Genesco Q2 Profit Down 44%, Misses View; Lowers 2015 Outlook

(RTTNews) - Specialty retailer Genesco, Inc. (GCO) on Thursday reported a 44 percent decline in profit for the second quarter from last year, reflecting lower sales and margins at the Lid Sports Group. In addition, the prior-year results include a gain on lease termination.

Adjusted earnings per share for the quarter missed analysts expectations, while revenues beat their estimates. Citing its second-quarter performance and lower expectations for the balance of the year at Lids Sports Group, the company lowered its fiscal 2015 earnings forecast.

Robert Dennis, chairman, president and chief executive officer of Genesco, said, "We are disappointed with our second quarter earnings performance. Solid comparable sales gains and a strong topline performance in our direct businesses were not enough to offset a sales and gross margin shortfall versus plan at the Lids Sports Group. The third quarter is off to a solid start, with consolidated comparable sales for the Company up 4% through August 23, 2014."

The Nashville, Tennessee-based company's net earnings for the second quarter were $4.69 million or $0.20 per share, down from $8.34 million or $0.36 per share in the prior year.

The latest quarter's results reflect expenses of $3.6 million, or $0.14 per share after tax. This includes $2.2 million 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.

The prior-year quarter's results reflected expenses of $6.6 million, or $0.20 per share after tax, but also included $7.1 million of income that reflects gain on a lease termination.

Adjusted earnings from continuing operations for the latest quarter were $8.02 million or $0.34 per share, compared to $13.19 million or $0.56 per share in the year-ago period. On average, eleven analysts polled by Thomson Reuters expected the company to report earnings of $0.55 per share for the quarter. Analysts' estimates typically exclude one-time items.

Net sales for the quarter grew 7 percent to $615.47 million from $574.75 million in the same period last year. Analysts had a consensus revenue estimate of $613.94 million.

Comparable sales for the quarter, including same store sales and comparable e-commerce and catalog sales, increased 2 percent, compared to a decrease of 2 percent in the year-ago period.

The latest quarter's comparable sales results include a 5 percent rise in the Journeys Group, a 1 percent increase in the Schuh Group, and a 2 percent increase in the Johnston & Murphy Group. However, comparable sales declined 2 percent in the Lids Sports Group.

Looking ahead to fiscal 2015, Genesco lowered its outlook for adjusted earnings to a range of $5.10 to $5.20 per share from the prior range of $5.40 to $5.55 per share.

The revised outlook represents flat to 2 percent increase over fiscal 2014's adjusted earnings per share of $5.09. Analysts expect the company to earn $5.47 per share for the year.

GCO closed Wednesday's trading at $88.67, down $0.58 or 0.65 percent on a volume of 221,792 shares.