Express raises full year 2011 guidance
Express Inc, a specialty retail apparel chain operating over 590 stores, announced its first quarter financial results for the thirteen week period ended April 30, 2011, which compares to the thirteen week period ended May 1, 2010.
Michael Weiss, Express, Inc.'s President and Chief Executive Officer commented: "We had a strong start to the year reporting better-than-expected comparable sales and earnings, continuing our positive momentum from 2010. The ongoing execution of our go-to-market strategy and progress against our four growth pillars provided us with a sustained platform for growth and led to a 10% increase in net sales, an 8% increase in comparable sales, a 130 basis point expansion in gross margin, and a 35% increase in operating income in the first quarter as compared to a year ago."
"We are excited about our positioning as we begin the second quarter," Mr. Weiss continued. "Customers are responding favorably to our assortments across our end uses; our store expansion remains on track, including the scheduled opening of our first locations in Canada in September of 2011; and we have additional initiatives in place to elevate our brand positioning with consumers as we test our innovative new store format, enhance our loyalty program, and capitalize on social media marketing opportunities. We are delighted to raise our full year guidance and expect 2011 to represent a year of significant accomplishments toward our long-term goals."
First Quarter Operating Results:
• Net sales increased $40.9 million, or 10%, to $467.4 million from $426.5 million in the first quarter of 2010;
• Comparable sales increased 8% in the first quarter following a 14% increase in comparable sales in the first quarter of 2010;
• Gross margin increased approximately 130 bps to 38.2% compared to 36.9% in the first quarter of 2010;
• Selling, general, and administrative (SG&A) expenses totaled $109.5 million, or 23.4% of net sales, and included $0.6 million of costs related to the secondary offering completed on April 6, 2011. This compares to SG&A expenses of $102.9 million, or 24.1% of net sales, in the first quarter of 2010, which included $1.8 million in costs related to the Senior Notes offering completed on March 5, 2010 along with a portion of the costs related to the initial public offering completed on May 18, 2010;
• Operating income increased $18.1 million, or 35%, to $69.4 million, or 14.9% of net sales, compared to $51.3 million, or 12.0% of net sales, in the first quarter of 2010;
• Interest expense totaled $11.0 million and included a $3.5 million loss on extinguishment of debt related to the repurchase of $25.0 million of Senior Notes. This compares to interest expense of $20.8 million in the first quarter of 2010, which included a $7.2 million loss on extinguishment of debt related to the Term C Loan prepayment;
• Income tax expense was $23.4 million, at an effective tax rate of approximately 40.1%, compared to tax expense of $0.4 million, at an effective tax rate of approximately 1.2%, in the first quarter of 2010. The increase in the effective tax rate is a result of the Company's conversion to a corporation in connection with its initial public offering in the second quarter of 2010;