Express Q3 net sales decline 7 percent

Express third quarter net sales decreased 7 percent to 506.1 million dollars from 546.6 million dollars in the third quarter of 2015. Comparable sales including ecommerce sales decreased 8 percent, compared to a 6 percent increase in the third quarter of 2015.

Commenting on the results, David Kornberg, the company’s President and CEO, said in the announcement, “Our third quarter performance was highlighted by sales and earnings in line with our guidance and progress made addressing the areas noted for improvement during our second quarter call. We expect the holiday season to remain challenging as mall traffic and a highly promotional retail environment continue to be headwinds.”

Third quarter operating results

Ecommerce sales increased 15 percent to 96.3 million dollars. Merchandise margin declined by 340 basis points driven by increased promotional activity, while buying and occupancy as a percentage of net sales rose by 160 basis points. In combination, this resulted in a 500 basis point decline in gross margin, representing 30 percent of net sales compared to 35 percent in last year’s third quarter.

Operating income was 15.1 million dollars or 3 percent of net sales, compared to 44.5 million dollars or 8.1 percent of net sales in the third quarter of 2015. Net income was 11.6 million dollars or 0.15 dollar per diluted share compared to net income of 26.3 million dollars or 0.31 dollar per diluted share, in the third quarter of 2015.

Expects to report decline in Q4 results

For the fourth quarter, the company expects, comparable sales to be negative low digits compared to 4 percent rise last year. Net income is expected to range between 20 to 23 million dollars against 56.1 million dollars last year and diluted EPS is anticipated to be between 0.26 to 0.30 dollar against 0.67 dollar last year.

For the full year, the company’s expectations include, comparable sales at negative to high single digits against 6 percent increase last year, net income from 55 to 58 million dollars against 116.5 million dollars, adjusted net income to range between 62 to 65 million dollars compared to 122.4 million dollars and diluted EPS of 0.70 to 0.74 dollar and adjusted diluted EPS of 0.78 to 0.82 dollar.

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