Genesco Inc. is banking on a strong second half after a sluggish retail environment and lack of standout fashion weighed on the company’s first-quarter result.
For the period ending May 3, the Nashville, Tenn.-based company posted earnings of $14 million, or 59 cents a diluted share, down from $14.4 million, or 61 cents, a year earlier.
Sales for the period rose 6.3 percent to $628.8 million.
The result missed the Street’s estimate of 91 cents on revenue of $620 million. Despite missing expectations, Genesco shares were up 6 percent, or $4.29, at $75.30 in morning trading after management announced expectations for a stronger second half.
Robert Dennis, Genesco’s chairman, president and CEO, said on a conference call with analysts and investors, “As we stated on our fourth-quarter call in March, we had modest expectations for the first half of the year. This was due to the effects of bonus offsets, planned new store openings, which are less productive in the first half, and concerns about the lack of a meaningful new fashion driver in the teen footwear space.”
Dennis said he expects improved trends at the firm’s Journeys Group will contribute to a stronger second half.
“We continue to expect comps to accelerate in the back half as casual footwear becomes a bigger percentage of Journeys’ mix, and as these newly identified product trends take hold,” he said on the call.
For the period, the firm’s cost of sales rose 6.8 percent, while its selling and administrative expenses increased 8.1 percent.
On the outlook, Dennis said, “The second quarter is off to a solid start with comparable-store sales up 3 percent through May 24. We are encouraged by the recent pace of business and optimistic that we can build on our current momentum.”
By business segment, The Journeys Group and Lids Sports Group both reported a 1 percent increase in same-store sales, while the Schuh Group and Johnston & Murphy Group both posted a 1 percent decline.
Dennis reiterated the company’s previously announced guidance for adjusted full-year diluted earnings per share in the range of $5.40 to $5.55, a 6 percent to 9 percent increase over the prior corresponding period’s EPS of $5.09.