Back to top

Image: Bigstock

Express (EXPR) Plunges 25% After Weak Q2 Sales, Store Traffic

Read MoreHide Full Article

On Wednesday, mall retailer Express Inc. (EXPR - Free Report) reported its second quarter fiscal 2016 results. Earnings per share came in at 13 cents, falling short of the Zacks Estimate of 17 cents per share and declining 48% year-over-year. Net sales decreased 6% to $504.8 million, missing our consensus estimate of $524.8 million.

EXPR has plummeted as a result of the company’s weak quarterly performance, down over 25% in mid-morning trading.

Results

Comparable sales, including e-commerce sales, declined 8%, compared to an increase of 7% in the second quarter of 2015. Express reported that merchandise margin fell by 200 basis points, driven by increased markdowns on clearance items as inventory for the upcoming fall season became a main focus.

Operating income was $17.0 million, or 3.5% of its net sales. Net income was $10.1 million.

“I am disappointed with our second quarter performance as sales and earnings were below our guidance, reflecting challenging store traffic,” said President and CEO David Kornberg. “This was compounded by a lack of clarity across the assortment. We believe we have identified the necessary actions to position Express to regain momentum and we are moving on them.

“Our fall assortment is more cohesive across our wearing occasions, clearly identifying the important trends, and we are aggressively pursuing several marketing initiatives focused on driving new customer acquisition and retention,” he continued.

Looking Ahead

Express again cut its profit forecast for the full year. The company now expects adjusted earnings of $1 to $1.14 per share, well below its previous guidance for $1.41 to $1.51 per share.

For the current quarter, Express forecasts earnings between 9 cents to 15 cents per share, a sharp decline from analysts’ previous projections of 32 cents per share. Same-store sales are expected to decrease in the high-single to low-double digits.

As Express and other retailers head into their next quarter, as well as the looming, all-important holiday quarter, they will need smart and innovative strategies for getting customers to their stores. However, these tactics should stay away from continuous sales that negatively impact the brand’s image and reputation.

EXPRESS INC Price, Consensus and EPS Surprise

EXPRESS INC Price, Consensus and EPS Surprise | EXPRESS INC Quote

EXPR has fallen over 7% year-to-date, and sits at a #3 (Hold) on the Zacks Rank.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 DaysClick to get this free report >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Express, Inc. (EXPR) - free report >>