Apparel retailer Express Inc forecast a profit for the current quarter that fell far short of analyst expectations, citing deep discounting and a steeper-than-expected fall in store traffic.
The company’s shares fell 17 percent in premarket trading after the specialty fashion apparel retailer also reported fourth-quarter results that also missed analyst estimates.
Express said it expects first-quarter earnings of 12 cents to 18 cents per share, below analysts’ average forecast of 41 cents per share, according to Thomson Reuters I/B/E/S.
“The start of 2014 has … been extremely difficult,” Chief Executive Officer Michael Weiss said in a statement.
In the past two days, U.S. 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.
In recent quarters, sales have slumped at most U.S. teen and fashion apparel retailers, including Abercrombie & Fitch Co and Aeropostale Inc, as young shoppers shift to the trendier and cheaper options at chains such as Sweden’s Hennes & Mauritz and Inditex’s Zara.
Express forecast comparable sales to fall in the low double digits to the high single digits in the first quarter.
The company’s net income fell to $47.93 million, or 57 cents per share, in the fourth quarter ended Feb. 1, from $63.94 million, or 75 cents per share, a year earlier.
Sales fell 2 percent to $715.9 million, while comparable-store sales rose 1 percent.
Analysts on average were expecting a profit of 59 cents on revenue of $721.13 million.
“The heavier than planned pace of promotions impacted both top-line and margins,” Weiss said.
The company’s shares closed at $18.24 Tuesday on the New York Stock Exchange. The stock slumped to $15.10 in trading before the bell on Wednesday.