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UPDATE 2-Apparel discounts hurt Express forecast; shares slump

* Sees 1st-quarter earnings $0.12-$0.18/shr vs est $0.41/shr

* Forecasts fall in comparable store sales

* 4th-quarter earnings $0.57/shr vs est $0.59/shr

* Rise in store traffic not imminent: CEO

* Shares fall 17 pct in premarket trading

(Adds analysts', CEO comment, background; updates shares)

March 12 (Reuters) - Express Inc forecast profit to slide by more than half in the current quarter, making it the latest U.S. apparel retailer to warn of an ongoing impact from deep discounts and declines in store traffic.

The specialty fashion retailer's shares fell as much as 17 percent in premarket trading after its fourth-quarter results missed analysts' average estimate.

"Our first-quarter guidance reflects year to date traffic and comparable sales as well as our belief that a material uptick in traffic is not necessarily imminent," Chief Executive Officer Michael Weiss said in a statement.

In the past two days, apparel retailers American Eagle Outfitters and Urban Outfitters Inc have warned that results in the current quarter would be hurt by stiff competition and choppy sales trends at malls.

Nomura Securities analyst Simeon Siegel said discounting is likely to continue across mall storefronts as retailers try to boost sales.

"The weather, product, and mall traffic are weighing on results of apparel retailers leading them to forecast earnings below the Street expectation," said Siegel.

U.S. retailers also struggled to cope with weak traffic due to the unusually cold, snowy weather that slammed retailers in January, and the first half of February.

Columbus, Ohio-based Express forecast first-quarter earnings of 12 to 18 cents per share, less than half the 38 cents per share it earned a year earlier.

The forecast is also in sharp contrast to the average analyst estimate which called for profit to rise slightly to 41 cents per share, according to Thomson Reuters I/B/E/S.

The company said comparable sales would fall in the low double digits to the high single digits in the quarter. Comparable-store sales rose 1 percent in the fourth quarter ended Feb. 1

"In the near-term we believe a difficult retail environment will hold back results in the first half despite what we believe is on-trend merchandise," Stifel Research analyst Richard Jaffe said.

The duration and the extent of discounts offered took a toll on gross margin, which fell 300 basis points to 32 percent in the fourth quarter.

The company's net income fell to $47.93 million, or 57 cents per share, from $63.94 million, or 75 cents per share, a year earlier.

Sales fell 2 percent to $715.9 million due to the deep discounting and weak traffic.

Analysts on average were expecting a profit of 59 cents on revenue of $721.13 million.

The company's shares closed at $18.24 Tuesday on the New York Stock Exchange. The stock slumped to a low of $15.10 in trading before the bell on Wednesday.

(Additional reporting by Aditi Shrivastava in Bangalore; Editing by Savio D'Souza)