MKM Partners Sees Several Potential Catalysts For Express (EXPR) Skewed Toward H2 2017 And Beyond

MKM Partners analyst Roxanna Meyer comments on Express Inc. (NYSE: EXPR) "There are several catalysts that have potential to support improving fundamentals beginning in spring, but more materially in 2H and beyond: 1) reduced SKU count (down 20% in women's/10% in men's), which means EXPR will be investing in greater depth instead of breadth. While this returns the sku count to 2015 levels (year of strong performance), it also means investing more in key items which exposes EXPR more if these items miss in fashion; 2) benefits from new systems should begin to bear fruit in 2H; 3) potential sales lift from the loyalty program relaunch (realistically a 2H opportunity); 4) launch of petites online in spring and launch of a collection collaborated with Karlie Kloss in April (unclear as to how material a driver); 5) potential for market share gains from the closing of Limited Stores; 6) opportunity to negotiate rent with landlords for leases coming due and to convert B&C mall stores to outlets, which could have positive implications for sales and margins; 7) lower IMU/AUC in 2H from sourcing initiatives."

She remains Neutral on Express with an $11 PT.

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