A sales decline in the second quarter at Express Inc., plus lackluster guidance, had shares of the retailer dropping 25.5 percent after the company posted second-quarter results that missed Wall Street’s consensus estimates.
David Kornberg, president and chief executive officer of the specialty retailer, said the second-quarter performance was below company guidance, reflecting challenging store traffic. “This was compounded by a lack of clarity across the assortment. We believe we have identified the necessary actions to position Express to regain momentum and we are moving on them.”
For the three months ended July 30, the company said net income dropped 51.8 percent to $10.1 million, or 13 cents a diluted share, from $21 million, or 25 cents, a year ago. Net sales were down 5.8 percent to $504.8 million from $535.6 million. The company said comparable-store sales fell 8 percent compared with a 7 percent increase a year ago. E-commerce sales in the quarter fell 7 percent to $70.1 million, the company said.
Wall Street was expecting earnings per share of 17 cents on revenues of $521 million.
For the six months, net income declined 32.5 percent to $23 million, or 29 cents a diluted share, on a net sales decrease of 2.9 percent to $1.01 billion.
Looking ahead, Kornberg said the fall assortment is more cohesive across wearing occasions, and clearly identifies the important trends. “Our overarching priorities remain unchanged: presenting our customers with a strong assortment, increasing customer acquisition and brand loyalty, enhancing gross margin as we benefit from our IT initiatives and maintaining inventory discipline while reducing expenses,” he said.
For the third quarter, the company is projecting net income of between $7 million and $12 million, compared with $26.3 million a year ago, and diluted EPS at between 9 cents to 15 cents, compared with 31 cents earned a year ago. Comp sales are expected at a negative high-single to low-double digits for the quarter.
For full-year 2016, the company guided net income to between $72 million to $90 million, compared with $122.4 million in 2015, and diluted EPS at between 91 cents and $1.05, compared with $1.38 in 2015. Comp sales are projected to be in the negative high-single digits.
Shares of Express on Wednesday closed at $11.94 in Big Board trading.