NEW YORK (TheStreet) -- Shares of Express (EXPR) - Get Report were falling 16.2% to $12.10 Tuesday after the clothing retailer announced it ended its buyout talks with private equity firm Sycamore Partners.
Express said that it ended the discussion with Sycamore because of the "unavailability of financing on commercially acceptable terms." Following the end of the talks Sycamore Partners agreed to be bound by restrictions relating to the disclosure of certain information and its ability to enter agreements with third parties to acquire Express until June 15, 2015.
Sycamore Partners first expressed interest in acquiring Express in June 2014 when it disclosed a 9.9% stake in the company, according to Reuters.
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TheStreet Ratings team rates EXPRESS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate EXPRESS INC (EXPR) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.39, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.72 is somewhat weak and could be cause for future problems.
- 35.46% is the gross profit margin for EXPRESS INC which we consider to be strong. Regardless of EXPR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.93% trails the industry average.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. In comparison to the other companies in the Specialty Retail industry and the overall market, EXPRESS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- Net operating cash flow has significantly decreased to -$6.80 million or 714.09% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: EXPR Ratings Report