Genesco delivered sales for the third quarter that exceeded expectations and returned to profits after posting losses in the second quarter. Schuh performed well, partly due to the accelerated shift to online spending, while Johnston & Murphy’s business struggled.
Sales for the third fiscal quarter ended on Dec. 4 decreased by 11 percent from the year-ago quarter to $479.3 million, but this was a significant improvement on the second quarter, as more stores were open and digital sales remained robust.
Net income improved by 1.6 percent to $7.4 million, which the company attributed to cost cutting actions and one-time expense relief benefits, combined with better gross margins, profitability in e-commerce and a lower tax rate.
Over the period, stores were open 95 percent of days. As of Dec. 4, 2020, the company was operating in 97 percent of its locations, including approximately 1,150 Journeys, 170 Johnston & Murphy and 110 Schuh locations.
In the third fiscal quarter, same-store sales fell by 18 percent due to store closures, but comparable direct sales soared by 62 percent as customer switched to online shopping.
Schuh delivered stronger back-to-school sales than expected, led by e-commerce. Comparable sales increased by 1 percent for the quarter, with casual assortment driving the business, especially boots. The management said the brand was able to capitalize on an accelerated shift in the U.K. market online spending thanks to its omni-channel capabilities. Overall sales for the brand declined by 3 percent.
Meanwhile, comparable sales at Johnston & Murphy tumbled by 45 percent, which the company attributed to more people working from home and therefore having less reasons to shop the brand’s items for work wear. Comparable sales decreased by 10 percent at Journeys, while other licensed brand saw same-store sales surge by 91 percent, due to the Togast acquisition in the fourth quarter last year.
Overall, the gross margin declined by 2.1 percentage points to 47.1 percent, due primarily to the mix, increased markdowns and inventory reserves at Johnston & Murphy and higher shipping and warehouse expense in all of the retail divisions, driven by the increase in penetration of e-commerce. This was partially offset by decreased markdowns at Journeys.
Because of continued uncertainty in the overall economy over the Covid-19 pandemic, the group did not provide any forward-looking guidance.
In November, management said it faced headwinds from the re-closure of stores in North America and the U.K., but most stores have since reopened. During the Black Friday weekend, traffic was more subdued than usual, but for the month of November, sales were in line with expectations. Thanks to recent technology investments made in stores and e-commerce platforms, the group believes it is ready and well positioned for the holiday season.