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Express Cuts 10% of Corporate Jobs in Q3 Amid Sagging Sales

Amid wider third-quarter losses, specialty fashion chain Express Inc. has cut 10 percent of its corporate jobs to save $13 million.

In a Nutshell: Express missed Wall Street’s consensus estimates for both adjusted diluted earnings per share and revenue for third quarter, reporting wider quarterly losses than a year ago as sales fell 34.1 percent.

That said, the company gained momentum in its digital strategy, showing sequential quarterly demand and transaction improvement throughout 2020. Third-quarter transactions were up 17 percent, while conversion rates were up 10 percent when compared with the same year-ago quarter, Express said.

The third-quarter, 10 percent reductions at headquarters in Columbus, Ohio, will trim next year’s expenses by about $13 million, the company said, adding that the changes will “calibrate” its operating model. The $13 million savings in benefits augment the $95 million cash tax benefit Express said it expects to receive in the second quarter of 2021 as part of the CARES Act.

“Our streamlined go to market process and the implementation of our new inventory planning and management systems have already improved our efficiency and enabled us to operate with greater speed and agility,” Tim Baxter, CEO, said. “Further reducing our workforce was a difficult decision, but was appropriate to calibrate the organization to the capabilities of this new operating model.”

Net Sales: For the quarter ended Oct. 31, net sales fell 34.1 percent to $322.1 million from $488.5 million.

The company attributed the sales shortfall to “continued steep declines in wear-to-work and occasion-based categories.”

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For the nine months, net sales dropped 44.9 percent to $778.0 million from $1.41 billion.

Earnings: The net loss widened to $90.3 million, or $1.39 a diluted share, from a net loss of $3.1 million, or five cents, in the year-ago quarter. On an adjusted basis, the diluted loss per share was $1.17.

Wall Street was expecting an adjusted diluted loss per share of 51 cents on revenue of $376.37 million.

For the nine months, the net loss ballooned to $352.2 million, or $5.46 a diluted share, from a net loss of $22.7 million, or 34 cents, in the same year-ago period.

CEO’s Take: “In the third quarter, we continued to advance the EXPRESSway Forward strategy while taking decisive and appropriate action to manage our liquidity. Our eCommerce business continues to gain momentum and the new fashion product that fully reflects the Express Edit viewpoint is outpacing the balance of our assortment,” Baxter said. “We have effectively managed that which was within our control, and as I look ahead, I am optimistic about our ability to deliver improved results and cautious about the continued uncertainty brought about by the current environment. Our strategy is the right one, the changes to our product presentation and brand positioning are the right ones, and our financial actions are the right ones. As we move into 2021, we remain focused on delivering our long-term goal of a mid-single digit operating margin and profitable growth.”