May 30 (Bloomberg) -- Express Inc., a retail chain that targets 20-something shoppers, tumbled the most since March after cutting its annual forecast and announcing plans to close 50 stores over the next three years.
The company now expects earnings of 74 cents to 90 cents a share this year, down from a previous forecast of as much as $1.23, according to a statement yesterday. Shutting the stores will boost profit by $5 million to $8 million, Express said. The move follows an almost 10 percent sales drop in the first quarter.
“We had anticipated a very challenging first quarter, but our actual results were weaker than planned,” Chief Executive Officer Michael Weiss said in the statement. “While external challenges contributed to the decline in our first-quarter performance, we also did not execute as well as we could have.”
Weiss is now working to clear out inventory of slow-moving spring apparel and relying on factory stores and new product offerings to boost sales. The chain also is contending with deep discounts across the retail industry, hurting profit margins. And foot traffic is declining at malls, where Express does much of its business.
Shares of the Columbus, Ohio-based chain fell 7.5 percent to $12.61 at the close of trading. The stock has dropped 32 percent his year.
First-quarter net income fell 84 percent to $5.1 million, or 6 cents a share, from $32.4 million, or 38 cents a share, a year earlier. Analysts had estimated 14 cents on average, according to data compiled by Bloomberg.
Net sales dropped to $460.7 million in the period, which ended May 3. Sales at stores open at least 13 months -- including online orders -- fell 11 percent.
The company plans to take out a $300 million term loan as part of its program to refinance long-term debt. Over the next 18 months, the chain also will repurchase as much as $100 million in stock.
Express also reviewed its operations and expenses and has undertaken a plan that will save about $18 million a year.
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