Earnings Preview: Shoe Carnival And Genesco

Earnings Preview: Shoe Carnival & Genesco
A Journeys store.
The brand.

It was a mixed bag for Evansville, Ind.-based Shoe Carnival Inc. and Nashville, Tenn.-based Genesco when the firms last reported earnings.

For Shoe Carnival, 400-plus days of store closures due to adverse weather created pressure, while Genesco continued to face challenges from its faltering hat retailer, Lids.

At the same time, there were signs of improvements at both firms. Shoe Carnival saw year-over-year revenue growth, while Genesco got a positive sales jolt from its Journeys chain.

Both companies are slated to release financial statements this week. Here’s what you need to know.

Shoe Carnival Inc.

While the footwear retail chain missed Wall Street’s estimates for revenues in its first quarter, reported May 20, there was upside to the release as the company showed gains in profits, earnings per diluted share, sales and comparable store sales.

Shoe Carnival’s Q1 net income totaled $10.4 million, up from the year-ago quarter’s $9.2 million; earnings per diluted share were 52 cents, compared with the year-ago quarter’s EPS of 45 cents; and net revenues amounted to $252.8 million, a 7 percent year-over-year jump.

While Shoe Carnival CEO Cliff Sifford said he was pleased with the company’s ability to deliver strong first-quarter earnings, he cautioned during the Q1 conference call that “major changes in tax rebates” could negatively impact Q2. In fact, many of Shoe Carnival’s shoe-industry competitors as well as other retailers have already given evidence of the impact of the tax-holiday shift this year.

“These date changes will shift approximately $7 million in sales out of the second quarter into third quarter,” Sifford explained during the call. “Last year, in the markets we served, 13 states had tax-free holidays that celebrated or began at the end of July. This year, three of those states will continue their holiday at the end of July. Two states have either not announced or have canceled their tax-free holiday and eight states will shift their tax-free celebration to August.”

With these shifts and tax-free in mind, Sifford said he expects second-quarter comparable-store sales to be flat to up by low-single digits.

Shoe Carnival is slated to report Q2 on Sept. 1.

Genesco Inc.

Genesco’s stock took a dive on May 29 after it reported first-quarter earnings that missed Wall Street’s forecasts for both revenues and EPS.

CEO Robert Dennis once again called out Journeys as the highlight of the quarter, which saw the company’s profits decline 29 percent year-over-year, to $9.9 million, and revenues rise 5 percent, to $661 million.

“Despite challenges from the West Coast ports, Journeys delivered a solid comp, benefiting from continued strength in casual footwear, plus newness on the fashion-athletic side, which is particularly important as we transitioned into spring and summer,” Dennis said during the firm’s Q1 conference call.

Dennis went on to reinforce management’s “conviction [about] Lids Sports Group,” saying “we are seeking to capture a significant strategic opportunity represented by becoming the leading omnichannel provider of licensed sports merchandise in the U.S,” Dennis said. “The road to this compelling strategic goal has been bumpy, and it is likely to remain bumpy for the next several quarters, but this does not diminish our enthusiasm for the long-term prospects of what we’re building at Lids.”

In an acknowledgement of its earnings miss, the firm adjusted down its EPS guidance for fiscal 2016.

Genesco reports Q2 on Sept. 3.