Express’ fourth-quarter sales fell 10 percent to $628.4 million. And losses for the three months ended Feb. 2 totaled $1.1 million, down from profits of $27 million a year earlier.
“Our overall performance in the period was disappointing,” said Matthew Moellering, the company’s interim chief executive officer and president.
But he added on a conference call with analysts that Express is “a resilient brand” and one that has driven $2 billion-plus in sales annually for some time.
He also pointed out that former ceo David Kornberg’s abrupt exit in January cost Express $5.4 million.
Still, the downward trend has been happening for some time. Express’ stock is down roughly 35 percent year-over-year. Last quarter, sales of jeans were low at the retailer, despite the thriving denim market. This quarter casual tops showed weakness.
Susan Anderson, an analyst at B. Riley FBR, wrote in a recent note that the retailer’s “inability to deliver on-trend merchandise could have a negative impact on the stock.” FBR set a target price of $6 on the company’s stock with a neutral rating.
“Competitors sell their products in stores that are located in the same shopping malls and lifestyle centers as Express stores,” Anderson said. “Express may not be able to compete successfully against existing or future retailers.”
Even so, the company has a plan. And it starts with a new ceo. Executives on Wednesday’s conference call said the search is currently on to fill the retailer’s top leadership role.
“We have no debt and a strong cash position,” Moellering said. “That gives us room to maneuver. So this should be a very attractive role for somebody to come in and really lead change and grow the Express brand dramatically.”
In the meantime, the company will focus on new products, investing in its digital channels and gaining and retaining new customers.
“There are a fair amount of one-and-done customers,” Moellering admitted. “When we have a new customer enter the brand, there is about a 90-day window where that customer is very receptive to returning to the business. This initiative that we’re putting in place is aggressively going after that customer for a second and third visit and turning them into a customer full-time.”
Express also saw momentum slow online as e-commerce sales rose just 5 percent for the quarter having risen 21 percent for the full year.
But there were some bright spots for the quarter, including women’s pants, skirts, jeans and dresses. In addition, Moellering said the men’s business did better than the women’s business, driven by Express’ NBA collection for men.
Still, shoppers were skimping on tops — particularly casual ones — a sign of increased competition in the ath-leisure and activewear categories. Or, that the company’s fashion sense might be off.
“The older, wear-to-work [category], we do have significant strength,” Moellering said. “It still does represent a large portion of the business, both in store and online. [But] we’re not walking away from [casual fashion]. We think we can fix it.”
“When we’re offering product on the casual side, where there is more competition, we have to make sure we can differentiate our product versus competition,” he said. “There has to be a reason for being on the casual side of the business. The little details will differentiate us and drive the excitement and the fashion.”
To do this, Express executives said the company will continue to invest in partnerships with key influencers, including a recent tie-up with former beauty queen Olivia Culpo. And a limited-edition apparel line with celebrity stylist Karla Welch will also be released this summer.
The retailer will also continue to re-evaluate its store fleet, with many of its store leases up for renewal in the next three years. This year, Express will open five new outlet locations and convert 24 existing retail locations to outlets.
“The positives here, we do have a lot of business coming into our stores and our e-commerce web site on an annual basis,” Moellering said. “We are focused on getting the product and fashion right. People are willing to pay for the right fashions.”