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GENESCO Inc. Reports Operating Results (10-Q)

September 12, 2013 | About:
10qk

10qk

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GENESCO Inc. (GCO) filed Quarterly Report for the period ended 2013-08-03.

Genesco, Inc. has a market cap of $1.48 billion; its shares were traded at around $62.02 with a P/E ratio of 13.70 and P/S ratio of 0.60. Genesco, Inc. had an annual average earning growth of 6.5% over the past 10 years. GuruFocus rated Genesco, Inc. the business predictability rank of 3.5-star.

Highlight of Business Operations:

Net sales from Lids Sports Group increased 5.8% to $192.5 million for the second quarter ended August 3, 2013, compared to $181.9 million for the same period last year, reflecting primarily a 5% increase in average Lids Sports Group stores operated partially offset by a 3% decrease in comparable sales, which includes a 4% decrease in same store sales and a 25% increase in comparable direct sales. The comparable sales decrease reflected a 5% decrease in average price per hat for the second quarter this year as "snap-back" hats are a lower priced item than fitted fashion hats and "snap-back" styles are becoming more price competitive. Management believes that the relative ease of merchandising non-fitted hats has enabled a variety of non-headwear retailers to carry the adjustable styles, increasing competition in the category, although management believes that competition in the category lessened somewhat during the quarter. There was a 2% increase in comparable store hat units sold, primarily due to increases in the fashion hat business. Lids Sports Group operated 1,071 stores at the end of the second quarter of Fiscal 2014, including 98 Lids stores in Canada and 157 Lids Locker Room and Clubhouse stores, compared to 1,021 stores at the end of the second quarter last year, including 90 Lids stores in Canada and 122 Lids Locker Room and Clubhouse stores.

in same store sales, a 12% increase in comparable direct sales and a 7% increase in comparable sales, including both store and direct sales; a 13% increase in Johnston & Murphy wholesale sales; and a 5% increase in average stores operated for Johnston & Murphy retail operations. Unit sales for the Johnston & Murphy wholesale business increased 9% in the second quarter of Fiscal 2014 and the average price per pair of shoes increased 3% for the same period. Retail operations accounted for 71.0% of Johnston & Murphy Group's sales in the second quarter this year, down from 71.6% in the second quarter last year. The comparable sales increase reflects a 5% increase in average price per pair of shoes for Johnston & Murphy retail operations, primarily associated with increased sales of higher-priced dress shoes, and a 2% increase in footwear unit comparable sales. The store count for Johnston & Murphy retail operations at the end of the first quarter of Fiscal 2014 included 163 Johnston & Murphy shops and factory stores, including seven stores in Canada, compared to 153 Johnston & Murphy shops and factory stores, including two stores in Canada, for the second quarter of Fiscal 2013.

The Company's net sales in the first six months ended August 3, 2013 increased 2.0% to $1.17 billion from $1.14 billion in the first six months ended July 28, 2012, reflecting increased net sales in all of the Company's business units except Schuh Group and Licensed Brands, partially offset by a 3% decrease in comparable sales. Gross margin increased 0.2% to $581.2 million in the first six months this year from $580.0 million in the same period last year but decreased as a percentage of net sales from 50.7% to 49.8%, reflecting decreased gross margin as a percentage of net sales in Schuh Group and Lids Sports Group, offset slightly by increased gross margin as a percentage of net sales in Journeys Group and Licensed Brands, while gross margin for Johnston & Murphy was flat. Selling and administrative expenses in the first six months this year increased 3.7% from the first six months last year and increased as a percentage of net sales from 46.0% to 46.8% reflecting increased expenses in Journeys Group, Schuh Group, Lids Sports Group, Johnston & Murphy Group and Licensed Brands, partially offset by lower Corporate annual incentive compensation accruals this year compared to last year's first six months. The Company records buying and merchandising and occupancy costs in selling and administrative expense. Because the Company does not include these costs in cost of sales, the Company's gross margin may not be comparable to other retailers that include these costs in the calculation of gross margin. Explanations of the changes in results of operations are provided by business segment in discussions following these introductory paragraphs.

Net sales from Lids Sports Group increased 1.5% to $370.4 million for the first six months ended August 3, 2013, compared to $365.0 million for the same period last year, reflecting primarily a 5% increase in average Lids Sports Group stores operated, partially offset by a 4% decrease in comparable sales, which includes a 6% decrease in same store sales and a 27% increase in comparable direct sales. The comparable sales decrease reflected a 1% decrease in comparable store hat units sold and a 4% decrease in average price per hat for the first six months this year as "snap-back" hats are a lower priced item than fitted fashion hats and "snap-back" styles are becoming more price competitive. Management believes that the relative ease of merchandising non-fitted hats has enabled a variety of non-headwear retailers to carry the adjustable styles, increasing competition in the category, although management believes that competition in the category lessened somewhat by the end of the first six months of Fiscal 2014.

Johnston & Murphy Group net sales increased 12.0% to $111.7 million for the first six months ended August 3, 2013 from $99.7 million for the first six months ended July 28, 2012, reflecting primarily a 6% increase in same store sales, an 11% increase in comparable direct sales and a 7% increase in comparable sales, including both store and direct sales; a 14% increase in Johnston & Murphy wholesale sales; and a 3% increase in average stores operated for Johnston & Murphy retail operations. Unit sales for the Johnston & Murphy wholesale business increased 13% in the first six months of Fiscal 2014 and the average price per pair of shoes increased 1% for the same period. Retail operations accounted for 70.3% of Johnston & Murphy Group's sales in the first six months this year, down from 70.9% in the first six months last year. The comparable sales increase reflects a 4% increase in average price per pair of shoes for Johnston &

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