Retailer Express cuts profit outlook, shares slump

Specialty apparel retailer Express Inc reported lower-than-expected quarterly results and cut its full-year earnings guidance as it goofed up on its strategy to move sales to pricier-knitted tops for women.

Photo: Express

The company's stock, which fell as much as 29 percent in morning trading, was the top loser on the New York Stock Exchange.

Express, which sells clothes and accessories to 20- to 30-year-old men and women, has been shifting its knit-top offerings from plain low-margin clothes to more fashionable products, but in the first quarter the company moved too fast for some shoppers.

"We reduced our styles of opening price point knit tops, and in hindsight, we did not follow some of our own guiding principles when planning this department this spring," CEO Michael Weiss said on a conference call with analysts.

"We did not take a balanced approach to this category."

First-quarter net income rose to $42.1 million, or 47 cents per share, from $35.0 million, or 39 cents per share, a year ago.

Net sales increased 6 percent to $496.0 million.

Analysts on average had expected earnings of 49 cents per share, on revenue of $503.2 million, according to Thomson Reuters I/B/E/S.

Gross margin fell to 38.1 percent from 38.2 percent.

The company now expects to earn $1.79 to $1.89 per share in fiscal 2012, compared with its previous guidance of $1.84 to $1.97 per share.

Shares of the company fell to a nine-month low of $16.38 on Tuesday.