Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of young-adult retailer Express (EXPR) soared 20% today after its fourth-quarter outlook topped Wall Street expectations.
So what: Express shares have shed nearly a third of their value over the past year on disappointing sales, but today's upbeat guidance suggests that management's turnaround initiatives are gaining traction. In fact, Express cited a particularly strong holiday season -- same-store sales and gross margins were much better than expected -- for the positive outlook, raising investor hopes for profitable growth going forward.
Now what: Management now sees fourth-quarter EPS of $0.72 to $0.74, nicely above its prior view of $0.62 to $0.68 and well ahead of Wall Street's estimate of $0.66. "Our promotional strategy and the introduction of opening price points in key categories contributed to a sequential improvement in comparable sales since the third quarter of 2012 and higher gross margin dollars versus last year's holiday season," said Chairman and CEO Michael Weiss. Of course, with the stock now up a whopping 60% over the past two months alone, I'd wait for some of the excitement to fade before betting on that operating momentum to continue.
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