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Genesco Q2 Loss Narrower Than Expected, Comparable Sales Fall 2%
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Genesco Inc. (GCO - Free Report) posted second-quarter fiscal 2025 results, with a narrower-than-expected loss per share and sales beat. Quarterly results benefited from improved Journeys business and diversified product assortment. The Journeys business gained from the early back-to-school demand, which boosted comparable sales (comps). Its cost-saving program is on track to achieve a reduction in the range of $45-$50 million in the annualized run rate by the end of fiscal 2025.
Shares of this Zacks Rank #1 (Strong Buy) company have risen 2.5% in the past six months against the industry’s 4.6% decline.
GCO’s Quarterly Performance
This retailer of branded footwear and accessories posted an adjusted quarterly loss of 83 cents per share, which outperformed the Zacks Consensus Estimate of a loss of $1.12 per share. Also, the bottom-line figure was narrower than the loss per share of 85 cents in the year-earlier quarter.
Net sales of the company inched up 0.4% to $525.2 million and beat the Zacks Consensus Estimate of $512 million. The year-over-year increase in the top line includes nearly $20-$25 million owing to the shift of a strong week of back-to-school sales from the third quarter of the prior fiscal year to the reported quarter and higher e-commerce comps, somewhat offset by lower store sales, the impact of net-store closings and decline in wholesale sales.
Genesco reported a 2% fall in consolidated comps. Further, it recorded a 4% drop in same-store sales while comps via the e-commerce platform rose 8%.
On a segmental basis, comps fell 1% at the Journeys Group, 2% at the Schuh Group and 5% at Johnston & Murphy Group.
Adjusted gross profit was down 1.5% to $245.8 million while the adjusted gross margin contracted 90 basis points (bps) to 46.8%. The gross margin fell owing to a rise in the mix of sale products at Schuh and product mix change at Journeys.
Selling and administrative expenses were down 1.7% to $255.1 million. Also, as a percentage of sales, the same fell 100 bps to 48.6%, thanks to lower occupancy expenses, favorable change in few non-income taxes, reduced royalty expenses and decline in performance-based compensation expenses, partly offset by higher selling salaries and depreciation expenses.
Adjusted operating income was $9.3 million compared with $10 million in the year-ago quarter.
Genesco’s Financial Snapshot
Genesco ended the quarter with approximately $45.9 million of cash, $77.8 million of long-term debt (excluding current maturities) and $532.6 million of shareholders’ equity. As of Aug. 3, 2024, inventories were $450.2 million, declining 8% year over year, owing to lower inventory for Journeys, Schuh and Johnston & Murphy, somewhat offset by a rise in Genesco Brands.
During the fiscal second quarter, Genesco incurred $8 million as capital expenditures. It opened five stores while closing 12 stores in the quarter. It is on track to evaluate up to 50 Journeys store closures in fiscal 2025. The company exited the quarter with 1,314 stores compared with 1,375 stores at the end of the year-earlier quarter.
Further, the company bought back 381,711 shares worth $9.3 million during the quarter. It had $42.8 million left under its expanded share repurchase authorization.
What to Expect From GCO in Fiscal 2025?
Given the choppy operating backdrop, the near-term outlook for the other businesses, except Journeys, is cautious.
Management now projects total sales to decline in the band of 1-2% year over year, or flat to down 1% excluding the 53rd week compared with the previous expectations of a total sales drop of 2-3%, or down 1-2% excluding the 53rd week in fiscal 2024. It still expects adjusted earnings from continuing operations to be in the band of 60 cents-$1 per share. The view reflects no further share repurchases and a tax rate of 27%.
The company has a trailing four-quarter earnings surprise of 7.1%, on average.
The Zacks Consensus Estimate for Boot Barn’s current financial-year sales indicates growth of 10.7% from the year-ago figure.
Abercrombie, a leading casual apparel retailer, currently sports a Zacks Rank of 1. ANF delivered an earnings surprise of 28.9% in the last reported quarter.
The Zacks Consensus Estimate for Abercrombie’s current financial-year sales indicates growth of 11.5% from the year-ago figure.
Deckers, a footwear and accessories dealer, currently carries a Zacks Rank #2 (Buy). DECK delivered an average earnings surprise of 47.2% in the trailing four quarters.
The Zacks Consensus Estimate for Deckers’ current financial-year sales indicates growth of 11.5% from the year-ago figure.
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Genesco Q2 Loss Narrower Than Expected, Comparable Sales Fall 2%
Genesco Inc. (GCO - Free Report) posted second-quarter fiscal 2025 results, with a narrower-than-expected loss per share and sales beat. Quarterly results benefited from improved Journeys business and diversified product assortment. The Journeys business gained from the early back-to-school demand, which boosted comparable sales (comps). Its cost-saving program is on track to achieve a reduction in the range of $45-$50 million in the annualized run rate by the end of fiscal 2025.
Shares of this Zacks Rank #1 (Strong Buy) company have risen 2.5% in the past six months against the industry’s 4.6% decline.
GCO’s Quarterly Performance
This retailer of branded footwear and accessories posted an adjusted quarterly loss of 83 cents per share, which outperformed the Zacks Consensus Estimate of a loss of $1.12 per share. Also, the bottom-line figure was narrower than the loss per share of 85 cents in the year-earlier quarter.
Net sales of the company inched up 0.4% to $525.2 million and beat the Zacks Consensus Estimate of $512 million. The year-over-year increase in the top line includes nearly $20-$25 million owing to the shift of a strong week of back-to-school sales from the third quarter of the prior fiscal year to the reported quarter and higher e-commerce comps, somewhat offset by lower store sales, the impact of net-store closings and decline in wholesale sales.
Genesco Inc. Price, Consensus and EPS Surprise
Genesco Inc. price-consensus-eps-surprise-chart | Genesco Inc. Quote
Genesco reported a 2% fall in consolidated comps. Further, it recorded a 4% drop in same-store sales while comps via the e-commerce platform rose 8%.
On a segmental basis, comps fell 1% at the Journeys Group, 2% at the Schuh Group and 5% at Johnston & Murphy Group.
Adjusted gross profit was down 1.5% to $245.8 million while the adjusted gross margin contracted 90 basis points (bps) to 46.8%. The gross margin fell owing to a rise in the mix of sale products at Schuh and product mix change at Journeys.
Selling and administrative expenses were down 1.7% to $255.1 million. Also, as a percentage of sales, the same fell 100 bps to 48.6%, thanks to lower occupancy expenses, favorable change in few non-income taxes, reduced royalty expenses and decline in performance-based compensation expenses, partly offset by higher selling salaries and depreciation expenses.
Adjusted operating income was $9.3 million compared with $10 million in the year-ago quarter.
Genesco’s Financial Snapshot
Genesco ended the quarter with approximately $45.9 million of cash, $77.8 million of long-term debt (excluding current maturities) and $532.6 million of shareholders’ equity. As of Aug. 3, 2024, inventories were $450.2 million, declining 8% year over year, owing to lower inventory for Journeys, Schuh and Johnston & Murphy, somewhat offset by a rise in Genesco Brands.
During the fiscal second quarter, Genesco incurred $8 million as capital expenditures. It opened five stores while closing 12 stores in the quarter. It is on track to evaluate up to 50 Journeys store closures in fiscal 2025. The company exited the quarter with 1,314 stores compared with 1,375 stores at the end of the year-earlier quarter.
Further, the company bought back 381,711 shares worth $9.3 million during the quarter. It had $42.8 million left under its expanded share repurchase authorization.
What to Expect From GCO in Fiscal 2025?
Given the choppy operating backdrop, the near-term outlook for the other businesses, except Journeys, is cautious.
Management now projects total sales to decline in the band of 1-2% year over year, or flat to down 1% excluding the 53rd week compared with the previous expectations of a total sales drop of 2-3%, or down 1-2% excluding the 53rd week in fiscal 2024. It still expects adjusted earnings from continuing operations to be in the band of 60 cents-$1 per share. The view reflects no further share repurchases and a tax rate of 27%.
Other Key Picks
We have highlighted three other top-ranked stocks, namely Boot Barn (BOOT - Free Report) , Abercombie (ANF - Free Report) and Deckers (DECK - Free Report) .
Boot Barn, a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories, currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company has a trailing four-quarter earnings surprise of 7.1%, on average.
The Zacks Consensus Estimate for Boot Barn’s current financial-year sales indicates growth of 10.7% from the year-ago figure.
Abercrombie, a leading casual apparel retailer, currently sports a Zacks Rank of 1. ANF delivered an earnings surprise of 28.9% in the last reported quarter.
The Zacks Consensus Estimate for Abercrombie’s current financial-year sales indicates growth of 11.5% from the year-ago figure.
Deckers, a footwear and accessories dealer, currently carries a Zacks Rank #2 (Buy). DECK delivered an average earnings surprise of 47.2% in the trailing four quarters.
The Zacks Consensus Estimate for Deckers’ current financial-year sales indicates growth of 11.5% from the year-ago figure.