Express, Inc. released its financial results for the second quarter of 2016, ended July 30, 2016, and it wasn’t good.
- Overall, Comparable sales (including e-commerce sales) decreased 8%, compared to a 7% increase in the second quarter of 2015.
- E-commerce sales declined 7% to $70.1 million.
- Net sales decreased 6% to $504.8 million from $535.6 million in the second quarter of 2015.
- Net income was $10.1 million, or $0.13 per diluted share. This compares to net income of $21.0 million, or $0.25 per diluted share, in the second quarter of 2015.
- Looking ahead, the company expects Q3 sales growth in the negative high single to low double digits. EPS is seen falling in a range of $0.09 to $0.15.
Stocks reacted accordingly, with premarket trading down almost 20%, putting shares into a 52-week low territory, according to Seeking Alpha.
David Kornberg, the Company’s President and Chief Executive Officer, stated: “I am disappointed with our second quarter performance as sales and earnings were below our 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. Our fall assortment is more cohesive across our wearing occasions, clearly identifying the important trends, and we are aggressively pursuing several marketing initiatives focused on driving new customer acquisition and retention.”
LIKE A KLOSS
Express does have an aggressive marketing program in place to attract attention, teaming up with supermodel/philanthropist Karlie Kloss to be the face of its #ExpressLife campaign, celebrating the Express customer spirit. Sales of the “Like a Kloss” T-shirt (pictured above) will help support Kode with Klossy, a girls coding initiative.
For Q3 comp sales, Express Inc. anticipates negative high single to low double digits. This is against 6% increases of Q3 2015. For the full-year 2016, they expect “negative high single digits” against 6% full-year 2015 actuals.
“We are pleased with our overall inventory position as we begin the fall season,” adds Kornberg. “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. We expect to deliver incremental progress toward our priorities in 2016 and firmly believe our strategy will move us toward our double digit operating margin goal.”