03 Sep Genesco’s Q2 Profits Leap
Genesco Inc. reported second-quarter earnings climbed 58.3 percent to $7.6 million, or 32 cents per share, easily exceeding Wall Street’s consensus target.
Second quarter results in the latest period reflect pretax items of $1.8 million, or 4 cents per share after tax, including $0.6 million of expenses related to deferred purchase price payments in connection with the acquisition of Schuh Group Limited, which are required to be expensed as compensation because the payment is contingent upon the payees’ continued employment; and $1.2 million for asset impairment charges and network intrusion expenses. Fiscal 2015 second quarter results reflected pretax items of $3.6 million, or $0.14 per share after tax, including $2.2 million of expenses related to deferred purchase price payments in connection with the acquisition of Schuh Group Limited and $1.4 million in network intrusion expenses, asset impairment charges and other legal matters.
Adjusted for the items described above in both periods, earnings from continuing operations were $8.5 million, or 36 cents per diluted share, for the second quarter of fiscal 2016, compared to $8.0 million, or 34 cents per diluted share, for the second quarter of fiscal 2015. Wall Street’s consensus estimate of 25 cents a share.
Net sales for the second quarter of fiscal 2016 increased 7 percent to $656 million from $615 million in the second quarter of fiscal 2015. Comparable sales in the second quarter of 2016 increased 7 percent for the company, with a 4 percent increase in the Journeys Group, an 8 percent increase in the Lids Sports Group, an 8 percent increase in the Schuh Group, and a 10 percent increase in the Johnston & Murphy Group. Comparable sales for the company reflected a 5 percent increase in same store sales and a 26 percent increase in e-commerce sales.
“The second quarter saw strong comparable sales growth despite the later start to the back-to-school selling season,” said Robert J. Dennis, Genesco chairman, president and CEO. “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 percent.
“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, we are reiterating our outlook for fiscal 2016, which calls for adjusted earnings per share in the range of $4.70 to $4.80. Consistent with previous guidance, these expectations do not include expected non-cash asset impairments and other charges, estimated in the range of $8.1 million to $8.6 million pretax, or $0.22 to $0.23 per share after tax, for the full fiscal year. These expectations also do not reflect expenses related to Schuh deferred purchase price payments as described above, which are $1.5 million, or $0.06 per diluted share, for the full year. This guidance assumes comparable sales increases in the 4 percent to 5 percent range for the full year.”