What happened

Shares of Express (EXPR) declined by as much as 25.5% on Thursday. The fashion retailer announced a massive equity offering shortly after the release of its first-quarter earnings results. As of 3:15 p.m. EDT, the stock's price was down more than 17%. 

So what 

Express's revenue jumped 64% year over year to $346 million, fueled by store reopenings and a 40% rise in e-commerce sales. CEO Tim Baxter said the retailer's store traffic has also begun to recover. "We experienced an inflection point in our business after Easter as more people were vaccinated and states began lifting restrictions," Baxter said in a press release.

A person is pointing to a stock chart that rises sharply and then falls.

Image source: Getty Images.

Still, Express continues to rack up losses. It generated an operating loss of $40.6 million following a loss of $145.3 million in the year-ago period.

To help shore up its dwindling cash reserves, Express said it would sell as many as 15 million shares to investors at market prices. 

Now what

The stock sale could increase Express's shares count by over 22%. The resulting dilution will make it more difficult for the struggling retail chain to produce meaningful per-share profits, even if its sales continue to recover.

Still, management remains undaunted. "We are well-positioned for the post-pandemic world, we are on track to achieve our goal of $1 billion in e-commerce demand by 2024, and I expect that we will return to positive operating cash flow in the second quarter," Baxter said.