-By Ankita Dutta.
US-based fashion retailer Express Inc has posted a 15% drop in consolidated net sales to $383.3m in Q1 FY23 from $450.8m in Q1 2022, accompanied by a 14% dip in consolidated comparable sales. Comparable retail sales, which comprised the company’s e-commerce and Express stores, plunged 13% compared to the same period the year before. The decline was dominated by an 18% fall in retail stores comparable sales and 7% fall in e-commerce comparable sales. Q1 FY23 comparable outlet sales also plummeted by 17% compared to Q1 FY22, according to a company statement.
Gross margin for Q1 FY23 stood at 16.6% of net sales, a significant drop of about 1,260 basis points from 29.2% in Q1 2022. This contraction in merchandise margin by 900 basis points was mainly attributed to a “challenging macroeconomic and highly promotional retail environment”, plus an additional 320 basis points of royalty expense related to the joint venture with WHP.
For Q1 FY23, selling, general, and administrative expenses were $139.3m, or 36.4% of net sales, a slight drop from $141.1m, or 31.3% of net sales, in the same period previous year. Express’s CEO, Tim Baxter, attributed the negative same-store sales figure to a combination of external factors and challenges in the apparel company’s product assortments. He also noted a general decline in consumption, increasing price sensitivity in discretionary categories, and aggressive competitive promotions that began in 2022 and continued into the first quarter of the year had negatively impacted on the company’s performance. Baxter said that despite this, Express continued to make corrections to address the imbalances in its women’s wear products, which saw a sequential improvement as Q1 progressed.
However, the company experienced a slowdown in its men’s wear and outlet businesses due to low traffic and amid record volume in the first quarter of 2022. Express reported an operating loss of $70.1m in Q1 FY23, compared to a modest operating loss of $9.1m in Q1 2022. The company also posted a net loss of $73.4m, or $0.99 per diluted share, an unprecedented increase from a net loss of $11.9m, or $0.18 per diluted share, in the same period the previous year. Additionally, earnings before interest, taxes, depreciation, and amortisation for Q1 FY23 were negative $55.9m, an extreme downturn from $5.8m in Q1 2022.
Express, Inc reported a significant dip in its first quarter sales and comparable sales, which the company attributed to a challenging macroeconomic environment alongside reduced consumer spending and aggressive promotional activity across the industry. The fashion retailer also reported sharp declines in gross margins as well as an operating and net loss in Q1 FY23.