Billionaire Ken Griffin Goes Shopping for Express Shares

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Express’s peers include Abercrombie & Fitch Co. (NYSE:ANF), The Gap Inc. (NYSE:GPS), Guess?, Inc. (NYSE:GES), and Urban Outfitters, Inc. (NASDAQ:URBN). Abercrombie & Fitch and Urban Outfitters carry trailing earnings multiples of more than 30; each of these retailers, however, reported double-digit earnings growth rates in their most recent quarter versus a year earlier. Abercrombie & Fitch in particular has a reasonable forward P/E, at 14. Guess is actually in a very similar situation to Express: at first glance it looks cheap with a trailing price-to-earnings multiple of 12, but sales were down slightly in the fiscal quarter ending in October from their levels a year ago and as a result earnings dropped 45%.

The darling of the industry is Gap, which is up 74% in the last year- and this figure is just a bit higher than the company’s reported earnings growth rate (though sales have shown considerably lower growth). Gap trades at 16 times trailing earnings, and so while its extremely high growth rates are not sustainable even moderate improvements on the bottom line would make it a good buy. Eddie Lampert and Stephen Mandel are two billionaires whose funds have a sizable position in Gap.

While Express’s earnings multiples look attractive, and we now have Citadel buying, the business’s recent performance has not been good and so we would be careful in evaluating the company. Gap, which trades at a moderate premium but is a larger company with more impressive numbers in the past few quarters, may be a better candidate for value status.

Disclosure: I own no shares of any stocks mentioned in this article.

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