Express Cuts Guidance as Sales Declines

Express Inc. again slashed its profit forecast for the year as the apparel chain reported sliding sales in the latest quarter, hurt by dwindling store traffic and online sales.

The muted results missed the company's already-downbeat expectations, and shares tumbled 25% to $12 in premarket trading.

The company said same-store sales, a measure that excludes recently closed or opened stores and includes online sales, fell 8%. Analysts polled by Consensus Metrix projected a 4.7% decline, given the company's guidance for same-store sales to fall by mid-single digits.

Retailers throughout the country, from department stores and specialty shops to Target Corp., have been reporting sliding sales due in large part to falling foot traffic as shoppers increasingly turn to Amazon.com Inc. and fast-fashion options such as Hennes & Mauritz AB.

Express Chief Executive David Kornberg said the company also was hurt by "a lack of clarity" in its offerings during the period. "Our fall assortment is more cohesive across our wearing occasions, clearly identifying the important trends," said Mr. Kornberg, who was elevated to CEO last year amid a management team shake-up. The company also is pursuing marketing initiatives focused on acquiring new customers and retaining them.

Gross margin fell to 29.9% from 33.1% in the year-ago period, hurt by increased markdowns. E-commerce sales fell 7% to $70.1 million during the quarter.

For the full year, the company now expects adjusted earnings of $1 to $1.14 a share, down from previous guidance for $1.41 to $1.54 a share.

Over all for the period ended July 30, Express posted a profit of $10.1 million, or 13 cents a share, down from $21 million, or 25 cents a share, a year earlier. The company projected earnings of 15 cents to 19 cents a share.

Revenue declined 6% to $504.8 million. Analysts surveyed by Thomson Reuters anticipated $521 million.

For the current quarter, the company said it expects earnings of 9 cents to 15 cents a share, sharply below analysts' projections for 32 cents. Same-store sales are expected to fall in the high-single to low-double digits.

Write to Joshua Jamerson at [e-mail]

(END) Dow Jones Newswires

August 24, 2016 08:15 ET (12:15 GMT)

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