What: Shares of Express Inc. (NYSE:EXPR) were down 24.9% as of 10:45 a.m. EDT Wednesday after the clothing retailer reported weaker-than-expected second-quarter 2016 results and reduced its full-year outlook.
So what: Quarterly revenue fell 6% year over year, to $504.8 million, driven by an 8% decline in comparable sales. That includes a 7% drop in e-commerce sales, to $70.1 million. Meanwhile, net income fell more than 50% year over year, to $10.1 million. Net income per diluted share was down 48%, to $0.13 -- partly helped by repurchases over the past year, including 3.2 million shares bought back for $51.5 million during the second quarter.
By contrast, Express' guidance provided three months ago called for a comparable sales decline in the mid-single-digit percent range, net income of $12 million to $15 million and net income per share of $0.15 to $0.19. And analysts, on average, expected Express to report higher revenue of $523.2 million and earnings of $0.18 per share.
According to Express CEO David Kornberg:
I am disappointed with our second quarter performance as sales and earnings were below our guidance, reflecting challenging store traffic. This was compounded by a lack of clarity across the assortment. We believe we have identified the necessary actions to position Express to regain momentum and we are moving on them. Our fall assortment is more cohesive across our wearing occasions, clearly identifying the important trends, and we are aggressively pursuing several marketing initiatives focused on driving new customer acquisition and retention. In addition, we are pleased with our overall inventory position as we begin the fall season.
Now what: For the current quarter, Express anticipates comparable sales in the range of negative high single digits to low double digits, net income of $7 million to $12 million, and diluted earnings per share of $0.09 to $0.15.
For the full year, Express now expects comparable sales in the negative high single digits, adjusted net income of $79 million to $90 million, and adjusted net income per diluted share of $1.00 to $1.14. Each of these ranges represents a reduction from Express' previous guidance provided three months ago, which called for full-year comps in the negative mid to low single digits, adjusted net income of $113 million to $123 million, and adjusted diluted EPS of $1.41 to $1.54.
While Express might well be on the right track headed into the crucial fall season, there's no denying this was another painful report. In the end, it's no surprise to see investors taking another big step back from Express stock today.