Express, Inc. (EXPR) Gets Massacred as Rival Retailers Brace for Impact

Advertisement

Express, Inc. (NYSE:EXPR) is having a midweek crisis, falling 25.6% as of this writing after reporting second-quarter earnings. EXPR analysts were hoping for 17 cents per share on $521 million in sales. Instead, investors were treated to per-share earnings of 13 cents on revenues that declined 6% year-over-year to $504.8 million.

Express, Inc. (EXPR) Gets Massacred as Rival Retailers Brace for ImpactInvestors reacted in traffic-clogging volume (more than 13 million as of now vs. an average 1.7 million), as if to say “do you feel good about yourself, Express??”

The answer is a resounding “no,” as CEO David Kornberg set off his company’s earnings release with “I am disappointed with our second-quarter performance as sales and earnings were below our guidance, reflecting challenging store traffic.”

Kornberg attributed the dismal performance of EXPR in Q2 to a “lack of clarity,” but believes Express’ fall assortment will not fall victim to the same headwinds:

“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. In addition, we are pleased with our overall inventory position as we begin the fall season. Our overarching priorities remain unchanged: presenting our customers with a strong assortment, increasing customer acquisition and brand loyalty, enhancing gross margin as we benefit from our IT initiatives, and maintaining inventory discipline while reducing expenses.”

All in all, comparable sales were slashed by 8% year over year (they actually increased by 7% in the year-ago quarter), and the all-important area of online sales took a 7% dive, bringing in a mere $70.1 million. The company’s merchandise margin dipped 2% as markdowns increased ahead of the chillier fall season.

Fading Hope for EXPR Stock

But really, contrary to Kornberg’s statements, the fall season for EXPR looks ugly already. The company’s EPS estimates of between 9 cents and 15 cents are less than half that of the analyst consensus, and its “negative high single to low double digits” prediction for comp sales are a huge disappointment for a company that grew comp sales by 6% in Q3 2015.

The full-year picture doesn’t look any better. Per-share earnings of $1 to $1.14 pale against previous estimates for $1.46.

The routing of EXPR stock is foreboding for retail stocks. Just look at the SPDR S&P Retail (ETF) (NYSEARCA:XRT), which is down half a percent today. Or to the three remaining retailers to report earnings: PVH Corp (NYSE:PVH), Guess?, Inc. (NYSE:GES) and Abercrombie & Fitch Co. (NYSE:ANF).

The three are down today by 0.5%, 6.2% and 2.6%, respectively.

As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.

More From InvestorPlace


Article printed from InvestorPlace Media, https://investorplace.com/2016/08/expr-stock-express-retail-stocks/.

©2024 InvestorPlace Media, LLC