Obi Anyanwu
Dec 4, 2016
Express updates outlook after Q3 sales fall and meet expectations
Obi Anyanwu
Dec 4, 2016
Express released its third quarter results on Thursday, which included a decrease in sales that were in line with its guidance. Net sales fell 7% to $506.1 million and comparable sales decreased 8% compared to an increase of 6% in the third quarter of 2015. E-commerce sales increased 15% to $96.3 million.
David Kornberg, the company’s president and chief executive officer, stated: “Our third quarter performance was highlighted by sales and earnings in line with our guidance and progress made addressing the areas noted for improvement during our second quarter call. This progress included refocusing our brand projection and marketing to be more consistent with our core demographic and additional steps taken to drive customer acquisition and retention. Notably, while mall traffic challenges continued to impact our store performance, we achieved a double digit increase in e-commerce sales.”
Gross margin fell 500 basis points representing 30.0% of net sales. Merchandise margin declined 340 points and net sales increased 160 basis points.
Net income was $11.6 million, or $0.15 per diluted share, compared to net income of $26.3 million, or $0.31 per diluted share in the previous year, and SG&A expenses were $136.6 million versus $146.6 million.
Express expects its holiday season to remain challenging “as mall traffic and a highly promotional retail environment continue to be headwinds,” according to Kornberg.
He added, “We believe our focus and execution against our key priorities, which include driving improved profitability through a balanced approach to growth, elevating our brand and customer experience, investing in the growth and development of our associates and achieving the benefits from our systems implementations, will position our Company to create shareholder value over the long term.”
The company updated its fourth quarter and full year guidance, and now expects its fourth quarter comparable sales to range in the negative low double digits, net income to be between $20 million and $23 million and diluted EPS to range from $0.20 and $0.30. All projections are below its actual fourth quarter 2015 results.
Full year comparable sales is expected to be in the negative high single digits, net income to range between $55 million and $58 million, and diluted EPS to be between $0.70 and $0.74.
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