Express meets expectations, but shares fall on forecast

Columbus-based Express reported fourth- quarter earnings Wednesday that were in line with Wall Street expectations and sales that beat expectations. But its forecast for a lackluster coming year was not well- received, and shares tumbled.

The fashion retailer reported earnings of 29 cents per share for the quarter on sales of $ 678.8 million. Earnings per share were exactly as predicted by analysts, while sales, which had been expected to be $ 675.9 million, topped expectations.

Shares closed down 10.9 percent at $ 9.51, however, based on the company’s forecast.

Comparable- store sales, a key indicator of a retailer’s health, are expected to be flat or rise in low single digits during 2017.

Earnings are projected to be between 65 cents and 73 cents per share. That’s no better than 2016, when earnings stood at 73 per share.

Analysts at L&F Capital Management said that Express executives were “likely very conservative” in their predictions for the coming year.

“We think there is a strong chance real results greatly surpass expectations,” L& F Capital analysts wrote in a note to investors.

“As big- box retailers go slim in their real estate portfolio, there is an opportunity for remaining mall retailers to see traffic share gains,” the investment firm said. “Retail trends are also cyclical, and Express has proven that good years often follow bad years. Right now, Express is being priced not only for those bad years to continue, but for the company to slowly disappear from the retail scene. We do not think that will happen.”

Online sales have become increasingly important to Express and made up 25 percent of fourth- quarter sales, up from 20 percent in the prior quarter, he said.

To adapt to that change, Express has been closing stores and plans to convert 20 regular retail stores to outlet stores. The company expects to end the year with 522 retail stores, down from 552 stores at the end of 2016.

In addition, in the second quarter, Express will introduce ship- from- store capability to improve its online sales operations and later in the year will introduce a buy- online, pick up- in- store option.

Other initiatives include “improving the fashion clarity in our stores through reduced choice counts, launching a new brand campaign, introducing compelling new products and improving upon key existing categories,” said David Kornberg, the company’s president and CEO.

Based on those plans, “we enter 2017 with confidence that the actions we have taken and the initiatives underway will translate into stronger performance as we move through the year.”