In its first quarter, ended on May 2 as well, the performance of its Journeys Group of stores exceeded Genesco’s expectations. It had a 4 percent increase in operating income to $5.5 million on 5 percent sales growth to $176.8 million, with a 3 percent rise in comparable store sales. The number of pairs sold was off by 1.3 percent on a comparable basis but average sales prices were 5.1 percent higher as women’s fashion, core skate and vulcanized canvas styles posted solid gains. In the 55-unit Shi by Journeys banner, prices were up by 12 percent and comparable store sales improved by 11 percent in the first quarter.
Still, overall, Genesco reported a quarterly net loss of $5.8 million compared with income of $129.3 million last year. Sales grew by 4 percent to $370.4 million, with a 2 percent comparable sale increase. However, adjusted for $11 million in pre-tax charges, adjusted net earnings would have been $3.5 million compared with $3.8 million last year.
Sales at the company’s Underground Station Group fell by 7.8 percent to $26.7 million for the quarter. On a comparable basis, they were down by 5 percent in value, with average sales prices declining by 2.7 percent. The chain had a total of 177 stores, 12 less than a year ago, and the company plans to shut down eight more by year’s end.
Johnston & Murphy’s revenues went up by 12.6 percent to $98.8 million.
Journeys finished the quarter with 1,018 stores, up from 1,012 at the end of January. Journeys Kids opened four stores for a total of 145 that reported comparable sales growth of 5 percent. Comparable sales fell by 1.3 percent in units, though average prices increase by 4.3 percent. Shi by Journeys kept its store count at 55. Twenty-eight percent of its sales came from athletic products, up from 17 percent in the first quarter last year. Footwear prices grew by 12 percent as higher-priced products were introduced. The company plans three new Shi by Journeys stores this fiscal year.
Although it’s winding down a dreadful May – a typically low sales period punctuated by a drop in comparable sales of 12 percent at Journeys Group through May 25 – Genesco has great expectations for a solid back-to-school sales season. The optimism is bolstered by Journeys’ positioning as the "only true national fashion footwear chain for teens," waning competition from cash-strapped mom-and-pop doors in footwear and headwear, and Genesco’s scale.
Despite the difficult May, comparable store sales in the second quarter are expected to moderate to end the period down by 5-6 percent. Comparable sales are forecast to moderate in the second half from flat to up by 2 percent, with full-year revenues pegged at $1.59 billion and gross margins flat to slightly up.