Genesco Holds Steady in Q1

NEW YORK — Analysts were upbeat last Thursday after Genesco Inc.’s first-quarter results came in better than expected.

The Nashville, Tenn.-based firm beat analysts’ expectations by 13 cents a share and reaffirmed its full-year guidance, but restructuring charges and a loss on the early retirement of debt pulled Genesco to a net loss in the first quarter.

“While we were pleased with how well our business has held up overall in the quarter given economic conditions … we are still experiencing an up-and-down sales pattern, currently down. That causes us to be cautious in our outlook and in our approach to managing the business in the near term,” President and CEO Robert Dennis said on a conference call with analysts. “We believe the Journeys Group heads into summer and back-to-school with a solid overall assortment, based on continued strength in several categories, especially skate and vulcanized fashion canvas.”

Sterne Agee senior research analyst Sam Poser said he sees strength for Genesco toward the back half of the year. “They may be a little too optimistic about the second quarter. That quarter is going to be really, really tough. But we’ll see improvement in the third quarter beyond what they are expecting. … People are shopping closer to need, so that will be in September [for back-to-school].”

In the three months ended May 2, Genesco’s net loss came to $5.8 million, or 31 cents a diluted share, versus net income of $129.3 million, or $5.14, in the year-ago period.

Excluding a loss on the early retirement of debt related to an exchange of notes for common stock, discontinued operations and other charges, Genesco earned $3.5 million, or 17 cents a share. Analysts polled by Yahoo Finance had anticipated EPS of 4 cents.

Excluding the benefit of the settlement reached in its aborted merger with Finish Line and other items in last year’s quarter, earnings during that period would have been $3.8 million, or 17 cents.

Sales in the first quarter of 2009 rallied 4 percent to $370.4 million from $356.9 million in the year-ago period. Sales at the Journeys Group were up 5 percent to $176.8 million and rose 3 percent on a same-store basis. Hat World sales jumped 11 percent to $98.8 million, while its comparable-store sales rose 7 percent. Sales at Johnston & Murphy fell 16 percent to $39.3 million, where comps dropped 18 percent. Underground Station’s sales fell 8 percent to $26.7 million, on 5 percent comps contraction.

Dennis said that, based on first-quarter results and business prospects, the firm was now “slightly more comfortable” with its full-year guidance for earnings of $1.70 to $1.80 a share.

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