Express, Inc. (NYSE:EXPR) reported better than anticiapted second quarter results on Wednesday, August 27th. The 630-store specialty retail apparel chain first half and second quarter results were only down slightly from 2Q 2013, and both sales and earnings per share exceeded the upper end of prior company guidance.
Shares of Express, Inc. are trading up $1.89 at $16.48 as of 12:24 PM ET today.
Statement from Express, Inc. CEO
Michael Weiss, Express, Inc. (NYSE:EXPR) Chairman and Chief Executive Officer, noted in a statement, “In light of the difficult environment, we feel very good about the progress made during the second quarter and delivering earnings that exceeded the high end of our guidance. With 17 of our 20 Express Factory Outlet stores open for approximately four months, we are delighted to see them continuing to exceed our expectations from both a revenue and a margin contribution perspective. In our full priced retail stores, we managed promotions in a manner that enabled us to deliver merchandise margins that were better than we initially expected. As new receipts flowed in during the second quarter, certain categories reversed their declines and others grew nicely. Looking ahead to the back half of the year, the opportunity remains to drive further sequential improvements in both sales and profits, while simultaneously continuing our disciplined approach to inventory units and input costs.”
Details of 2Q earnings report
Net sales in 2Q for Express, Inc. (NYSE:EXPR) declined to $481.4 million from $490.1 million in the second quarter of 2013. Comparable sales during the quarter (including e-commerce sales) were down by 5%, compared to a comparable sales increase of 6% in last year’s second quarter. E-commerce sales were up a solid 3% to $61.8 million.
Gross margin as a percentage of net sales was off by 280 basis points relative to 2Q last year, and represented 28.3% of net sales. The merchandise margin decreased by 70 basis points, and buying and occupancy costs as a percentage of sales increased by 210 basis points year over year.
Selling, general, and administrative expenses were $121.9 million compared to $119.2 million in the second quarter of 2013. SG&A expenses relative to net sales rose by 100 basis points to 25.3% compared to 24.3% in last year.
The firm’s operating income for the three months was $14.6 million, or 3.0% of net sales, compared to $33.4 million, or 6.8% of net sales, in 2Q last year.
Potential acquisition by Sycamore Partners
Express, Inc. (NYSE:EXPR) second quarter earnings report also noted it had not bought back any shares in its share repurchase program given Sycamore Partners expressing an interest in acquiring the company. The statement noted the firm “that will not be making any further comments at this time regarding Sycamore Partners’ expressed interest in the Company or our plans regarding refinancing or share repurchases.”