What happened?
Shares of Express (EXPR +0.00%), a fashion destination and apparel brand for women and men, are down 14% as of 11:00 a.m. EST after the company released its third-quarter financial results.
So what
Express' third-quarter sales posted a 2% gain to $514.96 million, higher than analysts' estimates calling for $505.5 million. Same-store sales were flat compared to the prior year, but that result was also better than estimates forecasting a 0.2% decline. Net income checked in at $0.11 per share, which was higher than the prior year's $0.08 per share result and higher than analysts' estimates of $0.10 per share. Another bright spot for investors was a strong 23% growth in same-store e-commerce sales, and that was compared to the prior year's third quarter that had also posted a 23% gain.
So if Express' third-quarter results beat on the top and bottom lines and comparable sales and posted strong e-commerce results, why today's decline?
Image source: Getty Images.
Now what
The answer is simple: A gloomy outlook is ruining the solid third-quarter results. Here's Express CEO David Kornberg on the topic.
We entered the holiday season positioned to succeed with increased newness as compared to last year. However, sales to date in November have been below our expectations. The apparel specialty retail environment continues to be highly promotional and our traffic has been challenging. While the majority of the quarter is still in front of us, we are revising our guidance to reflect a more cautious stance given recent unexpected sales trends.
Indeed, the fourth-quarter guidance does look rough. Management expects fourth-quarter earnings per share to check in between $0.11 and $0.20, well below consensus estimates calling for $0.31. It also expects a 5% to 7% decline in same-store sales, compared to analysts expecting flat same-store-sales growth during the fourth quarter. While investors should be pleased with third-quarter results, today's decline in the face of lowered guidance and an apparel retail environment that's been challenging and highly promotional is understandable.
