Express, Inc.

Good morning, my name is Chantal and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Express Inc. fourth quarter and full year 2021 earnings conference call. All lines have been placed on mute to prevent any background noise. After your speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. Thank you. I would now like to hand the conference over to Greg Johnson, Vice President of Investor Relations. Please go ahead.

Thank you, Chantel. Good morning and welcome to our call. I'd like to open by reminding you of the company's safe harbor provisions. Any statements made during this conference call, except those containing historical facts, may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual future results may differ materially from those suggested in forward-looking statements due to a number of risks and uncertainties, all of which are described in the company's filings with the SEC, including today's press release. Express assumes no obligation to update any forward-looking statements or information except as required by law. Our comments today will supplement the detailed information provided in both the press release and the investor presentation available on our investor relations website. In addition, you can locate a reconciliation of any adjusted results discussed in our comments to amounts reported under GAAP on our website or in our earnings release. We will also be providing financial comparisons to prior fiscal periods, and our prepared remarks today refer to 2020 unless otherwise noted. With me today are Tim Baxter, Chief Executive Officer, and Matt Mullery, President, Chief Operating Officer, and Interim Chief Financial Officer. And one additional item. Tim and Matt will be participating in a fireside chat at the UBS Global Consumer and Retail Conference tomorrow morning at 8 a.m. Eastern Time. This event will be webcast on our investor relations website, so please join us. I'll now turn the call over to Tim.

Thank you, Greg, and good morning, everyone. In 2021, we delivered three consecutive quarters of positive comparable sales versus 2019 and drove positive operating income for the full year. We had a strong holiday season and our momentum has continued. Sales in the fourth quarter grew 38% over 2020 and delivered a positive 4% comp compared to 2019. We drove gross margin improvement of 220 basis points compared to 2019 including the negative impact of $15 million of expense associated with ongoing supply chain challenges. We generated positive operating income of $10 million and EPS of 11 cents. We achieved EBITDA of $26 million in the fourth quarter and $65 million for the full year. We achieved free cash flow of $55 million for the full year. In the combined Q2, Q3, and Q4 period, Sales grew 53% over 2020. Comparable sales accelerated each quarter, and gross margin improved 420 basis points compared to 2019. We generated positive operating income of $41 million, EBITDA of $89 million, and free cash flow of $60 million. The Expressway Forward strategy has effectively galvanized our organization, advanced our brand, and accelerated our business. and we are well on our way from being known as a store in the mall to a brand with a purpose powered by a styling community. We are selling more elevated product to more loyal customers at stronger margins. Our average unit retail for the year was up 13% compared to 2019, and we are exiting the year with the highest number of active loyalty members in our company's 40-year history. We continue to advance each one of the four foundational pillars of the Expressway Forward strategy, product, brand, customer, and execution. I'll take you through each with some of the results we've achieved and what is still to come, starting with product. We completely reimagined our product, bringing more style, more versatility, and more newness across our entire assortment. Our occasion-based categories that have historically been our strengths and were disproportionately impacted by the pandemic accelerated significantly as the year progressed. Dresses and men's suits were down around 30% in the first quarter versus 2019, but delivered positive comps for the balance of the year. Customer response to our denim has been incredible. Starting in the second quarter and continuing through the end of the year, denim posted its best performance in recent history delivering a plus 16% comp versus 2019. Introduced this year, the Express Essentials Body Contour Collection generated nearly $60 million in sales and drove a 14% comp in women's knit tops compared to 2019. In men's, polos and graphic tees grew 40% in the full year versus 2019, delivering our best results in recent history. Our second pillar is brand. Google organic brand demand was up for the ninth consecutive month, increasing 14% on average between May and January compared to 2019. Brand tracking measures, social media engagement, and positive customer feedback, all important indicators of the health and vitality of our brand continue to increase. Our marketing has evolved to reflect where and how content is being consumed. And we are leveraging more TikTok, Instagram Reels, and live streams. We had over 110 million video views across these platforms in Q4. Our fourth quarter brand campaign launched with a segment on the Kelly Clarkson Show and a spot on the Adele One Night Only Special, which generated over 100 million impressions across all social platforms. We introduced a very exciting new dimension to our brand when we kicked off our community commerce program in Q3. Our lead style editor, Fashion Authority Rachel Zoe, joined us in Q4 and has already brought outsized awareness and engagement to the program. Our first livestream shopping event, highlighting her Express outfit selections, garnered nearly 450,000 viewers on Express.com and Facebook Live. You'll be hearing a lot more about this program in the coming months. Our third pillar is customer. We are successfully engaging existing customers and acquiring new ones. Our relaunched Express Insider Loyalty program has brought in 2.7 million new customers and reactivated 2.2 million lapsed customers. And as I previously mentioned, we ended the year with the highest number of active loyalty members in the company's history. We improved the quality of our customer file. Total customer spend increased by 13% in the fourth quarter, and new customer spend grew 19% compared to 2019. Our fourth pillar is execution. We refined our go-to-market process, advanced our multi-channel capabilities, and identified meaningful operational and financial efficiencies. We have right-sized our fleet, closed nearly 100 stores, and begun to execute a fleet optimization strategy. We effectively navigated supply chain challenges and applied strong financial discipline to both expenses and investments. Outstanding execution helped accelerate sales across all channels. I'll provide an update on our progress in each one starting with e-commerce. We stated a goal to achieve $1 billion in e-commerce demand by 2024 and are on track to achieve this target. With momentum that began last year and strengthened throughout 2021, we drove a 33% increase in demand for the year compared to 2020 and saw increases across all key metrics, traffic, conversion, average order value, and average unit retail. We now have 2.3 million app users, our most highly engaged customers, making five more visits and spending over $300 more each year than customers who only shop through our website or in one of our stores. We added features and functionality to our mobile app that drove demand up 72% for the full year. Traffic increased by 20%. Average order value increased by 27%. and conversion was 45 basis points higher than 2020. Our physical stores are one of the most important expressions of our brand, and we saw real progress in the performance of our retail stores this year. Comparable sales accelerated throughout the year, and we drove a 20% increase in average unit retail for the year compared to 2019. Our fleet optimization strategy includes a comprehensive look at the location, size, design, and customer experience in our stores, as well as the opening of Express Edit stores. We have renovated a select number of stores and see consistent comp sales increases. We have refreshed many of our stores to meet customer expectations for a great fitting room, a comfortable place to sit, and more clear sight lines and pathways for ease of shopping. And across both renovated and refreshed stores, we are creating consistency of our visual brand identity. Launched in 2020, our smaller format express edit stores are situated in high traffic locations and have product assortments tailored to the taste and character of each individual market and neighborhood. They are acquiring new customers and reactivating lapsed customers at higher rates than the balance of our fleet and driving higher digital sales in the surrounding zip codes. Based on these results, we will continue to open edit stores as a way to further diversify our brick and mortar portfolio. Our outlet channel had a remarkable year, driving record volume and a positive 4% comp in the last nine months of the year compared to 2019. UpWest also performed well in the quarter, capping off a great year and achieving a sales increase of 41% compared to 2020. UpWest launched as a digital brand with a mission to provide comfort for people and planet. and that has come to life through its assortment of casual, relaxed apparel and home goods, sustainable sourcing and manufacturing, and a volunteering and giving program. In 2022, we will expand the digital capabilities of UpWest with features such as single-page checkout and enhanced customer segmentation, introduce an active product line called Go UpWest, open additional stores, and continue to grow. As more consumers become more conscious about their buying choices, the UpWest product and ethos resonate even more strongly, and we see UpWest as an incredible growth opportunity for our company. Now let me turn the call over to Matt, who will provide details on our fourth quarter and full year results and share our view for 2022. Thank you, Tim.