The company, which owns and operates footwear retailers Journeys, Lids and Schuh, said its first-quarter reported earnings gained 5 percent, to $10.4 million, or 50 cents per diluted share, from $9.9 million, or 42 cents per diluted share, in the comparable period. Adjusted earnings advanced 7 percent, to $13 million, or 62 cents per diluted share, from $12.2 million, or 51 cents per diluted share, in the previous year. It was a substantial beat on analysts’ estimates for diluted earnings per share of 39 cents.
Genesco’s net sales decreased 2 percent to $649 million from $661 million in the prior year’s same period, primarily reflecting the divestiture of the Lids Team Sports business in January 2016, the company said. Comparable sales increased 1 percent with a 1 percent increase in the Journeys Group, a 2 percent increase in the Lids Sports Group, a 5 percent decrease in the Schuh Group, and a 6 percent increase in the Johnston & Murphy Group. Comparable sales for the company reflected a 1 percent increase in same store sales and e-commerce sales were flat.
Robert Dennis, Genesco chairman, president and CEO, said significantly stronger performance in its once-faltering Lids Sports Group — which pared down earlier this year by shedding its Lids Team Sports business — drove profit growth in Q1.
“A major contributor to the improvement in first quarter profitability was the significant swing at Lids as we began to gain traction turning that business around following multiple initiatives we executed during fiscal 2016,” Dennis said during the Q1 conference call. “This included reducing Lids retail inventories 25 percent by year-end through a heightened promotional activity that we ramped up throughout the year and especially intensified in the fourth quarter.”
Regarding Journeys, Dennis noted that its first-quarter comps were below expectations, due mostly to colder post-Easter temperatures.
The company reiterated its full-year guidance and continues to expect adjusted diluted EPS in the range of $4.80 to $4.90.
Regarding the current quarter, Mimi Vaughn, Genesco CFO and SVP of Finance, said total comps through May 21 were up 1 percent with stores up 1 percent and direct up 2 percent. By division, comps at both Journey and Lids were down 1 percent.