Why Express, Inc. Shares Got Crushed

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 apparel retailer Express, Inc.  (NYSE: EXPR  ) plummeted 23% today after its full-year outlook disappointed Wall Street.

So what: Express' third-quarter results managed to meet estimates -- EPS increased 15% on a revenue bump of 7% -- but downbeat guidance for the rest of the year is triggering serious concerns over slowing growth going forward. In fact, management cited a sharp increase in margin-pressuring promotional activity for the downbeat view, suggesting that its competitive position is weakening. 

Now what: Management now sees full-year EPS of $1.46 to $1.51, down from its prior view of $1.52 to $1.60 and below the consensus of $1.61. "We had been planning for a promotional holiday season but we now expect the intensity of those promotions to reach heightened levels and we are updating our full year guidance accordingly," said Chairman and CEO Michael Weiss. "Our overarching goal is to continue presenting Express as a premier fashion authority for our demographic, and we believe that our current and go-forward assortments demonstrate that standing." Of course, given the strong competitive headwinds facing Express at this point, I'd wait for an even wider margin of safety before buying into that optimism. 

Our top stock for 2014
The market stormed out to huge gains across 2013, leaving investors on the sidelines burned. However, opportunistic investors can still find huge winners. The Motley Fool's chief investment officer has just hand-picked one such opportunity in our new report: "The Motley Fool's Top Stock for 2014." To find out which stock it is and read our in-depth report, simply click here. It's free!


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2752485, ~/Articles/ArticleHandler.aspx, 4/17/2014 8:45:23 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement