Columbus, OH—Express Inc.’s first quarter earnings fell 23% as the youth-oriented fashion retailer posted flat comparable store sales and higher expenses. But Express still managed to top analysts’ forecast.
For the quarter ended May 4, Express reported a profit of $32.4 million, or 38 cents a share, compared to $42.1 million, or 47 cents a share, a year ago. The results were in line with the company’s March forecast, but beat analysts’ average estimate for 36 cents a share.
Net sales increased 2.5% to $508.5 million, ahead of analysts’ estimate for $498 million. Comparable store sales were flat compared to first quarter last year.
Gross margin narrowed to 33.6% from 38.1%, as input costs rose 10%.
“Much has been written about the macro-economic events and difficult retail environment that made the first quarter so challenging,” said Michael Weiss, chairman/ceo. “We successfully overcame those hurdles to deliver results that were at the high end of our guidance. It’s always about the product, and our customers responded enthusiastically to our spring merchandise, which we consider to be fresh and on-trend. While we promoted more heavily in the face of a highly promotional environment, we managed our expenses tightly and ended the quarter well-positioned to achieve our annual goals.”
‘Direction is Positive’
In fact, the company, which plans to open outlet stores, raised its full year earnings outlook $1.48 to $1.58 a share, up from its March view of $1.40 to $1.54.
For the current quarter, Express forecast income of 17 cents to 21 cents a share, compared to 14 cents a share that analysts expect.
“The direction the business is heading is positive,” Weiss added. “As we start the second quarter, momentum in the business is on the upswing, and conversion, which we often cite as a leading indicator of the business, has been building since relatively early in the first quarter.”
Weiss said the company would be opening several new or remodeled stores in key malls as part of a focus on prime “hub” locations. Online sales continue to grow and the company added three additional franchise locations internationally.