World Footwear

Companies

Genesco cuts again full year outlook

Dec 6, 2022 United States
Genesco cuts again full year outlook
The Nashville-based footwear group, which posted a third quarter net sales growth of 1% year-over-year, lowered again its annual outlook amid higher industry-wide promotional activity and cost pressures
"We are pleased that our third quarter results were largely in line with our expectations given the ongoing macroeconomic volatility. Journeys sales accelerated nicely in August and early September following a slower start to back-to-school, as our team successfully captured the demand that spiked when consumers had a reason to buy, behaviour US consumers have increasingly displayed in the current inflationary environment. Schuh and Johnston & Murphy's sustained strength helped elevate constant currency sales above a very strong period a year ago. While we did a good job growing top-line and protecting gross margins during back-to-school, a sluggish start to November combined with higher industry-wide promotional activity and cost pressures has led us to adopt a more conservative view on the balance of this year", commented Mimi E. Vaughn, Genesco board chair, president, and chief executive officer.

Third Quarter Results

In the third quarter of fiscal 2023, Genesco reported a net sales increase of 1%, reaching 604 million US dollars, on a comparable basis to net sales of 601 million US dollars in the same period of last fiscal year. This result was driven by "increased wholesale sales and a total comparable sales increase of 3%, partially offset by foreign exchange pressure in the Schuh business resulting from the strengthening dollar".  When compared to the pre-pandemic period (third quarter of fiscal 2020), the company's net sales grew by 12% to 537 million US dollars and e-commerce sales rose by almost 75%.

Overall, in the three months to the 29th of October, net sales were flat at Journeys, amounting to 380.6 million US dollars and decreased by 13% at Schuh, totalling 104.8 million US dollars, as compared to the same period of fiscal 2022. Instead, in the same period, the Johnston & Murphy group posted a net sales increase of 19%, reaching 79.6 million US dollars and Licenced Brands segment also recorded a net sales growth of 14% that added 38.7 million US dollars to Genesco's total revenue, year-over-year.

The company's gross margin contracted by 50 basis points to 48.7% in the third quarter of the current fiscal year, as compared to a gross margin of 49.2% in both last year and fiscal 2020.

Genesco posted 20.4 million US dollars third quarter net earnings from continuing operations, or 1.64 US dollars per diluted share, in this fiscal year, on a comparable basis to net earnings of 34.5 million US dollars, or 2.36 US dollars per diluted share, in the same period of the prior year and net earnings of 19.4 million US dollars, or 1.33 US dollars per diluted share in the third quarter of fiscal 2020.


Fiscal 2023 Outlook

The company revised once more its fiscal 2023 outlook. It is now expecting sales to be down by 1% to 2% over fiscal 2022, as compared to the prior guidance of a decline between 3% to flat. Moreover, adjusted diluted earnings per share from continuing operations are anticipated in the range of 5.50 US dollars to 5.90 US dollars, as compared to the previous guidance for adjusted diluted earnings per share to be near the mid-point of 6.25 US dollars to 7.00 US dollars.


Image Credits: mobile.twitter.com/genesco_inc

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