Mall-facing retailer Express (NYSE:EXPR) recently demonstrated a point of investing that doesn't often get discussed: sometimes it's enough just to lose less than everyone expected. There were a few bright spots, depending on who was asked, and the company did manage to ride the less-terrible results to gains in premarket trading, but is this indicative of a return to normalcy for mall-facing retailers?
A Decent Quarter, Depending on Who You Ask
The reports out for Express' latest quarter all start with one positive point: the losses the company incurred for the quarter were at least smaller than expected. The company posted a loss of $0.66 per share, which is below one set of estimates that looked for a $0.83 loss, and better still than expectations out of Zacks, which looked for $0.85. The downside to that bright side, however, is that during the same quarter last year, the company brought in earnings of $0.19 per share.
Revenue, meanwhile, either broke or failed consensus depending on which estimates are used. One set of estimates noted that revenue came in higher than expected, while both Zacks and FactSet noted losses against consensus expectations; FactSet was looking for $490 million while the figures at Zacks came in 1.89% higher than the actual revenue pulled.
Reports out of the company, meanwhile, noted that it's looking forward to further improvements with this year, including growth in comparable sales and gross margins. Additional word noted that the company was working on strategies to improve its digital channel operations, and get its online sales up to a full billion dollars in 2024. Details of the strategy, meanwhile, will be released in the second quarter.
A Stable Hold From Analysts
The analyst pool, meanwhile, has not had a lot to say about Express at any point in the last six months, based on our latest research. Six months ago, the company had a consensus opinion of “hold”, comprised of three “hold” ratings. That's the same figure as three months ago, a month ago, and even today.
The price target, meanwhile, has held a perfect consensus of $1.83 per share for the last six months as well. Given that Express stock currently trades at $4.30 per share, there's quite a bit of downside potential connected right now.
The analyst pool has not moved much on this stock at all. So far for 2021, the only real movement was B. Riley adjusting its price target from $1 per share to $1.50 per share. Before that, nothing had happened to Express since late August of 2020, when MKM Partners dropped its price target from $2 to $1.50. A similar move happened at Wedbush in March of 2020, dropping the price target from $3.50 to $2.50, and that was the only thing that had happened to Express since March of 2019.
Two Rising Tides Lifting Express?
For those interested in taking out a flier on Express—which at this point is almost but not quite like buying a lottery ticket—there are some positive signs afoot. Yes, the company is improving its direct-to-consumer operations, like most every other clothing retailer out there, but there are two major points giving Express a little extra life.
First is the return to mall shopping. Mall-facing retailers like American Eagle (NYSE:AEO) have made some great returns in their stock price as customers return to mall shopping. Sure, it's not what it once was—most every state still has at least some restriction to it—but it's certainly better than what it was this time last year, when “15 Days to Slow the Spread” was getting started. Many of these retailers have also made great strides in their online shopping components, which certainly doesn't hurt, and allows Express to build on some of its earlier-established name recognition to drive sales. Hearing more details about the Express plan in the next quarter will certainly be welcome.
Second, however, is the gain in the so-called “Reddit stocks” or “meme stocks”, as they're sometimes known. Express is one such stock, along with more popular entries like GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC). These stocks have seen some amazing gains in the last few months as small-scale retail investors unify their actions into a pool that has led to staggering gains.
With two factors at once working in Express' favor—the return to mall shopping and the gains from the Reddit community—it might be worth picking up a few shares of Express to ride any potential upward gains. Given the stock's current share price, picking up even $100 shares represents comparatively slim risk and a decent shot at upward growth. That's not to say it's going to be the next GameStop, but those who buy in now certainly have the “buy low” part of the classic stock picking mantra down.
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