Genesco Inc. said its fourth-quarter earnings continued to feel the pressure of management’s efforts to right size inventory at Lids Sports Group.
The Nashville, Tenn.-based firm said Friday that its Q4 reported net income totaled $46.4 million, or $2.15 per diluted share, an 8 percent decline from the comparable quarter when reported net income totaled $50.4 million, or $2.18 per diluted share. Adjusted earnings for the period were $45.8 million, or $2.11 per diluted share, a 16.3 percent decline from the comparable quarter when adjusted earnings were $54.7 million, or $2.30 per diluted share. Analysts had predicted diluted earnings per share of $2.13.
Net sales for the fourth quarter advanced 4.4 percent, to $932 million, from $893 million in the fourth quarter of Fiscal 2015. It was a miss on Wall Street’s prediction for net sales of $939.42 million.
Comp sales (including same store sales and comparable e-commerce and catalog sales) increased 4 percent with a 5 percent increase at the Journeys Group, a 3 percent increase at the Lids Sports Group, a 2 percent decrease at the Schuh Group, and a 6 percent increase at the Johnston & Murphy Group.
Genesco chairman, president and CEO Robert Dennis said the quarter’s earnings came in below the firm’s guidance “as a result of gross margin pressure related to our decision to make a final, aggressive push to complete our year-long program to right-size inventory in the Lids [as well as] similarly aggressive efforts to clear inventory after a slow holiday selling season at Schuh.”
“Fiscal 2016 earnings were disappointing, and we address specific challenges in certain businesses and work hard to prepare the company for sustained and profitable growth going forward,” Dennis said during the firm’s conference call. “While overall results were unsatisfactory, we did see strong performance at Journeys and Johnston & Murphy, and we believe that we did what was necessary to position the Lids Sports Group for a stronger future starting this year.”
For the full year, the company reported net sales of $3 billion, an increase of 5.7 percent from net sales of $2.9 billion in the prior year. Earnings were $97.1 million, or $4.22 per diluted share, a decline from the previous year when earnings were $99.4 million, or $4.19 per diluted share. Adjusted full-year earnings were $98.6 million, or $4.29 per diluted share, compared to adjusted earnings of $112.3 million, or $4.74 per diluted share, in the prior year.
“Based on the projected margin recovery at Lids Sports Group combined with modest overall comparable sales growth, we expect adjusted diluted earnings per share for the fiscal year ending January 28, 2017, in the range of $4.80 to $4.90, which represents a 12 percent to 14 percent increase over Fiscal 2016’s adjusted earnings per share of $4.29,” Dennis said of the company’s FY17 outlook. “This guidance assumes comparable sales increases in the 1 percent to 2 percent range for the full year.”
Dennis concluded, “We begin fiscal 2017 in a solid position to execute our long-term strategic plans. We look forward to realizing some of the benefits of last year’s hard work in the new fiscal year.”