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Despite recording lower sales, shares for the U.S. based retailer and wholesaler of footwear, clothing and accessories increased 2.8% on December 2, 2016 with the announcement of its results.
Genesco has reported better than expected third quarter results for Lids Sports Group and Schuh Group. Earnings from continuing operations for the third quarter ended October 29, 2016 reached US$25.9 million, or US$1.30 per diluted share, against US$32.9 million, or US$1.43 per diluted share the prior year.
Fiscal 2017 third quarter results reflect pre-tax items of US$0.6 million for asset impairment charges, offset by US$0.8 million from a lower than normal tax rate due to the release of tax reserves and other items. Adjusted earnings from continuing operations were US$25.5 million, against US$32.2 million in the third quarter of Fiscal 2016. Wall Street’s consensus estimate had been 91 cents.
Net sales decreased 8% in the period to US$711 million from the previous US$774 million, reflecting the sale of the Lids Team Sports business in the fourth quarter of 2015, and a decrease of approximately 3% in sales from businesses operated during both periods, according to the company. Consolidated third quarter 2017 comparable sales, including same store sales and comparable e-commerce and catalogue sales, decreased 3%, with an 8% decrease in the Journeys Group, a 2% increase in the Lids Sports Group, flat comparable sales in the Schuh Group, and a 1% increase in the Johnston & Murphy Group. Comparable sales for the company reflected a 4% decrease in same store sales and a 7% increase in e-commerce sales.
Gross profit was down 4.9% to US$355.6 million, while gross margin expanded 170 basis points (bps) to 50%, due to the development recorded at Lids and Johnston & Murphy businesses.
“Consolidated comparable sales for the third quarter came in ahead of our expectations, thanks to better than expected sales at the Lids Sports Group and Schuh Group”, said Robert J. Dennis, Chairman, President and CEO, Genesco. “Our top-line performance, effective management of selling costs, and share repurchases made during the quarter allowed us to deliver earnings per share ahead of expectations. We were able to offset some of the bottom line pressure caused by negative expense leverage on lower sales versus last year through gross margin expansion, primarily a significant increase in the Lids Sports Group”, he added.
The company reported it bought back a total of 747,000 shares worth US$40 million, and still has US$40 million at its disposal under its share repurchase authorisation of US$100 million.