Genesco reduces outlook following Q2 and slow Q3 start

By

Obi Anyanwu

Published
Sep 1, 2016

Genesco Inc. reported its second quarter 2017 results ended on July 30, 2016, which resulted in a decreased full year outlook. A fashion rotation emerged at Journeys in July and led to a shift away from core styles, according to Genesco Chariman, President and Chief Executive Officer Robert J. Dennis.
 

He added, “We were able to offset the effect this headwind had on our bottom line through a meaningful improvement in Lids Sports Group and continued strength at Johnston & Murphy combined with share repurchases over the past year."

Net sales for the quarter decreased 4.6% to $626 million from $656 million in the previous second quarter, and consolidated second quarter comparable sales, including same store sales and comparable e-commerce and catalog sales, decreased 1%. The decrease in sales reflects the divestiture of the Lids Team Sports business in the fourth quarter of fiscal 2016.

Journeys Group had a 4% decrease in consolidated second quarter comparable sales, Lids Sports Group was flat, Schuh Group decreased 1% and Johnston & Murphy increased 3%.
 
Earnings from continued operations increased to $14.5 million, or $0.72 per diluted share, compared to $7.6 million, or $0.32 per diluted share, in the previous year.
 
"The third quarter is off to a difficult start driven largely by the impact of the fashion shift at Journeys during the height of the back to school season and challenges at Schuh,” said Dennis. “Comparable sales for the third quarter through Saturday, August 27, 2016, are down (5%) from the same period last year.”
 
Genesco reduced its full year outlook and now expects its adjusted diluted earnings per share to range from $3.80 to $4.00, compared to the previously issued guidance of $4.80 to $4.90.
 
Dennis concluded, "While we are disappointed with our reduced outlook, we are confident that the Journeys' team will be able to leverage their experience and strong vendor relationships to ensure Journeys emerges from this current cycle with leading, trend right merchandise assortments."