Express reports 6 percent rise in Q3 comparable sales

Express third quarter net sales for the period ended October 31, 2015 reported 10 percent rise to 546.6 million dollars from 497.6 million dollars in the third quarter of 2014. Comparable sales including e-commerce sales increased 6 percent, compared to a 5 percent decrease in the third quarter, last year. E-commerce sales rose 6 percent to 83.8 million dollars.

Commenting on the positive performance, David Kornberg, President and Chief Executive Officer, said, “I am pleased with our third quarter performance. We presented our customers with compelling fashion. We maintained our balanced approach to running the business, used promotions with restraint and managed inventory with discipline. This led to a 10 percent increase in sales, with retail stores, outlets and e-commerce each growing. Operating margin expanded to 8.1percent, and diluted EPS increased 82 percent compared to last year's third quarter. While we expect the holiday season to remain highly competitive, we believe we are well positioned, and our positive outlook for the season is reflected in our guidance.”

Third quarter operating results

Merchandise margin grew by 160 basis points through disciplined management of inventory levels and a reduction in promotions. Buying and occupancy as a percentage of net sales also improved by 170 basis points as costs were leveraged against higher sales. Together, these led to a gross margin improvement of 330 basis points, with gross margin of 35 percent compared to 31.7 percent in last year's third quarter.

Operating income was 44.5 million dollars, or 8.1 percent of net sales, compared to 30.5 million dollars, or 6.1 percent of net sales in the third quarter of 2014. Net income was 26.3 million dollars, or 0.31 dollar per diluted share. This compares to net income of 14.6 million dollars, or 0.17 dollar per diluted share, in the third quarter of 2014.

Fourth quarter and FY015 guidance

For the fourth quarter, ended January 30, 2016, the company expects low single digit rise in comparable store sales and diluted earnings per share to range between 0.60 dollar to 0.64 dollar. For the fiscal year, the company expects to report comparable sales growth in the mid-single digits and diluted earnings per share of 1.31 dollars to 1.35 dollars and adjusted diluted earnings per share of 1.38 dollars to 1.42 dollars.