$EXPR Joins the Dead Mall Narrative, Issues Downside Guidance

This is getting redundant, but it bears repeating and vigilant analysis. Something is afoot with the consumer. Between record low credit card utilization rates and the fact that no one seems to be spending any money on clothes and gadgets anymore, a starkly different America stands before it, rich and healthy, crazier than ever.

Express just warned. Their fashion sense is an abomination for all of mankind.

Reports Q1 (Apr) earnings of $0.25 per share, $0.02 worse than the Capital IQ Consensus of $0.27; revenues rose 0.1% year/year to $502.91 mln vs the $521.32 mln Capital IQ Consensus. Comparable sales (including e-commerce sales) decreased 3% vs. guidance for up low single digits.

Inventory was $281.3 million compared to $265.9 million at the end of the prior year’s first quarter, and includes
approximately $58.6 million related to Express Factory Outlet stores this year compared to approximately $35.4 million in the prior year’s first quarter. Retail inventory decreased by 3% in the aggregate.

Co issues downside guidance for Q2, sees EPS of $0.15-0.19 vs. $0.29 Capital IQ Consensus Estimate; sees comps down mid single digits.

Co lowers guidance for FY17, sees EPS of $1.41-1.54 (Prior $1.56-1.71) vs. $1.66 Capital IQ Consensus Estimate; sees comps down mid to low single digits (Previously guided for up low single digits)

The shares are down a bunch this morning, 15 some odd percent.

Update: via the call

Positive comps early in quarter were overshadowed by slowdown that began in mid-March (notes high base)
“Selling was strong during February and first half of March”
Saw significant drop of traffic during April
driven primarily by traffic declines, starting in Mid-March
on track to achieve comps guidance for Q2 (3 weeks into quarter)
Closed 41 stores since announcement of 50 store initiative/ doesn’t plan closing more than 50
Identified $14 mln in expense savings; ~$7 mln benefit in 2H of 16
Sees 90s trends becoming popular
launched first of 3 online order management systems during the quarter
$41.5 mln in shares repurchases durinig the quarter w/ $30 mln left in program
Q1 Capex $18 mln
Expects Q2 Operating margin to contract by 250 bps
FY Capex remains $110-115 mln
Still on track for double-digit operating margin gains
e-commerce sales were down 1% to $77 mln
demand is looking “very positive” in response to question about e-commerce sales acceleration