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Why Express, Inc. Stock Plunged on Tuesday

What happened

Shares of Express Inc. (NYSE: EXPR) fell 20.2% on Tuesday after the clothing and apparel retailer announced disappointing preliminary results for the crucial holiday quarter.

More specifically, based on its holiday-season performance, Express now expects fourth-quarter comparable sales to decline in the range of 1% to 2%. That should translate to net income of $24.5 million to $26.0 million, or $0.31 to $0.33 per share.

Each range fell below Express' previous guidance, which called for comps to increase in the low single-digit range and earnings per share of $0.40 to $0.44. Analysts, on average, were looking for earnings of $0.43 per share.

Blue shirts hanging on a display rod
Blue shirts hanging on a display rod

IMAGE SOURCE: GETTY IMAGES.

So what

"The fourth quarter was off to a positive start in November and early December, however the key weeks leading up to Christmas were disappointing," explained Express CEO David Kornberg. "Our performance during December was most challenging in our retail stores, where traffic was worse than expected."

Kornberg added that e-commerce sales "continue to trend positively" with double-digit growth from the same year-ago period.

Now what

Express' sales trends so far in January have also stabilized on a sequential basis, and the company insists its long-term initiatives still hold promise for driving improved performance across the business.

Even so, it's disappointing that Express couldn't deliver as promised during the key holiday shopping season. And it's hard to blame the market for bidding shares down in response.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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