Genesco tops $3 billion mark in 2015
Specialty retailer Genesco surpassed a significant sales milestone last year, but the operator of nearly 2,700 stores faced some self-imposed profitability challenges as it positioned the business for 2016.
Nashville-based Genesco, best known for its Lids and Journeys stores, said sales increased 4.4% to $932 million and same store sales increased 4% during the quarter ended Jan. 30. Comparable sales reflected a 2% increase in same store sales and a 21% increase in e-commerce sales.
While those are respectable figures, the growth was influenced by promotional and clearance activity which depressed margins and hurt profits.
"Fourth quarter earnings came in just below our guidance range as a result of gross margin pressure related to our decision to make a final, aggressive push to complete our year-long program to right-size inventory in the Lids Sports Group and similarly aggressive efforts to clear inventory after a slow holiday selling season at Schuh (stores),” said Robert Dennis, Genesco’s chairman, president and CEO."Additionally, a later start to IRS tax refunds than in the previous year reduced comparable sales at the end of the quarter.”
The overall results were disappointing, but Dennis said the company is encouraged by the strong performance of Journeys and Johnston & Murphy and the work done to prepare the company for sustained, profitable growth going forward.
"Comparable sales for the first quarter through March 5, 2016 increased 3% from the same period last year, reflecting in part the impact on early February sales from the delay in receipt of income tax refunds by customers, and recovery later in the month as tax refunds began,” Dennis said.
In the fourth quarter, profits from continuing operations declined to $46.7 million, or $2.15 a share, from $51.8 million, or $2.18 a share, the prior year. Profits declined more severely when results were adjusted to include various non-recurring expenses and one-time gains. Adjusted profits fell to $45.8 million, or $2.11 a share, compared to $54.7 million, or $2.30 a share. Full year sales increased 5.7% to $3 billion and earnings totaled $97.1 million, or $4.22 a share, compared to $99.4 million, or $4.19 a share.
Looking ahead, Genesco is projecting improved margins at the Lids Sports Group and same store sales in the range of 1% to 2% will allow the company to grow adjusted earnings per share by 12% to 14% to a range of $4.80 to $4.90.