What happened
Shares of Express (EXPR), a fashion brand with over 600 retail and outlet stores in the U.S. and Puerto Rico, were down sharply Wednesday, along with a number of other apparel retailers, after a report from the U.S. Bureau of Labor Statistics (BLS). The stock ended the day down almost 10%.
So what
In the BLS consumer price report, men's apparel prices declined 0.9% in November versus the prior year, and there was a 3.6% price decline in women's apparel. Boys' and girls' apparel prices dropped 3.9% and 2.2%, respectively, worsening an already gloomy apparel retail segment.
Adding to the pessimism Wednesday were a warning from American Eagle Outfitters that its markdown activity was higher than anticipated, and an underwhelming third-quarter earnings report from another apparel retailer, The Children's Place (PLCE 1.31%).
Image source: Getty Images.
Now what
Express reported third-quarter results on Dec. 5, with management noting comparable-store sales dropped 5%. While dissatisfied with its third-quarter results, the company believed the quarter was a sequential improvement over the previous two quarters.
With today's BLS report showing pricing weakness in apparel, investors are likely concerned that Express' sequential improvement could end during the holiday season and fourth quarter. Investors would be wise to tune in to the company's Jan. 22, 2020, event that will lay out a new corporate strategy, among other plans.
