The Finish Line is having second thoughts about its $1.5 billion acquisition of Genesco. Disappointed by the results announced by Genesco for its 2nd quarter ended Aug. 4, the American athletic shoe retailer said it was “evaluating its options in accordance with the terms of the merger agreement,” The statement sent the value of The Finish Line’s shares up by 13 percent, while those of Genesco lost 13 percent.

Genesco reported a loss before discontinued operations of $2.9 million, as compared to earnings of $5.9 million for the year-ago quarter, falling below previous guidance. In a conference call to discuss the poor results with the financial community, Genesco’s management blamed them on a “generally weak market” in the USA as well as a late start of the back-to-school season and a shift in the timing of sales tax holidays in Texas and Florida.

Some analysts questioned why the company had not given the investment community some kind of indication that the results would be below expectations before issuing its financial statement, as the company has traditionally done in the past. Genesco’s management responded that the company was waiting for the sales results in July and August before validating that previous months had indeed been poor. In addition, company officials said, there was no material change in how the business was being run, and any poor performances stemmed from outside forces.

As a whole, net sales were up by 8 percent to $328 million in the quarter, with growth across most business units. The Journeys Group’s turnover grew by 8 percent to $148 million, but its sales on a comparable basis slumped by 7 percent, with decreases of 13 percent in Texas and 20 percent in Florida due to the postponed sales tax holidays. Women’s shoes fared worse than men’s, and sales of non-footwear items were up. Average selling prices for footwear were down by 5 percent.

The division’s operating earnings fell to $983,000 during the period, as compared to $7,935,000 in the year-ago quarter. The 3rd quarter is expected to be strong for the Journeys retail chain, as back-to-school and tax holiday sales are both going to fall under that period.

The company's Underground Station Group, which aside from banners under the same name includes the remaining Jarman doors that are being phased out, continues to struggle. Comparable store turnover dropped by 23 percent during the period, as net sales totaled $25 million, down from $31 million one year ago. The group reported an operating loss of $4,893,000, as compared to a loss of $1,747,000 for the same period last year.

The Johnston & Murphy group’s revenues grew by 9 percent to $46 million. On the wholesales side, sales for the Johnston & Murphy brand rose by 18 percent. In the Johnston & Murphy retail chain, same-store turnover increased by 18 percent. Operating earnings rose to $3,612,000 from $2,484,000. Revenues from licensed brands improved by 18 percent to $19 million, with strong growth for Dockers Footwear.

The analysts’ interest in the effect of Genesco’s poor results on the pending merger with The Finish Line was quelled at the start of the conference call by a statement by the company that it would only respond to questions about Genesco’s operations, as it was legally bound to communicate any details on the deal only through official channels. A special investors’ meeting is scheduled for Sept. 17 where further details about the merger may be revealed.