Express Profit Soars on Fewer Promotions

Express Inc. reported profit shot up 80% in its latest quarter as promotional restraint and inventory management boosted sales.

Earnings and sales handily beat expectations and the clothing retailer lifted its guidance for the year.

Mall-based chains such as Express—which spun off from L Brands Inc. in 2007—have struggled recently amid dwindling foot traffic and margin-eating promotions.

But Chief Executive David Kornberg said a "balanced approach" has helped the company deliver comparable sales growth, margin expansion and significant earnings growth in each of the past three quarters on a year-over-year basis.

"I believe we can deliver consistent and profitable growth in 2016 and beyond by continuing to follow this approach," he said.

Earlier this year, Express revamped its management team and elevated Mr. Kornberg to CEO.

Overall, the retailer reported a profit of $26.3 million, or 31 cents a share, up from $14.6 million, or 17 cents, a year earlier. Revenue increased 9.8% to $546.6 million.

The company had forecast 26 to 29 cents in per-share profit. Analysts were expecting $541 million in sales.

During the period, sales at stores open at least a year—including e-commerce—jumped 6%, compared with a 5% decrease in the same quarter last year.

With higher sales and fewer discounts, Express managed to improve its gross profit margin to 35% from 31.7%.

For the year ending in January, Express now expects to earn $1.38 to $1.42 a share, up from its earlier prediction of $1.30 to $1.37 a share.

Express said fourth-quarter profit will be between 60 cents and 64 cents a share, in line with the 61 cents analysts have projected.

Shares in the company, up about 18% this year, were inactive premarket.

Write to Anne Steele at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

December 03, 2015 08:05 ET (13:05 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.