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Express Tripled Profit in Q2, Raises Full-Year Forecast

Express saw its shares plunge earlier this year when Sycamore Partners abandoned efforts to acquire it, but the youth-oriented retailer shocked Wall Street on Wednesday by reporting record second-quarter sales and raising its full-year outlook.

The Columbus, Ohio-based company posted a profit of $21 million, or $0.25 per diluted share, for the quarter ended Aug. 2—a giant leap from the $6.9 million, or $0.08 per diluted share, it pulled in a year ago and beating analyst expectations by $0.09.

Net sales increased 11 percent to $535.6 million from $481.4 million, while comps (including e-commerce) climbed 7 percent, versus a 5 percent fall in the second quarter of 2014. Online sales alone surged 21 percent to $75 million.

David Kornberg, the company’s president and chief executive officer since January, pointed to scaled-back promotional activity and a stepped-up product assortment as the spark behind the turnaround, which also led to gross profit margin improving to 33.1% from 28.3%.

“Growth continued across our distribution channels of retail stores, e-commerce and factory outlets,” Kornberg said in a statement, adding, “The various components of our business were managed consistently with our balanced approach to growth and each contributed to our diluted earnings per share results, which rose 213 percent to $0.25.”

For the year ending in January, Express now expects its earning to be between $1.30 and $1.37 per share, compared to its previous prediction of $1.11 to $1.22 per share and Thomson Reuters analysts’ projection of $1.20. Same-store sales growth, meanwhile, is forecast to be in the mid-single digits.

Kornberg continued, “Looking towards the second half of the year, I believe we are well positioned to further grow our business and enhance the Express brand. We expect the continued execution of our strategy to result in productivity and profitability gains for our company and increased value for our shareholders.”