• Net profit reached $16.9m, up 7% from $15.8m 
  • Sales increased 7% to $486.2m versus $454.9m 
  • Comparable sales rose 6%
  • Gross margin declined to 31.4% from 32.2%

Specialty retail apparel chain Express has lifted its full year earnings outlook after booking a 7% increase in second quarter net profit, helped by higher sales.

Chairman and CEO Michael Weiss said: "We delivered a very solid second quarter. Financial highlights include high single digit sales growth, comparable sales that represent a return to mid-single digit growth and earnings per share that came near the upper end of our guidance.

"These results were driven by improved execution of our go-to-market strategy and by our ability to react quickly as the competitive environment evolved."

The Columbus, Ohio-based company now expects full-year diluted earnings per share to be $1.52-1.60, compared to its earlier guidance of $1.48-1.58.

Weiss added: "Our customers are responding enthusiastically to our assortments, which are trend-right, differentiated and well-edited. We are seeing this reflected in improved conversion rates.

"As we move into the second half of the year, we are confident in our product and marketing strategies, and believe we are well positioned for the fall and holiday seasons."

Show the press release
EXPRESS, INC. REPORTS SECOND QUARTER 2013 RESULTS; INTRODUCES THIRD QUARTER OUTLOOK AND RAISES FULL YEAR GUIDANCE
- Second quarter net sales rise 7%; comparable sales increase 6%
- Second quarter diluted EPS increases 11% to $0.20
- Full year guidance raised to reflect strong second quarter and positive third quarter outlook

COLUMBUS, Ohio, Aug. 28, 2013 /PRNewswire/ -- Express, Inc. (NYSE: EXPR), a specialty retail apparel chain operating over 620 stores, today announced its financial results for the second quarter and first six months of 2013.  These results cover the thirteen and twenty-six week periods ended August 3, 2013 and compare to the thirteen and twenty-six week periods ended July 28, 2012. 

Michael Weiss, Express, Inc.'s Chairman and Chief Executive Officer commented, "We delivered a very solid second quarter.  Financial highlights include high single digit sales growth, comparable sales that represent a return to mid-single digit growth and earnings per share that came near the upper end of our guidance. These results were driven by improved execution of our Go-to-Market strategy and by our ability to react quickly as the competitive environment evolved."

In terms of product offering, Mr. Weiss noted that, "Our customers are responding enthusiastically to our assortments, which are trend-right, differentiated and well-edited.  We are seeing this reflected in improved conversion rates.  As we move into the second half of the year, we are confident in our product and marketing strategies, and believe we are well positioned for the fall and holiday seasons."

He went on to add that, "We made progress on each of our four growth pillars during the second quarter.  At the same time, we took concrete steps to prepare for the launch of our outlet business in the second quarter of 2014, which represents another opportunity to drive significant top and bottom line growth." 

Second Quarter 2013 Operating Results:

  • Net sales increased 7% to $486.2 million from $454.9 million in the second quarter of 2012.
  • Comparable sales increased 6%, following a 1% comparable sales increase in last year's second quarter.  This includes e-commerce sales, which increased 27% to $59.9 million.  In last year's second quarter, e-commerce sales grew 24% to $47.2 million.
  • Gross margin declined to 31.4% of net sales compared to 32.2% in the second quarter of 2012.  Merchandise margin was down 40 basis points driven by increased promotional activity late in the second quarter in response to the competitive environment.  Buying and occupancy costs as a percentage of sales increased 40 basis points, driven primarily by the incremental non-cash rent expense associated with the New York City and San Francisco flagship stores.
  • Selling, general, and administrative (SG&A) expenses were $119.2 million versus $115.3 million in last year's second quarter.  As a percentage of net sales, SG&A expenses improved 80 basis points to 24.5% compared to 25.3% in the same period last year.  This improvement reflects continued discipline in managing these expenses.
  • Operating income was $33.4 million, or 6.9% of net sales, compared to $31.2 million, or 6.9% of net sales, in the second quarter of 2012.
  • The effective tax rate was 39.7% compared to 39.6% in last year's second quarter.
  • Net income was $16.9 million, or $0.20 per diluted share, compared to net income of $15.8 million, or $0.18 per diluted share, in the second quarter of 2012. 
  • Real estate activity for the second quarter of 2013 is detailed in Schedule 4.

Twenty-Six Week Operating Results:

  • Net sales increased 5% to $994.7 million from $950.8 million in the prior year period.
  • Comparable sales increased 3%, following a 2% comparable sales increase in the prior year period.  This includes e-commerce sales, which increased 37% to $130.6 million.  In the prior year period, e-commerce sales grew 26% to $95.1 million.
  • Gross margin declined to 32.5% of net sales compared to 35.3% in the prior year period.  Merchandise margin declined 150 basis points and buying and occupancy costs as a percentage of sales increased 130 basis points.
  • SG&A expenses were $231.8 million versus $229.5 million in the prior year period. As a percentage of net sales, SG&A expenses improved 80 basis points to 23.3% compared to 24.1% in the same period last year. 
  • Operating income was $92.1 million, or 9.3% of net sales, compared to $105.8 million, or 11.1% of net sales, in the prior year period.
  • The effective tax rate declined to 39.6% compared to 39.8% in the prior year period.
  • Net income was $49.3 million, or $0.58 per diluted share, compared to net income of $57.9 million, or $0.65 per diluted share, in the prior year period. 
  • Capital expenditures totaled $45.5 million, compared to $45.7 million in the prior year period.

Second Quarter 2013 Balance Sheet:

  • Cash and cash equivalents totaled $234.3 million versus $130.2 million at the end of the second quarter of 2012.
  • As expected, inventory rose to $241.9 million, an increase of 13.4%, compared to $213.3 million at the end of the second quarter of 2012.  The calendar shift due to last year's 53rd week accounted for approximately 4% of the increase.  Inventory per square foot increased 8.8% compared to the same period in 2012. 
  • Long-term debt was relatively unchanged at $199.0 million, with no borrowings outstanding under the Revolving Credit Facility. 
  • During the quarter the Company purchased approximately 0.6 million shares of its common stock at an aggregate cost of $13.9 million, to end the second quarter with approximately $21.1 million of its $100 million repurchase authorization still outstanding. Repurchases of an additional 1.0 million shares during the third quarter have completed the repurchase program.

2013 Guidance:
The table below compares the Company's projected results for the thirteen week period ended November 2, 2013 to the actual results for the thirteen week period ended October 27, 2012.           


Third Quarter 2013 
Guidance


Third Quarter 2012

Actual Results

Comparable Sales

+Mid Single Digits


(5)%

Effective Tax Rate

Approximately 40%


41.4%

Interest Expense

$4.8 million


$4.8 million

Net Income

$18 - $22 million


$17.4 million

Diluted EPS

$0.21 - $0.26


$0.20

Weighted Average Diluted Shares Outstanding

85.1 million


86.2 million

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