Express Q2 income falls but sales edge up
Express reported its fifth straight quarter of comp-sales gains but warned of “challenging macroeconomic conditions that worsened as the quarter progressed.”
The apparel retailer reported that its net income fell to $7.04 million, or $0.10 a share, for the quarter ended July 30, from $10.6 million, or $0.15 a share, in the year-ago period. Analysts had expected earnings of $0.09 per share.
Net sales rose 1.6% to $464.9 million. Comparable sales inched up 1%, marking the fifth consecutive quarter of positive comparable sales compared to pre-pandemic levels.
Express said that “modern tailoring” in men’s and women’s continued their resurgence. Men’s suits were up double digits with chinos one of the best categories, posting significant growth. Women’s delivered double digit growth in jackets and skirts.
Gross margin improved to 33.1% from 32.6%. Inventories were up 29.9% to $346.2 million.
"While our performance was below our outlook, we achieved solid results despite challenging macroeconomic conditions that worsened as the quarter progressed,” stated CEO Tim Baxter. “We have demonstrated our ability to stay focused on the fundamentals, control the controllables, and operate with both discipline and agility.”
Express is currently running a pilot program to test a reimagined customer experience in 25 stores. The locations are outperforming the rest of the company’s fleet with higher sales, higher loyalty program sign-ups, increased customer engagement and overall improvements to customer experience, the retailer said. It plans to expand the program to 70 stores in September
In addition, Express is expanding its off-mall, Edit store format, with plans to open six stores in the next 90 days. There are currently five Edit stores up and running.
The company expects same-third-quarter same-store sales to decrease in the mid-single digits percentage range. For the full year, it forecasts a per-share loss of $0.16 to $0.22.
"While we have lowered our outlook for the back half of this year to reflect the uncertainty of macroeconomic conditions, we remain committed to our long-term objective of a mid-single digit operating margin,” Baxter said.
Express operates more than 550 stores in the U.S. and Puerto Rico.