- Net sales decreased 7% to $506.1 million.
- Diluted EPS was $0.15, including a $0.04 net tax benefit.
- Total inventory was down 6%.
COLUMBUS, Ohio, 2016-Dec-05 — /EPR Retail News/ — Express, Inc. (NYSE:EXPR), a specialty retail apparel company, announced its financial results for the third quarter of 2016. These results, which cover the thirteen and thirty-nine weeks ended October 29, 2016, are compared to the thirteen and thirty-nine weeks ended October 31, 2015.
David Kornberg, the Company’s president and chief executive officer, stated: “Our third quarter performance was highlighted by sales and earnings in line with our guidance and progress made addressing the areas noted for improvement during our second quarter call. This progress included refocusing our brand projection and marketing to be more consistent with our core demographic and additional steps taken to drive customer acquisition and retention. Notably, while mall traffic challenges continued to impact our store performance, we achieved a double digit increase in e-commerce sales.”
Mr. Kornberg, continued: “We expect the holiday season to remain challenging as mall traffic and a highly promotional retail environment continue to be headwinds. That being said, we believe our focus and execution against our key priorities, which include driving improved profitability through a balanced approach to growth, elevating our brand and customer experience, investing in the growth and development of our associates and achieving the benefits from our systems implementations, will position our Company to create shareholder value over the long term.”
Third Quarter 2016 Operating Results:
- Net sales decreased 7% to $506.1 million from $546.6 million in the third quarter of 2015.
- Comparable sales (including e-commerce sales) decreased 8%, compared to a 6% increase in the third quarter of 2015.
- E-commerce sales increased 15% to $96.3 million.
- Merchandise margin declined by 340 basis points driven by increased promotional activity. Buying and occupancy as a percentage of net sales rose by 160 basis points. In combination, this resulted in a 500 basis point decline in gross margin, representing 30.0% of net sales compared to 35.0% in last year’s third quarter.
- Selling, general, and administrative (SG&A) expenses were $136.6 million versus $146.6 million in last year’s third quarter. As a percentage of net sales, SG&A expenses increased by 20 basis points to 27.0%.
- Operating income was $15.1 million, or 3.0% of net sales, compared to $44.5 million, or 8.1% of net sales in the third quarter of 2015.
- Income tax expense was $2.8 million, at an effective tax rate of 19.6%, compared to $16.9 million, at an effective tax rate of 39.2% in last year’s third quarter. The effective tax rate for the thirteen weeks ended October 29, 2016 includes a net tax benefit of approximately $2.9 million attributable to certain discrete items that occurred during the third quarter.
- Net income was $11.6 million, or $0.15 per diluted share and includes a net $0.04 per diluted share benefit related to the aforementioned income tax items. This compares to net income of $26.3 million, or $0.31 per diluted share, in the third quarter of 2015.
- Real estate activity for the third quarter of 2016 is presented in Schedule 5.
Third Quarter 2016 Balance Sheet Highlights:
- Cash and cash equivalents totaled $101.9 million versus $91.2 million at the end of the third quarter of 2015. During the thirty-nine weeks ended October 29, 2016, approximately $51.5 million was used to repurchase approximately 3.2 million shares of the Company’s outstanding common stock.
- Capital expenditures totaled $80.9 million for the thirty-nine weeks ended October 29, 2016 compared to $85.0 million for the thirty-nine weeks ended October 31, 2015.
- Inventory was $341.9 million compared to $364.7 million at the end of the prior year’s third quarter, a 6% decrease.
Source: Express, Inc.