Genesco, the American retail group operating Journeys and other formats, increased its guidance again after the release of higher-than-expected third-quarter results. For the full financial year ending in January 2012, the company expects an increase in sales of about 25 percent to $2.24 billion, partly thanks to the acquisition of in June of Schuh, the British retailer of young fashion shoes. Without Schuh, sales are seen rising by around 14 percent.
Comparable store sales are expected to grow 3-4 percent in the fourth quarter, lowering the full-year average to 10-11 percent from 13 percent in the first nine months of the year. The store network is due to rise by about 77 stores, or 3 percent of the total, while the floor space will grow by 11 percent, mainly thanks to Schuh, whose stores average about 4,600 square feet.
The outlook for diluted earnings per share (EPS) was lifted to $3.64-3.69, which represents a 47-49 percent year-on-year increase. The previous estimate set the EPS range at $3.35-3.42. The new guidance indicates an EPS of $1.54-1.58 in the fourth quarter.
In the fiscal year ending in January 2013, the store network may be further expanded by 2-3 percent in units and by 4-5 percent in floor space. The floor space will grow faster thanks to the opening of Schuh stores and Lids Locker Room, a chain selling sports memorabilia and merchandise. The company warned, however, that actual levels will depend on the outcome of lease renegotiations for more poorly performing stores.
The group aims to close a total of 79 stores this year, largely offset by 71 openings and 85 stores obtained through acquisitions. The number of closures would have been higher if landlords had not accepted reduced rents. But many lease renewals were for very short periods. “So, we have a lot of stores at the bottom end of the food chain,” explained the company's chairman and chief executive, Robert Dennis. He believes that the current occupancy level in American malls, especially in the lower half of the spectrum, offers opportunities to obtain better lease conditions and help achieve “a reasonable return” for the weaker locations. Dennis noted that the decision by Gap to close about 150 stores in North America will put further pressure on landlords. The Brown Shoe Company also announced plans to close more than 145 stores by the end of 2012 (see adjoining article).
Genesco set a sales target of $3.1 billion for the full year ending in January 2016, with an operating margin objective of 9 percent.
Its quarterly sales rose by 33 percent to $616.5 million. Excluding acquisitions, organic growth reached 13 percent. Same-store sales rose by 12 percent in the quarter and were up by 11 percent in the first three weeks of November, but are expected to slow down.
TheJourneys Group boosted sales by 16 percent to $251.5 million, lifted by a 15 percent rise in same-store sales. Comparable store sales by banner showed that Journeys booked a 15 percent rise, Journeys Kidz was up by 12 percent and Shi by Journeys grew by 25 percent. Online sales grew by 47 percent. In the first three weeks of November, comparable store sales were up by 15 percent for Journeys Group.