US retailer Genesco’s sales down 4% in Q2FY23

Excluding the impact of lower exchange rates, net sales decreased 1 per cent for the second quarter of fiscal 2023 compared to the second quarter of fiscal 2022. As a result of store closures during fiscal 2021 in response to the COVID-19 pandemic and the company’s policy of removing any store closed for seven consecutive days from comparable sales, the company has not included second quarter comparable sales for fiscal 2022, except for comparable direct sales, as it believes that overall sales was a more meaningful metric for that period.

The net sales of Genesco for the second quarter of fiscal 2023 decreased 4 per cent to $535 million from $555 million in the second quarter of fiscal 2022 and increased 10 per cent from $487 million in the second quarter of fiscal 2020, prior to the pandemic. The sales decrease compared to last year was driven by decreased comparable sales.

Overall sales for the second quarter this year compared to the second quarter of fiscal 2022 were down 7 per cent at Journeys, down 4 per cent at Schuh and down 10 per cent at Licensed Brands as we repositioned the distribution mix, partially offset by a 22 per cent increase in sales at Johnston & Murphy. On a constant currency basis, Schuh sales were up 9 per cent for the second quarter this year, the company said in a press release.

Second quarter gross margin this year was 47.5 per cent, down 160 basis points compared with 49.1 per cent last year and down 110 basis points compared with 48.6 per cent in fiscal 2020. The decrease as a percentage of sales as compared to fiscal 2022 is due primarily to increased markdowns in the Journeys business as they returned to a more normalized promotional environment and higher freight and logistics costs in the Johnston & Murphy business. Additionally, the company had the reversal of inventory reserves in the second quarter last year at Johnston & Murphy as the brand began to recover from the pandemic making for a difficult comparison this year.

“We are pleased with our second quarter performance, which combined with our first quarter results, represent a strong start to Fiscal 2023 on top of last year’s stimulus-induced spending environment. Strength from our Schuh and Johnston & Murphy businesses and careful expense control helped offset softness late in the quarter versus expectations at Journeys to deliver earnings ahead of projections. While we’ve seen nicely improved trends through August and we saw a good start to the back-to-school season, sales didn’t achieve levels contemplated in our previous guidance. With these current trends and in light of the current impact inflation is having on consumer discretionary spending we believe it’s prudent to take a more conservative approach to our back half outlook. We remain confident that our footwear focused strategy has created a much more resilient and fundamentally stronger business that we believe is better positioned to successfully navigate more difficult market conditions and outperform in favorable economic backdrops,” Mimi E Vaughn, Genesco board chair, president and chief executive officer, said.

“Our second quarter results were highlighted by solid revenue growth when compared to pre-pandemic levels as top line grew 10 per cent versus the same period in fiscal 2020 despite having 5 per cent fewer stores. With gross margin in line with our expectations combined with the work we’ve done reshaping and reducing our cost structure, we more than doubled operating income, which along with $176 million in share repurchases over the past three years, allowed us to achieve adjusted EPS of $0.59 this quarter compared to $0.15 in the second quarter of fiscal 2020. While we are pleased with the long-term direction of the business, the current operating environment has led us to take a more cautious approach to our guidance. We now expect adjusted earnings per share for fiscal 2023 to range between $6.25 to $7.00. We believe somewhere close to the middle of the range is where we will land,” Thomas A George, Genesco chief financial officer, said.

Fibre2Fashion News Desk (RR)