Genesco Inc.’s shares are in the green today — up nearly 5 percent to $66.40, as of 11 a.m. ET — after the firm significantly surpassed earnings expectations in the third quarter.
The owner of Journeys, Shuh and Lids said its reported net income declined 20 percent year-over-year, to $25.9 million, or $1.30 per diluted share. Despite the drop, adjusted diluted earnings per share, at $1.28, handily topped market watchers’ estimates predicting diluted EPS of 93 cents.
Total comparable sales —including e-commerce — decreased 3 percent, with an 8 percent decrease in the Journeys Group as sluggish sales from the back-to-school period lingered into Q3 for the family footwear retailer. (Comparable sales for the company reflected a 4 percent decrease in same store sales and a 7 percent increase in e-commerce sales.)
Genesco president, chairman and CEO Robert Dennis said he expects the weakness at Journeys — which had been bolstered by consumer shifts away from the retailer’s usual assortment of canvas styles and toward retro looks — to leak into the fourth quarter.
“[We expect] a more challenging fourth quarter at Journeys due to unseasonably warmer weather that has hurt sales and the continued impact of the fashion shift that began to affect Journeys’ sales in the second quarter,” Dennis said.
Revenues for the third quarter decreased 8 percent, to $711 million, missing forecasts for revenues of $716.8 million. The company said the decline reflected the sale of the Lids Team Sports business in the fourth quarter of last year and a decrease of 3 percent in sales from businesses operated during both periods.
Genesco reported a 2 percent comp increase in the Lids Sports Group, flat comparable sales in the Schuh Group, and a 1 percent increase in the Johnston & Murphy Group.
The firm reiterated its full-year guidance as it expects a better-than-expected performance at Lids to offset weakness in the rest of the firm’s businesses.
“The Chicago Cubs’ dramatic win over the Cleveland Indians in Game 7 and the end of the plus-100-year World Series drought provided Lids with an unusually strong start to the fourth quarter,” Dennis noted during the firm’s Q3 conference call. “[But] given recent results, we have become more cautious about Journeys and the rest of our footwear businesses.”
Genesco expects full-year adjusted diluted EPS in the range of $3.80 to $4.00.