Second Quarter 2013 Operating Results:
- Net sales increased 7% to $486.2 million from $454.9 million in the second quarter of 2012.
- Comparable sales increased 6%, following a 1% comparable sales increase in last year's second quarter. This includes e-commerce sales, which increased 27% to $59.9 million. In last year's second quarter, e-commerce sales grew 24% to $47.2 million.
- Gross margin declined to 31.4% of net sales compared to 32.2% in the second quarter of 2012. Merchandise margin was down 40 basis points driven by increased promotional activity late in the second quarter in response to the competitive environment. Buying and occupancy costs as a percentage of sales increased 40 basis points, driven primarily by the incremental non-cash rent expense associated with the New York City and San Francisco flagship stores.
- Selling, general, and administrative (SG&A) expenses were $119.2 million versus $115.3 million in last year's second quarter. As a percentage of net sales, SG&A expenses improved 80 basis points to 24.5% compared to 25.3% in the same period last year. This improvement reflects continued discipline in managing these expenses.
- Operating income was $33.4 million, or 6.9% of net sales, compared to $31.2 million, or 6.9% of net sales, in the second quarter of 2012.
- The effective tax rate was 39.7% compared to 39.6% in last year's second quarter.
- Net income was $16.9 million, or $0.20 per diluted share, compared to net income of $15.8 million, or $0.18 per diluted share, in the second quarter of 2012.
- Real estate activity for the second quarter of 2013 is detailed in Schedule 4.
Michael Weiss, Express, Inc.'s Chairman and Chief Executive Officer commented, "We delivered a very solid second quarter. Financial highlights include high single digit sales growth, comparable sales that represent a return to mid-single digit growth and earnings per share that came near the upper end of our guidance. These results were driven by improved execution of our Go-to-Market strategy and by our ability to react quickly as the competitive environment evolved."
In terms of product offering, Mr. Weiss noted that, "Our customers are responding enthusiastically to our assortments, which are trend-right, differentiated and well-edited. We are seeing this reflected in improved conversion rates. As we move into the second half of the year, we are confident in our product and marketing strategies, and believe we are well positioned for the fall and holiday seasons."
He went on to add that, "We made progress on each of our four growth pillars during the second quarter. At the same time, we took concrete steps to prepare for the launch of our outlet business in the second quarter of 2014, which represents another opportunity to drive significant top and bottom line growth."
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