Shares of Express Inc. fell sharply as first-quarter sales and profit declines prompted investors to sell even as Wall Street set a new high.
The specialty chain posted a $4.5 million net loss for the first quarter, compared to net income of $12.9 million a year ago, along with a 10 percent drop in net sales to $467 million. Comparable sales, including e-commerce, also fell 10 percent on top of a 3 percent drop in the first quarter of 2016.
Wall Street wasn’t pleased and shares of Express fell 19.2 percent on Thursday to $6.27, the chain’s low for the past 52 weeks.
Express had the day’s worst showing for an apparel retailer and was followed by Vera Bradley Inc., which recently posted negative first-quarter results of its own and saw its stock fall 7 percent to $8.74.
The declines stood out on a solid day for the market. The S&P 500 Retailing Industry Group gained 1 percent to 1,531.69 as the S&P 500 ended at an all-time high of 2,430.06, marking a 0.8 percent gain for the day.
Among the fashion players gaining ground were Urban Outfitters Inc., which rose 3.8 percent to $19.59; Guess Inc., which rose 3.6 percent to $12.47, and Macy’s Inc., which rose 2.4 percent to $24.08.
Express president and chief executive officer David Kornberg tried to put a positive spin on things, noting “recent trends” have improved and that e-commerce sales increased by 27 percent during the quarter.
“As we look to the balance of the year, we are increasingly optimistic about our ability to drive improved performance,” Kornberg said. “We are excited about our summer and fall assortments and expect continued sales momentum in our e-commerce business, along with sequential improvement in stores.”
Kornberg added that initiatives related to customer loyalty are showing “meaningful progress” and a test of shipping in-store goods to fulfill online orders has proven successful.
“We remain focused on carefully managing our cost base, further optimizing our store footprint, and improving profitability,” Kornberg said.
Looking toward the second quarter, Express projected similar results to the first. Comparable-store sales are expected to be in the negative midsingle digits and the company’s net loss is expected to increase to between $16 million and $19 million. For the second quarter of 2016, Express posted net income of $10.1 million.
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