Earnings Preview: Brown Shoe, DSW, Deckers & Genesco

There are four big names on the earnings-release roster this week. And FN has the key numbers and market trends to bring you up to speed.

Read on for the financial roundup.

Brown Shoe Co.
The St. Louis-based footwear company, which announced in April that it will become Caleres on May 28, is seeing its share price decline today on the leadup to its Q1 earnings release on May 27.

The company is in the midst of an ambitious rebranding effort that has been four years in the making, with CEO Diane Sullivan leading the charge.

At a company-wide meeting at the firm’s headquarters in mid-April, Sullivan outlined plans to focus on organic growth, acquire and incubate new brands and the 2016 debut of a men’s footwear business called Brown Shoe Bootmakers.

On the earnings front, the company hired Kenneth Hannah as CFO and senior vice president, effective Feb. 16, while reporting a mixed finish to Q4, beating Wall Street’s earnings estimates but missing its revenue forecast.

“While we’re confident about our 2015 strategy, we are also cautious about the potential for product delays in the first half of the year, as the West Coast port situation is gradually untangled,” Hannah had said during the Q4 conference call.

DSW Inc.
The Columbus, Ohio-based footwear-and-accessories retailer was riding high on a Wall Street beat, stock gains and record comparable-store sales growth when it reported Q4 on March 17.

But the company’s stock is taking a tumble today, and analysts say they are less bullish on the Q1 leadup.

“We are reiterating our ‘hold’ rating and $34 price target and lowering our FY16 and FY17 EPS estimates [for DSW],” wrote Wunderlich Securities Inc. analyst Danielle McCoy last week. “We expect the initial impact of delayed shipments from the West Coast port slowdown to potentially drive upside to 1Q results as inventories were tight and promotions calmed across the footwear space.”

Net income for the fourth quarter, ended Jan. 31, 2015, was $30.8 million, which included an expense of $100,000 related to RVI, compared with the year-ago quarter’s $21.8 million in earnings, including $600,000 of net charges related to RVI and the company’s luxury test.

DSW is scheduled to report on May 27.

Deckers Brands
The Goleta, Calif.-based company’s most recent earnings showed soft demand for some of its product offerings, with revenue for the quarter reaching $784.7 million, a 6.6 percent year-over-year jump but a significant sales miss during a historically top-performing quarter for the brand.

In addition to slowing demand, in Q3 (ended December 31, 2014), Ugg Australia suffered from mild weather and currency fluctuations. The brand did enjoy stronger demand for its new product, but order levels were underestimated, so reorders couldn’t be filled.

“We expect a breakeven quarter when Deckers reports Q4,” wrote Susquehanna Financial Group LLP analyst Christopher Svezia in a May 21 note. “FY16 guidance and backlog will be the focus, where we look for 10 percent earnings growth to be reiterated, while the latter should be healthy [mid-to-high-single digits] months away from its important selling season.”

Svezia also noted that currencies have stabilized since the last update, “but this will likely weigh on tourist spending at flagship stores, which can continue hurting retail comp.”

Recent resignations at the company may also be a focus, market watchers say.

Recall that Deckers’ stock price took a dip in mid-April following the company’s announcement that Connie Rishwain, president of Ugg Australia and Deckers’ Fashion & Lifestyle Brands, would be leaving the company.

Deckers has been mum on Rishwain’s timeline and transition strategy, but the impending departure of the 20-year Deckers’ veteran created quite the industry buzz.

Deckers will report Q4 on May 28.

Genesco Inc.
The Nashville, Tenn.-based specialty footwear-and-accessories retailer cited currency headwinds as a key factor in its earnings miss for the fourth quarter, ended January 31, 2015.

The firm posted net income of $50.4 million, or $2.12 per diluted share, an improvement from earnings of $42.2 million, or $1.79 per diluted share, in the prior year’s final quarter. With adjustments, fourth-quarter earnings amounted to $54.7 million, or $2.30 per diluted share, compared with $51 million, or $2.16 per diluted share, in the prior year.

“Fourth-quarter sales were strong — exceeding our expectations,” Genesco’s CEO Robert Dennis, had said in the company’s Q4 statement. “However, gross margin pressure, lower-than-planned contribution from new stores and acquisitions in the Lids Sports Group and unfavorable trends in foreign-exchange rates resulted in disappointing earnings.”

Genesco also softened its 2016 guidance due to currency pressures and supply-chain uncertainties from the West Coast port issues.

Genesco’s share price was down slightly today. It is expected to report Q1 earnings on May 29.

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