Shares of clothing retailer Express (EXPR -1.46%) were trading up 24.3% as of 9:55 a.m. ET on Thursday after the company reported better-than-expected earnings results for the third quarter.
Express continued to show progress in lessening its dependence on shopping malls, instead serving customers across e-commerce and retail stores. Net sales grew 47% year over year to $472 million, boosted by e-commerce comp sales growth of 52%.
Sales came in below the consensus analyst estimate of $503 million, but investors were impressed with the company's performance on the bottom line. Express turned a year-ago loss on an adjusted basis of $76.2 million into a profit of $11.6 million, or $0.17 per share.
Profits should improve again in the fourth quarter, which is encouraging when you consider the supply chain obstacles affecting many retailers right now. Express saw its gross margin improve to 33% in the last quarter, up from 4.3% in the year-ago quarter. Guidance calls for another 100-basis-point improvement in the fourth quarter.
Despite the supply and labor shortages, management expects fourth-quarter comparable-store sales to increase by the low single digits. On a positive note, Express appears to have prepared for the potential supply challenges in the near term by increasing its inventory by 45% since the beginning of the year. This should allow it to meet holiday demand and deliver on its guidance.
Looking further ahead, management is confident its e-commerce business will reach $1 billion in sales and over $100 million in operating profit by 2024, which is part of its Expressway Forward growth strategy.