Express (EXPR 5.91, -1.25) slumped 17.5% pre-market, as cautious
guidance overshadows better than expected quarterly results. The early weakness
has sent the stock to a 13-month low with the 2017 low looming at $5.28.
The apparel retailer reported above-consensus third quarter earnings of $0.11 per share on a 2.3% yr/yr increase in revenue to $515 mln, which was also ahead of estimates. However, the company expects that fourth quarter earnings will be between $0.11 per share and $0.20 per share, which is well below current market expectations. Comparable sales are expected to decline between 5.0% and 7.0%. Express President and CEO David Kornberg said the company faced a tough specialty retail environment so far in November, which weighed on traffic. The soft start to the holiday season prompted the company to reduce its guidance for the fourth quarter.
Comparable sales, including e-commerce sales, were unchanged during the third quarter. On their own, e-commerce comparable sales grew 23.0% yr/yr and made up 29.0% of net sales. Gross margin increased to 30.7% from 30.0% one year ago. Lower buying and occupancy costs and a higher merchandise margin were responsible for gross margin expansion.
Express announced it has $59 mln remaining under its current buyback program, which was authorized on November 28, 2017. The company ended the quarter with cash of $161.19 mln and no debt.
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