The analyst thinks the company is taking an even more aggressive approach to reduce costs with $80 million in savings in FY23, up from $65 million previously, a $30 million workforce reduction, and gross margin efforts.

The analyst notes that cost savings help to add visibility to the company's longer-range efforts to drive improved profitability and cash flow, particularly in light of an uncertain macro environment. 

However, given the competitive retail environment, margin pressure from guaranteed minimum royalty payments to WHP Global for brand licensing, and an assortment that remains a work in progress, the analyst maintains the High Risk rating.

Below the top line, the analyst looks for 840 bps of gross margin contraction to 24.7%, broadly in line with the consensus of 24.9%.

Telsey expects SG&A to deleverage 340 bps, while total operating expenses are expected to deleverage 240 bps in the quarter to 33.2%.

Taken together, Telsey expects the operating margin to contract 1,080 bps to (8.5%) down from the (2.2%) margin recorded last year.

Price Action: EXPR shares are trading higher by 2.00% to $10.20 on the last check Thursday.