Promotional changes, trendy clothing help Express bounce back

Thu May 30, 2013 1:07pm EDT

(Reuters) - Apparel retailer Express Inc (EXPR.N) reported better-than-expected first-quarter results, benefiting from being featured on the hit reality TV show "Fashion Star" as well as from simpler promotions aimed at its core 20-to-30-year-old clientele.

The company also forecast current-quarter profit above analysts' expectations, helping to drive up its shares by as much as 12 percent to a one-year high on Thursday.

Express has bounced back after a promotional strategy offering discounts on second purchases backfired last year, saddling the company with a large inventory.

The retailer has since then lowered its prices and is now offering straight discounts. New styles such as Portofino shirts and knit tops also resonated with shoppers.

"Their presence on the show Fashion Star has (also) driven a lot of consumer traffic and interest to its website," Betty Chen, an analyst at Wedbush Securities, told Reuters.

Contestants on NBC's Fashion Star design clothes for Express, as well as for Saks Inc SKS.N and Macy's Inc (M.N).

Express said more than half of the sales on the Fashion Star website in the first quarter came from new buyers. Overall, online sales rose 48 percent from a year earlier to $70.7 million.

Chen said she expected Express to continue to benefit from a combination of its "fashion-right" assortments and clearer marketing and promotions.

Express said it expected a second-quarter profit of 17 cents to 21 cents per share, above Wall Street's average estimate of f 14 cents.

EXPENSES FALL

Revenue rose 3 percent to $508.5 million in the quarter ended April 28, beating the average analyst estimate of $498.2 million. Comparable sales were flat.

Net income fell 22.7 percent to $32.4 million, or 38 cents per share.

Analysts had expected earnings of 36 cents per share, according to Thomson Reuters I/B/E/S.

"While we promoted more heavily in the face of a highly promotional environment, we managed our expenses tightly," Chief Executive Michael Weiss said in a statement.

Expenses fell 1.4 percent to $112.6 million.

Express shares were up 10 percent at $20.66 at midday on the New York Stock Exchange.

(Reporting by Aditi Shrivastava in Bangalore; Editing by Roshni Menon, Maju Samuel)

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