Express to Impress!
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Shares of clothing and accessories retailer, Express Inc. (NYSE: EXPR), skyrocketed after the company raised its projections for the fourth-quarter and the entire year. Shares bumped more than 21% to $17.03 during the first half of the session, the biggest intraday gain since the company’s market debut in May 2010. The volume of shares traded was 638% higher than the normal. The stock has set nearly a 4-month peak, while analysts expecting it to cross $20.
Third-Quarter Recap
This young-adult retailer reported third-quarter earnings for fiscal 2013 that topped analysts’ expectations, while quarterly revenue missed by a whisker. Net income declined to $17.42 million or $0.20 per share, from $32.67 million or $0.37 per share in the prior-year quarter. This decline in profit was on the back of 5% lower comp sales and 4% lower sales due to a weak global economy and consumer spending.
Express Inc. stated that its successful promotional and pricing strategies during the holiday season contributed to a performance that exceeded its expectations and enabled it to raise its outlook. The holiday season is the most crucial time for the US retailers as 40% of the company’s annual revenue is earned in this period.
For the quarter ending February 2, the company expects net income in the range of $61 million to $63 million, or $0.72 to $0.74 per share, bypassing the company's prior estimation of $53 million to $58 million, or $0.62 to $0.68 per share. Comparable sales, including e-commerce sales, are expected to rise by 1%, in contrast to its former estimation of a decline in the low single digit range. On the back of brightened fourth-quarter outlook, full year 2012 net income is also upgraded to $1.56 to $1.59 per share, compared to previous guidance of $1.47 to $1.53 per share.
Competition
Gap (NYSE: GPS) intends to repurchase new $1 billion share in this fourth quarter. The company's net sales for December 2012 increased 5% compared to last year and the year-to-date comparable sales increased 4% compared to 4% decline last year. The company offers its products under the Gap, Banana Republic, Old Navy, Piperlime and Athleta brands in 3,000 company-operated stores, e-commerce sites and more than 300 franchise stores. Gap has entered into a highly competitive sector with its purchase of Intermix announced last week. Intermix is a multi-brand specialty retailer of luxury and contemporary women’s apparel and accessories.
Guess Inc. (NYSE: GES) reported weak financials for the third quarter fiscal 2013, because of which the company lowered its guidance for sales, margins and earnings per share for the entire year. Third quarter earnings declined by 39.4% to 43 cents, from the year-ago earnings of 71 cents due to lower consumer demand and currency headwinds. The company now expects earnings in the range of $2.05 to $2.15 per share on expected net revenue of $2.62 billion to $2.64 billion for the fourth quarter of fiscal 2013.
Limited Brands Inc. (NYSE: LTD), through Victoria's Secret, Pink, Bath & Body Works, La Senza and Henri Bendel, reported 3% gains in comparable store sales for the month of December 2012. The company surpassed analysts’ estimate in the third quarter financials by reporting $0.26 EPS on revenue of $2.05 million, which also marked the ninth straight quarter with a positive surprise. It also has an attractive annual dividend yield of 2.26%.
Express Inc. is the only retailer out of Gap, Limited, and Guess who do not have factory outlet stores. This could be a strategic move in order to secure its pricing in its stores. The retailer is now the cheapest in the industry at 11x earnings, compared to Guess (12x), Limited Brands (20.19x) and Gap (15.91x).
Are you impressed?
Express Inc. is a specialty apparel and accessory retailer offering both women's and men's merchandise targeted at people aged between 20 and 30 years. It is running over 600 stores at present and also through e-commerce website express.com. When comparing value against its major competitors, it is clear that Express offers value for investors. It has 52-week low of $10.47 and 52-week high of $26.27. It expects to report fourth-quarter earnings in coming March.
The company seems to be a solid value opportunity at present since it is trading at a PEG of only 0.51 and it expects EPS to grow at the rate of 19%. The PEG ratio shows us the growth, relative to the valuation (P/E ratio). Keeping in mind the company’s attractive valuation and consistent growth, I am quite impressed with this stock and remain bullish on this.
sidhikharkia has no position in any stocks mentioned. The Motley Fool recommends Guess?. The Motley Fool owns shares of Guess?. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!
