Genesco, Inc.

Genesco, Inc. (GCO - Snapshot Report) is bucking the retail gloom as sales remain robust. The company raised full year guidance in August. GCO is trading at 9.6x forward earnings.

Company Description

Genesco sells footwear, headwear and accessories in 2,150 stores in the United States and Canada. The company's brands include Journeys, Journeys Kidz, Johnston & Murphy, Underground Station, Hatworld, Lids, Hat Shack, Hat Zone, Head Quarters and Cap Connection.

The company, a Zacks #1 Rank (Strong Buy), also sells merchandise on various Internet web sites and sells footwear at wholesale under its Johnston & Murphy brand and under the licensed Dockers brand.

Genesco Beats Wall Street Estimates for the Second Quarter by 350%

On Aug 28, Genesco reported second-quarter 2009 earnings that surprised on estimates by 14 cents. Net income was a loss of $4.9 million, or 27 cents per share. The results include a $6.4 million income tax liability related to the settlement of litigation with The Finish Line Inc.

Adjusted for items in this quarter and the second-quarter 2007, GCO earned $3.6 million, or 18 cents, compared to break even in net income and EPS in the year ago period. Analysts expected 4 cents per share.

Sales jumped 8% to $353 million from $328 million in the second quarter a year ago. Comparable store sales rose 4% year-over-year.

The Hat World Group was particularly strong, with sales climbing 13% to $102 million. Same store sales rose 7% with urban stores rising 9% compared to a 6% gain for non-urban stores. Core and fashion Major League Baseball merchandise performed well.

Sales also rose 9% in the Journeys segment with same store sales up 2%. The Licensed Brands segment, which includes the Dockers Footwear line, gained 16% year over year. Dockers Footwear remained strong in the specialty shoe retail chains.

The Underground Station segment also saw a jump in same store sales of 9% and footwear unit comps rose 13%.

Only the Johnston & Murphy segment underperformed with same store sales declining 3% which the company said was due to the challenging economic environment.

Genesco Raises 2009 Guidance

Given the solid sales numbers at several of its segments, Genesco is bullish about the rest of 2009. It raised full year 2009 guidance to the range of $2.15 - $2.20 from its May forecast of $2.09 - $2.19.

Consensus Estimates Rise for the Full Year

Given the company's full year guidance, covering analysts have been raising estimates. Consensus estimates jumped 7 cents to $2.20, the high end of the company's forecast range, in the last 3 months.

Value Fundamentals

Genesco has a forward P/E of 9.66. Its price-to-book is 1.07. The company has a stellar 5-year average return on equity of 16.72%.

Read the full analyst report on GCO