What happened

Shares of Express (NYSE:EXPR), a fashion retailer of apparel and accessories, soared over 23% higher Thursday morning after the company reported better-than-expected third-quarter results and offered investors upbeat guidance.

So what

Starting from the top, sales dropped 5.1% to $488.5 million, which topped analysts' estimates calling for $483.3 million. The top-line sales decline coincided with a 5% drop in same-store sales, although the decline was better than the 6.1% analysts had expected. Adjusted loss per share checked in at $0.03, beating analysts' estimates that called for a $0.09 loss per share. Digging deeper, two additional negative takeaways from the third quarter were Express' gross margin contraction of 250 basis points, down to 28.2%, and a 70-basis-point increase in selling, general, and administrative (SG&A) expenses compared to the prior year's third quarter.

Apparel retailer store front

Image source: Getty Images.

"While we are certainly not satisfied with our results, sequential improvement over the last two quarters, and throughout the third quarter is compelling evidence that the immediate changes we have been able to make to our product, merchandising and marketing approach are resonating with customers," said CEO Tim Baxter in a press release.

Now what

EXPR Chart

EXPR data by YCharts

While Express' third quarter was far from great, it was at least better than expected, and management was confident enough to set fourth-quarter adjusted earnings guidance between $0.16 and $0.21 per share, well above analysts' consensus estimates calling for $0.12 per share. The apparel retailer stock has recorded a solid 54% gain over the past three months as leadership settles in and attempts to return the company to better operating margins and profits in the near term. Investors interested in the stock, which is in a competitive industry, would be wise to tune into the company's investor event on January 22, 2020, to soak up the new corporate strategy.