Genesco takes the Lid off sales in Q2

The CEO of Genesco Inc. says the company had strong sales despite the later start to the back-to-school season and some pressures to right-size inventories.

For the second quarter ended Aug. 1, Genesco reported earnings of $7.6 million, or 32 cents per diluted share, compared to earnings from continuing operations of $4.8 million, or 20 cents per diluted share in the prior-year period. Net sales increased 7% to $656 million. Same store sales increased 7% for the company, 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.

"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%."

It was Journeys, Dennis said, that had to shoulder the biggest impact from the shift in the timing of the back-to-school season and Labor Day holidays. Comps, the CEO said, accelerated in May and June compared to the first quarter trends and then flattened during the end of July as a result of the shifts.

"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% to 5% range for the full year."