Express plans to close approximately 50 stores during the next 36 months, primarily at the end of their leases, following a weaker-than-expected first quarter.
The company’s profit dropped to $5.08 million, from $32.4 million a year earlier. Sales decreased to $460.7 million, from $509.4 million, while Same-store sales fell 11%.
"We had anticipated a very challenging first quarter, but our actual results were weaker than planned,” said chairman and CEO Michael Weiss. “Our business strengthened in April, but not to the degree that we anticipated when we formulated our first quarter guidance. While external challenges contributed to the decline in our first quarter performance, we also did not execute as well as we could have."
Despite the store closings — which are expected to result in profit improvement of $5 to $8 million once all the locations are closed — the company is not hitting the brakes on expanding its new outlet-store concept, which the company debuted this past April.
“I am also delighted to note that the 17 Express Factory Outlet Stores now in operation are exceeding our plans and being met with great enthusiasm. We expect them to contribute to a stronger second half. In light of this performance, we are accelerating future outlet store openings,” added Weiss.
Looking ahead to the second quarter and full year, Weiss said that second quarter results will be impacted by the need to move through slow-selling spring inventory and a Memorial Day event that did not drive traffic as successfully as it did last year.
“Our full year guidance incorporates the impact of a very challenging first half, while also anticipating sequential improvements in comparable sales in quarters two through four as we deliver new product we believe will be more in line with customer expectations. We also expect to benefit from cost saving initiatives and, upon completion of our debt refinancing, lower interest expense,” said Weiss.
The store closings are expected to start at the end of its current fiscal year or the beginning of the next fiscal year.