Express (EXPRQ) 8-K Introduces First Quarter and Full Year 2018 Outlook

Information Regarding Adoption of ASC 606, Revenue from Contracts with Customers

Express, Inc. (the "Company") adopted the new revenue recognition accounting standard, ASC 606, Revenue from Contracts with Customers ("ASC 606") in the first quarter of 2018. ASC 606 is effective for all public companies for annual reporting periods beginning after December 15, 2017. The Company adopted the new revenue accounting standard using the “full retrospective” method. This requires that the financial statements for 2017 and 2016 be adjusted as though ASC 606 was adopted in the first period presented. The Company has provided the information contained in this Exhibit 99.3, which details the adjustments required in applying the full retrospective method, because it believes it provides information to be able to compare the 2018 outlook with prior periods on a consistent basis under ASC 606. Beginning with the the first quarter of 2018, the Company's financial results will be reported under ASC 606 with prior period financial results being retrospectively adjusted as provided in this exhibit.

The new standard primarily impacts the Company's revenue recognition as follows:

• accounting for points earned through the NEXT customer loyalty program as a deferral of revenue at retail rather than a liability under the cost method;

• reclassification of income and associated costs related to our private label credit card arrangement from Selling, General, and Administrative Expenses to Net Sales and Costs of Goods Sold; and

• the recognition of e-commerce revenue when merchandise is shipped rather than when it is received by the customer.

Selected Information from the Consolidated Statements of Income (Unaudited)
(in thousands, except per share amounts)			2017							2016
	As reported		Adjustments			Recast		As reported		Adjustments		Recast
NET SALES	$	2,138,030	$	20,472		$	2,158,502	$	2,192,547	$	11,870	$	2,204,417
COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS	1,522,797		8,194			1,530,991		1,529,343		385		1,529,728
Gross profit	615,233		12,278			627,511		663,204		11,485		674,689
Selling, general and administrative expenses	562,088		11,462			573,550		559,541		10,005		569,546
OPERATING INCOME	29,740		816			30,556		103,601		1,480		105,081
INCOME BEFORE INCOME TAXES	28,035		816			28,851		90,617		1,480		92,097
INCOME TAX EXPENSE	8,669		1,309			9,978		33,200		557		33,757
NET INCOME	$	19,366	$	(493	)	$	18,873	$	57,417	$	923	$	58,340
EARNINGS PER SHARE:
Basic	$	0.25	$	(0.01	)	$	0.24	$	0.73	$	0.01	$	0.74
Diluted	$	0.25	$	(0.01	)	$	0.24	$	0.73	$	0.01	$	0.74
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic	78,592					78,592		78,669				78,669
Diluted	78,870					78,870		79,049				79,049

Sales by Channel (Unaudited)
(in thousands)			2017						2016
	As reported		Adjustments		Recast		As reported		Adjustments			Recast
Stores	$	1,590,745	$	1,476	$	1,592,221	$	1,737,722	$	2,438		$	1,740,160
E-commerce	509,039		432		509,471		413,448		(523		)	412,925
Other revenue	38,246		18,564		56,810		41,377		9,955			51,332
Total net sales	$	2,138,030	$	20,472	$	2,158,502	$	2,192,547	$	11,870		$	2,204,417

Selected Information from the Consolidated Statements of Income (Unaudited)
(in thousands, except per share amounts)				Q1'17								Q2'17									Q3'17							Q4'17
	As reported			Adj.		Recast			As reported				Adj.			Recast			As reported		Adj.			Recast		As reported		Adj.			Recast
NET SALES	$	467,029		$	7,163	$	474,192		$	478,536			$	2,673		$	481,209		$	498,651	$	4,768		$	503,419	$	693,814	$	5,868		$	699,682
COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS	340,031			1,880		341,911			347,066				386			347,452			349,850		2,377			352,227		485,850		3,551			489,401
Gross profit	126,998			5,283		132,281			131,470				2,287			133,757			148,801		2,391			151,192		207,964		2,317			210,281
Selling, general and administrative expenses	130,072			2,267		132,339			131,736				2,433			134,169			137,721		2,772			140,493		162,559		3,990			166,549
OPERATING INCOME	(9,746		)	3,016		(6,730		)	(15,882		)		(146		)	(16,028		)	11,163		(381		)	10,782		44,205		(1,673		)	42,532
(LOSS) INCOME BEFORE INCOME TAXES	(10,531		)	3,016		(7,515		)	(16,053		)		(146		)	(16,199		)	10,586		(381		)	10,205		44,033		(1,673		)	42,360
INCOME TAX (BENEFIT) EXPENSE	(6,000		)	1,153		(4,847		)	(4,251		)		(57		)	(4,308		)	4,316		(142		)	4,174		14,604		355			14,959
NET INCOME (LOSS)	$	(4,531	)	$	1,863	$	(2,668	)	$	(11,802	)		$	(89	)	$	(11,891	)	$	6,270	$	(239	)	$	6,031	$	29,429	$	(2,028	)	$	27,401
EARNINGS PER SHARE:
Basic	$	(0.06	)	$	0.02	$(0.03)			$	(0.15	)		$	—		$(0.15)			$	0.08	$	—		$0.08		$	0.38	$	(0.03	)	$0.35
Diluted	$	(0.06	)	$	0.02	$(0.03)			$	(0.15	)		$	—		$(0.15)			$	0.08	$	—		$0.08		$	0.37	$	(0.03	)	$0.35
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic	78,446					78,446			78,786							78,786			78,805					78,805		78,333					78,333
Diluted	78,446					78,446			78,786							78,786			78,890					78,890		78,927					78,927

Sales by Channel (Unaudited)
(in thousands)			Q1'17						Q2'17								Q3'17							Q4'17
	As reported		Adj.		Recast		As reported			Adj.			Recast		As reported		Adj.			Recast		As reported		Adj.			Recast
Stores	$	357,779	$	4,142	$	361,921	$	382,376		$	(47	)	$	382,329	$	371,847	$	(931	)	$	370,916	$	478,743	$	(1,688	)	$	477,055
E-commerce	97,572		758		98,330		89,955			283			90,238		118,176		(77		)	118,099		203,336		(532		)	202,804
Other revenue	11,678		2,263		13,941		6,205			2,437			8,642		8,628		5,776			14,404		11,735		8,088			19,823
Total net sales	$	467,029	$	7,163	$	474,192	$	478,536		$	2,673		$	481,209	$	498,651	$	4,768		$	503,419	$	693,814	$	5,868		$	699,682