Express (NYSE:EXPR) reported stronger-than-expected second-quarter profit on Wednesday but fell short of sales forecasts and said it was heading into the second half of the year with a more conservative outlook.
The Columbus, Ohio-based young-adult retailer reported net income of $15.8 million, or 18 cents a share, compared with a year-earlier profit of $12.6 million, or 14 cents, topping average analyst estimates in a Thomson Reuters poll by a penny.
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Revenue for the three months ended July 30 was up 2% to $454 million from $446 million a year ago, missing the Street’s view of $467 million. Same-store sales, a highly-watched growth metric that measures sales at stores open longer than a year, increased by 1%.
Improved sales and tighter expenses helped offset increased promotional activity in the latter part of the quarter, Express said.
The retailer continued to reach agreements with countries abroad, most recently in Mexico, and firmed up the timing of the launch of its U.S. flagship locations in New York’s Time Square and San Francisco’s Union Square, slated to open by the fall of 2013.
"We continued to focus on our growth pillars during the quarter, opening new stores and maintaining double digit growth in e-commerce,” Express CEO Michael Weiss said in a statement.
For the second half of the year, Express said it believes it is “prudent” to set the company’s guidance “more conservatively and in line with the trends” experienced in the second quarter.
The company currently expects third-quarter comparable sales to be flat to up in the low-single-digits range with net income in the range of 27 cents to 32 cents, which is below the consensus of 37 cents. Express expects to open eight new stores during the quarter, on top of the eight it opened in the second quarter.
In the final period of fiscal 2012, the retail chain sees earnings between 77 cents and 82 cents a share, versus the Street’s view of 82 cents.
Shares of Express traded down about 8.3% to $15.50 on Wednesday.