Express Shares Drop Post Q1 Results, Completes Bonobos Acquisition

Fashion apparel retailer Express, Inc. EXPR reported a first-quarter FY23 sales decline of 15% year-over-year to $383.3 million, missing the consensus of $389.43 million.
Comparable retail sales, including Express stores and eCommerce, were down 13%, and comparable outlet sales fell 17%.
Loss per share fell to $(0.99) versus $(0.18) a year ago.
The gross margin was 16.6%, down by 1,260 basis points. Merchandise margin contracted by 900 bps, primarily driven by the challenging macroeconomic and highly promotional retail environment.
Operating loss was $(70.1) million for the quarter, compared to $(9.1) million in 1Q22.
EBITDA was negative $(55.9) million, compared to $5.8 million last year same quarter.
Inventory was $347 million (-7% Y/Y) at the end of the quarter and down 5% sequentially.
EXPR held cash and equivalents of $34.1 million. Operating cash flow was negative $(80.6) million for the thirteen weeks that ended April 29, 2023, compared to $(75.9) million a year ago.
The joint acquisition of Bonobos by EXPR and WHP Global from Walmart Inc. WMT has been completed. The addition of Bonobos is anticipated to broaden the portfolio of EXPR brands, increasing the company's sales growth and profitability and benefitting operating income and free cash flow in FY23.
Related: WHP Global & Express Make The First Joint Acquisition - Menswear Brand Bonobos From Walmart
"We are taking aggressive action to reduce expenses and improve the operating efficiency of our business. In January, we disclosed $40 million in annualized expense savings versus 2022, excluding the impact of inflation, and since that time, we have implemented an additional $25 million which we expect to realize in 2023 and which is reflected in our outlook," commented Tim Baxter, Chief Executive Officer.
2Q23 Outlook: Express sees net sales of $400 million-$450 million versus a consensus of $449.88 million.
It expects the gross margin rate to decrease by approximately 800 basis points. It sees a loss per share of $(0.50)-$(0.60).
FY23 Outlook: EXPR expects net sales of $1.9 billion-$2 billion versus the consensus of $1.96 billion. It sees a loss per share of $(1.50)-$(1.70). In its Q1 results, the company provided FY23 loss per share outlook of $(0.85)-$(1.05).
Price Action: EXPR shares are trading lower by 16.6% at $0.6781 on the last check Wednesday.

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