EXPR - Express posts sharp sales decline projects persistent margin pressure

2023-03-24 07:10:28 ET

Ohio-based retailer Express ( NYSE: EXPR ) reported a deeper decline in sales than expected and forecast further pressure on margins in an earnings announcement on Friday.

The retailer reported a $0.63 per share loss for the fourth quarter, sharply down from $0.11 in earnings per share in Q4 2021, but better than the $0.69 expected by analysts. Meanwhile, a 13.6% decline in revenue from the prior year to $514.3M came in below the $524.9M consensus expectation.  Comparable retail sales slumped 15%, eCommerce sales declined 19%, and comparable outlet sales decreased 7% as compared to the fourth quarter of 2021.

“Our comparable sales were flat for the year with negative comps in the back half of 2022 offsetting gains we had made in the first half,” CEO Tim Baxter commented. “Our strategy to elevate our brand with higher average unit retails and reduced promotions - which had driven steady growth for five consecutive quarters through the second quarter of 2022 - bumped up against reduced consumer spending and increased price sensitivity in discretionary categories.”

However, he indicated that sales trends should improve into 2023 as the company repositions its overall business. Further, cost-savings efforts are expected to improve bottom line trends.

"While we expect the margin pressure and recessionary environment we experienced in the back half of the year to continue, we have identified and begun to realize $40M in annualized expense savings in early 2023 and are working to identify additional expense savings opportunities in 2023 and beyond,” Baxter concluded.

For the first quarter, the retailer expects comparable sales to mark a low-double digit decline year over year while gross margins contract approximately 850 basis points. A projected diluted loss per share of $0.70 to $0.80 outpaced a consensus estimate of a $0.47 per share loss as inventory levels are normalized.

For the full-year, a diluted loss per share of $0.85 to $1.05 is anticipated, against a $0.71 per share expected loss. Comparable sales are expected to rise by a positive low-single digit percentage from 2022.

Shares of Express ( EXPR ) wavered on Friday, rising over 5% immediately after the print before giving up that gain and sliding 1.6% as premarket trading progressed.

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