Genesco posted net earnings from continuing operations of $42.2 million for the 13-week period ended Feb. 1, 2014, up from $38.9 million for the 14-week period ended Feb. 2, 2013. The U.S.-based retailer and wholesaler of footwear, apparel and accessories reported a slow start to the quarter in December, with flat same-store sales early in the period.
The results for this fourth-quarter period of Genesco's fiscal year include pre-tax charges of $7.2 million, including $3.0 million of expenses related to deferred purchase price payments in connection with the acquisition of Schuh Group in the U.K., and $5.7 million for network intrusion expenses, other legal matters, a lease termination, and asset impairment charges, partially offset by a $1.5 million gain related to a change in accounting. In the same quarter a year ago, the results came after pre-tax charges of $19.2 million, partially offset by a gain of $0.2 million
Adjusted for these extraordinary items in both periods, earnings from continuing operations were $51.0 million for the fourth quarter ended Feb. 1, 2014, down from $51.4 million for the fourth quarter of fiscal 2013. Adjusted earnings per share fell a penny short of the retailer's projected range.
Consolidated sales for the fourth quarter of fiscal 2014 decreased by 0.5 percent to $793 million. Schuh Group posted sales of $121.7 million, down from $126.8 million in the fourth quarter of fiscal 2013.
Total comparable sales, including same-store and comparable direct sales, increased by 1 percent, with a 7 percent decrease for the Schuh Group, a 4 percent increase in the Lids Sports Group, a flat comparison in the Journeys Group, and an 11 percent increase in the Johnston & Murphy Group.
Journeys saw solid gains in casual shoes, including boots, but athletic styles were somewhat softer. Stronger sales of casual footwear helped the Journeys Kids chain to generate same-store growth of 2 percent for the full financial year, and Genesco plans to add 25 more stores for the chain to the 174 locations it had in place at the end of the financial year.
Genesco operated 2,565 permanent retail units as of Feb. 1, 2014, compared with 2,532 on Feb. 11, 2013. These numbers of units exclude Schuh concessions that are expected to close this year and temporary “pop-up” locations.
For the 52-week period ended Feb. 1, 2014, corresponding to the full financial year, the company reported net sales of $2.62 billion, an 0.8 percent increase versus the 53-week period ended on Feb. 2, 2013. Sales were off by 6.5 percent for the Journeys Group, but went up by 7.2 percent at Lids and up by 0.3 percent in terms of dollars at Schuh, whose sales reached the equivalent of $92.6 million.
All the three segments of Genesco's business recorded lower operating earnings. They fell by 46.0 percent at Schuh to $1.95 million.
Comparable store sales at Schuh fell by 10 percent for the year due to a tough comparison with the 9 percent increase recorded in the previous year and the lack of a must-have fashion trend in the U.K., where price competition has become more acute than in the U.S.
Total revenues declined by 3 percent to $1,082 million for the year, with same-store sales down by 2 percent. Earnings from continuing operations were $93.0 million, down from $112.9 million for fiscal 2013. Adjusted to exclude non-recurring items in both years, earnings from continuing operations were $120.3 million for fiscal 2014 and $121.8 million for fiscal 2013.
Upon announcing fourth quarter and fiscal year results, the company said that the inconsistent sales patterns that characterized last year carried over into the start of fiscal 2015, with comparable sales down 2 percent through March 8, 2014. Following a difficult first week marked by severe winter storms in several of its key markets, however, comparable sales turned positive and margins held up.
The management is expecting a sales recovery this year, with total sales rising by between 8 and 9 percent and same-store sales growing by 2 to 3 percent.
The outlook for the first half of new financial year remains cautious, given the lack of a strong new fashion driver for teenagers and continued uncertainty around customer traffic in the U.S., the company said. Based on current visibility, the company expects adjusted fiscal 2015 earnings per share to register a 6 percent to 9 percent increase over fiscal 2014's adjusted earnings per share.
Consistent with previous guidance, these expectations do not include expected non-cash asset impairments and other charges, which are estimated in the range of $3.1 million to $4.5 million pre-tax in fiscal 2015. They also do not reflect compensation expense associated with the deferred purchase price for Schuh, which is currently estimated at around $7.1 million for the full year. This guidance assumes comparable sales increases in the low single-digit range for the full fiscal year.