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Express
reported its Q3 earnings on Thursday. Shares of the company are down nine percent.
Below are some key highlights from its conference call:
Performance Metrics and Plans:
• Our third quarter EPS was $0.17, which was the upper end of our guidance range of $0.13 to $0.18.
• Our third quarter comp came in at negative 5%.
• In August, our comp was in line with the sequential improvement we have been seen.
• The remaining two months of the quarter, however, will reflect the weakness in mall traffic and as a result, did not achieve the third quarter comp contemplated in our guidance.
• I do want to note that during the quarter and despite the decline in mall traffic, we approached promotions carefully.
• During the third quarter, we continued to execute against our strategic initiatives and our growth pillars, both of which are designed to elevate our brand and better serve our customers.
• We are continuing to deliver service through fashion that provides a compelling price value proposition.
• We are optimizing our retail real estate to focus on hub location that our customers view as a most attractive destinations.
• We are successfully serving a different segment of our demographic by building up the Express factory outlet store base.
• And we are expanding our international reach.
• With that framework as a backdrop, there were a number of positive developments during the quarter that I want to call out.
• We planned nine new Express factory outlet stores, we - excuse me, we opened nine new Express factory outlook stores.
• Collectively, the outlet stores are continuing to exceed our initial expectations, but for ones now opened for a few months as well as the ones opened most recently.
• First, the outlets, customers are reacting enthusiastically to our offering which consists of proven wins from last year.
• We showed you that the incremental revenue from new stores were estimated at $55 million to $60 million. That projection remains on track.
• We are encouraged by the great comparable store sales growth we are seeing at outlet locations, that work conversions from other format as well as the overall strength in outlet.
• We now expect to end the fiscal year with 41 outlet stores in operation.
• We've continue to make a nice sequential progress in e-commerce this year as we move from negative 2% in Q1 to a positive 3% in Q2 and a positive 11% during the third quarter.
• In addition, we anticipate solid gains in the fourth quarter.
• We've rolled out a number of enhancements which are contributing to this progress and are working on new e-commerce initiatives. A few gap holes.
• Our improved product description and pricing clarity, easy and navigation and simplified check-out process.
• As we continue in more and more about customer preferences, we're getting smarter about the way webbing post office to drive sale in individual categories.
Financial Metrics:
• We were pleased to deliver improved merchandise margins during the quarter and earnings per share that were at the upper end of our guidance.
• Net sales were $498 million, 1% below last year's $504 million. Comparable sales during the quarter declined 5%.
• We're pleased to see that our e-commerce business grew nicely on top of our second quarter performance and was up 11%.
• On a full year basis, we expect our comps to decline in the mid to high single-digit range, our tax rate to be approximately 39%.
• And we expect our 2014 net income to range from $59 million to $65 million or $0.69 to $0.76 per diluted share.
• Capital expenditures are now expected to be between $113 million and $117 million compared to the $105 million spend in 2013.
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