Higher gross margins at each of the group's divisions helped Genesco achieve a net income gain of 31.4 percent for the third quarter to $18.9 million. However, the American shoe retailing group's total revenues were down slightly by 0.5 percent to $537.2 million. The company benefited from an improved performance overall at the U.K.-based Schuh Group, good sales at Journeys, as well as solid online sales, but Johnston & Murphy continued to struggle.
Comparable sales improved by 3 percent to $354.9 million. They dropped by one percent at brick-and-mortar stores but jumped by 19 percent online, compared with a 12 percent increase for the year-ago quarter, accounting for 11.4 percent of total retail sales for the quarter, compared to 9.6 percent a year ago, with 90 percent of the traffic now coming from mobile devices. This sent Genesco's shares up by 15 percent.
The Schuh Group's sales declined, although the quarter was a significant improvement from recent quarters, as the company reduced discounting and increased online sales. Its revenues declined by 3 percent to $92.9 million, while its operating income improved by 4 percent to $4.4 million. The chain's comparable store sales rose by 3 percent, in contrast with a drop of 4 percent registered in the same period of last year. Sales were driven by boots and fashion athletic styles. Schuh is aggressively seeking rent reductions from landlords, and closed one store in the quarter, ending with 131 doors.
During the quarter, Journeys' sales increased by 3 percent to $354.9 million, including a 4 percent gain in comparable sales. Meanwhile, Johnston & Murphy's sales declined by 9 percent, which the company blamed on warm temperatures and a tough comparison with the introduction last year of new sports casual styles.
Genesco's overall gross margin increased by 0.7 percentage points to 49.2 percent in the quarter, reflecting higher initial margins and decreased markdowns for the Journeys Group, improved margins at Schuh and a higher mix of direct-to-consumer sales and improved wholesale gross margin at Johnston & Murphy.
During the quarter, the company opened 36 new stores and closed 59. It ended the quarter with a total of 1,535 stores under various banners, led by Journeys.
The management said the fourth quarter started well, with better results than a year ago during the period between Black Friday and Cyber Monday. Based on its strong third-quarter results and positive start to the holiday season, it has raised its previous profit guidance for the full year, predicting that comparable sales will go up by 2 to 3 percent.