Fri. Jan 24th, 2020

Genesco Inc. Reports Fiscal 2k20 3rd-Quarter Results

27 min read

Genesco Inc. (NYSE: GCO) recently stated GAAP earnings from continuing operations for each diluted share of $1.310 for the 3.0-months finished November 2, 2k19, compared to $1.00 in the 3rd-quarter last year.  Adjusted for the excluded items in both durations, the Company reported 3rd-quarter earnings from continuing operations for each diluted share of $1.330 compared to $0.970 for each diluted share last year.

3rd-Quarter Review
Net sales for the 3rd-quarter of Fiscal 2k20 were flat at $537.00M compared to the 3rd-quarter of Fiscal 2k19. Excluding the effect of lower exchange rates, net sales would have inclined $2.00M compared to last year. Comparable sales inclined 3.0 percent, with stores up 1.0 percent and direct up 19.00 percent. Direct-to-consumer sales were 11.40 percent of total retail sales for the quarter, compared to 9.60 percent last year.

The 3rd-quarter gross margin this year was 49.20 percent, up 70.0 basis points, compared with 48.50 percent last year. The incline as a percentage of sales reflects higher initial margins and declined markdowns for Journeys Group, improved margin in both sale and full price product at Schuh Group and a higher mix of direct to consumer sales and improved wholesale gross margin in Johnston & Murphy Group.

Selling and administrative cost for the 3rd-quarter this year was 44.20 percent, up 60.0 basis points, compared to 43.60 percent of sales for a similar duration previous year.  The incline as a percentage of sales was driven by the negative comparable sales at Johnston & Murphy and inclined selling salaries, partially offset by declined store rent.

Genesco’s GAAP operating income for the 3rd-quarter was $25.90M, or 4.80 percent of sales this year, compared with $26.40M, or 4.90 percent of sales last year.  Adjusted for the excluded items in both durations, operating income for the 3rd-quarter was $26.70M this year compared with $26.30M last year.  The adjusted operating margin was 5.0 percent of sales in the 3rd-quarter of Fiscal 2k20 and 4.90 percent last year.

Income tax cost for the quarter was $6.50M, or 25.40 percent in Fiscal 2k20 compared to $5.90M, or 23.00 percent last year.  Adjusted income tax cost, reflecting excluded items, was $6.90M, or 26.20 percent in Fiscal 2k20 compared to $6.40M, or 25.10 percent last year.  The higher adjusted tax amount for this year reflects the inability to recognize a tax benefit for certain foreign losses.

GAAP earnings from continuing operations were $19.00M in the 3rd-quarter of Fiscal 2k20, compared to $19.70M in the 3rd-quarter previous year.  Adjusted for the excluded items in both durations, 3rd-quarter earnings from continuing operations were $19.40M, or $1.330 for each share, in Fiscal 2k20, compared to $19.10M, or $0.970 for each share, last year.

Cash, Borrowings, and Inventory
Cash and cash equivalents at November 2, 2k19, were $55.80M, compared with $53.40M at November 3, 2k18.   Total debt at the end of the 3rd-quarter of Fiscal 2k20 was $79.50M compared with $81.80M at the end of last year’s 3rd-quarter, a decline of 3.0 percent. Inventories inclined 4.0 percent in the 3rd-quarter of Fiscal 2k20 on a year-over-year basis.

Capital Expenditures and Store Activity
For the 3rd-quarter, capital expenditures were $8.00M, which consisted of $5.00M related to store remodels and new stores and $3.00M related to direct-to-consumer, omnichannel, information technology, distribution center, and other projects. Depreciation and amortization was $12.00M.  Throughout the quarter, the Company opened four new stores and closed six stores.  The Company finished the quarter with 1,492 stores compared with 1,537 stores at the end of the 3rd-quarter last year, or a decline of 3.0 percent.  Square footage was down 2.0 percent on a year-over-year basis.

Share Repurchases
For the 3rd-quarter of Fiscal 2k20, the Company repurchased 1,150,198 shares for approximately $41.30M at an average price of $35.90 for each share. Since late December 2k18 through last Friday, the Company has spent approximately $235.00M repurchasing over 5.50M shares across three authorizations totalling $325.00M, including a new $100.00M authorization announced in late September.

Fiscal 2k20 Outlook

For Fiscal 2k20, the Company expects:

  • Comparable sales to be up 2.0 percent to 3.0 percent, and
  • Adjusted diluted earnings for each share from continuing operations in the range of $4.100 to $4.400 with an expectation that earnings for each share for the year will be near the mid-point of the range. 2

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