Genesco’s Footwear Focus Had Been Going Well — Now the Coronavirus Is Hurting Its Airport Stores

With one year as a footwear-focused firm under its belt, Genesco Inc. is off and running. Although, like many of its peers, it sounded the alarm on coronavirus impacts down the line.

The company, parent to Johnston & Murphy, Schuh and teen mall staple Journeys, today posted fourth-quarter profits that trumped expectations.

On an adjusted basis, Genesco’s earnings per share climbed 42% year over year to $3.09, besting forecasts that called for adjusted EPS of $2.74. Sales, meanwhile, held steady year on year at $6.78 billion, just below analysts’ bets of $6.79 billion. Comparable sales across all businesses Improved 1%.

Genesco president and CEO Mimi Vaughn said the company’s first year as a shoe-focused firm “was filled with many notable successes and important accomplishments.”

“We delivered strong results, building on the turnaround in profitability that began in fiscal 2019,” she added in a statement. “This included positive consolidated comparable sales growth in every quarter, even as we faced more challenging comparisons, and positive store comps for the year.”

Vaughn attributed Genesco’s profit growth to positive comps as well as gross margin expansion, the firm’s cost reduction efforts and share repurchase activity.

Still, amid what the World Health Organization Wednesday declared a global pandemic, Genesco’s chief noted that the company is feeling the business effects of the coronavirus in its airport stores as well as at other tourist-heavy locations globally, including in the U.S. and the U.K. For that reason and partially due to unseasonably warm weather in parts of the United States, Vaughn said the first quarter has started slowly for Genesco’s domestic footwear businesses.

“Despite these near-term headwinds, we are confident in the strategic course we have set for Genesco,” she said. “With a very healthy balance sheet, we have the flexibility to invest for growth and new capabilities in our current businesses, pursue new growth opportunities and return cash to our shareholders.”

By division, comps at Journeys gained 1% in Q4 while Schuh’s advanced 3% and Johnston and Murphy dipped 3%.

Looking ahead, Genesco predicts its fiscal year 2021 sales will increase 3% to 6% including sales from its recent Togast acquisition. It expects comparable sales to be down 1% to up 2%, and adjusted diluted earnings per share from continuing operations in the range of $4.90 to $5.40 with an expectation that earnings for the year will be near the midpoint of the range.

Genesco shares closed down 9.33% to $24.11 on Wednesday.

Genesco in December announced its acquisition of New York-based Togast LLC, which specializes in the design, sourcing and sale of licensed footwear and is the distributor for Levi’s footwear in the United States. The move had come a year after Genesco offloaded Lids Sports Group to focus on footwear. After several years of struggling sales at the division, the athletic headwear business sold for $100 million in cash to FanzzLids Holdings, with sports licensing and e-commerce firm Fanatics Inc. making a minority investment in FanzzLids as part of a commercial arrangement connected with the deal.

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