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Express (NYSE:EXPR) flagged accelerating losses and a steep decline in margins in its latest earnings result.
For the first quarter, the company reported a $0.99 per share loss, accelerating from an $0.18 per share loss in Q1 2022. Meanwhile, the company reported a 15% drop in revenue to $383.26M, below the $389.4M consensus expectation. Comparable retail sales slipped 13% year over year.
Gross margins contracted 12.6% year over year due to “challenging macroeconomic and highly promotional retail environment” as well as its joint venture alongside WHP Global. Inventory ended the quarter at $347M, down 7% year over year and 5% sequentially.
“Our first quarter comparable sales were negative 14% due to a combination of external factors and challenges in our product assortments. The reduced consumer spending, increased price sensitivity in discretionary categories and aggressive promotional activity across the industry that began in 2022 continued into the first quarter of this year and negatively impacted our performance,” CEO Tim Baxter said. “We continued to take corrective actions to address the imbalances in our women’s assortment architecture and delivered sequential improvement in women’s sales as the quarter progressed. However, we experienced a deceleration in our men’s and outlet stores businesses due to softness in traffic and against the backdrop of record volume in the first quarter of 2022.”
He said that the company will take aggressive action to improve efficiency and reduce expenses moving forward. Additionally, the joint acquisition of Bonobos alongside WHP Global is expected to aid a turnaround.
Moving forward, the company expects net sales of approximately $400M to $450M in Q2. Gross margins are expected to contract about 800 basis points in the quarter as compared to the prior year amid the impact of Bonobos’ acquisition and ongoing efforts to cut inventory levels. A diluted loss per share of $0.50 to $0.60 is expected for the quarter, significantly wider than the $0.12 expectation.
For the full year, management sees net sales between $1.9B and $2B and a diluted loss per share between $1.50 to $1.70. Analysts had expected a $1 per share loss on $1.96B in revenue. Capital expenditure guidance was also cut to $30M, down from $55M in prior forecasts.
“We are committed to identifying and implementing significant additional expense savings which we expect to be realized in the back half of 2023 and full year 2024,” Baxter said. “To do this most expeditiously, we have engaged external advisors.”
Shares of Express (EXPR) slid over 13.95% shortly after the print.
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