[ACCESSWIRE]
LONDON, UK / ACCESSWIRE / September 8, 2016 / Active Wall St. announces its post-earnings coverage on Genesco Inc. (NYSE: GCO). The company released its second quarter fiscal 2017 results on September 01st, 2016. The apparel maker reported a drop in revenue in its second quarter results and gave a disappointing full-year outlook. Register with us now for your free membership at: http://www.activewallst.com/register/.
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Earnings Reviewed
For the three months ended on July 30, 2016, Genesco reported net earnings of $14.50 million, up from a year-earlier profit of $7.5 million. On a reported basis, including one-time items, the company's earnings from continuing operations were $0.72 per share compared with $0.32 per share in the year-ago quarter; the improvement in the earnings per share was partly attributed to a 14% decline in the number of shares outstanding. Excluding certain items, earnings for the period were $0.34 per share, which was above analysts' estimates of $0.32 per share. The company's net sales dropped 4.6% to $625.56 million, thus missing analysts' estimate of $641 million. The year-over-year decline in top-line was due to the sale of the Lids Team Sports business in Q4 FY16.
Comps
During Q2 FY17, Genesco's total comparable sales (Comps) fell 1%. The company recorded a 2% decrease in store comps, while comps via its ecommerce platform slipped 1%. On a segmental basis, the company recorded a 4% drop in Comps at the Journeys Group. On the earnings call, the company stated that Journeys' Comps were lacklustre in May 2016, which is a low volume month and then got progressively worse through June, July, and then August. The company have observed Journeys' consumers shift away from several of the fashion trends, something Journeys has experienced many times before, but the speed and the intensity of the shift in this instance are more pronounced than it has ever seen in the past.
Brexit Ruins Sales in Schuh
Genesco noted that its Schuh unit had a solid start to Q2 FY17, with positive comps in May and June helped by warm weather in the U.K .However, concurring with the UK's decision at the end of June to leave the European Union, consumer confidence dipped and the retail environment turned challenging again for Schuh. There was a drop in traffic conversion in Schuh's retail stores, which led to a 1% comp decline in Q2 FY17. The challenging quarter for Journeys and Schuh was offset in part by considerable improvement in Lids Sports Group and continued strength at Johnston & Murphy.
Margins
Genesco's Q2 FY17 gross margin came in at 50.3%, improving by 150 basis points. For its Lids unit, gross margin improved 480 basis points, partly reflecting the sale of Lids Team Sports, which was a lower-margin business. Schuh margin was 90 basis points lower than last year, driven primarily by mix with athletic as a higher percentage of the overall assortment.
Financials
As of July 30, 2016, Genesco had $41.47 million of cash and cash equivalents and $124.98 million of long-term debt (excluding current maturities). The company's inventory at the end of the reported quarter totaled $663.7 million compared to $734.8 million at the end of the year ago quarter.
Outlook
For FY 2016, Genesco is forecasting adjusted earnings in the range of $3.80 per share to $4 per share, down from its previous guidance of between $4.80per share and $4.90 per share. Analysts estimate earnings of $4.91 per share.
Stock Performance
Genesco's shares were up 1.33%, closing Wednesday's session at $49.40 on a total volume of 343.28 thousand shares. The stock is trading at a PE ration of 11.40,
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SOURCE: Active Wall Street
