Genesco Narrows Q2 Loss, Lifts Full Year Forecast on Improved Sales

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Journeys, one of Genesco's retail brands

Nashville–Genesco, Inc., which operates Journey, Lids and Underground Station, reported Wednesday a narrowed second quarter loss, reflecting strong revenue growth and an increase in comparable store sales.

For the quarter ended July 30, the retailer of branded footwear and apparel said its net loss narrowed to $392,000 or 2 cents a share from $3.18 million or 14 cents a share last year.

Excluding items, earnings from continuing operations were $5.19 million or 22 a share, compared to loss of $0.53 million or 2 cents a share in the year-ago period.

Back to School: ‘Good for Us’

Net sales rose 29% to $470.59 million from $363.65 million a year ago. Total comparable store sales increase 14%, compared with a 3% increase a year ago. By division, Lids Sports Group’s comparable store sales were up 12%, the Journeys Group up 15%, the Johnston & Murphy Group up 17%, and the Underground Station Group up 10%.

Analysts’ average estimates, which typically exclude one-time items, expected the company to earn 10 cents a share on sales of $447.08.

Robert J. Dennis, chairman, president and chief executive officer of Genesco, said, “Our second quarter operating results represent a significant improvement from a year ago,” Robert Dennis, chairman/president/ceo, said.

Genesco said purchased British footwear company Schuh Group Ltd.  in June for about $112.6 million, giving the company a retail foothold in the United Kingdom and better insight into global fashion trends. Genesco recorded $33.9 million in revenue from Schuh Group in the second quarter.

“The combination of 14% organic growth and contributions from acquisitions allowed us to better leverage expenses and achieve much higher profitability in our seasonally slowest period,” Dennis said. “We are pleased with the recent strength of our business and believe we are well positioned for continued sales and earnings gains as we move further into our key selling period.

“The Back-to-School season has been very good for us through August with comparable store sales up 12%. While we expect this trend to moderate as we proceed through the third quarter, this is an encouraging start to the second half of the year,” he added.

But some expenses rose: cost of sales climbed 30% to $233.3 million and selling and administrative expenses were up 27% to $235.3 million.

Looking ahead, Genesco said it expects fiscal 2012 earnings to range between $3.35 and $3.42 a share, up from a previous range of $2.90 to $2.97 a share. (excluding acquisition-related expenses and some other charges.)

Analysts’ average estimate expects full year earnings of $3.31 a share