Express Soars After Forecast Tops Analysts’s Estimates

Express Inc. (EXPR) gained the most in more than a year after the clothing retailer’s lowered annual profit forecast topped analysts’ estimates.

The shares advanced 8.9 percent to $14.15 at the close in New York, for the biggest one-day increase since September 2011. The stock has dropped 29 percent this year, while the Russell 2000 Index is up 9.8 percent.

Full-year profit excluding certain items will be $1.47 to $1.53, down from a prior forecast of $1.69 to $1.79, according to a statement from the Columbus, Ohio-based operator of more than 600 stores. The average of 11 analysts’ estimates compiled by Bloomberg was $1.40.

Express has changed its sweater offerings and set a clearer pricing strategy after what it called a disappointing third quarter. The company said that an improvement in communicating promotions to customers contributed to a record performance on Black Friday, the day after the U.S. Thanksgiving holiday and the unofficial start to the holiday shopping season.

“We remain cautious on the overall performance of the fourth quarter given that the majority of the holiday season lies ahead,” Chairman and Chief Executive Officer Michael Weiss said in the statement.

The company reported a 5 percent decline in same-store sales in the third quarter ended Oct. 27 and said it expects such sales to fall in the “low single digits” in 2012, compared with a 6 percent increase in 2011.

Same-store sales are based on stores open at least a year.

Options Trading

Option traders are anticipating lower volatility in Express’s share price than they were at the beginning of the month. The company’s three-month implied volatility, one measure of potential future price swings, has declined about 25 percent since reaching 69 on Nov. 5. That was the highest reading in at least 2 1/2 years, according to data compiled by Bloomberg.

American Eagle Outfitters Inc. (AEO) rose the most in six months after the teen-apparel chain boosted its annual profit forecast and reported a 10 percent increase in same-store sales for its fiscal third quarter ended Oct. 27.

The stock gained 7.1 percent to $20.77, the most since May 21. Shares of the Pittsburgh-based operator of more than 1,000 stores in North America have gained 36 percent this year.

American Eagle’s three-month implied volatility has dropped about 15 percent since Nov. 15, when it reached 40. That was the highest since Aug. 10.

Full-year earnings excluding some items will be $1.38 to $1.40, compared with a prior forecast of $1.33 to $1.36, the company said in a statement. The average of analysts’ estimates was $1.37.

Momentum in the third quarter carried “into the fourth quarter and record results over Thanksgiving weekend,” CEO Robert Hanson said in the statement.

To contact the reporter on this story: Niamh Ring in New York at nring@bloomberg.net

To contact the editor responsible for this story: Kevin Miller at kmiller@bloomberg.net