Nashville, TN–Genesco Inc. today reported a 60% hike in its second quarter profit, buoyed by improved sales in its cap business.
For the three months ended August 2, Genesco posted a profit of $7.5 million, or 32 cents a share, up from a year-earlier profit of $4.7 million, or 20 cents a share. Excluding certain items, adjusted earnings for the period were 36 cents a share, up from 34 cents a share a year earlier.
Genesco has been trying to turn around its hat business, Lids, which posted a $3.4 million operating loss in the previous quarter. This time around the mall-based retailer posted a $5.6 million operating profit in the latest quarter.
Reiterates Full Year Forecast
Net sales increased 7% to $656 million from $615 million in the second quarter last year. Comparable sales increased 7%, with a 4% increase in the Journeys Group, an 8% increase in the Lids Sports Group, an 8% increase in the Schuh Group, and a 10% increase in the Johnston & Murphy Group. Comparable sales for the Company reflected a 5% increase in same store sales and a 26% increase in e-commerce sales.
Analysts had anticipated 24 cents in earnings and $651 million in sales.
“The second quarter saw strong comparable sales growth despite the later start to the back-to-school selling season,” said Robert J. Dennis, chairman, president and chief executive officer of Genesco. “Our top-line performance helped offset expected gross margin pressure from our continued efforts to right size the Lids Sports Group’s inventory levels.
“The third quarter is off to a strong start in spite of a later Labor Day, aided by the ramp up in the start of school in many areas of the country and the corresponding tax free shopping periods. Comparable sales for the month of August increased 6%.
“Based on our second quarter results and start to the third quarter balanced with some uncertainty around the extent of gross margin pressure that will be necessary to complete the right-sizing of the Lids Sports Group’s inventory, Dennis reiterated the company’s full year outlook, calling for adjusted earnings per share in the range of $4.70 to $4.80, with comp store sales growth between 4% and 5%.