The owner of Journeys and Underground Station reports a 9 percent sales increase to $363.7 million for the second quarter ended July 31, with 3 percent growth in comparable store sales company-wide. Genesco's net loss widened, though, hitting $3.2 million compared with $2.7 million for the same period last year. This year's figure included $3.2 million in pre-tax charges, however. The gross margin stayed stable at 50.6 percent. The quarterly results were in line with the company's expectations.
As families started preparing for back-to-school season, Genesco said that its stores were doing better in August, and comparable store sales for the month alone were up by 8 percent.
At the Journeys Group, sales rose by 3 percent to $153.0 million on a 2 percent comparable store sales increase. However, the operating loss worsened to $4.5 million versus a loss of $3.2 million last year. Average sales prices dropped by 2 percent. Athletic sales were down slightly while casual offerings had a strong increase as the banner moved to ?a more distinctive merchandising position.? Journeys is getting a solid performance from the skate category and intends to have a strong boot assortment for holiday. Comparable store sales for August rose by 7 percent as the chain adopted a more promotional stance for back-to-school.
Management sees Canada as a growth vehicle for the banner, with an eventual 80-120 doors north of the border, as the U.S. experiences minimal net door growth with the shuttering of underperforming doors.
Underground Station Group saw a 7.6 percent drop in revenues to $17.1 million, but its operating loss improved, coming in at $3.5 million compared with a loss of $3.8 million for the same period last year. Comparable store sales slipped by 4 percent.
Johnston & Murphy's sales were just about flat at $39.1 million, but the chain turned around from last year's operating loss of $459,000 to an income of $105,000 this year. Its comparable store sales were flat as well.
At the end of the quarter, Genesco's total store count was 2,264, three doors less net than at the end of the first quarter. Journeys Group opened three Journeys stores and one Journeys Kidz store while closing one Journeys store, for a total as of July 31 of 1,026 doors. Underground Station closed one shop, bringing its total to 162 stores. Johnston & Murphy opened one factory outlet to have 160 stores at quarter's end.
Looking ahead to 2015, Genesco's strategic plan is to increase revenues by 8 percent and bring its operating margin back to the 8 percent mark, through a 3-4 percent increase in comparable store sales and the addition of 300 doors, largely Journeys Canada locations and additional units in the Lids Sports Group. The specific strategy for Journeys calls for revenues of approximately $1 billion, 100 new doors and the closure of 70 unprofitable locations as the banner moves back to an operating margin of 9.0 percent.
The company, which is forecasting just a 3 percent increase in comparable store sales in the second half despite the strong August start, reaffirms its full-year earnings guidance of about $51.7 million in net income.
During the conference call discussing the financial results, Genesco announced that it had bought Anaconda Sports, a major team dealer in the eastern U.S. Added to its first-quarter purchase of Brand Innovators on the West Coast, Genesco said it now has a team sports presence in 43 U.S. states, with the opportunity to expand to 49.