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Genesco Reports Negative Comps

GCO FINL

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Breaking its streak of reporting positive comparable-store sale (comps) results for several quarters, the Nashville, Tennessee-based Genesco Inc. (GCO - Snapshot Report) witnessed a 2% decline in the same for the fourth-quarter-to-date period ended Jan 12, 2013. The company had experienced an impressive comps growth of 13% in the year-ago period.

The dip in comps was primarily due to weak comps performance at the company’s Lids Sports Group and Johnston & Murphy Group divisions, which fell 12% and 1%, respectively. However, Genesco’s Journeys Group and Schuh Group divisions’ comps improved 2% and 7%, respectively.

Sales at the company’s fastest-growing e-Commerce and catalog direct sales businesses surged 17% during the period under review. Including both stores and direct sales, Genesco’s total comparable sales inched down 1% compared with 13% growth registered in the year-ago comparable period.

However, the company has revealed that sales have improved in January so far. Currently, it has healthy inventory level and its merchandises are being sold out at stipulated time.

The company is in the process of integrating its retail stores and e-Commerce operations, and hence believes that total comparable sales provide better assessment of its retail performance.

However, the company  lowered its earnings guidance range for the fiscal year ending on Feb 2, 2013, due to current sales trends and a delay in federal tax refunds, which may significantly affect its sales in the last week of January, shifting it to the next quarter.

The company now expects its earnings per share for the fiscal to be at the lower half of its earlier guidance range of $5.00–$5.08. The current Zacks Consensus Estimate is pegged at $5.03 per share for the fiscal.

Genesco sells footwear, headwear, sports apparel and accessories in the U.S., Canada, the United Kingdom and the Republic of Ireland. Its principal brands Journeys, Journeys Kidz, Shi by Journeys, Underground by Journeys, Schuh, Lids, Lids Locker Room, Johnston & Murphy, compete with assorted apparel store chains like Finish Line Inc. (FINL - Snapshot Report) and Weyco Group Inc. .

Genesco currently retains Zacks Rank #3 (Hold). Moreover, we maintain a long term Neutral recommendation on this retailer.

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