Express Q4 comparable sales drop by 6 percent

Express, Inc. for its fourth quarter reported decrease in net sales of 10 percent to 628.4 million dollars, while comparable sales including e-commerce sales decreased 6 percent, compared to a 1 percent decrease in the fourth quarter of 2017. The company said net loss was 1.1 million dollars or 2 cents per diluted share, compared to net income of 27.4 million dollars or 35 cents per diluted share in last year's fourth quarter.

Commenting on the financial update, Matthew Moellering, the company's interim CEO and interim president and EVP and COO, said in a statement: "Despite our fourth quarter results being in line with the guidance we provided on November 29, 2018, our overall performance in the period was disappointing. While we expect our results to remain challenging in the near-term, we are focusing on three key areas including product, brand and product clarity, and customer acquisition and retention to reposition the business for future growth and improved profitability."

Highlights of Express’ Q4 performance

Fourth quarter ecommerce sales were 203.3 million dollars and on a comparable sales basis, ecommerce sales increased 5 percent. The company said, merchandise margin decreased by 150 basis points driven by increased promotional activity. Buying and occupancy as a percentage of net sales increased by 100 basis points and in combination, this resulted in a 250 basis point decrease in gross margin, representing 27.6 percent of net sales compared to 30.1 percent in last year’s fourth quarter.

Excluding costs related to the CEO departure and impairment of Homage investment, the company added that adjusted net income was 12.8 million dollars or 19 cents per diluted share compared to 25.8 million dollars or 33 cents per diluted share, in the fourth quarter of 2017. Fourth quarter of 2017 EPS benefited from an extra week, which was worth 4 cents per diluted share.

Review of Express’ full year operating results

Net sales decreased 2 percent to 2,116 million dollars in 2018, while comparable sales including ecommerce sales decreased 1 percent, compared to a 3 percent decrease in 2017. Ecommerce sales increased 20 percent to 609 million dollars and on a comparable sales basis, ecommerce sales increased 21 percent in 2018.

Operating income was 28.2 million dollars and on an adjusted basis was 33.7 million dollars in 2018 compared to 30.6 million dollars and 54.7 million dollars on an adjusted basis in 2017. Net income was 9.6 million dollars or 13 cents per diluted share, compared to 18.9 million dollars or 24 cents per diluted share in 2017. Adjusted net income was 23.6 million dollars or 32 cents per diluted share, compared to 28.9 million dollars or 37 cents per diluted share in 2017.

For its first quarter of 2019, the company expects comparable sales to decline by 9 to 11 percent, net loss of 18 to 23 million dollars and diluted EPS to range between a loss of 27 cents to 34 cents.

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