Genesco Q3 Results Top Estimates; But Trims 2014 Outlook

(RTTNews) - Specialty retailer Genesco, Inc. (GCO) reported Friday a profit for the third quarter that declined 34 percent from last year, reflecting higher charges and lower comparable-store sales. However, both adjusted earnings from continuing operations per share and quarterly revenues topped analysts' expectations.

The company also trimmed its earnings guidance for the full-year 2014, citing a 'slightly more cautious outlook for the balance of the year' amid a choppy retail environment.

"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," Chairman, President and CEO Robert Dennis said in a statement.

The Nashville, Tennessee-based retailer posted earnings from continuing operations of $27.80 million or $1.18 per share for the third quarter, lower than $42.22 million or $1.78 per share in the prior-year quarter.

Excluding items, adjusted earnings from continuing operations for the quarter was $33.82 million or $1.43 per share, compared to $34.47 million or $1.44 per share in the year-ago quarter.

On average, nine analysts polled by Thomson Reuters expected the company to report earnings of $1.38 per share for the quarter. Analysts' estimates typically exclude one-time items.

Net sales for the quarter edged up 0.3 percent to $666.33 million from $664.46 million last year and topped eight Wall Street analysts' consensus estimate of $662.55 million by a whisker.

Genesco, which owns Journeys and Johnston & Murphy shoe stores, said total comparable store sales decreased 1 percent for the quarter over a 5 percent growth reported last year.

Comparable store sales for Lids Sports Group grew 5 percent, while Journeys Group declined 2 percent, Johnston & Murphy group grew 7 percent, and Schuh Group dropped 10 percent.

Sales from Journeys group decreased to $281 million from $301 million, while Lids Sports group's sales grew to $199 million from $186 million a year ago.

Johnston & Murphy group's sales totaled $62 million, up from $53 million last year, and sales edged up for Schuh Group to $92.56 million from $92.25 million last year. Meanwhile, licensed brands sales were $31.63 million, lower than $32.45 million a year ago.

"Comparable sales for the fourth quarter to date through Tuesday, December 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," Dennis added.

Looking ahead to fiscal 2014, the company trimmed its guidance for adjusted earnings from continuing operations to a range of $5.10 to $5.20 per share from the prior forecast of $5.20 to $5.30 per share.

Comparable store sales for the year is now projected to decline in the low single digit range, down from the prior projection for a low single digit range growth. The guidance includes a low single digit comparable store sales increase in the fourth quarter.

Street is currently looking for full-year 2014 earnings of $5.20 per share on annual revenues of $2.64 billion.

Looking further ahead, the company now expects annual sales to hit $3.9 billion and operating margins to be about 9 to 9.5 percent by fiscal 2018 as per its updated our 5-year plan, while also staying the course on its long-term strategic direction.

GCO closed Thursday's regular trading session at $71.37, down $0.36 on a volume of 0.32 million shares. In the past 52-week period, the stock has been trading in a range of $50.33 to $75.84.