[ACCESSWIRE]
Upcoming AWS Coverage on Stage Stores Post-Earnings Results
LONDON, UK / ACCESSWIRE / December 9, 2016 / Active Wall St. announces its post-earnings coverage on Genesco Inc. (NYSE: GCO). The company posted its third quarter fiscal 2017 (Q3 FY17) earnings on December 02, 2016. This retailer of branded footwear, headwear, and accessories posted an 8% decline in sales due to sale of its business, while the company reiterated its Q4 FY17 earnings outlook. Register with us now for your free membership at: http://www.activewallst.com/register/.
One of Genesco's competitors within the Apparel Stores space, Stage Stores, Inc. (NYSE: SSI), reported on November 17, 2016, its financial results for the third quarter ended October 29, 2016. AWS will be initiating a research report on Stage Stores in the coming days.
Today, AWS is promoting its earnings coverage on GCO; touching on SSI. Get our free coverage by signing up to:
http://www.activewallst.com/registration-3/?symbol=GCO
http://www.activewallst.com/registration-3/?symbol=SSI
Earnings Reviewed
For the third quarter ended October 29, 2016, Genesco reported that net sales declined 8% to $711 million from $774 million in Q3 FY16. The company attributed the decline on the sale of the Lids Team Sports business in Q4 FY16 and a decrease of approximately 3% in sales from businesses operated during both periods. Excluding Lids Team Sports from last year, total sales were down 3% for Q3 FY17, which includes a 3% decrease in consolidated comparable (comps) sales and a 4% increase in wholesale sales. The company's net sales were below Wall Street's projections of $714.3 million.
Genesco reported earnings from continuing operations for Q3 FY17 of $25.9 million, or $1.30 per diluted share, compared to earnings from continuing operations of $32.9 million, or $1.43 per diluted share, for the prior year's same quarter. Excluding charges related to pretax items of $0.6 million, or $0.02 per diluted share after tax, for asset impairment charges, offset by $0.8 million, or $0.04 per diluted share gain, from a lower than normal tax rate due to the release of tax reserves and other items, the company's earnings from continuing operations were $25.5 million, or $1.28 per diluted share, for Q3 FY17. The company's earnings numbers handily beat analysts' expectations of $0.91 per share.
Comparable Sales
During Q3 FY17, Genesco's consolidated comps, including same store sales and comparable e-commerce and catalog sales, decreased 3% - with an 8% decrease in the Journeys Group, a 2% increase in the Lids Sports Group, flat comparable sales in the Schuh Group, and a 1% increase in the Johnston & Murphy Group. Comparable sales for the Company reflected a 4% drop in same store sales, while e-commerce sales improved 7%.
For Q3 FY17, the company's gross margin expanded 170 basis points to 50%, the improvement was driven by Lids and Johnston & Murphy, where better results offset declines in other businesses. Gross margin for Lids improved 790 basis points in the reported quarter, partly reflecting the sale of Lids Team Sports which was a lower margin business. However the company also noted a robust improvement in the retail business, 410 basis points in total, due to a lower level of promotions this year and much stronger full-price sales. Gross margin was up 100 basis points for Johnston and Murphy due to lower markdowns and lower expense to deliver product.
For Genesco's Journeys division gross margin decreased 120 basis points compared to the year ago same quarter. Schuh's gross margin was 110 basis points lower on a y-o-y basis, driven by both mix, with athletic as a higher percentage of the overall assortment, and higher markdowns reflecting Schuh's more aggressive promotional stance.
Balance Sheet
At the end of Q3 FY17, Genesco's total inventory, excluding Lids Team Sports was down 1% to $720 million, with a 3% decline in sales and 2% increase in retail square footage. Without Little Burgundy, Journeys inventory was down 5% on a y-o-y basis. Including Little Burgundy, Journeys inventory fell 1% on a square footage increase of 6% and a sales decrease of 2%. Inventory for the Lids retail business was down 2% on a square footage decrease of 6% and a 1% decline in sales. The company's capital expenditures were $25 million and depreciation and amortization was $19 million for Q3 FY17. Meanwhile, Genesco repurchased 747,000 shares for roughly $40 million at an average price of $53.34 per share during the reported quarter. As of October 29th, 2016, Genesco had approximately $30.5 million of cash and cash equivalents and approximately $214.1 million of long-term debt.
Earnings Outlook
For Q4 FY17, Genesco reiterated its expectation for adjusted earnings per share in the range of $3.80 to $4.00. The company's top-line assumption is for sales to be down 5% to 6% for fiscal year 2017, reflecting the Lids Team Sports sale, the impact of a stronger dollar on exchange rates, and a consolidated comp at a negative 2% to 3%. Excluding Macy's, by the end of FY17, Genesco plans to open 88 new stores concentrated in Journeys Kidz, and to have closed 91 stores for a net 3 fewer stores.
Stock Performance
On December 08th, 2016, Genesco's share price finished yesterday's trading session at $71.15, marginally up 0.35%. A total volume of 407.29 thousand shares exchanged hands, which was higher than the 3 months average volume of 261.96 thousand shares. The stock has surged 27.74% and 46.61% in the last month and past three months, respectively. Furthermore, since the start of the year, shares of the company have rallied 25.20%. The stock is trading at a PE ratio of 15.05.
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