A better product assortment and more disciplined markdown activity helped Express Inc. deliver robust first-quarter sales and earnings. Shares of the retailer were up 6 percent to $17.65 in mid-morning trading.
Sales jumped 9.1 percent to $502.4 million from $460.7 million in the same period last year as net income rose to $13.1 million, or 15 cents per share, from $5.1 million, or 6 cents a share. Gross margins gained 330 basis points to 33.1 percent from 29.8 percent in the prior year. Gross margin gains were fueled by an increase in merchandise margins of 200 basis points, the company said in its report. Same-store sales increased 7 percent in the quarter.
David Kornberg, president and chief executive officer, said in a statement that the year is “off to a strong start.”
“Our customers responded with enthusiasm to our assortment while we intensified our inventory discipline and scaled back our promotional activity,” Kornberg said. “We also continued to execute against our growth pillars and our 2015 priorities. I am particularly pleased that the growth we delivered resulted from our balanced approach to running the business.”
On the balance sheet, the retailer sat on $265.9 million of inventory at the close of the quarter, which compares to $235 million in the prior year. The company also said it amended and restated its asset-based loan to increase borrowing capacity to $250 million from $200 million. By way of guidance, the company is looking at same-store sales for the second quarter to be come in at the “low, single digits,” which compares to a 5 percent decline in the second quarter of last year.