Express, Inc. (NYSE:EXPR) reported that its profit tripled in the second quarter, mainly due to improved sales and higher margins. Earnings easily surpassed consensus forecast and the company further raised its guidance for the full year and gave a strong outlook for the current quarter. EXPR shares climbed roughly 19 percent following the results.
Like many other Mall-based chains, the company has struggled in recent years due to margin-eating promotions and decreasing foot traffic. However, Express CEO David Kornberg said on Wednesday that improved product assortment and management of inventory helped the company to lower the depth and frequency of its promotions. Separately, CFO Perry Pericleous said that the company cut the number of wholesale promotion days to four, from eight one year ago.
Earlier this year, the company reorganized its management team and promoted Mr. Kornberg to Chief Executive Officer. Mr. Pericleous was promoted to Chief Financial Officer in July. Analysts at Nomura stated on Wednesday that the results for the latest quarter indicates the success of the new management.
Express also performed well in comparatively new collection, named Express One Eleven, which drove results. The company reported that its upcoming product launch—an extended line of activewear—will start soon. The company is also making progress in the men’s business, according to Kornberg.
On overall basis, the company posted earnings of $21 million, or 25 cents per share for the quarter, well above $6.9 million, or 8 cents per share, one year ago. Revenue came in at $535.6 million, up 11 percent from the same period last year.
The company managed to boost its gross profit margin from 28.3 percent to 33.1 percent amid fewer discounts and higher sales.
Looking forward, Express is anticipating earnings in the range of 26 cents per share to 29 cents per share for the third quarter, above analysts’ estimate of 25 cents.
