Journeys Leads Genesco to Strong Quarter

LOS ANGELES — Strong sales at its Journeys stores helped Genesco Inc. kick off fiscal 2012 in a big way.

“The overall results were particularly strong, specifically with Journeys on the comp-sales side, but also on the margin side,” said analyst Mitch Kummetz from R.W. Baird. “The results were very impressive and better than what we were anticipating.”

Kummetz added that the strength of the retailer could be seen in the fact that, even though cold weather may have hampered sandal sales, the stores still performed well.

Sterne Agee analyst Sam Poser said that as the competitive landscape has changed, particularly in malls where some retailers have struggled, Journeys has made the right moves to grab a significant share of that business.

“The Journeys business is very good,” he said. “The trends are in their favor. They’re making progress across the board.”

For its first fiscal quarter ended April 30, the Nashville, Tenn.-based company reported a profit of $14.8 million, or 63 cents a share, up 75 percent from $8.6 million, or 36 cents, in the same period a year ago. Sales during the quarter totaled $481.5 million, a 20 percent increase from $400.9 million last year, on the back of a 14 percent jump in consolidated comp-store sales.

Comps for the Journeys Group rose 15 percent; the Lids Sports Group increased 16 percent; Johnston & Murphy jumped 10 percent; and Underground Station advanced by 6 percent. Internet and catalog sales surged 24 percent.

“The Journeys Group had its best first quarter in several years,” Robert Dennis, chairman, president and CEO of Genesco, said during a conference call with investors and analysts.

“We believe the limited distribution of our branded product assortment within the mall continues to drive traffic in our stores. We saw it in men’s and women’s casuals for the fall season, and that trend continued as we repositioned our stores for the spring selling season with strength in casual, canvas, sandals and skate brands.”

Based on the recent success of three new locations in Canada, the company said it now intends to open an additional seven to 10 Journeys doors in the country by year-end.

The company also raised its fiscal 2012 guidance. Assuming comp sales rise between 5 percent and 6 percent, it now expects earnings per share to be in the range of $2.90 to $2.97, which represents a 17 percent to 20 percent increase over last year’s earnings.

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