Nashville, TN— Genesco Inc., owner of Journeys and Lids etc., reported Friday that its third quarter profit fell 34% as charges increased and comp sales dropped. Still, the apparel, footwear and accessories retailer posted adjusted earnings and sales that beat analyts’ estimates.
For the quarter ended Nov. 2, Genesco had earnings of $27.8 million, or $1.18 a share, compared with $42.1 million, or $1.76 a share, a year ago. Excluding charges related to its acquisition of Schuh Group, deferred bonuses and other items, adjusted earnings were $1.43 a share. That was better than analysts’ average estimate for $1.38 a share.
Net revenue rose 0.3% to $666.3 million from $664.5 million, that too was ahead of analysts’ estimate for $663 million in sales.
Flat Comps as Far in Q4
Comparable store sales decreased by 1%. By division, there was a 5% increase in the Lids Sports Group, a 2% decrease in the Journeys Group, a 10% decrease in the Schuh Group, and a 7% increase in the Johnston & Murphy Group.
Gross margin narrowed to 49.8% from 50.3% a year ago. Selling and administrative expenses rose 1.4% and as percentage of sales, selling and administrative expenses expanded 50 basis points to 42.6%.
“As we expected, easier comparisons in our U.S.-based retail businesses as the third quarter progressed allowed for a modest improvement in consolidated comparable sales relative to recent quarters and overall results in line with our expectations,” said Robert J. Dennis, chairman.
Moreover, Dennis said that comp sales for the fourth quarter through Dec. 3 were flat. “Because the retail environment remains somewhat choppy and the calendar shifts make meaningful comparisons difficult, we are adopting a slightly more cautious outlook for the balance of the year,” he added.
As a result, Genesco again cut its per-share earnings estimate for the year to $5.10 to $5.20, down from its previous estimate $5.20 to $5.30. Also, comp sales for the year are expected to decline but post a low single digit figure for the fourth quarter.
“We continue to focus on successfully navigating the current headwinds while staying the course on our long-term strategic direction,” Dennis said. “We recently updated our 5-year plan and now expect annual sales to hit $3.9 billion and operating margins to be approximately 9% to 9.5% by Fiscal 2018.”