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Express posts loss in Q1, but tops Street, will close 11 stores

Specialty apparel retailer Express reported a net loss and declining sales but remained ahead of projections from Wall Street analysts as it plans to shutter stores.

Express reported a net loss of $9.9 million in the first quarter of fiscal 2019, compared to net income of $0.5 million in the prior year period. Earnings per share were in the red at -$0.15, but beat analyst expectations of -$0.30 EPS.

Net sales decreased 6% to $451.3 million from $479.4 million in the first quarter of 2018. However, this decline also topped analyst predictions of a 10% slide to $429.4 million. And a 9% drop in comparable retail sales (including same-store and e-commerce sales) was better than the expected 10% fall.

During fiscal 2019, Express expects to close 11 retail stores and convert another 27. This figure includes two closed stores and 15 converted stores in the first quarter, as well as an anticipated three closures and nine conversions in the second quarter. Express also plans to open four new outlet stores and convert 27 outlet stores during the fiscal year, including one opening and nine conversions in the second quarter.

Matthew Moellering, interim CEO and interim president and executive VP and COO, Express, said the retailer is encouraged by Q1 results and has been positioning itself to improve promotional and CRM efforts.

"While we had a soft start to the year, the health of the business improved throughout the period,” said Moellering. “As a result, we were able to reduce promotion levels in the back half of the quarter. We are making significant headway on the implementation of several new business initiatives focused on product, brand and product clarity, and customer acquisition and retention. While much remains to be done, we expect to build on this progress throughout the year."

During the second quarter of fiscal 2019, Express is offering guidance of a net loss of $9-12 million, diluted EPS loss of $0.13-0.17 per share, and negative comparable sales growth of 6-8%.

Express operates more than 600 retail and factory outlet stores in the U.S. and Puerto Rico, as well as shopping through its website and mobile app.
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