Genesco Misses Expectations in Third Quarter

Genesco Inc. share prices slipped in morning trading after the firm announced it missed quarterly earnings expectations.
 
The Nashville-based company announced that its net earnings for the third quarter were $28.7 million, or $1.21 per diluted share. Though it was a 3 percent gain over $27.8 million, or $1.18 per share, in the year-ago period, the earnings missed analyst predictions. Market watchers expected the firm would make $1.44 per share in the quarter.
 
Net sales for the quarter ending Nov. 1 grew 8 percent to $723 million, from third quarter last year of $666 million.
 
Of Genesco’s divisions, Journey’s revenue continued to grow and was the strongest performing of the group, with net sales of $303.8 million.
 
Comparable-store sales in December have increased 9 percent in the fourth quarter, and executives sounded confident in holiday expectations.
 
“We delivered solid top-line growth in the third quarter, driven by better-than-expected sales in the Journeys Group,” said Robert J. Dennis, chairman, president and CEO in a statement. “Sales in our other divisions, except for the Lids Sports Group, were essentially on plan. At the Lids Sports Group, lower-than-planned sales caused negative expense leverage and lower gross margins, resulting in a shortfall in earnings that was not offset by the other divisions’ performance. We continue to be confident in the long-term outlook for our company and believe the actions we are taking to improve our earnings power will begin to yield positive results next year.”
 
The firm revised its guidance for the remainder of the year. Diluted earnings per share are now expected to range from $4.75 to $4.85, down from earlier expectations of $5.10 to $5.20.
 
The firm also announced the retirement of CFO James Gulmi at the end of fiscal year 2015 and will be succeeded by Mimi Vaughn, who currently is SVP and president of strategy and shared services.

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