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Genesco Q4 Exceeds Guidance On Journeys Momentum

Genesco Q4 Exceeds Guidance On Journeys Momentum

Genesco Inc. reported earnings excluding non-recurring gadgets rose 18.eight % within the fourth quarter. Comps grew four %, led by a 7 % climb on the Journeys chain.

Genesco Inc. reported GAAP earnings from persevering with operations per diluted share of $1.53 for the three months ended February 2, 2019, in comparison with earnings from persevering with operations per diluted share of $2.51 within the fourth quarter final yr.

Adjusted for the Excluded Gadgets in each durations, the corporate reported fourth quarter earnings from persevering with operations per diluted share of $2.18, in comparison with earnings from persevering with operations per diluted share of $1.85 final yr. Extrapolating full-year steerage, steerage for the fourth quarter was anticipated between a variety of $2.00 to $2.30, or $2.15 on the mid-point.

GAAP earnings from persevering with operations per diluted share have been $2.63 for the yr ended February 2, 2019, in comparison with earnings from persevering with operations per diluted share of $1.90 for the yr ended February Three, 2018.  Adjusted for the Excluded Gadgets in each durations, the corporate reported Fiscal 2019 earnings from persevering with operations per diluted share of $Three.28, in comparison with earnings from persevering with operations per diluted share of $2.67 for Fiscal 2018.

Genesco had projected full-year earnings on an adjusted foundation within the vary of $Three.10 to $Three.40.

Robert J. Dennis, Genesco chairman, president and chief government officer, stated: “Fiscal 2019 was an extremely vital and profitable yr for Genesco highlighted by a number of essential accomplishments and a turnaround within the trajectory of our enterprise. The power of our U.S. retail footwear ideas fueled our highest annual comparable gross sales improve in three years. Our top-line efficiency included constructive retailer comps, which together with our current value discount efforts allowed us to leverage our brick and mortar expense construction. This helped us ship EPS above expectations and up properly over final yr, whilst we incurred a significant quantity of bonus expense in contrast with virtually none in Fiscal 2018.

“With the sale of the Lids Sports activities Group accomplished in early February, we started Fiscal 2020 as a footwear- targeted firm. Our robust strategic positioning, shut reference to our clients and enduring management positions are what make every of our footwear companies distinctive.  With the brand new strategic course we now have set for Genesco, we consider we at the moment are in a stronger place to unlock the potential of our mixed footwear companies, make the most of the platforms we now have for future progress and generate larger shareholder worth this yr and over the long-term.”

Fourth Quarter Assessment

Internet gross sales from persevering with operations for the fourth quarter of Fiscal 2019 decreased 2 % to $675 million from $689 million within the fourth quarter of Fiscal 2018. Excluding the additional week from final yr’s 14-week quarter and the impression of decrease trade charges this yr, income was up four %.  Comparable gross sales from persevering with operations elevated four %, with shops up Three % and direct up 10 %. Direct-to-consumer gross sales have been 14 % of complete retail gross sales from persevering with operations for the quarter, in comparison with 13 % final yr.

 

 

 

 

Fourth quarter gross margin this yr was 46.7 %, up 70 foundation factors, in contrast with 46.zero % final yr. The rise as a proportion of gross sales displays decreased markdowns for Journeys Group and fewer promotional gross sales for Schuh Group, partially offset by elevated markdowns and delivery and warehouse expense at Johnston & Murphy Group.

Promoting and administrative expense for the fourth quarter this yr was 38.9 %, up 80 foundation factors, in comparison with 38.1 % of gross sales for a similar interval final yr.  The rise as a proportion of gross sales displays larger bonus expense, partially offset by robust leverage from lease and promoting salaries.

Genesco’s GAAP working revenue for the fourth quarter was $50.6 million this yr in contrast with $48.1 million final yr.  Adjusted for the Excluded Gadgets in each durations, working revenue for the fourth quarter was $58.5 million this yr in contrast with $54.four million final yr.  Adjusted working margin was eight.7 % of gross sales within the fourth quarter of Fiscal 2019 and seven.9 % final yr.

The efficient tax fee for the quarter was 40.6 % in Fiscal 2019 in comparison with -Three.9 % final yr.  The adjusted tax price, reflecting Excluded Gadgets, was 27.5 % in Fiscal 2019 in comparison with 32.5 % final yr.  The decrease adjusted tax price for this yr displays the decrease U.S. federal revenue tax price following the passage of the Tax Minimize and Jobs Act in December 2017, partially offset by the lack to acknowledge a tax profit for sure abroad losses.

GAAP earnings from persevering with operations have been $29.7 million within the fourth quarter of Fiscal 2019, in comparison with $48.four million within the fourth quarter final yr.  Adjusted for the Excluded Gadgets in each durations, fourth quarter earnings from persevering with operations have been $42.four million, or $2.18, in Fiscal 2019, in comparison with earnings from persevering with operations of $35.7 million, or $1.85, final yr.

Full Yr Evaluation

Internet gross sales from persevering with operations for Fiscal 2019 elevated Three % to $2.2 billion from $2.1 billion in Fiscal 2018. Comparable gross sales from persevering with operations elevated 5 %, with shops up four % and direct up 10 %. Direct-to-consumer gross sales have been 11 % of complete retail gross sales from persevering with operations for the yr in comparison with 10 % final yr.
Comparable Gross sales from Persevering with Operations

 

 

 

 

 

Fiscal 2019 gross margin this yr was 47.eight %, up 30 foundation factors, in contrast with 47.5 % final yr. The rise as a proportion of gross sales displays decreased markdowns for Journeys Group and an elevated mixture of retail gross sales for Johnston & Murphy Group, partially offset by elevated promotional exercise for Schuh Group.

Promoting and administrative expense for the yr was 44.zero %, up 30 foundation factors, in comparison with 43.7 % of gross sales for a similar interval final yr.  The rise as a proportion of gross sales displays larger bonus accruals, partially offset by the leveraging of occupancy associated and different prices.

Genesco’s GAAP working revenue for Fiscal 2019 was $81.eight million in contrast with $74.four million final yr.  Adjusted for the Excluded Gadgets in each durations, working revenue was $90.7 million this yr in contrast with $82.Three million final yr.  Adjusted working margin was four.1 % of gross sales in Fiscal 2019 and three.9 % final yr.

The efficient tax price was 34.5 % in Fiscal 2019 in comparison with 46.eight % final yr.  The adjusted tax fee, reflecting Excluded Gadgets, was 27.1 % in Fiscal 2019 in comparison with 33.1 % final yr.  The decrease adjusted tax fee for this yr displays the decrease U.S. federal revenue tax fee following the passage of the Tax Minimize and Jobs Act in December 2017, partially offset by the lack to acknowledge a tax profit for sure abroad losses.

GAAP earnings from persevering with operations have been $51.2 million in Fiscal 2019, in comparison with $36.7 million in Fiscal 2018.  Adjusted for the Excluded Gadgets in each durations, earnings from persevering with operations have been $64.zero million in Fiscal 2019, in comparison with earnings from persevering with operations of $51.four million final yr.

Money, Borrowings and Stock

Money and money equivalents at February 2, 2019, have been $167.four million, in contrast with $39.9 million at February Three, 2018.   Complete debt on the finish of the fourth quarter of Fiscal 2019 was $65.7 million in contrast with $88.four million on the finish of final yr’s fourth quarter, a lower of 26 %. Inventories decreased 5 % within the fourth quarter of Fiscal 2019 on a year-over-year foundation.

Capital Expenditures and Retailer Exercise

For the fourth quarter, capital expenditures have been $eight million, which consisted of $5 million associated to retailer remodels and new shops and $Three million associated to direct to shopper, omnichannel, info know-how, distribution middle and different tasks. Depreciation and amortization was $13 million.  Through the quarter, the corporate opened eight new shops and closed 33 shops.  The corporate ended the quarter with 1,512 shops in contrast with 1,535 shops on the finish of the fourth quarter final yr, or a lower of 1 %.  Sq. footage was down 1 % on a year-over-year foundation.

Share Repurchases

For the fourth quarter and yr of Fiscal 2019, the corporate repurchased 968,375 shares for about $45.9 million at a mean worth of $47.45 per share, as a part of a $125 million share repurchase program permitted by the Board of Administrators in December 2018.  For the primary quarter of Fiscal 2020 via March eight, 2019, the corporate has repurchased 584,465 shares for about $26.four million at a mean worth of $45.10 per share, leaving roughly $52.7 million obtainable to repurchase beneath the present authorization.

Discontinued Operations

On December 14, 2018, the corporate entered right into a definitive settlement for the sale of Lids Sports activities Group to FanzzLids Holdings, a holding firm managed and operated by associates of Ames Watson Capital, LLC.

On February 2, 2019, the corporate accomplished the sale of its Lids Sports activities Group to FanzzLids Holdings for $100 million, which continues to be topic to working capital and different changes.  For the fourth quarter ended February 2, 2019, the corporate recorded a lack of $98.Three million, internet of tax, on the sale of those belongings, representing the sale worth much less the worth of the Lids Sports activities Group belongings bought and different miscellaneous fees, together with divestiture transaction prices, offset by a tax profit on the loss.  This loss is included within the Loss from discontinued operations, internet on the Condensed Consolidated Statements of Operations.

Fiscal 2020 Outlook  

For Fiscal 2020, the corporate expects:
• Comparable gross sales from persevering with operations to be up 1 % to 2 %, and
• Adjusted diluted earnings per share from persevering with operations within the vary of $Three.35 to $Three.75 with an expectation that earnings for the yr might be close to the midpoint of the vary.

Picture courtesy Journeys

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