Express Shares Tumble As Q3 Profit Misses View, Lowers Full-year Outlook

(RTTNews) - Shares of Express, Inc. (EXPR) are trading lower by more than 18 percent in pre-market trades on Wednesday after the retail apparel chain reported earnings per share for the third quarter that missed analysts' estimates, forecast earnings for the fourth quarter below their expectations and also lowered its earnings outlook for fiscal 2013.

However, net income for the third quarter rose 11 percent from last year on higher comparable sales and margins, while revenues beat Street expectations.

Michael Weiss, Chairman and Chief Executive Officer of Express said, "We delivered a solid third quarter, in line with our guidance and highlighted by a 5% increase in comparable sales and 15% EPS growth. These results were achieved against the backdrop of an extremely challenging and promotional retail environment."

Comparable sales, or sales from stores open at least a year, increased 5 percent in the third quarter, compared to a decline of 5 percent in the year-ago period. E-commerce sales increased 29 percent from last year to $71.2 million.

Gross margin for the quarter improved 60 basis points to 32.9 percent of net sales.

Columbus, Ohio-based Express' net income for the third quarter rose to $19.27 million or $0.23 per share from $17.42 million or $0.20 per share in the year-ago period. On average, fourteen analysts polled by Thomson Reuters expected the company to report earnings of $0.25 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the third quarter grew 7 percent to $502.99 million from $468.53 million in the year-ago period. Analysts had a consensus revenue estimate of $499.67 million for the quarter.

Looking ahead to the fourth quarter, Express forecasts net income in a range of $56 million to $60 million or $0.66 to $0.71 per share, and comparable sales in the low single digits. This compares to earnings of $0.75 per share and comparable sales increase of 1.5 percent in the year-ago period. Street expects the company to earn $0.78 per share for the quarter on revenues of $740.04 million.

Weiss said, "Thanksgiving week sales exceeded last year's, however results did not meet our expectations. We had been planning for a promotional holiday season but we now expect the intensity of those promotions to reach heightened levels and we are updating our full year guidance accordingly."

For fiscal 2013, Express now forecasts net earnings of $1.46 to $1.51 per share and comparable sales in low single digits. Earlier, the company forecast earnings of $1.52 to $1.60 per share for the year. This compares to earnings of $1.60 per share and flat comparable sales in the previous year. Analysts expect the company to earn $1.61 per share for the year on revenues of $2.23 billion.

EXPR closed Tuesday's trading at $24.67. In Wednesday's pre-market trades, the company's shares are down $4.54 or 18.40 percent to $20.13.