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Bear of the Day

When will Express Inc. (EXPR - Snapshot Report) turn it around? This Zacks Rank #5 (Strong Sell) had a tough holiday quarter but Q1 was also a major disappointment as it missed the Zacks Consensus by 57%.

Express operates 630 men's and women's specialty apparel stores targeting 20 to 30 year olds in high-traffic shopping malls, urban neighborhoods and lifestyle centers.

Big Miss in Q1

In the fourth quarter the problem was the heavy promotional environment. In the first quarter of 2014, it was a consumer who just wasn't out shopping.

On May 29, the company reported fiscal first quarter results and missed the Zacks Consensus by $0.08. Earnings were just $0.06 compared to the consensus of $0.14.

Express said business strengthened in April but it wasn't enough to boost the quarter.

Comparable store sales, which includes e-commerce sales, fell 11%. You can't blame it all on the weather either as e-commerce sales also fell by 2% in the quarter following a 48% increase the year before. That is sales from people shopping in their living rooms during the polar vortices.

Warning on the Second Quarter

The second quarter is not looking too bright. Express said that it is still working its way through the spring inventory, which is selling slowly, and that the Memorial Day event, which usually draws good traffic, was not as successful this year.

It anticipates a "very challenging" first half of the year.

Combined with the big miss in the first quarter, that's really all analysts needed to hear.

Since the earnings report was released, analysts slashed estimates which has pushed down the Zacks Consensus to juts $0.83 from $1.59 just 90 days ago.

That's an earnings decline of 40% as Express made $1.37 in 2013.

Is Express a Deal?

After yet another quarterly disappointment, Express shares sank to new 52-week lows.

Express has a forward P/E of 16.7 which is basically in line with the average of the S&P 500. I wouldn't call the shares "cheap."

The entire retail industry isn't exactly a great place to be investing right now. The retailer's industry rank is in the bottom 18% of all 265 industries that Zacks tracks.

But if you MUST buy a retailer right now, you might want to consider Foot Locker (FL - Snapshot Report). It has surprised on the Zacks Consensus 3 quarters in a row. This Zacks Rank #2 (Buy) stock is also expected to grow earnings by 15% this year.

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Tracey Ryniec is the Value Stock Strategist for She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.

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