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These Analysts Remain Sidelined On Express

Jayson Derrick

Express, Inc. (NYSE: EXPR) on Wednesday reported mixed fourth-quarter results and while management's first-quarter guidance came in short of expectations.

The Analyst

Wedbush's Jen Redding maintains a Neutral rating on Express with a price target lowered from $6 to $5.

MKM Partners' Roxanne Meyer maintains at Neutral, price target lowered from $5 to $4.50.

'Bleak' Outlook

Express reported an EPS beat but gross margin of 27.6 percent missed expectations as merchandise margin dipped by 150 basis points due to increased promotional activity, Redding said in a research report. Comps also disappointed at -6 percent versus expectations of -5.63 percent. Inventories per square foot grew 3.7 percent year over year, which outpaced a 9.42-percent decline in revenue.

Looking forward, Wedbush's proprietary data analytics points to a "meaningful" deterioration in average discounts that implies minimal upside to first quarter revenue guidance. The "bleak outlook" could extend beyond the first quarter if a new CEO sets a low bar for the second quarter.

A 'Repositioning Year At Best'

Expectations for any significant improvement at Express is unlikely to be seen until a new CEO takes over the top ranks and is able to examine the business, Meyer said in a research report. Aside from filling the vacant job, the company is likely to hire a Chief Merchant and Chief Customer Experience Officer.

Express also faces brand-related issues, including a large outlet presence which may be diluting the brand so a new CEO may take action in rebalancing the portfolio, the analyst wrote. Management could also narrow its merchandise offering away from a "complete lifestyle" offering towards a focus on "wear-to-work and dressy," which would better differentiate the company against its peers.

Price Action

Express traded around $4.50 per share Thursday afternoon.

View more earnings on EXPR

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Photo credit: Mike Mozart, Flickr

Latest Ratings for EXPR

Date Firm Action From To
Mar 2019 Wedbush Maintains Neutral Neutral
Jan 2019 Wedbush Maintains Neutral Neutral
Aug 2018 B. Riley FBR Maintains Neutral Neutral

View More Analyst Ratings for EXPR
View the Latest Analyst Ratings

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