policy or applicable law, without further consideration or action.

14.24 Non-U.S. Laws. The Committee shall have the authority to adopt such modifications, procedures and subplans as may be necessary or desirable to comply with provisions of the laws of foreign countries in which the Company or its Affiliates may operate to assure the viability of the benefits from Awards granted to Participants performing services in such countries and to meet the objectives of the Plan.




14.25 Code Section 162(m). For the avoidance of doubt, the provisions of this Plan is not intended, and shall not be interpreted, to modify any awards granted in the Prior Plan or any written binding contract in effect as of November 2, 2017 to the extent such modification would result in a loss of deductibility under Code Section 162(m).

ARTICLE XV
EFFECTIVE DATE OF PLAN

The Plan shall become effective on the date of the Company’s 2018 Annual Meeting of Stockholders, subject to approval at such meeting by stockholders eligible to vote in the election of directors, by a vote sufficient to meet the requirements of Code Section 422, Rule 16b-3 under the Exchange Act (if applicable), applicable requirements under the rules of any stock exchange or automated quotation system on which the Shares may be listed or quoted and other laws, regulations and obligations of the Company applicable to the Plan. Awards may be granted subject to stockholder approval, but may not be exercised or otherwise settled in the event the stockholder approval is not obtained.

ARTICLE XVI
TERM OF PLAN

No Award shall be granted pursuant to the Plan on or after the tenth anniversary of the earlier of the date that the Plan is adopted or the date of stockholder approval, but Awards granted prior to such tenth anniversary may extend beyond that date.

ARTICLE XVII
NAME OF PLAN

This Plan shall be known as the “Express, Inc. 2018 Incentive Compensation Plan.”

EXHIBIT A
PERFORMANCE GOALS

Performance Goals with respect to Performance Awards may be based on the attainment of certain target levels of, or a specified increase or decrease (as applicable), in objective measurement, including but not limited to, the following:

earnings per share;

operating income;

gross income;

net income (before or after taxes);

cash flow;

gross profit;

gross profit return on investment;

gross margin return on investment;

gross margin;

operating margin;

working capital;

earnings before interest and taxes;

earnings before interest, tax, depreciation and amortization;




return on equity;

return on assets;

return on capital;

return on invested capital;

net revenues;

gross revenues;

revenue growth;

annual recurring revenues;

recurring revenues;

license revenues;

sales or market share;

total shareholder return;

economic value added;

specified objectives with regard to limiting the level of increase in all or a portion of the Company’s bank debt or other long-term or short-term public or private debt or other similar financial obligations of the Company, which may be calculated net of cash balances and/or other offsets and adjustments as may be established by the Committee in its sole discretion;

the fair market value of a share of Common Stock;

the growth in the value of an investment in the Common Stock assuming the reinvestment of dividends;

reduction in operating expenses;

comparable sales, comparable store sales, e-commerce sales;

inventory turnover or shrinkage;

free cash flow;

cash flow from operations; or

strategic or operational business criteria, consisting of one or more objectives based on meeting geographic expansion or new concept development goals; new store openings or other changes in store count; cost savings targets; customer satisfaction; human resources goals, including employee engagement, staffing, training and development and succession planning; implementation or development of new or enhanced technology systems and capabilities; omni-channel goals; marketing goals; merchandising goals; sustainability goals; and goals relating to acquisitions or divestitures of subsidiaries, affiliates, or joint ventures.

The Committee may, in its sole discretion, also exclude, or adjust to reflect, the impact of an event or occurrence that the Committee determines should be appropriately excluded or adjusted, including:

(a) restructurings, discontinued operations, extraordinary items or events, and other unusual or non-recurring charges as described in Accounting Principles Board Opinion No. 30 and/or management’s discussion and analysis of financial condition and results of operations appearing or incorporated by reference in the Company’s Form 10-K for the applicable year;




(b) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management; or

(c) a change in tax law or accounting standards required by generally accepted accounting principles.

Performance goals may also be based upon individual participant performance goals or on such other performance goals as determined by the Committee in its sole discretion.

In addition, such performance goals may be based upon the attainment of specified levels of Company (or subsidiary, division, other operational unit or administrative department of the Company) performance under one or more of the measures described above relative to the performance of other corporations. The Committee may also:

(a) designate additional business criteria on which the performance goals may be based; or

(b) adjust, modify or amend the aforementioned business criteria.


Document

EXHIBIT 31.1
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Timothy Baxter, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Express, Inc. for the quarter ended November 2, 2019;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 
Date:December 11, 2019By:/s/ Timothy Baxter
Timothy Baxter
Chief Executive Officer
 


Document

EXHIBIT 31.2
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Periclis Pericleous, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Express, Inc. for the quarter ended November 2, 2019;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 
Date:December 11, 2019By:/s/ Periclis Pericleous  
Periclis Pericleous
Senior Vice President, Chief Financial Officer and Treasurer


Document

EXHIBIT 32.1
CERTIFICATION PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Express, Inc. (the "Company") on Form 10-Q for the quarter ended November 2, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned Timothy Baxter, Chief Executive Officer of the Company, and Periclis Pericleous, Senior Vice President, Chief Financial Officer, and Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of each of our knowledge:
 
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company and its subsidiaries.
 
Date: December 11, 2019
 
/s/ Timothy Baxter
Timothy Baxter
Chief Executive Officer
/s/ Periclis Pericleous  
Periclis Pericleous
Senior Vice President, Chief Financial Officer and Treasurer
The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.


v3.19.3.a.u2
Share-Based Compensation - Schedule of Stock Options Activity (Details)
$ / shares in Units, shares in Thousands, $ in Thousands
9 Months Ended
Nov. 02, 2019
USD ($)
$ / shares
shares
Number of Shares  
Stock Options Outstanding at beginning of period (in shares) | shares 2,379
Stock Options Granted (in shares) | shares 2,320
Stock Options Exercised (in shares) | shares 0
Stock Options Forfeited or expired (in shares) | shares (642)
Stock Options Outstanding at end of period (in shares) | shares 4,057
Stock Options Expected to Vest at end of period (in shares) | shares 2,268
Stock Options Exercisable at end of period (in shares) | shares 1,634
Grant Date Weighted Average Exercise Price Per Share  
Grant Date Weighted Average Exercise Price of Options Outstanding at beginning of period (in dollar per share) $ 16.40
Grant Date Weighted Average Exercise Price of Options Granted (in dollar per share) 2.60
Grant Date Weighted Average Exercise Price of Options Exercised (in dollar per share) 0
Grant Date Weighted Average Exercise Price of Options Forfeited or expired (in dollar per share) 15.09
Grant Date Weighted Average Exercise Price of Options Outstanding at end of period (in dollar per share) 8.71
Grant Date Weighted Average Exercise Price of Options Expected to Vest at end of period (in dollar per share) 2.97
Grant Date Weighted Average Exercise Price of Options Exercisable at end of period (in dollar per share) $ 17.25
Weighted-Average Remaining Contractual Life (in years)  
Weighted Average Remaining Contractual Life of Options Outstanding 7 years
Weighted Average Remaining Contractual Life of Options Expected to Vest at end of period 9 years 7 months 6 days
Weighted Average Remaining Contractual Life of Options Exercisable at end of period 3 years 3 months 18 days
Aggregate Intrinsic Value  
Aggregate Intrinsic Value of Options Outstanding at end of period | $ $ 1,624
Aggregate Intrinsic Value of Options Expected to Vest at end of period | $ 1,517
Aggregate Intrinsic Value of Options Exercisable at end of period | $ $ 0
Company's Stock Options  
Weighted average grant date fair value of options granted (in dollar per share) $ 1.25
Total intrinsic value of options exercised | $ $ 0
v3.19.3.a.u2
Debt - Letters of Credit (Details) - USD ($)
$ in Millions
Nov. 02, 2019
Feb. 02, 2019
Letter of Credit [Member] | Stand-by LCs [Member]    
Debt Instrument [Line Items]    
Letters of credit outstanding $ 2.7 $ 3.0
v3.19.3.a.u2
Leases - Operating Lease Maturity after Adoption of Topic 842 (Details)
$ in Thousands
Nov. 02, 2019
USD ($)
Leases [Abstract]  
2019 (remaining) $ 67,114
2020 272,902
2021 236,660
2022 217,736
2023 193,253
Thereafter 394,877
Total minimum lease payments 1,382,542
Less: amount of lease payments representing interest 223,556
Present value of future minimum lease payments 1,158,986
Less: current obligations under leases 222,439
Long-term lease obligations $ 936,547
v3.19.3.a.u2
Earnings Per Share (Tables)
9 Months Ended
Nov. 02, 2019
Earnings Per Share [Abstract]  
Schedule of Earnings Per Share, Basic and Diluted
The following table provides a reconciliation between basic and diluted weighted-average shares used to calculate basic and diluted earnings per share:

Thirteen Weeks EndedThirty-Nine Weeks Ended
November 2, 2019November 3, 2018November 2, 2019November 3, 2018
(in thousands) 
Weighted-average shares - basic66,438  72,512  66,845  73,959  
Dilutive effect of stock options and restricted stock units—  961  —  798  
Weighted-average shares - diluted66,438  73,473  66,845  74,757  
v3.19.3.a.u2
Share-Based Compensation (Tables)
9 Months Ended
Nov. 02, 2019
Share-based Payment Arrangement [Abstract]  
Schedule of Shared-based Compensation Expense
The following summarizes share-based compensation expense:

Thirteen Weeks EndedThirty-Nine Weeks Ended
November 2, 2019November 3, 2018November 2, 2019November 3, 2018
(in thousands)
Restricted stock units$2,088  $3,015  $6,417  $9,347  
Stock options304  255  468  842  
Performance-based restricted stock units16  280  319  627  
Total share-based compensation$2,408  $3,550  $7,204  $10,816  
Schedule Activity related to Restricted Stock Units, Including Awards with Performance Conditions
The Company’s activity with respect to RSUs, including awards with performance conditions granted prior to 2018, for the thirty-nine weeks ended November 2, 2019 was as follows:

Number of
Shares
Grant Date
Weighted Average
Fair Value Per Share
(in thousands, except per share amounts)
Unvested, February 2, 2019
3,064  $8.95  
Granted3,830  $3.70  
Vested(1,172) $10.17  
Forfeited(1,052) $6.43  
Unvested, November 2, 2019
4,670  $4.91  
Schedule of Activity related to Stock Options
The Company’s activity with respect to stock options during the thirty-nine weeks ended November 2, 2019 was as follows:

Number of
Shares
Grant Date
Weighted Average
Exercise Price Per Share
Weighted-Average Remaining Contractual Life (in years)Aggregate Intrinsic Value
(in thousands, except per share amounts and years)
Outstanding, February 2, 20192,379  $16.40  
Granted2,320  $2.60  
Exercised—  $—  
Forfeited or expired(642) $15.09  
Outstanding, November 2, 2019
4,057  $8.71  7.0$1,624  
Expected to vest at November 2, 2019
2,268  $2.97  9.6$1,517  
Exercisable at November 2, 2019
1,634  $17.25  3.3$—  
Supplemental Stock Options Information
The following provides additional information regarding the Company's stock options:

Thirty-Nine Weeks Ended
November 2, 2019
(in thousands, except per share amounts)
Weighted average grant date fair value of options granted (per share)$1.25  
Total intrinsic value of options exercised$—  
Schedule of Weighted-Average Assumptions, Stock Options
The fair value of stock options was estimated at the grant date using the Black-Scholes-Merton option pricing model with the following weighted-average assumptions:
Thirty-Nine Weeks Ended
November 2, 2019
Risk-free interest rate (1)
1.93 %
Price volatility (2)
47.27 %
Expected term (years) (3)
6.29
Dividend yield (4)
—  
(1)Represents the yield on U.S. Treasury securities with a term consistent with the expected term of the stock options.
(2)Primarily based on the historical volatility of the Company's common stock over a period consistent with the expected term of the stock options.
(3)Calculated using the midpoint scenario, which combines historical exercise data with hypothetical exercise data for outstanding options. The Company believes this data currently represents the best estimate of the expected term of granted employee stock options.
(4)The Company does not currently plan on paying regular dividends.
v3.19.3.a.u2
Revenue Recognition - Loyalty Deferred Revenue (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Nov. 02, 2019
Nov. 03, 2018
Nov. 02, 2019
Nov. 03, 2018
Contract With Customer, Liability [Roll Forward]        
Beginning balance     $ 40,466  
Ending balance $ 32,394   32,394  
Loyalty Program [Member]        
Contract With Customer, Liability [Roll Forward]        
Beginning balance 14,766 $ 18,313 15,319 $ 14,186
Reduction in revenue/(revenue recognized) (1,313) (2,843) (1,866) 1,284
Ending balance $ 13,453 $ 15,470 $ 13,453 $ 15,470
v3.19.3.a.u2
Leases - Supplemental Cash Flow Information (Details)
$ in Thousands
9 Months Ended
Nov. 02, 2019
USD ($)
Cash paid for amounts included in the measurement of lease liabilities:  
Operating cash flows for operating leases $ 214,609
Right-of-use assets obtained in exchange for operating lease liabilities $ 11,491
v3.19.3.a.u2
Intangible Assets (Details) - USD ($)
$ in Thousands
9 Months Ended
Nov. 02, 2019
Feb. 02, 2019
Finite-Lived Intangible Assets [Line Items]    
Accumulated Amortization  $ 356 $ 319
Indefinite-lived Intangible Assets [Line Items]    
Cost 197,618 197,618
Cost 198,043 198,043
Ending Net Balance 197,687 197,724
Tradename/domain names/trademarks [Member]    
Indefinite-lived Intangible Assets [Line Items]    
Cost 197,618 197,618
Licensing arrangements [Member]    
Finite-Lived Intangible Assets [Line Items]    
Cost 425 425
Accumulated Amortization  356 319
Ending Net Balance $ 69 $ 106
Finite-lived intangible assets, useful life 10 years  
v3.19.3.a.u2
Revenue Recognition - Gift Card Liability (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Nov. 02, 2019
Nov. 03, 2018
Nov. 02, 2019
Nov. 03, 2018
Contract With Customer, Liability [Roll Forward]        
Beginning balance     $ 40,466  
Ending balance $ 32,394   32,394  
Gift Card Liability [Member]        
Contract With Customer, Liability [Roll Forward]        
Beginning balance 19,966 $ 20,335 25,133 $ 26,737
Issuances 7,157 7,393 22,826 24,376
Redemptions (7,699) (8,241) (26,617) (29,681)
Gift card breakage (623) (616) (2,541) (2,561)
Ending balance $ 18,801 $ 18,871 $ 18,801 $ 18,871
v3.19.3.a.u2
Leases
9 Months Ended
Nov. 02, 2019
Leases [Abstract]  
Leases Leases
The Company leases all of its store locations and its corporate headquarters, which also includes its distribution center, under operating leases. The store leases typically have initial terms of 5 to 10 years. The current lease term for the corporate headquarters expires in 2026, with one optional five-year extension period. The Company also leases certain equipment and other assets under operating leases, typically with initial terms of 3 to 5 years. The lease term includes the initial contractual term as well as any options to extend the lease when it is reasonably certain that the Company will exercise that option. Leases with an initial term of 12 months or less (short-term leases) are not recorded on the balance sheet. The Company does not currently have any material short-term leases. The Company is generally obligated for the cost of property taxes, insurance and other landlord costs, including common area maintenance charges, relating to its leases. If these charges are fixed, they are combined with lease payments in determining the lease liability; however, if such charges are not fixed, they are considered variable lease costs and are expensed as incurred. The variable payments are not included in the measurement of the lease liability or asset. The Company’s finance leases are immaterial.

Certain lease agreements include rental payments based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The following table is a summary of the Company’s components of net lease cost, which is included in cost of goods sold, buying and occupancy costs, on the unaudited Consolidated Statements of Income and Comprehensive Income:

Thirty-Nine Weeks Ended
November 2, 2019
(in thousands)
Operating lease costs$206,672  
Variable and short-term lease costs53,375  
Total lease costs$260,047  
 
Supplemental cash flow information related to leases is as follows:

Thirty-Nine Weeks Ended
November 2, 2019
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases$214,609  
Right-of-use assets obtained in exchange for operating lease liabilities$11,491  

Supplemental balance sheet information related to leases as of November 2, 2019 is as follows:

Thirty-Nine Weeks Ended
November 2, 2019
Operating leases:
Weighted average remaining lease term (in years)5.8
Weighted average discount rate4.8 %

The Company’s lease agreements do not provide an implicit rate, so the Company uses an estimated incremental borrowing rate, which is derived from third-party information available at the lease commencement date, in determining the present value of lease payments. The rate used is for a secured borrowing of a similar term as the lease.
The following table reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities recorded on the unaudited Consolidated Balance Sheets as of November 2, 2019:

November 2, 2019
(in thousands)
2019 (remaining)$67,114  
2020272,902  
2021236,660  
2022217,736  
2023193,253  
Thereafter394,877  
Total minimum lease payments1,382,542  
Less: amount of lease payments representing interest223,556  
Present value of future minimum lease payments1,158,986  
Less: current obligations under leases222,439  
Long-term lease obligations$936,547  

As previously disclosed in the Company's Consolidated Financial Statements for the year ending February 2, 2019, future minimum lease payments for noncancelable operating leases, under the previous lease accounting standard, were as follows at February 2, 2019 (in thousands):

2019$221,816  
2020189,285  
2021163,748  
2022151,718  
2023135,345  
Thereafter290,790  
Total$1,152,702  
Lease Financing Obligations
Prior to the adoption of ASC 842, in certain lease arrangements, the Company was involved in the construction of the building. To the extent the Company was involved in the construction of structural improvements or took construction risk prior to commencement of a lease, it was deemed the owner of the project for accounting purposes. Therefore, the Company recorded an asset in property and equipment on the unaudited Consolidated Balance Sheets, including any capitalized interest costs, and related liabilities in accrued interest and lease financing obligations in other long-term liabilities on the unaudited Consolidated Balance Sheets, for the replacement cost of the Company’s portion of the pre-existing building plus the amount of construction costs incurred by the landlord as of the balance sheet date.
The initial terms of the lease arrangements for which the Company was considered the owner are expected to expire in 2023 and 2029. The net book value of landlord-funded construction, replacement cost of pre-existing property, and capitalized interest in property and equipment on the unaudited Consolidated Balance Sheets was $56.6 million as of February 2, 2019. There was also $65.1 million of lease financing obligations as of February 2, 2019 in other long-term liabilities on the unaudited Consolidated Balance Sheets. These amounts were eliminated as part of the adoption of ASC 842.
Rent expense relating to the land was recognized on a straight-line basis. The Company did not report rent expense for the portion of the rent payment determined to be related to the buildings which were owned for accounting purposes. Rather, this
portion of the rent payment under the lease was recognized as interest expense and a reduction of the lease financing obligations.In February 2016, the Company amended its lease arrangement with the landlord of the Times Square Flagship store. The amendment provided the landlord with the option to cancel the lease upon sufficient notice through December 31, 2016. The option was never exercised and therefore expired on December 31, 2016. In conjunction with amending the lease, the Company recognized an $11.4 million put option liability that was being amortized through interest expense over the remaining lease term. As of February 2, 2019, the remaining balance related to the put option was $7.5 million of which $6.7 million was included within other long-term liabilities on the Consolidated Balance Sheets. These amounts were eliminated as part of the adoption of ASC 842.
Leases Leases
The Company leases all of its store locations and its corporate headquarters, which also includes its distribution center, under operating leases. The store leases typically have initial terms of 5 to 10 years. The current lease term for the corporate headquarters expires in 2026, with one optional five-year extension period. The Company also leases certain equipment and other assets under operating leases, typically with initial terms of 3 to 5 years. The lease term includes the initial contractual term as well as any options to extend the lease when it is reasonably certain that the Company will exercise that option. Leases with an initial term of 12 months or less (short-term leases) are not recorded on the balance sheet. The Company does not currently have any material short-term leases. The Company is generally obligated for the cost of property taxes, insurance and other landlord costs, including common area maintenance charges, relating to its leases. If these charges are fixed, they are combined with lease payments in determining the lease liability; however, if such charges are not fixed, they are considered variable lease costs and are expensed as incurred. The variable payments are not included in the measurement of the lease liability or asset. The Company’s finance leases are immaterial.

Certain lease agreements include rental payments based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The following table is a summary of the Company’s components of net lease cost, which is included in cost of goods sold, buying and occupancy costs, on the unaudited Consolidated Statements of Income and Comprehensive Income:

Thirty-Nine Weeks Ended
November 2, 2019
(in thousands)
Operating lease costs$206,672  
Variable and short-term lease costs53,375  
Total lease costs$260,047  
 
Supplemental cash flow information related to leases is as follows:

Thirty-Nine Weeks Ended
November 2, 2019
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases$214,609  
Right-of-use assets obtained in exchange for operating lease liabilities$11,491  

Supplemental balance sheet information related to leases as of November 2, 2019 is as follows:

Thirty-Nine Weeks Ended
November 2, 2019
Operating leases:
Weighted average remaining lease term (in years)5.8
Weighted average discount rate4.8 %

The Company’s lease agreements do not provide an implicit rate, so the Company uses an estimated incremental borrowing rate, which is derived from third-party information available at the lease commencement date, in determining the present value of lease payments. The rate used is for a secured borrowing of a similar term as the lease.
The following table reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities recorded on the unaudited Consolidated Balance Sheets as of November 2, 2019:

November 2, 2019
(in thousands)
2019 (remaining)$67,114  
2020272,902  
2021236,660  
2022217,736  
2023193,253  
Thereafter394,877  
Total minimum lease payments1,382,542  
Less: amount of lease payments representing interest223,556  
Present value of future minimum lease payments1,158,986  
Less: current obligations under leases222,439  
Long-term lease obligations$936,547  

As previously disclosed in the Company's Consolidated Financial Statements for the year ending February 2, 2019, future minimum lease payments for noncancelable operating leases, under the previous lease accounting standard, were as follows at February 2, 2019 (in thousands):

2019$221,816  
2020189,285  
2021163,748  
2022151,718  
2023135,345  
Thereafter290,790  
Total$1,152,702  
Lease Financing Obligations
Prior to the adoption of ASC 842, in certain lease arrangements, the Company was involved in the construction of the building. To the extent the Company was involved in the construction of structural improvements or took construction risk prior to commencement of a lease, it was deemed the owner of the project for accounting purposes. Therefore, the Company recorded an asset in property and equipment on the unaudited Consolidated Balance Sheets, including any capitalized interest costs, and related liabilities in accrued interest and lease financing obligations in other long-term liabilities on the unaudited Consolidated Balance Sheets, for the replacement cost of the Company’s portion of the pre-existing building plus the amount of construction costs incurred by the landlord as of the balance sheet date.
The initial terms of the lease arrangements for which the Company was considered the owner are expected to expire in 2023 and 2029. The net book value of landlord-funded construction, replacement cost of pre-existing property, and capitalized interest in property and equipment on the unaudited Consolidated Balance Sheets was $56.6 million as of February 2, 2019. There was also $65.1 million of lease financing obligations as of February 2, 2019 in other long-term liabilities on the unaudited Consolidated Balance Sheets. These amounts were eliminated as part of the adoption of ASC 842.
Rent expense relating to the land was recognized on a straight-line basis. The Company did not report rent expense for the portion of the rent payment determined to be related to the buildings which were owned for accounting purposes. Rather, this
portion of the rent payment under the lease was recognized as interest expense and a reduction of the lease financing obligations.In February 2016, the Company amended its lease arrangement with the landlord of the Times Square Flagship store. The amendment provided the landlord with the option to cancel the lease upon sufficient notice through December 31, 2016. The option was never exercised and therefore expired on December 31, 2016. In conjunction with amending the lease, the Company recognized an $11.4 million put option liability that was being amortized through interest expense over the remaining lease term. As of February 2, 2019, the remaining balance related to the put option was $7.5 million of which $6.7 million was included within other long-term liabilities on the Consolidated Balance Sheets. These amounts were eliminated as part of the adoption of ASC 842.
v3.19.3.a.u2
Investment in Equity Interests
9 Months Ended
Nov. 02, 2019
Equity Method Investments and Joint Ventures [Abstract]  
Investment in Equity Interests Investment in Equity InterestsIn 2016, the Company made a $10.1 million investment in Homage, LLC, a privately held retail company based in Columbus, Ohio. The non-controlling investment in the entity is being accounted for under the equity method. Under the terms of the agreement governing the investment, the Company’s investment was increased by $0.5 million during the second quarter of both 2018 and 2019, as the result of an accrual of a non-cash preferred yield. This investment is assessed for impairment whenever factors indicate an other than temporary loss in value. Factors providing evidence of such a loss include the fair value of an investment that is less than its carrying value, absence of an ability to recover the carrying value or the investee’s inability to generate income sufficient to justify the carrying value. As a result of this assessment in 2018, the Company determined the carrying value exceeded the fair value and recognized an $8.4 million impairment charge within other expense/(income), net in the Consolidated Statements of Income and Comprehensive Income. In addition, during the second quarter of 2019, the Company recognized an additional $0.5 million impairment charge within other expense/(income), net in the unaudited Consolidated Statements of Income and Comprehensive Income. The remaining $2.7 million investment, inclusive of the $1.5 million preferred yield, is included in other assets on the unaudited Consolidated Balance Sheets. The fair value of the equity method investment was determined based on applying income and market approaches. The income approach relied on the discounted cash flow method and the market approach relied on a market multiple approach considering historical and projected financial results.
v3.19.3.a.u2
Investment in Equity Interests - Equity Method Investments (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended 12 Months Ended
Aug. 03, 2019
Aug. 04, 2018
Nov. 02, 2019
Nov. 03, 2018
Feb. 02, 2019
Jan. 28, 2017
Equity Method Investments and Joint Ventures [Abstract]            
Equity method investment     $ 2,700     $ 10,100
Increase in equity method investment during period $ 500 $ 500        
Impairment charge $ 500   500 $ 0 $ 8,400  
Preferred yield     $ 1,500      
v3.19.3.a.u2
Revenue Recognition
9 Months Ended
Nov. 02, 2019
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition
The following is information regarding the Company’s major product categories and sales channels:

Thirteen Weeks EndedThirty-Nine Weeks Ended
 November 2, 2019November 3, 2018November 2, 2019November 3, 2018
(in thousands)
Apparel$422,468  $446,395  $1,219,628  $1,292,029  
Accessories and other48,355  50,860  144,846  151,007  
Other revenue17,660  17,706  47,995  44,882  
Total net sales$488,483  $514,961  $1,412,469  $1,487,918  

Thirteen Weeks EndedThirty-Nine Weeks Ended
 November 2, 2019November 3, 2018November 2, 2019November 3, 2018
(in thousands)
Retail$356,758  $388,830  $1,022,703  $1,137,092  
Outlet114,065  108,425  341,771  305,944  
Other revenue17,660  17,706  47,995  44,882  
Total net sales$488,483  $514,961  $1,412,469  $1,487,918  
In light of the progress made in transforming into an omni-channel business model and the growth of the outlet channel, during the first quarter of 2019, the Company began providing sales channel information for retail, which includes retail store and e-commerce sales, outlets, and other revenue. Historically, the Company provided sales data for stores, which included both retail and outlet stores, and e-commerce. Other revenue is unchanged from the Company’s prior classification.

Other revenue consists primarily of sell-off revenue related to mark-out-of-stock inventory sales to third parties, shipping and handling revenue related to e-commerce activity, revenue earned from our private label credit card agreement, revenue from gift card breakage, and revenue from franchise agreements.
Revenue related to the Company’s international franchise operations were not material for any period presented and, therefore, are not reported separately from domestic revenue.
Revenue Recognition Policies
Merchandise Sales
The Company recognizes sales for in-store purchases at the point-of-sale. Revenue related to e-commerce transactions is recognized upon shipment based on the fact that control transfers to the customer at that time. The Company has made a policy election to treat shipping and handling as costs to fulfill the contract and as a result any amounts received from customers are included in the transaction price allocated to the performance obligation of providing goods with a corresponding amount accrued within cost of goods sold, buying and occupancy costs in the unaudited Consolidated Statements of Income and Comprehensive Income for amounts paid to applicable carriers. Associate discounts on merchandise purchases are classified as a reduction of net sales. Net sales excludes sales tax collected from customers and remitted to governmental authorities.
Loyalty Program
The Company maintains a customer loyalty program in which customers earn points toward rewards for qualifying purchases and other marketing activities. Upon reaching specified point values, customers are issued a reward, which they may redeem on merchandise purchases at the Company’s stores or on its website. Generally, rewards earned must be redeemed within 60 days from the date of issuance. The Company defers a portion of merchandise sales based on the estimated standalone selling price of the points earned. This deferred revenue is recognized as certificates are redeemed or expire. To calculate this deferral, the Company makes assumptions related to card holder redemption rates based on historical experience. The loyalty liability is included in deferred revenue on the unaudited Consolidated Balance Sheets.

Thirteen Weeks EndedThirty-Nine Weeks Ended
 November 2, 2019November 3, 2018November 2, 2019November 3, 2018
(in thousands)
Beginning balance loyalty deferred revenue$14,766  $18,313  $15,319  $14,186  
Reduction in revenue/(revenue recognized)(1,313) (2,843) (1,866) 1,284  
Ending balance loyalty deferred revenue$13,453  $15,470  $13,453  $15,470  
Sales Returns Reserve
The Company reduces net sales and provides a reserve for projected merchandise returns based on prior experience. Merchandise returns are often resalable merchandise and are refunded by issuing the same payment tender as the original purchase. The sales returns reserve was $11.8 million and $9.9 million as of November 2, 2019 and February 2, 2019, respectively, and is included in accrued expenses on the unaudited Consolidated Balance Sheets. The asset related to projected returned merchandise is included in other assets on the unaudited Consolidated Balance Sheets.
Gift Cards
The Company sells gift cards in its stores, on its e-commerce website, and through third parties. These gift cards do not expire or lose value over periods of inactivity. The Company accounts for gift cards by recognizing a liability at the time a gift card is sold. The gift card liability balance was $18.8 million and $25.1 million, as of November 2, 2019 and February 2, 2019, respectively, and is included in deferred revenue on the Consolidated Balance Sheets. The Company recognizes revenue from gift cards when they are redeemed by the customer. The Company also recognizes income on unredeemed gift cards, referred to as “gift card breakage.” Gift card breakage is recognized proportionately using a time-based attribution method from issuance of the gift card to the time when it can be determined that the likelihood of the gift card being redeemed is remote and that there is no legal obligation to remit unredeemed gift cards to relevant jurisdictions. The gift card breakage rate is based on historical redemption patterns. Gift card breakage is included in net sales in the unaudited Consolidated Statements of Income and Comprehensive Income.
Thirteen Weeks EndedThirty-Nine Weeks Ended
 November 2, 2019November 3, 2018November 2, 2019November 3, 2018
(in thousands)
Beginning gift card liability$19,966  $20,335  $25,133  $26,737  
Issuances7,157  7,393  22,826  24,376  
Redemptions(7,699) (8,241) (26,617) (29,681) 
Gift card breakage(623) (616) (2,541) (2,561) 
Ending gift card liability$18,801  $18,871  $18,801  $18,871  
Private Label Credit Card
The Company has an agreement with Comenity Bank (the “Bank”) to provide customers with private label credit cards (the “Card Agreement”) which was amended on August 28, 2017 to extend the term of the arrangement through December 31, 2024. Each private label credit card bears the logo of the Express brand and can only be used at the Company’s store locations and e-commerce channel. The Bank is the sole owner of the accounts issued under the private label credit card program and absorbs the losses associated with non-payment by the private label card holders and a portion of any fraudulent usage of the accounts.
Pursuant to the Card Agreement, the Company receives amounts from the Bank during the term based on a percentage of private label credit card sales and is also eligible to receive incentive payments for the achievement of certain performance targets. These funds are recorded as net sales in the unaudited Consolidated Statements of Income and Comprehensive Income. The Company also receives reimbursement funds from the Bank for expenses the Company incurs. These reimbursement funds are used by the Company to fund marketing and other programs associated with the private label credit card. The reimbursement funds received related to private label credit cards are recorded as net sales in the unaudited Consolidated Statements of Income and Comprehensive Income.

In connection with the Card Agreement, the Bank agreed to pay the Company a $20.0 million refundable payment which the Company recognized upon receipt as deferred revenue within other long-term liabilities in the Consolidated Balance Sheets and began to recognize into income on a straight-line basis commencing January of 2018. As of November 2, 2019, the deferred revenue balance of $14.9 million will be recognized over the remaining term of the amended Card Agreement within the other revenue component of net sales.
Thirteen Weeks EndedThirty-Nine Weeks Ended
 November 2, 2019November 3, 2018November 2, 2019November 3, 2018
(in thousands)
Beginning balance refundable payment liability$15,589  $18,467  $17,028  $19,906  
Recognized in revenue(719) (719) (2,158) (2,158) 
Ending balance refundable payment liability $14,870  $17,748  $14,870  $17,748  
v3.19.3.a.u2
Consolidated Statements of Income and Comprehensive Income - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Nov. 02, 2019
Nov. 03, 2018
Nov. 02, 2019
Nov. 03, 2018
Income Statement [Abstract]        
NET SALES $ 488,483 $ 514,961 $ 1,412,469 $ 1,487,918
COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS 350,810 356,812 1,025,795 1,046,204
Gross profit 137,673 158,149 386,674 441,714
OPERATING EXPENSES:        
Selling, general, and administrative expenses 144,301 148,294 415,391 426,583
Restructuring costs 0 166 0 166
Other operating expense/(income), net 47 (513) (728) (689)
Total operating expenses 144,348 147,947 414,663 426,060
OPERATING (LOSS)/INCOME (6,675) 10,202 (27,989) 15,654
INTEREST (INCOME)/EXPENSE, NET (690) 32 (2,185) 168
OTHER INCOME, NET 0 0 0 (500)
(LOSS)/INCOME BEFORE INCOME TAXES (5,985) 10,170 (25,804) 15,986
INCOME TAX (BENEFIT)/EXPENSE (2,880) 2,203 (3,062) 5,268
NET (LOSS)/INCOME (3,105) 7,967 (22,742) 10,718
COMPREHENSIVE (LOSS)/INCOME $ (3,105) $ 7,967 $ (22,742) $ 10,718
EARNINGS PER SHARE:        
Basic (in dollars per share) $ (0.05) $ 0.11 $ (0.34) $ 0.14
Diluted (in dollars per share) $ (0.05) $ 0.11 $ (0.34) $ 0.14
WEIGHTED AVERAGE SHARES OUTSTANDING:        
Basic (in shares) 66,438 72,512 66,845 73,959
Diluted (in shares) 66,438 73,473 66,845 74,757
v3.19.3.a.u2
Income Taxes (Details) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Nov. 02, 2019
Nov. 03, 2018
Nov. 02, 2019
Nov. 03, 2018
Income Tax Disclosure [Abstract]        
Effective income tax rate 48.10% 21.70% 11.90% 33.00%
Change in estimate from previous quarter provision due to a change in the previously forecasted annual effective rate $ 1.4      
Discrete tax expense, share-based compensation     $ 2.6 $ 1.3
Net discrete tax benefit       $ 0.6
v3.19.3.a.u2
Revenue Recognition - Refundable Payment Liability (Details) - Comenity Bank [Member] - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Nov. 02, 2019
Nov. 03, 2018
Nov. 02, 2019
Nov. 03, 2018
Movement in Deferred Revenue [Roll Forward]        
Beginning balance refundable payment liability $ 15,589 $ 18,467 $ 17,028 $ 19,906
Recognized in revenue (719) (719) (2,158) (2,158)
Ending balance refundable payment liability $ 14,870 $ 17,748 $ 14,870 $ 17,748
v3.19.3.a.u2
Leases - Supplemental Balance Sheet Information (Details)
Nov. 02, 2019
Leases [Abstract]  
Weighted average remaining lease term (in years) 5 years 9 months 18 days
Weighted average discount rate 4.80%
v3.19.3.a.u2
Income Taxes
9 Months Ended
Nov. 02, 2019
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The provision for income taxes is based on a current estimate of the annual effective tax rate, adjusted to reflect the effect of discrete items. The Company’s effective income tax rate may fluctuate from quarter to quarter as a result of a variety of factors, including the estimate of annual pre-tax income, the related changes in the estimate, and the effect of discrete items. The impact of these items on the effective tax rate will be greater at lower levels of pre-tax earnings.
For 2019, the Company's estimated annual effective tax rate has fluctuated with small changes in the estimated full-year pre-tax income due to near break-even forecasted pre-tax earnings. Differences between pre-tax book and taxable income, such as non-deductible executive compensation, cause the effective income tax rate to vary significantly. Accordingly, the Company does not believe that it can estimate the annual effective tax rate for 2019 with sufficient precision and, as permitted by GAAP, has determined the income tax benefit for the thirty-nine weeks ended November 2, 2019 based upon year-to-date pre-tax loss and the effect of differences between book and taxable loss.
The Company’s effective tax rate was 48.1% and 21.7% for the thirteen weeks ended November 2, 2019 and November 3, 2018, respectively. The effective tax rate for the thirteen weeks ended November 2, 2019 reflects a $1.4 million change in estimate from the second quarter provision due to a change in the previously forecasted annual effective tax rate.
The Company’s effective tax rate was 11.9% and 33.0% for the thirty-nine weeks ended November 2, 2019 and November 3, 2018, respectively. The effective tax rate for the thirty-nine weeks ended November 2, 2019 reflects a tax benefit from a pre-tax loss offset by $2.6 million of discrete tax expense related to a tax shortfall for share-based compensation. The effective tax rate
for the thirty-nine weeks ended November 3, 2018 reflects $1.3 million of discrete tax expense related to a tax shortfall for share-based compensation partially offset by a net discrete tax benefit of $0.6 million.
v3.19.3.a.u2
Commitments and Contingencies
9 Months Ended
Nov. 02, 2019
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
In a complaint filed in January 2017 by Mr. Jorge Chacon in the Superior Court for the State of California for the County of Orange, certain subsidiaries of the Company were named as defendants in a representative action alleging violations of California state wage and hour statutes and other labor standards. The lawsuit seeks unspecified monetary damages and attorneys’ fees. In July 2018, former associate Ms. Christie Carr filed suit in Alameda County Superior Court for the State of California naming certain subsidiaries of the Company in a representative action alleging violations of California State wage and hour statutes and other labor standard violations. The lawsuit seeks unspecified monetary damages and attorneys’ fees. On January 28, 2019, Jorge Chacon filed a second representative action in the Superior Court for the State of California for the County of Orange alleging violations of California state wages and hour statutes and other labor standard violations. The lawsuit seeks unspecified monetary damages and attorneys' fees. The Company is vigorously defending itself against these claims and, as of November 2, 2019, has established an estimated liability based on its best estimate of the outcome of the matters.

The Company is subject to various other claims and contingencies arising out of the normal course of business. Management believes that the ultimate liability arising from such claims and contingencies, if any, is not likely to have a material adverse effect on the Company’s results of operations, financial condition, or cash flows.
v3.19.3.a.u2
Cover Page - shares
9 Months Ended
Nov. 02, 2019
Nov. 30, 2019
Cover page.    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Nov. 02, 2019  
Document Transition Report false  
Entity File Number 001-34742  
Entity Registrant Name EXPRESS, INC.  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 26-2828128  
Entity Address, Address Line One 1 Express Drive  
Entity Address, City or Town Columbus  
Entity Address, State or Province OH  
Entity Address, Postal Zip Code 43230  
City Area Code 614  
Local Phone Number 474-4001  
Title of 12(b) Security Common Stock, $.01 par value  
Trading Symbol EXPR  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Outstanding (in shares)   63,907,212
Entity Central Index Key 0001483510  
Current Fiscal Year End Date --02-01  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q3  
Amendment Flag false  
v3.19.3.a.u2
Consolidated Statements of Changes in Stockholders' Equity - USD ($)
shares in Thousands, $ in Thousands
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Accumulated Other Comprehensive Loss [Member]
Treasury Stock [Member]
Balance, at start of period (in shares) at Feb. 03, 2018   76,724        
Balance, at start of period at Feb. 03, 2018 $ 648,314 $ 926 $ 199,099 $ 704,395 $ 0 $ (256,106)
Balance, at start of period, treasury stock (in shares) at Feb. 03, 2018           15,923
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net (loss)/income 517     517    
Exercise of stock options and restricted stock (in shares)   854        
Exercise of stock options and restricted stock 0 $ 9 (9)      
Share-based compensation 3,814   3,814      
Repurchase of common stock (in shares)   2,519       2,519
Repurchase of common stock (18,245)         $ (18,245)
Balance, at end of period (in shares) at May. 05, 2018   75,059        
Balance, at end of period at May. 05, 2018 634,400 $ 935 202,904 704,912 0 $ (274,351)
Balance, at end of period, treasury stock (in shares) at May. 05, 2018           18,442
Balance, at start of period (in shares) at Feb. 03, 2018   76,724        
Balance, at start of period at Feb. 03, 2018 648,314 $ 926 199,099 704,395 0 $ (256,106)
Balance, at start of period, treasury stock (in shares) at Feb. 03, 2018           15,923
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net (loss)/income 10,718          
Balance, at end of period (in shares) at Nov. 03, 2018   70,904        
Balance, at end of period at Nov. 03, 2018 611,037 $ 936 209,876 715,099 0 $ (314,874)
Balance, at end of period, treasury stock (in shares) at Nov. 03, 2018           22,728
Balance, at start of period (in shares) at Feb. 03, 2018   76,724        
Balance, at start of period at Feb. 03, 2018 $ 648,314 $ 926 199,099 704,395 0 $ (256,106)
Balance, at start of period, treasury stock (in shares) at Feb. 03, 2018           15,923
Balance, at end of period (in shares) at Feb. 02, 2019 93,632 67,424        
Balance, at end of period at Feb. 02, 2019 $ 585,178 $ 936 211,981 713,864 0 $ (341,603)
Balance, at end of period, treasury stock (in shares) at Feb. 02, 2019 26,208         26,208
Balance, at start of period (in shares) at May. 05, 2018   75,059        
Balance, at start of period at May. 05, 2018 $ 634,400 $ 935 202,904 704,912 0 $ (274,351)
Balance, at start of period, treasury stock (in shares) at May. 05, 2018           18,442
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net (loss)/income 2,234     2,234    
Exercise of stock options and restricted stock (in shares)   131        
Exercise of stock options and restricted stock 0 $ 1 (1)      
Share-based compensation 3,452   3,452      
Repurchase of common stock (in shares)   1,809       1,809
Repurchase of common stock (16,396)         $ (16,396)
Balance, at end of period (in shares) at Aug. 04, 2018   73,381        
Balance, at end of period at Aug. 04, 2018 623,690 $ 936 206,355 707,146 0 $ (290,747)
Balance, at end of period, treasury stock (in shares) at Aug. 04, 2018           20,251
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net (loss)/income 7,967     7,967    
Exercise of stock options and restricted stock (in shares)   3       3
Exercise of stock options and restricted stock 0   (29) (14)   $ 43
Share-based compensation 3,550   3,550      
Repurchase of common stock (in shares)   2,480       2,480
Repurchase of common stock (24,170)         $ (24,170)
Balance, at end of period (in shares) at Nov. 03, 2018   70,904        
Balance, at end of period at Nov. 03, 2018 $ 611,037 $ 936 209,876 715,099 0 $ (314,874)
Balance, at end of period, treasury stock (in shares) at Nov. 03, 2018           22,728
Balance, at start of period (in shares) at Feb. 02, 2019 93,632 67,424        
Balance, at start of period at Feb. 02, 2019 $ 585,178 $ 936 211,981 713,864 0 $ (341,603)
Balance, at start of period, treasury stock (in shares) at Feb. 02, 2019 26,208         26,208
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net (loss)/income $ (9,934)     (9,934)    
Exercise of stock options and restricted stock (in shares)   1,024       1,024
Exercise of stock options and restricted stock 0   (4,316) (8,735)   $ 13,051
Share-based compensation 2,372   2,372      
Repurchase of common stock (in shares)   1,273       1,273
Repurchase of common stock (6,387)         $ (6,387)
Balance, at end of period (in shares) at May. 04, 2019   67,175        
Balance, at end of period at May. 04, 2019 $ 565,747 $ 936 210,037 689,713 0 $ (334,939)
Balance, at end of period, treasury stock (in shares) at May. 04, 2019           26,457
Balance, at start of period (in shares) at Feb. 02, 2019 93,632 67,424        
Balance, at start of period at Feb. 02, 2019 $ 585,178 $ 936 211,981 713,864 0 $ (341,603)
Balance, at start of period, treasury stock (in shares) at Feb. 02, 2019 26,208         26,208
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net (loss)/income $ (22,742)          
Balance, at end of period (in shares) at Nov. 02, 2019 93,632 64,501        
Balance, at end of period at Nov. 02, 2019 $ 549,002 $ 936 214,389 675,539 0 $ (341,862)
Balance, at end of period, treasury stock (in shares) at Nov. 02, 2019 29,131         29,131
Balance, at start of period (in shares) at May. 04, 2019   67,175        
Balance, at start of period at May. 04, 2019 $ 565,747 $ 936 210,037 689,713 0 $ (334,939)
Balance, at start of period, treasury stock (in shares) at May. 04, 2019           26,457
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net (loss)/income (9,703)     (9,703)    
Exercise of stock options and restricted stock (in shares)   93       93
Exercise of stock options and restricted stock 0   (311) (867)   $ 1,178
Share-based compensation 2,424   2,424      
Repurchase of common stock (in shares)   1       1
Repurchase of common stock (4)         $ (4)
Balance, at end of period (in shares) at Aug. 03, 2019   67,267        
Balance, at end of period at Aug. 03, 2019 558,464 $ 936 212,150 679,143 0 $ (333,765)
Balance, at end of period, treasury stock (in shares) at Aug. 03, 2019           26,365
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net (loss)/income (3,105)     (3,105)    
Exercise of stock options and restricted stock (in shares)   55       55
Exercise of stock options and restricted stock 0   (169) (499)   $ 668
Share-based compensation 2,408   2,408      
Repurchase of common stock (in shares)   2,821       2,821
Repurchase of common stock $ (8,765)         $ (8,765)
Balance, at end of period (in shares) at Nov. 02, 2019 93,632 64,501        
Balance, at end of period at Nov. 02, 2019 $ 549,002 $ 936 $ 214,389 $ 675,539 $ 0 $ (341,862)
Balance, at end of period, treasury stock (in shares) at Nov. 02, 2019 29,131         29,131
v3.19.3.a.u2
Share-Based Compensation - Performance-based Restricted Stock Units and Cash-Settled Awards (Details) - USD ($)
$ / shares in Units, shares in Millions, $ in Millions
3 Months Ended 9 Months Ended
May 05, 2018
Nov. 02, 2019
Performance Shares, Restricted Stock Units [Member]    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Shares outstanding (in shares)   0.2
Award vesting period 3 years  
Grant date weighted average fair value, granted (in dollar per share) $ 7.54  
Performance Shares, Restricted Stock Units [Member] | Minimum [Member]    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Target percentage of performance award which can be earned 0.00%  
Performance Shares, Restricted Stock Units [Member] | Maximum [Member]    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Target percentage of performance award which can be earned 200.00%  
Cash-Settled Awards [Member]    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Award vesting period   3 years
Unrecognized compensation costs   $ 1.4
Period for recognition   2 years 1 month 6 days
Cash-Settled Awards [Member] | Minimum [Member]    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Target percentage of performance award which can be earned   0.00%
Cash-Settled Awards [Member] | Maximum [Member]    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Target percentage of performance award which can be earned   200.00%
v3.19.3.a.u2
Earnings Per Share
9 Months Ended
Nov. 02, 2019
Earnings Per Share [Abstract]  
Earnings Per Share Earnings Per Share
The following table provides a reconciliation between basic and diluted weighted-average shares used to calculate basic and diluted earnings per share:

Thirteen Weeks EndedThirty-Nine Weeks Ended
November 2, 2019November 3, 2018November 2, 2019November 3, 2018
(in thousands) 
Weighted-average shares - basic66,438  72,512  66,845  73,959  
Dilutive effect of stock options and restricted stock units—  961  —  798  
Weighted-average shares - diluted66,438  73,473  66,845  74,757  
Equity awards representing 8.9 million and 7.2 million shares of common stock were excluded from the computation of diluted earnings per share for the thirteen and thirty-nine weeks ended November 2, 2019, as the inclusion of these awards would have been anti-dilutive. Equity awards representing 2.5 million and 3.4 million shares of common stock were excluded from the
computation of diluted earnings per share for the thirteen and thirty-nine weeks ended November 3, 2018, as the inclusion of these awards would have been anti-dilutive.
Additionally, for the thirteen weeks ended November 2, 2019, approximately 0.4 million shares were excluded from the computation of diluted weighted average shares because the number of shares that will ultimately be issued is contingent on the Company’s performance compared to pre-established performance goals which have not been achieved as of November 2, 2019.
v3.19.3.a.u2
Share-Based Compensation - Cost by Award Type (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Nov. 02, 2019
Nov. 03, 2018
Nov. 02, 2019
Nov. 03, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Share-based compensation $ 2,408 $ 3,550 $ 7,204 $ 10,816
Tax benefit from share-based compensation expense 100   1,700 2,500
Restricted Stock Units (RSUs) [Member]        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Share-based compensation 2,088 3,015 6,417 9,347
Stock Options [Member]        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Share-based compensation 304 255 468 842
Performance Shares, Restricted Stock Units [Member]        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Share-based compensation $ 16 $ 280 $ 319 $ 627
v3.19.3.a.u2
Leases - Operating Lease Maturity before Adoption of Topic 842 (Details)
$ in Thousands
Feb. 02, 2019
USD ($)
Leases [Abstract]  
2019 $ 221,816
2020 189,285
2021 163,748
2022 151,718
2023 135,345
Thereafter 290,790
Total $ 1,152,702
v3.19.3.a.u2
Share-Based Compensation - Weighted-Average Assumptions (Details) - Stock Option [Member]
9 Months Ended
Nov. 02, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Risk-free interest rate 1.93%
Price volatility 47.27%
Expected term 6 years 3 months 14 days
Dividend yield 0.00%
v3.19.3.a.u2
Revenue Recognition - Narrative (Details) - USD ($)
$ in Thousands
9 Months Ended
Nov. 02, 2019
Aug. 03, 2019
Feb. 02, 2019
Nov. 03, 2018
Aug. 04, 2018
Feb. 03, 2018
Aug. 28, 2017
Disaggregation of Revenue [Line Items]              
Redemption period for rewards earned 60 days            
Sales returns reserve $ 11,800   $ 9,900        
Gift card liability 32,394   40,466        
Gift Card Liability [Member]              
Disaggregation of Revenue [Line Items]              
Gift card liability 18,801 $ 19,966 25,133 $ 18,871 $ 20,335 $ 26,737  
Comenity Bank [Member]              
Disaggregation of Revenue [Line Items]              
Deferred revenue 14,870 $ 15,589 $ 17,028 $ 17,748 $ 18,467 $ 19,906  
Comenity Bank [Member] | Credit Card [Member]              
Disaggregation of Revenue [Line Items]              
Deferred revenue $ 14,900           $ 20,000
v3.19.3.a.u2
Revenue Recognition (Tables)
9 Months Ended
Nov. 02, 2019
Revenue from Contract with Customer [Abstract]  
Schedule of Revenue by Major Product Categories and Sales Channels
The following is information regarding the Company’s major product categories and sales channels:

Thirteen Weeks EndedThirty-Nine Weeks Ended
 November 2, 2019November 3, 2018November 2, 2019November 3, 2018
(in thousands)
Apparel$422,468  $446,395  $1,219,628  $1,292,029  
Accessories and other48,355  50,860  144,846  151,007  
Other revenue17,660  17,706  47,995  44,882  
Total net sales$488,483  $514,961  $1,412,469  $1,487,918  

Thirteen Weeks EndedThirty-Nine Weeks Ended
 November 2, 2019November 3, 2018November 2, 2019November 3, 2018
(in thousands)
Retail$356,758  $388,830  $1,022,703  $1,137,092  
Outlet114,065  108,425  341,771  305,944  
Other revenue17,660  17,706  47,995  44,882  
Total net sales$488,483  $514,961  $1,412,469  $1,487,918  
Schedule of Contract with Customer, Liability
Thirteen Weeks EndedThirty-Nine Weeks Ended
 November 2, 2019November 3, 2018November 2, 2019November 3, 2018
(in thousands)
Beginning balance loyalty deferred revenue$14,766  $18,313  $15,319  $14,186  
Reduction in revenue/(revenue recognized)(1,313) (2,843) (1,866) 1,284  
Ending balance loyalty deferred revenue$13,453  $15,470  $13,453  $15,470  
Thirteen Weeks EndedThirty-Nine Weeks Ended
 November 2, 2019November 3, 2018November 2, 2019November 3, 2018
(in thousands)
Beginning gift card liability$19,966  $20,335  $25,133  $26,737  
Issuances7,157  7,393  22,826  24,376  
Redemptions(7,699) (8,241) (26,617) (29,681) 
Gift card breakage(623) (616) (2,541) (2,561) 
Ending gift card liability$18,801  $18,871  $18,801  $18,871  
Thirteen Weeks EndedThirty-Nine Weeks Ended
 November 2, 2019November 3, 2018November 2, 2019November 3, 2018
(in thousands)
Beginning balance refundable payment liability$15,589  $18,467  $17,028  $19,906  
Recognized in revenue(719) (719) (2,158) (2,158) 
Ending balance refundable payment liability $14,870  $17,748  $14,870  $17,748  
v3.19.3.a.u2
Leases (Tables)
9 Months Ended
Nov. 02, 2019
Leases [Abstract]  
Net Lease Cost and Supplemental Cash Flow Information
The following table is a summary of the Company’s components of net lease cost, which is included in cost of goods sold, buying and occupancy costs, on the unaudited Consolidated Statements of Income and Comprehensive Income:

Thirty-Nine Weeks Ended
November 2, 2019
(in thousands)
Operating lease costs$206,672  
Variable and short-term lease costs53,375  
Total lease costs$260,047  
 
Supplemental cash flow information related to leases is as follows:

Thirty-Nine Weeks Ended
November 2, 2019
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases$214,609  
Right-of-use assets obtained in exchange for operating lease liabilities$11,491  
Balance Sheet Supplemental Disclosures
Supplemental balance sheet information related to leases as of November 2, 2019 is as follows:

Thirty-Nine Weeks Ended
November 2, 2019
Operating leases:
Weighted average remaining lease term (in years)5.8
Weighted average discount rate4.8 %
Operating Lease Maturity after Adoption of Topic 842
The following table reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities recorded on the unaudited Consolidated Balance Sheets as of November 2, 2019:

November 2, 2019
(in thousands)
2019 (remaining)$67,114  
2020272,902  
2021236,660  
2022217,736  
2023193,253  
Thereafter394,877  
Total minimum lease payments1,382,542  
Less: amount of lease payments representing interest223,556  
Present value of future minimum lease payments1,158,986  
Less: current obligations under leases222,439  
Long-term lease obligations$936,547  
Operating Lease Maturity before Adoption of Topic 842
As previously disclosed in the Company's Consolidated Financial Statements for the year ending February 2, 2019, future minimum lease payments for noncancelable operating leases, under the previous lease accounting standard, were as follows at February 2, 2019 (in thousands):

2019$221,816  
2020189,285  
2021163,748  
2022151,718  
2023135,345  
Thereafter290,790  
Total$1,152,702  
v3.19.3.a.u2
Fair Value Measurements
9 Months Ended
Nov. 02, 2019
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date.
Level 1-Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2-Valuation is based upon quoted prices for similar assets and liabilities in active markets or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3-Valuation is based upon other unobservable inputs that are significant to the fair value measurement.
Financial Assets
The following table presents the Company’s financial assets, recorded in cash and cash equivalents on the unaudited Consolidated Balance Sheets, measured at fair value on a recurring basis as of November 2, 2019 and February 2, 2019, aggregated by the level in the fair value hierarchy within which those measurements fall.

November 2, 2019
Level 1Level 2Level 3
(in thousands)
Money market funds$139,226  $—  $—  
February 2, 2019
Level 1Level 2Level 3
(in thousands)
Money market funds$155,014  $—  $—  
The money market funds are valued using quoted market prices in active markets.
The carrying amounts reflected on the unaudited Consolidated Balance Sheets for the remaining cash and cash equivalents, receivables, prepaid expenses, and payables as of November 2, 2019 and February 2, 2019 approximated their fair values.
Non-Financial Assets
The Company’s non-financial assets, which include fixtures, equipment, improvements, right of use assets, and intangible assets, are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur indicating the carrying value of these assets may not be recoverable, or annually in the case of indefinite-lived intangibles, an impairment test is required. The impairment test requires the Company to estimate the fair value of the assets and compare this to the carrying value of the assets. If the fair value of the asset is less than the carrying value, then an impairment charge is recognized, and the non-financial assets are recorded at fair value. The Company estimates the fair value using a discounted cash flow model or other fair value models as appropriate. Factors used in the evaluation include, but are not limited to, management’s plans for future operations, recent operating results, and projected cash flows. During the thirteen weeks ended November 2, 2019, the Company did not recognize any impairment charges. During the thirty-nine weeks ended November 2, 2019, the Company recognized impairment charges of approximately $2.3 million. During the thirteen and thirty-nine weeks ended November 3, 2018, the Company did not recognize any impairment charges. Impairment charges are recorded in cost of goods sold, buying and occupancy costs in the unaudited Consolidated Statements of Income and Comprehensive Income.
v3.19.3.a.u2
Debt
9 Months Ended
Nov. 02, 2019
Debt Disclosure [Abstract]  
Debt Debt
A summary of the Company’s financing activities are as follows:
Revolving Credit Facility
On May 24, 2019, Express Holding, LLC, a wholly-owned subsidiary of the Company (“Express Holding”), and its subsidiaries entered into a First Amendment to the Second Amended and Restated $250.0 million Asset-Based Loan Credit Agreement (“Revolving Credit Facility”). The expiration date of the Revolving Credit Facility is May 24, 2024. As of November 2, 2019, there were no borrowings outstanding and approximately $247.3 million was available for borrowing under the Revolving Credit Facility.
Under the Revolving Credit Facility, revolving loans may be borrowed, repaid, and reborrowed until May 24, 2024, at which time all amounts borrowed must be repaid. Borrowings under the Revolving Credit Facility bear interest at a rate equal to either the rate published by ICE Benchmark Administration Limited (with a floor of 0%) (the “Eurodollar Rate”) plus an applicable margin rate or the highest of (1) Wells Fargo Bank, National Association’s prime lending rate (with a floor of 0%), (2) 0.50% per annum above the federal funds rate (with a floor of 0%) or (3) 1% above the Eurodollar Rate (the “Base Rate”), in each case plus an applicable margin rate. The applicable margin rate is determined based on excess availability as determined by reference to the borrowing base. The applicable margin rate for Eurodollar Rate-based advances is 1.25% or 1.50% and the applicable margin rate for Base Rate-based advances is 0.25% or 0.50%, in each case, based on the borrowing base. Under certain circumstances, a default interest rate will apply on any overdue amount payable under the Revolving Credit Facility during the existence of an event of default at a per annum rate equal to 2.00% above the applicable interest rate for any overdue principal and 2.0% above the rate applicable for Base Rate-based advances for any other overdue interest.
The unused line fee payable under the Revolving Credit Facility is incurred at 0.20% per annum of the average daily unused revolving commitment during each quarter, payable quarterly in arrears on the first day of each May, August, November, and February. In the event that (1) an event of default has occurred and is continuing or (2) excess availability plus eligible cash collateral is less than 10.0% of the borrowing base for 5 consecutive days, such unused line fees are payable on the first day of each month.
Interest payments under the Revolving Credit Facility are due quarterly on the first day of each May, August, November, and February for Base Rate-based advances, provided, however, in the event that (1) an event of default has occurred and is continuing or (2) excess availability plus eligible cash collateral is less than 10.0% of the borrowing base for 5 consecutive days, interest payments are due on the first day of each month. Interest payments under the Revolving Credit Facility are due on the last day of the interest period for Eurodollar Rate-based advances for interest periods of 1, 2, and 3 months, and additionally every 3 months after the first day of the interest period for Eurodollar Rate-based advances for interest periods of greater than 3 months.
The Revolving Credit Facility requires Express Holding and its subsidiaries to maintain a fixed charge coverage ratio of at least 1.0:1.0 if excess availability plus eligible cash collateral is less than 10.0% of the borrowing base for 15 consecutive days. In addition, the Revolving Credit Facility contains customary covenants and restrictions on Express Holding’s and its subsidiaries’ activities, including, but not limited to, limitations on the incurrence of additional indebtedness, liens, negative pledges, guarantees, investments, loans, asset sales, mergers, acquisitions, prepayment of other debt, distributions, dividends, the repurchase of capital stock, transactions with affiliates, the ability to change the nature of its business or fiscal year, and permitted business activities. All obligations under the Revolving Credit Facility are guaranteed by Express Holding and its domestic subsidiaries (that are not borrowers) and secured by a lien on, among other assets, substantially all working capital assets including cash, accounts receivable, and inventory of Express Holding and its domestic subsidiaries.
Letters of Credit
The Company may enter into stand-by letters of credit (“stand-by LCs”) on an as-needed basis to secure payment obligations for merchandise purchases and other general and administrative expenses. As of November 2, 2019 and February 2, 2019, outstanding stand-by LCs totaled $2.7 million and $3.0 million, respectively.
v3.19.3.a.u2
Stockholders' Equity
9 Months Ended
Nov. 02, 2019
Equity [Abstract]  
Stockholders' Equity Stockholders’ EquityOn November 28, 2017, the Board approved a new share repurchase program that authorized the Company to repurchase up to $150.0 million of the Company’s outstanding common stock using available cash (the “2017 Repurchase Program”). Under the 2017 Repurchase Program, the Company may repurchase shares on the open market, including through Rule 10b5-1 plans, in privately negotiated transactions, through block purchases, or otherwise in compliance with applicable laws, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The timing and amount of stock repurchases will depend on a variety of factors, including business and market conditions as well as corporate and regulatory considerations. The share repurchase program may be suspended, modified, or discontinued at any time and the Company has no obligation to repurchase any amount of its common stock under the program. In 2018, the Company repurchased 10.0 million shares of its common stock under the 2017 Repurchase Program for an aggregate amount equal to $83.2 million, including commissions. During the thirteen weeks ended November 2, 2019, the Company repurchased 2.8 million shares of its common stock under the 2017 Repurchase Program for an aggregate amount equal to $8.7 million, including commissions. During the thirty-nine weeks ended November 2, 2019, the Company repurchased 3.7 million shares of its common stock under the 2017 Repurchase Program for an aggregate amount equal to $13.6 million, including commissions. As of November 2, 2019, the Company had approximately $36.2 million remaining under this authorization. In addition, subsequent to November 2, 2019 through December 10, 2019, the Company repurchased an additional 0.6 million shares of its common stock under the 2017 Repurchase Program for an aggregate amount equal to $2.0 million, including commissions.
v3.19.3.a.u2
Leases - Net Lease Cost (Details)
$ in Thousands
9 Months Ended
Nov. 02, 2019
USD ($)
Leases [Abstract]  
Operating lease costs $ 206,672
Variable and short-term lease costs 53,375
Total lease costs $ 260,047
v3.19.3.a.u2
Fair Value Measurements (Details) - USD ($)
3 Months Ended 9 Months Ended
Nov. 02, 2019
Nov. 03, 2018
Nov. 02, 2019
Nov. 03, 2018
Feb. 02, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]          
Impairment charge $ 0 $ 0 $ 2,282,000 $ 0  
Recurring [Member] | Level 1 [Member] | Money market funds [Member]          
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]          
Money market funds 139,226,000   139,226,000   $ 155,014,000
Recurring [Member] | Level 2 [Member] | Money market funds [Member]          
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]          
Money market funds 0   0   0
Recurring [Member] | Level 3 [Member] | Money market funds [Member]          
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]          
Money market funds $ 0   $ 0   $ 0
v3.19.3.a.u2
Consolidated Balance Sheets (Parentheticals) - $ / shares
Nov. 02, 2019
Feb. 02, 2019
Statement of Financial Position [Abstract]    
Preferred stock, par value (in dollar per share) $ 0.01 $ 0.01
Preferred stock, authorized (in shares) 10,000,000 10,000,000
Preferred stock, issued (in shares) 0 0
Preferred stock, outstanding (in shares) 0 0
Common stock, par value (in dollar per share) $ 0.01 $ 0.01
Common stock, authorized (in shares) 500,000,000 500,000,000
Common stock, issued (in shares) 93,632,000 93,632,000
Common stock, outstanding (in shares) 64,501,000 67,424,000
Treasury stock (in shares) 29,131,000 26,208,000
v3.19.3.a.u2
Description of Business and Basis of Presentation
9 Months Ended
Nov. 02, 2019
Description of Business and Basis of Presentation [Abstract]  
Description of Business and Basis of Presentation Description of Business and Basis of Presentation
Business Description
Express, Inc., together with its subsidiaries (“Express” or the “Company”), is a leading fashion brand for women and men. Since 1980, Express has provided the latest apparel and accessories to help customers build a wardrobe for every occasion, offering fashion and quality at an attractive value. As of November 2, 2019, Express operated 411 primarily mall-based retail stores in the United States and Puerto Rico as well as 215 factory outlet stores. Additionally, as of November 2, 2019, the Company earned revenue from 13 franchise stores in Latin America. These franchise stores are operated by franchisees pursuant to franchise agreements. Under the franchise agreements, the franchisees operate stand-alone Express stores that sell Express-branded apparel and accessories purchased directly from the Company.
Fiscal Year
The Company’s fiscal year ends on the Saturday closest to January 31. Fiscal years are referred to by the calendar year in which the fiscal year commences. References herein to “2019” and “2018” represent the 52-week period ended February 1, 2020 and the 52-week period ended February 2, 2019, respectively. All references herein to “the third quarter of 2019” and “the third quarter of 2018” represent the thirteen weeks ended November 2, 2019 and November 3, 2018, respectively.
Basis of Presentation
The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and therefore do not include all of the information or footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited Consolidated Financial Statements reflect all adjustments (which are of a normal recurring nature) necessary to state fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for 2019. Therefore, these statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto for the year ended February 2, 2019, included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 19, 2019.
Principles of Consolidation
The unaudited Consolidated Financial Statements include the accounts of Express, Inc. and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
Segment Reporting 
The Company defines an operating segment on the same basis that it uses to evaluate performance internally. The Company has determined that, together, its Chief Executive Officer and its President and Chief Operating Officer are the Chief Operating Decision Maker, and that there is one operating segment. Therefore, the Company reports results as a single segment, which includes the operation of its Express brick-and-mortar retail and outlet stores, e-commerce operations, and franchise operations.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited Consolidated Financial Statements and the reported amounts of revenue and expense during the reporting period, as well as the related disclosure of contingent assets and liabilities as of the date of the unaudited Consolidated Financial Statements. Actual results may differ from those estimates. The Company revises its estimates and assumptions as new information becomes available.
Recently Issued Accounting Pronouncements - Adopted
Leases
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)” (“ASC 842”). This ASU is a comprehensive new standard that amends various aspects of existing guidance for leases and requires additional disclosures about leasing arrangements. It requires lessees to recognize lease assets and lease liabilities for most leases, including those leases previously classified as operating leases. ASC 842 requires a modified retrospective transition for leases existing at or entered into after the beginning of the earliest comparative
period presented in the financial statements. In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements,” that allows entities to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without adjustment to the financial statements for periods prior to adoption.

The Company adopted ASC 842 on February 3, 2019 on a modified retrospective basis and applied the new standard to all leases through a cumulative-effect adjustment to beginning retained earnings. As a result, comparative financial information has not been restated and continues to be reported under the accounting standards in effect for the respective periods. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which permitted companies not to reassess prior conclusions on lease identification, lease classification and initial direct costs. The Company did not elect the hindsight practical expedient.

On February 3, 2019, the Company recognized leases, primarily related to its stores and corporate headquarters, on its unaudited Consolidated Balance Sheet, as right-of-use assets of $1.2 billion with corresponding lease liabilities of $1.3 billion and eliminated certain existing lease-related assets and liabilities as a net adjustment to the right-of-use assets. The Company’s right-of-use assets represent a right to use underlying assets for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease assets and liabilities are recognized at the lease commencement date (date on which the Company gains access to the property) based on the estimated present value of lease payments over the lease term, net of landlord allowances to be received. The Company accounts for the lease and non-lease components as a single lease component for all current classes of leases. In connection with this adoption, the Company recorded a transition adjustment, which was a net reduction of retained earnings of $5.5 million. This adjustment primarily reflects the difference between the right-of-use assets and lease liabilities recorded upon adoption, the elimination of the lease financing obligations and related assets described in Note 7, including the related put option, and the recognition of the impairment, upon adoption, of certain right-of-use assets totaling $1.2 million. The adoption of the new standard had no material impact on the unaudited Consolidated Statements of Income and Comprehensive Income, the unaudited Consolidated Statements of Cash Flows, and did not impact the Company's compliance with debt covenants.
v3.19.3.a.u2
Stockholders' Equity (Details) - USD ($)
shares in Millions
1 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended
Dec. 10, 2019
Nov. 02, 2019
Aug. 03, 2019
May 04, 2019
Nov. 03, 2018
Aug. 04, 2018
May 05, 2018
Nov. 02, 2019
Feb. 02, 2019
Nov. 28, 2017
Class of Stock [Line Items]                    
Stock repurchase program, authorized amount                   $ 150,000,000.0
Treasury stock, value, acquired   $ 8,765,000 $ 4,000 $ 6,387,000 $ 24,170,000 $ 16,396,000 $ 18,245,000      
Stock repurchase program, remaining authorized amount   $ 36,200,000           $ 36,200,000    
Share Repurchase Program 2017 [Member]                    
Class of Stock [Line Items]                    
Treasury stock, acquired (in shares)   2.8           3.7 10.0  
Treasury stock, value, acquired   $ 8,700,000           $ 13,600,000 $ 83,200,000  
Share Repurchase Program 2017 [Member] | Subsequent Event [Member]                    
Class of Stock [Line Items]                    
Treasury stock, acquired (in shares) 0.6                  
Treasury stock, value, acquired $ 2,000,000.0                  
v3.19.3.a.u2
Share-Based Compensation - Unrecognized Compensation Expense and Period for Recognition (Details)
$ in Millions
9 Months Ended
Nov. 02, 2019
USD ($)
Restricted Stock Units (RSUs) [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Unrecognized compensation expense related to unvested RSUs $ 16.7
Period for recognition 1 year 9 months 18 days
Stock Options [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Unrecognized compensation expense related to stock options $ 2.6
Period for recognition 1 year 10 months 24 days
v3.19.3.a.u2
Debt - Revolving Credit Facility (Details) - Line of Credit [Member] - USD ($)
May 24, 2019
Nov. 02, 2019
Debt Instrument [Line Items]    
Maximum borrowing capacity $ 250,000,000.0  
Amount outstanding   $ 0
Remaining borrowing capacity   $ 247,300,000
Percent per annum above federal funds rate 0.50%  
Percent above Eurodollar rate 1.00%  
Minimum percentage margin for Eurodollar rate-based advances 1.25%  
Maximum percentage margin for Eurodollar rate-based advances 1.50%  
Minimum percentage margin for base rate-based advances 0.25%  
Maximum percentage margin for base rate-based advances 0.50%  
Existence of event of default percentage per annum 2.00%  
Over due principal interest rate 2.00%  
Commitment fee percentage 0.20%  
Percent of borrowing base restriction (less than) 10.00%  
Number of days in excess availability restriction 5 days  
Fixed charge ratio, numerator 1.0  
Fixed charge ratio, denominator 1.0  
Percent of borrowing base in fixed charge coverage ratio restriction, less than 10.00%  
Number of days in fixed charge coverage ratio restriction 15 days  
Eurodollar [Member]    
Debt Instrument [Line Items]    
Basis rate, floor 0.00%  
Prime Rate [Member]    
Debt Instrument [Line Items]    
Basis rate, floor 0.00%  
Fed Funds Effective Rate Overnight Index Swap Rate [Member]    
Debt Instrument [Line Items]    
Basis rate, floor 0.00%  
v3.19.3.a.u2
Fair Value Measurements (Tables)
9 Months Ended
Nov. 02, 2019
Fair Value Disclosures [Abstract]  
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis
The following table presents the Company’s financial assets, recorded in cash and cash equivalents on the unaudited Consolidated Balance Sheets, measured at fair value on a recurring basis as of November 2, 2019 and February 2, 2019, aggregated by the level in the fair value hierarchy within which those measurements fall.

November 2, 2019
Level 1Level 2Level 3
(in thousands)
Money market funds$139,226  $—  $—  
February 2, 2019
Level 1Level 2Level 3
(in thousands)
Money market funds$155,014  $—  $—  
v3.19.3.a.u2
Description of Business and Basis of Presentation (Details)
$ in Thousands
9 Months Ended
Feb. 03, 2019
USD ($)
Nov. 02, 2019
USD ($)
segment
store
Description of Business and Basis of Presentation [Line Items]    
Number of stores under franchise agreements | store   13
Number of operating segments | segment   1
Right-of-use assets   $ 1,043,874
Lease liabilities   $ 1,158,986
Accounting Standards Update 2016-02 [Member]    
Description of Business and Basis of Presentation [Line Items]    
Right-of-use assets $ 1,200,000  
Lease liabilities 1,300,000  
Cumulative effect of new accounting principle 5,482  
Right-of-use assets, impaired $ 1,200  
Retail [Member]    
Description of Business and Basis of Presentation [Line Items]    
Number of stores | store   411
Outlet [Member]    
Description of Business and Basis of Presentation [Line Items]    
Number of stores | store   215
v3.19.3.a.u2
Share-Based Compensation - Schedule of Restricted Stock Units, Including Awards with Performance Conditions (Details) - Restricted Stock Units (RSUs) [Member]
$ / shares in Units, shares in Thousands, $ in Millions
9 Months Ended
Nov. 02, 2019
USD ($)
$ / shares
shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Award vesting period 4 years
Number of Shares  
Unvested at beginning of period (in shares) | shares 3,064
Granted (in shares) | shares 3,830
Vested (in shares) | shares (1,172)
Forfeited (in shares) | shares (1,052)
Unvested at end of period (in shares) | shares 4,670
Grant Date Weighted Average Fair Value Per Share  
Grant date weighted average fair value at beginning of period (in dollar per share) | $ / shares $ 8.95
Grant date weighted average fair value, granted (in dollar per share) | $ / shares 3.70
Grant date weighted average fair value, vested (in dollar per share) | $ / shares 10.17
Grant date weighted average fair value, forfeited (in dollar per share) | $ / shares 6.43
Grant date weighted average fair value at end of period (in dollar per share) | $ / shares $ 4.91
Fair value of options vested | $ $ 11.9
v3.19.3.a.u2
Leases - Lease Financing Obligations (Details) - USD ($)
$ in Millions
Feb. 02, 2019
Feb. 29, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Landlord funded construction, replacement cost of pre-existing property, and capitalized interest $ 56.6  
Lease financing obligations 65.1  
Put option 7.5 $ 11.4
Other Noncurrent Liabilities [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Put option $ 6.7  
v3.19.3.a.u2
Label Element Value
Accounting Standards Update 2016-02 [Member] | Retained Earnings [Member]  
Cumulative Effect of New Accounting Principle in Period of Adoption us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption $ (5,482,000)
v3.19.3.a.u2
Intangible Assets (Tables)
9 Months Ended
Nov. 02, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Intangible Assets
The following table provides the significant components of intangible assets:

 November 2, 2019
Cost
Accumulated
Amortization 
Ending Net Balance
(in thousands)
Tradename/domain names/trademarks$197,618  $—  $197,618  
Licensing arrangements425  356  69  
 $198,043  $356  $197,687  

 February 2, 2019
Cost
Accumulated
Amortization 
Ending Net Balance
(in thousands)
Tradename/domain names/trademarks$197,618  $—  $197,618  
Licensing arrangements425  319  106  
 $198,043  $319  $197,724  
v3.19.3.a.u2
Revenue Recognition - Revenue by Major Product Categories and Sales Channels (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Nov. 02, 2019
Nov. 03, 2018
Nov. 02, 2019
Nov. 03, 2018
Disaggregation of Revenue [Line Items]        
Total net sales $ 488,483 $ 514,961 $ 1,412,469 $ 1,487,918
Apparel [Member]        
Disaggregation of Revenue [Line Items]        
Total net sales 422,468 446,395 1,219,628 1,292,029
Accessories And Other [Member]        
Disaggregation of Revenue [Line Items]        
Total net sales 48,355 50,860 144,846 151,007
Other Revenue [Member]        
Disaggregation of Revenue [Line Items]        
Total net sales 17,660 17,706 47,995 44,882
Retail [Member]        
Disaggregation of Revenue [Line Items]        
Total net sales 356,758 388,830 1,022,703 1,137,092
Outlet [Member]        
Disaggregation of Revenue [Line Items]        
Total net sales $ 114,065 $ 108,425 $ 341,771 $ 305,944
v3.19.3.a.u2
Description of Business and Basis of Presentation (Policies)
9 Months Ended
Nov. 02, 2019
Description of Business and Basis of Presentation [Abstract]  
Fiscal Year
Fiscal Year
The Company’s fiscal year ends on the Saturday closest to January 31. Fiscal years are referred to by the calendar year in which the fiscal year commences. References herein to “2019” and “2018” represent the 52-week period ended February 1, 2020 and the 52-week period ended February 2, 2019, respectively. All references herein to “the third quarter of 2019” and “the third quarter of 2018” represent the thirteen weeks ended November 2, 2019 and November 3, 2018, respectively.
Basis of Presentation Basis of PresentationThe accompanying unaudited Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and therefore do not include all of the information or footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited Consolidated Financial Statements reflect all adjustments (which are of a normal recurring nature) necessary to state fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for 2019. Therefore, these statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto for the year ended February 2, 2019, included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 19, 2019.
Principles of Consolidation Principles of ConsolidationThe unaudited Consolidated Financial Statements include the accounts of Express, Inc. and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
Segment Reporting
Segment Reporting 
The Company defines an operating segment on the same basis that it uses to evaluate performance internally. The Company has determined that, together, its Chief Executive Officer and its President and Chief Operating Officer are the Chief Operating Decision Maker, and that there is one operating segment. Therefore, the Company reports results as a single segment, which includes the operation of its Express brick-and-mortar retail and outlet stores, e-commerce operations, and franchise operations.
Use of Estimates in the Preparation of Financial Statements Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited Consolidated Financial Statements and the reported amounts of revenue and expense during the reporting period, as well as the related disclosure of contingent assets and liabilities as of the date of the unaudited Consolidated Financial Statements. Actual results may differ from those estimates. The Company revises its estimates and assumptions as new information becomes available.
Recently Issued Accounting Pronouncements
Recently Issued Accounting Pronouncements - Adopted
Leases
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)” (“ASC 842”). This ASU is a comprehensive new standard that amends various aspects of existing guidance for leases and requires additional disclosures about leasing arrangements. It requires lessees to recognize lease assets and lease liabilities for most leases, including those leases previously classified as operating leases. ASC 842 requires a modified retrospective transition for leases existing at or entered into after the beginning of the earliest comparative
period presented in the financial statements. In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements,” that allows entities to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without adjustment to the financial statements for periods prior to adoption.

The Company adopted ASC 842 on February 3, 2019 on a modified retrospective basis and applied the new standard to all leases through a cumulative-effect adjustment to beginning retained earnings. As a result, comparative financial information has not been restated and continues to be reported under the accounting standards in effect for the respective periods. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which permitted companies not to reassess prior conclusions on lease identification, lease classification and initial direct costs. The Company did not elect the hindsight practical expedient.

On February 3, 2019, the Company recognized leases, primarily related to its stores and corporate headquarters, on its unaudited Consolidated Balance Sheet, as right-of-use assets of $1.2 billion with corresponding lease liabilities of $1.3 billion and eliminated certain existing lease-related assets and liabilities as a net adjustment to the right-of-use assets. The Company’s right-of-use assets represent a right to use underlying assets for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease assets and liabilities are recognized at the lease commencement date (date on which the Company gains access to the property) based on the estimated present value of lease payments over the lease term, net of landlord allowances to be received. The Company accounts for the lease and non-lease components as a single lease component for all current classes of leases. In connection with this adoption, the Company recorded a transition adjustment, which was a net reduction of retained earnings of $5.5 million. This adjustment primarily reflects the difference between the right-of-use assets and lease liabilities recorded upon adoption, the elimination of the lease financing obligations and related assets described in Note 7, including the related put option, and the recognition of the impairment, upon adoption, of certain right-of-use assets totaling $1.2 million. The adoption of the new standard had no material impact on the unaudited Consolidated Statements of Income and Comprehensive Income, the unaudited Consolidated Statements of Cash Flows, and did not impact the Company's compliance with debt covenants.
Fair Value Measurements Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date.
Level 1-Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2-Valuation is based upon quoted prices for similar assets and liabilities in active markets or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3-Valuation is based upon other unobservable inputs that are significant to the fair value measurement.
Leases LeasesThe Company leases all of its store locations and its corporate headquarters, which also includes its distribution center, under operating leases. The store leases typically have initial terms of 5 to 10 years. The current lease term for the corporate headquarters expires in 2026, with one optional five-year extension period. The Company also leases certain equipment and other assets under operating leases, typically with initial terms of 3 to 5 years. The lease term includes the initial contractual term as well as any options to extend the lease when it is reasonably certain that the Company will exercise that option. Leases with an initial term of 12 months or less (short-term leases) are not recorded on the balance sheet. The Company does not currently have any material short-term leases. The Company is generally obligated for the cost of property taxes, insurance and other landlord costs, including common area maintenance charges, relating to its leases. If these charges are fixed, they are combined with lease payments in determining the lease liability; however, if such charges are not fixed, they are considered variable lease costs and are expensed as incurred. The variable payments are not included in the measurement of the lease liability or asset. The Company’s finance leases are immaterial.
Share-Based Compensation Share-Based Compensation The Company records the fair value of share-based payments to employees in the unaudited Consolidated Statements of Income and Comprehensive Income as compensation expense, net of forfeitures, over the requisite service period. The Company issues shares of common stock from treasury stock upon exercise of stock options and vesting of restricted stock units, including those with performance conditions.Restricted Stock UnitsDuring the thirty-nine weeks ended November 2, 2019, the Company granted restricted stock units (“RSUs”) under the terms of the 2018 Plan. The fair value of RSUs is determined based on the Company’s closing stock price on the day prior to the grant date in accordance with the 2018 Plan. The RSUs granted in 2019, in general, vest ratably over four years and the expense related to these RSUs will be recognized using the straight-line attribution method over this vesting period.
v3.19.3.a.u2
Intangible Assets
9 Months Ended
Nov. 02, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets Intangible Assets
The following table provides the significant components of intangible assets:

 November 2, 2019
Cost
Accumulated
Amortization 
Ending Net Balance
(in thousands)
Tradename/domain names/trademarks$197,618  $—  $197,618  
Licensing arrangements425  356  69  
 $198,043  $356  $197,687  

 February 2, 2019
Cost
Accumulated
Amortization 
Ending Net Balance
(in thousands)
Tradename/domain names/trademarks$197,618  $—  $197,618  
Licensing arrangements425  319  106  
 $198,043  $319  $197,724  
The Company’s tradename, internet domain names, and trademarks have indefinite lives. Licensing arrangements are amortized over a period of ten years and are included in other assets on the unaudited Consolidated Balance Sheets.
In 2018, the Company performed a quantitative analysis and determined that no impairment was necessary on its intangible assets with indefinite lives. This analysis resulted in estimated fair values that exceeded the carrying values by a more than an insignificant amount; however, the estimated fair values decreased compared to the prior year due to decreased financial results. During the thirty-nine weeks ended November 2, 2019, the Company continued to experience negative comparable sales and a stock price below historic levels. The Company has evaluated whether these indicate a potential impairment of intangible assets with indefinite lives as of November 2, 2019. Additionally, the Company has considered, among other factors, the 2019 full year forecast, whether the results for the thirty-nine week period ended November 2, 2019 were consistent with the forecast, and expected future expense reductions. Based on these factors, the Company determined there were no events or circumstances that indicate it is more likely than not that the fair value of its intangible assets with indefinite lives is less than the carrying value. However, the intangible assets with indefinite lives are at risk of impairment if comparable sales continue to decline more than our expectations, future expense reductions are not achieved, or the Company does not meet its forecasted financial results.
v3.19.3.a.u2
Share-Based Compensation
9 Months Ended
Nov. 02, 2019
Share-based Payment Arrangement [Abstract]  
Share-Based Compensation Share-Based Compensation
The Company records the fair value of share-based payments to employees in the unaudited Consolidated Statements of Income and Comprehensive Income as compensation expense, net of forfeitures, over the requisite service period. The Company issues shares of common stock from treasury stock upon exercise of stock options and vesting of restricted stock units, including those with performance conditions.
Share-Based Compensation Plans
In 2010, the Board approved, and the Company implemented, the Express, Inc. 2010 Incentive Compensation Plan (as amended, the "2010 Plan"). The 2010 Plan authorized the Compensation Committee (the "Committee") of the Board and its designees to offer eligible employees and directors cash and stock-based incentives as deemed appropriate in order to attract, retain, and reward such individuals.

As of April 30, 2018, upon the recommendation of the Committee, the Board unanimously approved and adopted, subject to stockholder approval, the Express, Inc. 2018 Incentive Compensation Plan (the “2018 Plan”) to replace the 2010 Plan. On June 13, 2018, stockholders of the Company approved the 2018 Plan and all grants made subsequent to that approval will be made under the 2018 Plan, other than inducement grants made under the NYSE listing standards, which do not require stockholder approval but are otherwise subject to the terms and conditions of the 2018 Plan. In the third quarter of 2019, in connection with updates made by the Company to its policy regarding the clawback of incentive compensation awarded to associates, the Board approved an amendment to the 2018 Plan, solely for the purpose of updating the language regarding the recoupment of an Award granted under the 2018 Plan.

The following summarizes share-based compensation expense:

Thirteen Weeks EndedThirty-Nine Weeks Ended
November 2, 2019November 3, 2018November 2, 2019November 3, 2018
(in thousands)
Restricted stock units$2,088  $3,015  $6,417  $9,347  
Stock options304  255  468  842  
Performance-based restricted stock units16  280  319  627  
Total share-based compensation$2,408  $3,550  $7,204  $10,816  
The stock compensation related income tax benefit recognized by the Company during the thirteen and thirty-nine weeks ended November 2, 2019 was $0.1 million and $1.7 million, respectively. The stock compensation related income tax benefit recognized by the Company during the thirteen and thirty-nine weeks ended November 3, 2018 was negligible and $2.5 million, respectively.
Restricted Stock Units
During the thirty-nine weeks ended November 2, 2019, the Company granted restricted stock units (“RSUs”) under the terms of the 2018 Plan. The fair value of RSUs is determined based on the Company’s closing stock price on the day prior to the grant date in accordance with the 2018 Plan. The RSUs granted in 2019, in general, vest ratably over four years and the expense related to these RSUs will be recognized using the straight-line attribution method over this vesting period.
The Company’s activity with respect to RSUs, including awards with performance conditions granted prior to 2018, for the thirty-nine weeks ended November 2, 2019 was as follows:

Number of
Shares
Grant Date
Weighted Average
Fair Value Per Share
(in thousands, except per share amounts)
Unvested, February 2, 2019
3,064  $8.95  
Granted3,830  $3.70  
Vested(1,172) $10.17  
Forfeited(1,052) $6.43  
Unvested, November 2, 2019
4,670  $4.91  
The total fair value of RSUs that vested during the thirty-nine weeks ended November 2, 2019 was $11.9 million. As of November 2, 2019, there was approximately $16.7 million of total unrecognized compensation expense related to unvested RSUs, which is expected to be recognized over a weighted-average period of approximately 1.8 years.
Stock Options
The Company’s activity with respect to stock options during the thirty-nine weeks ended November 2, 2019 was as follows:

Number of
Shares
Grant Date
Weighted Average
Exercise Price Per Share
Weighted-Average Remaining Contractual Life (in years)Aggregate Intrinsic Value
(in thousands, except per share amounts and years)
Outstanding, February 2, 20192,379  $16.40  
Granted2,320  $2.60  
Exercised—  $—  
Forfeited or expired(642) $15.09  
Outstanding, November 2, 2019
4,057  $8.71  7.0$1,624  
Expected to vest at November 2, 2019
2,268  $2.97  9.6$1,517  
Exercisable at November 2, 2019
1,634  $17.25  3.3$—  
The following provides additional information regarding the Company's stock options:

Thirty-Nine Weeks Ended
November 2, 2019
(in thousands, except per share amounts)
Weighted average grant date fair value of options granted (per share)$1.25  
Total intrinsic value of options exercised$—  
As of November 2, 2019, there was approximately $2.6 million of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted average period of approximately 1.9 years.
The Company uses the Black-Scholes-Merton option-pricing model to value stock options granted to employees. The Company's determination of the fair value of stock options is affected by the Company's stock price as well as a number of subjective and complex assumptions. These assumptions include the risk-free interest rate, the Company's expected stock price volatility over the term of the award, expected term of the award, and dividend yield.
The fair value of stock options was estimated at the grant date using the Black-Scholes-Merton option pricing model with the following weighted-average assumptions:
Thirty-Nine Weeks Ended
November 2, 2019
Risk-free interest rate (1)
1.93 %
Price volatility (2)
47.27 %
Expected term (years) (3)
6.29
Dividend yield (4)
—  
(1)Represents the yield on U.S. Treasury securities with a term consistent with the expected term of the stock options.
(2)Primarily based on the historical volatility of the Company's common stock over a period consistent with the expected term of the stock options.
(3)Calculated using the midpoint scenario, which combines historical exercise data with hypothetical exercise data for outstanding options. The Company believes this data currently represents the best estimate of the expected term of granted employee stock options.
(4)The Company does not currently plan on paying regular dividends.
Performance-based Restricted Stock Units
In the first quarter of 2018, the Company granted performance shares to a limited number of senior executive-level employees, which entitle these employees to receive a specified number of shares of the Company’s common stock upon vesting. The number of shares earned could range between 0% and 200% of the target amount depending upon performance achieved over a three-year vesting period. The performance conditions of the award include adjusted diluted earnings per share (EPS) targets and total shareholder return (TSR) of the Company’s common stock relative to a select group of peer companies. As of November 2, 2019, there were 0.2 million shares outstanding of the 2018 performance grant with a grant date fair value of $7.54 per share.
Cash-Settled Awards
In 2019 and 2018, the Company granted cash-settled awards to a limited number of senior executive-level employees. These awards are classified as liabilities, are valued based on the fair value of the award at the grant date and are remeasured at each reporting date until settlement with compensation expense being recognized in proportion to the completed requisite period up until date of settlement. The amount of cash earned could range between 0% and 200% of the target amount depending upon performance achieved over the three-year vesting period. The performance conditions of the award include EPS targets and TSR of the Company’s common stock relative to a select group of peer companies. A Monte Carlo valuation model is used to determine the fair value of the awards. As of November 2, 2019, $1.4 million of total unrecognized compensation cost is expected to be recognized on cash-settled awards over a weighted-average period of 2.1 years.
v3.19.3.a.u2
Leases - Narrative (Details)
9 Months Ended
Nov. 02, 2019
renewal_option
Office Building [Member]  
Lessee, Lease, Description [Line Items]  
Number of renewal options 1
Lease renewal term 5 years
Minimum [Member] | Stores [Member]  
Lessee, Lease, Description [Line Items]  
Lease term 5 years
Minimum [Member] | Equipment And Other Assets [Member]  
Lessee, Lease, Description [Line Items]  
Lease term 3 years
Maximum [Member] | Stores [Member]  
Lessee, Lease, Description [Line Items]  
Lease term 10 years
Maximum [Member] | Equipment And Other Assets [Member]  
Lessee, Lease, Description [Line Items]  
Lease term 5 years
v3.19.3.a.u2
Earnings Per Share (Details) - shares
shares in Thousands
3 Months Ended 9 Months Ended
Nov. 02, 2019
Nov. 03, 2018
Nov. 02, 2019
Nov. 03, 2018
Earnings Per Share [Abstract]        
Weighted-average shares, basic (in shares) 66,438 72,512 66,845 73,959
Dilutive effect of stock options and restricted stock units (in shares) 0 961 0 798
Weighted-average shares, diluted (in shares) 66,438 73,473 66,845 74,757
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Potentially dilutive securities excluded from computation of earnings per share (in shares) 8,900 2,500 7,200 3,400
Performance Shares [Member]        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Potentially dilutive securities excluded from computation of earnings per share (in shares) 400      
v3.19.3.a.u2
Consolidated Balance Sheets - USD ($)
$ in Thousands
Nov. 02, 2019
Feb. 02, 2019
CURRENT ASSETS:    
Cash and cash equivalents $ 167,915 $ 171,670
Receivables, net 12,199 17,369
Inventories 345,931 267,766
Prepaid rent 6,905 30,047
Other 33,387 25,176
Total current assets 566,337 512,028
RIGHT OF USE ASSET, NET 1,043,874  
PROPERTY AND EQUIPMENT 991,550 1,083,347
Less: accumulated depreciation (734,556) (719,068)
Property and equipment, net 256,994 364,279
TRADENAME/DOMAIN NAMES/TRADEMARKS 197,618 197,618
DEFERRED TAX ASSETS 6,379 5,442
OTHER ASSETS 6,712 7,260
Total assets 2,077,914 1,086,627
CURRENT LIABILITIES:    
Short-term lease liability 222,439  
Accounts payable 221,721 155,913
Deferred revenue 32,394 40,466
Accrued expenses 93,504 78,313
Total current liabilities 570,058 274,692
LONG-TERM LEASE LIABILITY 936,547  
DEFERRED LEASE CREDITS 2,258 129,505
OTHER LONG-TERM LIABILITIES 20,049 97,252
Total liabilities 1,528,912 501,449
COMMITMENTS AND CONTINGENCIES (Note 10)
STOCKHOLDERS’ EQUITY:    
Preferred stock – $0.01 par value; 10,000 shares authorized; no shares issued or outstanding 0 0
Common stock – $0.01 par value; 500,000 shares authorized; 93,632 shares and 93,632 shares issued at November 2, 2019 and February 2, 2019, respectively, and 64,501 shares and 67,424 shares outstanding at November 2, 2019 and February 2, 2019, respectively 936 936
Additional paid-in capital 214,389 211,981
Retained earnings 675,539 713,864
Treasury stock – at average cost; 29,131 shares and 26,208 shares at November 2, 2019 and February 2, 2019, respectively (341,862) (341,603)
Total stockholders’ equity 549,002 585,178
Total liabilities and stockholders’ equity $ 2,077,914 $ 1,086,627
v3.19.3.a.u2
Consolidated Statements of Cash Flows - USD ($)
3 Months Ended 9 Months Ended 12 Months Ended
Nov. 02, 2019
May 04, 2019
Nov. 03, 2018
May 05, 2018
Nov. 02, 2019
Nov. 03, 2018
Feb. 02, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:              
Net (loss)/income $ (3,105,000) $ (9,934,000) $ 7,967,000 $ 517,000 $ (22,742,000) $ 10,718,000  
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:              
Depreciation and amortization         64,121,000 64,099,000  
Loss on disposal of property and equipment         1,098,000 303,000  
Impairment charge 0   0   2,282,000 0  
Impairment of equity method investment         500,000 0 $ 8,400,000
Share-based compensation 2,408,000   3,550,000   7,204,000 10,816,000  
Deferred taxes         212,000 (42,000)  
Landlord allowance amortization         (1,782,000) (8,702,000)  
Other non-cash adjustments         (500,000) (500,000)  
Changes in operating assets and liabilities:              
Receivables, net         5,169,000 (3,412,000)  
Inventories         (78,165,000) (102,039,000)  
Accounts payable, deferred revenue, and accrued expenses         71,891,000 52,187,000  
Other assets and liabilities         (16,454,000) (5,113,000)  
Net cash provided by operating activities         32,834,000 18,315,000  
CASH FLOWS FROM INVESTING ACTIVITIES:              
Capital expenditures         (20,503,000) (32,402,000)  
Net cash used in investing activities         (20,503,000) (32,402,000)  
CASH FLOWS FROM FINANCING ACTIVITIES:              
Costs incurred in connection with debt arrangements         (849,000) 0  
Payments on lease financing obligation         (81,000)    
Payments on lease financing obligations           (1,385,000)  
Repayments of financing arrangements         0 (750,000)  
Repurchase of common stock under share repurchase program         (13,603,000) (56,161,000)  
Repurchase of common stock for tax withholding obligations         (1,553,000) (2,650,000)  
Net cash used in financing activities         (16,086,000) (60,946,000)  
NET DECREASE IN CASH AND CASH EQUIVALENTS         (3,755,000) (75,033,000)  
CASH AND CASH EQUIVALENTS, Beginning of period   $ 171,670,000   $ 236,222,000 171,670,000 236,222,000 236,222,000
CASH AND CASH EQUIVALENTS, End of period $ 167,915,000   $ 161,189,000   $ 167,915,000 $ 161,189,000 $ 171,670,000