Why Express, Inc. Shares Jumped Today

Is this meaningful? Or just another movement?

Jun 13, 2014 at 5:34PM

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 Express, (NYSE:EXPR) were flying higher today, up as much 24%, and finishing 21% higher after the clothing chain said it received a letter from an investor offering to take the company private. 

So what: Express said that Sycamore Partners, a private equity firm that revealed it accumulated a 9.9% stake in the company, indicated that it was interested in acquiring the company. In response, Express said it established a Special Committee of the Board to "determine the best course of action," and it adopted a shareholder rights plan to prevent any unwanted takeover attempt by Sycamore or another investor. 

Now what: Express had seen shares plunge by nearly 50% before today's news as sales have fallen sharply, and the company has missed earnings estimates in its last three quarterly reports. In its most recent quarter, same-store sales declined 11%, and earnings fell from $0.38 a share to $0.06. Clearly, Express is facing numerous challenges as fashion tastes appear to be changing. Sycamore has already taken clothing chains such as Hot Topic and Talbot's, and is a major investor in Aeropostale, so it's not a surprise to see it chasing yet another ailing retailer. No price tag was attached to Sycamore's letter, but given the recent sales decline, a buyout may be the best option for Express shareholders.

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Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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