Express Q4 Results Miss Estimates; Provides Weak Outlook

(RTTNews) - Shares of Express, Inc. (EXPR) are plunging more than 12 percent in early deals on Wednesday after the apparel and accessories retailer reported results for the fourth quarter that missed analysts' expectations. The company also provided earnings guidance for the first quarter and full-year 2014, both well below Street view.

The company also reported a profit for the quarter that declined from last year, reflecting lower margins and a sales decline.

"Our fourth quarter results were within the range of our revised guidance but disappointing nonetheless given the strength of our collection across both genders. We delivered positive comps for the quarter, but the heavier than planned pace of promotions impacted both top-line and margins," Chairman and CEO Michael Weiss said in a statement.

The Columbus, Ohio-based company reported net income of $47.93 million or $0.57 per share for the fourth quarter, lower than $63.94 million or $0.75 per share in the prior-year quarter, which included a fourteenth week that contributed about $0.04 per share.

On average, 18 analysts polled by Thomson Reuters expected the company to report earnings of $0.59 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter declined to $715.88 million from $731.69 million in the same quarter last year, and missed seventeen Wall Street analysts' consensus estimate of $721.13 million.

The prior-year quarter in included an extra 14th week that contributed earnings og about $0.04 per share and net sales of about $27.0 million.

On a 13-week basis, comparable sales or sales at stores open at least for a year, including e-commerce sales, increased 1 percent, on top of a 1.5 percent growth last year.

E-commerce sales increased 14 percent to $138.8 million from the year-ago quarter.

Merchandise margins declined 220 basis points, reflecting the intensely promotional nature of the holiday period and January.

Operating margin for the quarter contracted 330 basis points to 11.9 percent as gross margin decreased 300 basis points to 32.0 percent from last year, and selling, general, and administrative expenses, as a percentage of net sales, increased 40 basis points to 20.1 percent from a year ago.

"Specifically, we continued to grow our E-Commerce business; opened new North American stores, including our San Francisco flagship; and continued our international expansion. We also laid the groundwork for our outlet initiative and plan to open the first of these outlet stores in the beginning of May 2014," Weiss added.

Looking ahead to the first quarter, the company expects earnings in a range of $0.12 to $0.18 per share, with comparable sales projected to decline between low-double-digits and high-single-digits. Analysts currently expects the company to earn $0.41 per share on quarterly sales of $526.04 million for the quarter.

For fiscal 2014, Express currently anticipates earnings in a range of $1.03 to $1.23 per share, on projected comparable sales between a low-single-digits decline and flat. Street is currently looking for full-year 2014 earnings of $1.58 per share on annual sales of $2.31 billion.

EXPR closed Tuesday's regular trading session at $18.24, down $0.14 on a volume of 2.07 million shares.