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Express 4th-quarter net income falls on markdowns

Express 4th quarter net income falls more than expected, stock declines 11 percent

Associated Press

COLUMBUS, Ohio (AP) -- Clothing and accessories chain The Express Inc. said Wednesday its fourth-quarter net income fell 25 percent as the company marked down more goods than expected to move merchandise.

Results missed expectations and the company gave disappointing guidance for the first quarter. Shares fell nearly 12 percent in morning trading.

Express and other mall retailers have been dealing with declining mall traffic and winter storms keeping shoppers at home. CEO Michael Weiss said traffic has continued to be down "significantly" since the start of 2014. He said the company marked down more goods than planned and that hurt both revenue and earnings during the quarter. But he said that the company has "lean inventories" going into the spring.

Net income for the three months ended Feb. 1 fell to $47.9 million, or 57 cents per share. That compares with net income of $63.9 million, or 75 cents per share, a year ago. Analysts expected net income of 59 cents per share, according to FactSet.

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Revenue fell 2 percent to $715.9 million from $731.7 million. Analysts expected $722 million. Revenue in stores open at least one year, a key retail metric, rose 1 percent.

For the year, net income fell 16 percent to $116.5 million, or $1.37 per share. That compares with net income of$139.3 million, or $1.60 per share. Revenue rose 3 percent to $2.22 billion from $2.16 billion.

Weiss said the chain, which operates about 630 stores, is facing weak traffic in the first quarter.

"Our first-quarter guidance reflects year-to-date traffic and comparable sales as well as our belief that a material uptick in traffic is not necessarily imminent," he said. "This in turn leads us to believe that the promotional environment will continue, and we have planned accordingly."

The company expects quarterly income of 12 cents to 18 cents per share. Analysts expected 42 cents per share. For the full year, it expects net income of $1.03 to $1.23 per share. Analysts expect $1.59 per share.

Shares fell $2.09, or 11.5 percent, to $16.15. The stock had been down about 2 percent for the year.