The Five Dumbest Things on Wall Street This Week: May 25

3. Express Stores Inanity

Pity the brass at Express (EXPR) stores. They were in such a rush to sell high-priced clothing that they ended up with a low-priced stock instead.

Shares of the specialty retailer sold off in a hurry on Tuesday, sinking more than 25% after it missed first quarter Wall Street earnings estimates by 2 cents and drastically lowered its full-year guidance as a result of a poorly thought-out pricing strategy.

"We reduced our styles of opening price point knit tops, and in hindsight, we did not follow some of our own guiding principles when planning this department this spring," said CEO Michael Weiss said on a conference call, adding "We did not take a balanced approach to this category."

Nor a very smart one Michael, but clearly the masses alerted you to that fact by avoiding your stores and unloading your stock.

Of course, had you recognized how important the masses were to your business beforehand then perhaps you could have avoided all these troubles. In your attempt to push your once faithful customers into a higher price point, you starved them of low-end options. As a result, the very same folks that feed your business each day are now taking a bite out of your bottom line.

Nevertheless, even while Weiss realized his foolishness, the brain surgeons on Wall Street failed to see the light. Despite the stock getting clocked, Piper Jaffray analyst Neely Tamminga kept her overweight rating on Express, saying the retailer's move to sell higher-priced tops would eventually pan out.

"Longer-term, we believe Express' deliberate shift away from basic knit tops and into opening price point fashion tops will enhance margins and make it more of a destination for its customer," wrote Tamminga in a note.

Oh Neely. That's just so nearsighted. Even the CEO has finally grasped that before Express becomes a "destination", it needs its customers to come home first. So why don't you?

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