Choppy environment cause for concern at Genesco
Genesco, the company behind Lids and Journeys, is the latest company to express concern about the holiday season and lower fourth-quarter expectations after producing a solid third-quarter performance.
The operator of roughly 2,500 footwear, apparel, accessories and headwear stores said its third-quarter sales were essentially flat with the prior year at roughly $666 million while same-store sales fell 1%. A 5% comp increase at the 1,002 unit Lids division was offset by a 2% comp decline at Journeys. The company also saw a 10% decrease at its Schuh Group while the Johnston & Murphy footwear group increased 7%. Profits from continuing operations adjusted to exclude a litany of non-recurring items were $33.8 million, or $1.43 a share, compared to $34.5 million, or $1.44 the prior year.
"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,” said Robert Dennis, Genesco chairman, president and CEO. "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.”
The company said its expects full-year adjusted profits from continuing operations to range from $5.10 to $5.20, 10 cents lower than its earlier forecast range.
"We continue to focus on successfully navigating the current headwinds while staying the course on our long-term strategic direction,” Dennis said. “We recently updated our five year plan and now expect annual sales to hit $3.9 billion and operating margins to be approximately 9% to 9.5% by fiscal 2018. We remain confident in our strategic position and our ability to achieve our growth targets and generate increased value for our shareholders."