The weak first quarter has left specialty chains scrambling to reinvent, resize and — more immediately — contend with a very promotional climate at the mall.

This story first appeared in the May 30, 2014 issue of WWD. Subscribe Today.

Both Express Inc. and Pacific Sunwear of California Inc. were showing signs of the strain on Thursday.

Express Inc. said it would shutter about 50 of the company’s more than 600 doors over the next three years, mostly through lease expirations. Once completed, the closures are expected to boost profits by $5 million to $8 million.

Michael Weiss, chairman and chief executive officer, defended malls to analysts on a conference call, noting they offer a shopping experience that can’t be replicated online.

“They aren’t going away,” said Weiss, who also acknowledged changes in the real estate landscape. “Some malls are getting stronger, while others are weakening.” This jibes with the sentiment that came out of the ReCon convention in Las Vegas last week, where real estate experts were emphasizing “A” malls over “B” and “C” malls.

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On top of the store closures, Express said it would move to cut $18 million in annual costs, with about $15 million in savings seen this year.

“We had anticipated a very challenging first quarter, but our actual results were weaker than planned,” Weiss said. “Our business strengthened in April, but not to the degree that we anticipated….Our second-quarter results will be impacted by the need to move through slow-selling spring inventory and a Memorial Day event that did not drive traffic as successfully as last year.”

Express’ first-quarter profits fell 83 percent to $5.5 million, or 6 cents a share, from $32.5 million, or 38 cents, a year earlier. Sales for the three months ended May 3 declined 9.6 percent to $460.7 million from $509.4 million as comparable sales fell 11 percent.

For the second quarter, Express said comp sales would fall by a percentage in the mid- to high-single digits and that the bottom line would range from a loss of $2.5 million to profits of $2.5 million.

Also getting hit at the mall was Pacific Sunwear, which saw net losses of $10.4 million, or 15 cents a share. Still, that marked an improvement from losses of $24.2 million, or 35 cents, a year earlier. Adjusting for certain items, losses from continuing operations narrowed to $7.4 million from $9.5 million.

Sales inched up 2.9 percent to $171.1 million from $166.4 million as comp sales increased 3 percent.

Gary Schoenfeld, president and ceo noted, “While we anticipate continued growth in our men’s business, the promotional environment that we are seeing in the mall coupled with underperformance in a couple of categories in women’s is resulting in a more cautious outlook for the second quarter.”

The retailer said comp sales would range from down 5 percent to flat in the second quarter.

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