FINANCE

Express swings to a loss; still on hunt for a CEO

BY Marianne Wilson

Express Inc. posted a loss for its fourth quarter amid sliding sales amid sliding sales.

In reporting its quarterly results, Express also gave an update on its search for a CEO, which it initiated in the wake of David Korberg’s sudden departure in January. Mylle Mangum, board chair, said the search is progressing and the company is “actively interviewing” multiple individuals.

“This is a very attractive role that provides the new CEO ample strategic flexibility given the company’s strong brand and solid financial position,” Mangum said. “The board’s top priority is finding the right candidate to return Express to growth and we are confident that we will appoint a strong leader in the near future.”

Interim CEO Matthew Moellering struck a similar theme on the chain’s quarterly call with investors.

“We have no debt and a strong cash position,” Moellering said. “That gives us room to maneuver. So this should be a very attractive role for somebody to come in and really lead change and grow the Express brand dramatically.”

On the same call, Moellering said that Express has many store leases coming up for renewal during the next three years and that the company will continue to re-evaluate its store fleet. Express, which has been converting select stores to its outlet format, will continue to do so this year. It will open five new outlet locations and convert 24 existing stores to the format.

The fashion apparel reported a net loss for the quarter ended Feb. 2 of $1.1 million, or 2 cents a share, from a profit of $27.4 million, or 35 cents a share, in the year-ago period. Excluding non-recurring items, such as costs related to the departure of Kornberg, adjusted EPS fell to 19 cents from 33 cents, but was still above analysts’ estimates of 15 cents.

Net sales fell 10% to $628.4 million, missing estimates of $629.6 million. (The previous quarter had an extra week.) Same-store sales dropped 6%.

For the full year, Express’ net sales decreased 2.0% to $2.11 billion from $2.15 billion million in 2017. (In 2017, net sales benefited from an extra week which was worth $26 million.) E-commerce sales increased 20%. Same-store sales fell 1%. On a comparable sales basis, e-commerce sales increased 21% in 2018.

“While we expect our results to remain challenging in the near-term, we are focusing on three key areas including product, brand and product clarity, and customer acquisition and retention to reposition the business for future growth and improved profitability,” said Moellering who is serving as interim CEO and president, executive VP and COO. “Express is a resilient and relevant brand and we continue to believe strongly in its long-term opportunity. Our financial position remains strong with $172 million in cash and cash equivalents and no long-term debt.”

For the first quarter, Express expects a loss per share of 27 cents to 34 cents, compared with the Street forecast for a per-share loss of 4 cents, and a same-store sales decrease of 9% to 11% versus expectations of a 5%.

Express operates more than 600 retail and factory outlet stores in the United States and Puerto Rico.

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