Express narrows loss; to expand smaller-store format
Express Inc. topped first-quarter expectations and said its second-quarter store sales to date are exceeding 2019 levels on a comparable basis.
The apparel retailer reported a loss of $45.7 million, or $0.70 a share, for the quarter ended May 1, from $154.1 million, or $2.41 a share, in the year-ago period. The adjusted per-share loss was $0.55. Analysts had expected a loss of $0.58.
Sales rose 64.4% to $345.8 million, beating estimates of $322.9 million. Comparable retail sales, which includes both Express stores and eCommerce, increased 11% compared to last year. Comparable outlet store sales decreased 19%. (Express comparable sales results exclude sales from stores that were closed for at least one full day, including during the pandemic.)
"First quarter results exceeded our expectations across all channels and drove a $130 million improvement in our operating cash flow," said Tim Baxter, CEO, Express. “We experienced an inflection point in our business after Easter as more people were vaccinated and states began lifting restrictions. As some people resumed pre-pandemic routines and began attending occasions, we have also seen improved trends in our historically dominant occasion based and wear to work product categories, while continuing our momentum and growth in our ‘new core’ such as denim and Express Essentials.”
Express ended the first quarter with more than 500 retail and factory outlet stores in the United States and Puerto Rico and an online store. On the company's earnings call, Baxter said the chain plans to expand its new, smaller-store format, Express Edit, with plans to operate approximately 10 Express Edit Concept Stores by the end of this year. The stores include a mix of regional products and brand staples.
"Express Edit stores have short-term leases in off-mall locations with strong foot traffic that allow us the flexibility to test, learn and modify going forward," Baxter said. "We have already selected sites in Westport, Connecticut and Washington DC with footprints under 4,500 square feet, and true to the Express Edit Concept, the product mix will be curated to reflect local styles and trends within each market and neighborhood. The stores include a mix of regional products and brand staples."
Another facet of the Express Edit strategy is the exploration of multiple stores in a single market.
"We will open two locations in Washington DC where we currently operate stores in the adjacent suburbs, so testing these smaller formats in the city center will allow us to read the impact on existing stores, e-commerce sales to these zip codes and new and existing customer activity overall," Baxter said.
Express expects same-store sales to improve sequentially throughout the year.
“Our transformation is well underway, customer response to our product assortment and brand positioning has been very positive, and our performance has begun to reflect the strength of our strategy,” Baxter said.