Express Cuts Guidance as Sales Growth Slumps
May 25 2016 - 8:20AM
Dow Jones News
Express Inc. slashed its guidance for the year and gave a bleak
outlook for the current quarter as the apparel chain reported
disappointing sales growth in the most recent quarter amid a tough
retail environment.
Shares tumbled 15% to $13.60 in light premarket trading.
The company said same-store sales, a measure that excludes
recently closed or opened stores, fell 3%. It had forecast a
low-single-digit rise.
Mall-based chains have been pressured in recent months, with
several retailers reporting dour results in the past few weeks amid
dwindling foot traffic and margin-eating promotions.
Still, Express has scaled back on promotional activity and
managed inventory levels. Chief Executive David Kornberg pointed to
increased merchandise margin and gross margin in the quarter.
Merchandise margin rose 20 basis points, on the company's
"disciplined approach to inventories and prudent use of
promotions," while gross margin improved 30 basis points.
"We believe that our product is on trend and we are providing
customers with engaging experiences," said Mr. Kornberg, who was
elevated to CEO last year amid a management team shake-up. "That
being said, our second-quarter and full-year guidance reflect the
challenges presented by the current retail environment."
For the full year, the company now expects adjusted earnings of
$1.41 to $1.54 a share, down from previous guidance for $1.56 to
$1.71. For the current quarter, the company said it anticipates
earnings of 15 cents to 19 cents a share, sharply below analysts'
projections for 29 cents. Same-store sales are expected to fall in
the mid-single digits.
For the quarter ended April 30, Express posted a first-quarter
profit of $12.9 million, or 16 cents a share, compared with $13.1
million, or 15 cents a share, a year earlier. The quarter was
dented by a $11.4 million expense related to the amendment to the
Times Square flagship store lease.
Excluding that charge, adjusted earnings rose to 25 cents from
22 cents, the low end of the company's projection for a range of 25
cents to 28 cents.
Revenue edged up 0.1% to $502.9 million. Analysts surveyed by
Thomson Reuters had anticipated $521 million.
E-commerce sales fell 1% to $77 million during the quarter.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
May 25, 2016 08:05 ET (12:05 GMT)
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