Apparel retailer Express (EXPR 9.35, -1.32) is set to begin at a fresh all-time low after the company's in-line earnings report was overshadowed by cautious guidance for the fiscal year.
The retailer reported in-line fourth quarter earnings of $0.29 per share on revenue of $678.80 million, which declined 11.3% year-over-year, but was just ahead of expectations.
While fourth quarter results matched market expectations, the company's guidance for below-consensus full year earnings between $0.65 and $0.73 per share has been met with selling pressure. Comparable sales growth for the full year is not expected to exceed low single digits. The company expects a difficult first quarter, projecting a loss of as much as $0.04 per share. Comparable sales during the first quarter are expected to decline in the high single digits.
During the fourth quarter, comparable sales fell 13.0%, which was in line with the company's lowered guidance from January 10. Despite the overall decrease, eCommerce sales grew 9.0% to $170.10 million, reflecting a common industry trend towards more online sales as retailers struggle to get shoppers into stores.
Gross margin declined to 28.4% from last year's 34.0%, as merchandise margin fell 330 basis points due to increased promotional activity while buying and occupancy as a percentage of net sales increased 230 basis points.
The company's operating income of $38.80 million represented just 5.7% of net sales, down from 12.1% of sales or $92.90 million one year ago.
Aware of its struggles, Express has employed cost saving measures, which totaled $9 million in 2016. The company expects to deliver $44 to $54 million in total cost savings over the next three years.
With today's decline, Express is now down 13.1% for the year versus a 4.8% decline in the SPDR S&P Retail ETF (XRT).