Express Drops On Q2 Top-Line Miss, FY22 Guidance Cut

Express Drops On Q2 Top-Line Miss, FY22 Guidance Cut
  • Fashion apparel retailer Express Inc EXPR reported second-quarter FY22 sales growth of 2% year-on-year to $464.92 million, missing the consensus of $479.62 million.
  • Consolidated comparable sales increased 1% versus last year. Comparable retail sales, including Express stores and eCommerce, were flat. E-commerce demand declined 6%. Comparable outlet store sales increased by 2%.
  • Operating expenses rose 6.5% Y/Y to $143.3 million. The gross margin expanded 50 basis points to 33.1%.
  • The operating income for the quarter fell 29.7% Y/Y to $10.4 million with an operating margin of 2.2%.
  • Inventory at the end of the quarter climbed 30% Y/Y to $346.2 million.
  • EBITDA was $25.6 million versus $30.8 million last year.
  • EPS of $0.10 beat the Street view of $0.09.
  • "While our performance was below our outlook, we achieved solid results despite challenging macroeconomic conditions that worsened as the quarter progressed," said CEO Tim Baxter.
  • The company held $37.7 million in cash and equivalents as of July 30, 2022.
  • Outlook: Express sees FY22 comparable sales to increase in mid-single digits (previous outlook 8% - 10%).
  • EXPR expects an FY22 EPS of $(0.16) - $(0.22), (previous view $0.14 - $0.20) versus the consensus of $0.14.
  • For Q3, Express sees comparable sales to decrease mid-single digits and gross margin rate to drop approximately 350 basis points.
  • "While we have lowered our outlook for the back half of this year to reflect the uncertainty of macroeconomic conditions, we remain committed to our long-term objective of a mid-single digit operating margin," added Baxter.
  • Price Action: EXPR shares are trading lower by 19.3% at $1.54 on the last check Wednesday.

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