Struggling fashion retailer Express Inc. forecast continued troubles in the first quarter, with declines expected in comp-store sales and a net loss for the period.
In a Nutshell: It was a difficult fourth quarter for Express Inc., with decreases in comparable-store sales and net sales, and a net loss in income.
On the plus side, e-commerce sales were up on a net and comp basis. The company also said it had achieved its target of $12 million in cost savings in 2018, and that it had a strong balance sheet, with $172 million in cash and no debt at year’s end.
Mylle Mangum, the company’s chairwoman, said the board is making good progress on the CEO search. In January, Express said CEO David Kornberg was leaving the company. Mangum said, “The board’s top priority is finding the right candidate to return Express to growth and we are confident that we will appoint a strong leader in the near future.”
Sales: Net sales for the fourth quarter ended Feb. 3 decreased 10 percent to $628.4 million from $699.7 million in the fourth quarter of 2017. Fourth quarter 2017 net sales benefited from an extra week, which was worth $26 million, Express noted.
Comparable sales, including e-commerce, fell 6 percent from a year earlier. On a comparable sales basis, e-commerce sales increased 5 percent to $203.3 million. Express has about 600 stores across the U.S.
For the full year, net sales were down 2 percent to $2.12 billion from net sales of $2.16 billion in 2017. In 2017, net sales benefited from an extra week, which was worth $26 million.
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E-commerce sales increased 20 percent to $609 million from $509 million in 2017. On a comparable sales basis, e-commerce sales increased 21 percent for the year.
Earnings: Express reported a net loss of $1.1 million in the fourth quarter compared to net income of $27.4 million in last year’s fourth quarter. Excluding costs of $4.05 million related to the CEO departure and impairment of its Homage investment, adjusted net income was $12.8 million compared to adjusted net income of $25.8 million in the year-ago period. Express made a $10 million investment in vintage clothing retailer Homage in 2016.
For the year, net income fell 49.2 percent to $9.6 million from $18.9 million in 2017. Adjusted net income was down 52.9 percent to $23.6 million compared to $28.9 million a year earlier.
CEO’s Take: Matthew Moellering, interim CEO and president, and executive vice president and chief operating officer, said: “Despite our fourth quarter results being in line with the guidance we provided on Nov. 29…our overall performance in the period was disappointing. While we expect our results to remain challenging in the near-term, we are focusing on three key areas, including product, brand and product clarity, and customer acquisition and retention, to reposition the business for future growth and improved profitability.”
“Express is a resilient and relevant brand and we continue to believe strongly in its long-term opportunity,” he added. “Our financial position remains strong with $172 million in cash and cash equivalents and no long-term debt.”