Performance Driven by Journeys Segment, Despite Overall Sales Decline
Summary
- Revenue: $457.6 million, exceeded estimates of $445.65 million, representing a 5% decrease year-over-year.
- GAAP EPS: ($2.22), compared to ($1.60) in the same quarter last year.
- Comparable Sales: Decreased 5%, with e-commerce sales up 3% and store sales down 7%.
- Inventory: Decreased 17% year-over-year, reflecting strategic inventory management.
- Store Activity: Closed 21 stores, ending the quarter with 1,321 stores, a 5% decrease from last year.
- Gross Margin: Remained flat at 47.3%, with adjusted gross margin increasing by 30 basis points due to fewer markdowns and a higher mix of direct-to-consumer sales.
- Debt Reduction: Total debt decreased to $59.4 million from $118.2 million at the end of last year’s first quarter.
On May 31, 2024, Genesco Inc (GCO, Financial) released its 8-K filing reporting the financial results for the first quarter of Fiscal 2025, ending May 4, 2024. The company, which sells footwear, headwear, sports apparel, and accessories through its four segments—Journeys Group, Schuh Group, Johnston & Murphy Group, and Licensed Brands—reported a mixed performance.
First Quarter Financial Summary
Genesco Inc (GCO, Financial) reported total net sales of $458 million for the first quarter of Fiscal 2025, a 5% decrease compared to $483 million in the same period last year. Despite the decline, the revenue exceeded the analyst estimate of $445.65 million. The decrease was primarily driven by lower store sales, decreased wholesale sales, and net store closings, partially offset by a 3% increase in e-commerce comparable sales.
Company Performance and Challenges
Genesco Inc (GCO, Financial) faced several challenges, including a 7% decrease in comparable store sales and a 5% decrease in overall comparable sales. The Schuh Group and Johnston & Murphy Group also reported declines of 7% and 3%, respectively. However, the company saw a 3% increase in comparable e-commerce sales, which now represent 23% of retail sales, up from 21% last year.
Despite these challenges, the company managed to reduce its inventory by 17% year-over-year, reflecting decreased inventory for Journeys and Johnston & Murphy, partially offset by small increases at Schuh and Genesco Brands.
Financial Achievements
Genesco Inc (GCO, Financial) reported a GAAP EPS of ($2.22) and a Non-GAAP EPS of ($2.10). The company's gross margin remained flat at 47.3% compared to the previous year, but the adjusted gross margin increased by 30 basis points due to fewer markdowns at Journeys and a greater mix of direct-to-consumer sales.
Mimi E. Vaughn, Genesco’s Board Chair, President, and CEO, stated, “Against continued headwinds in the operating environment, we executed to our strategic plan to deliver top and bottom-line results that were ahead of our expectations, led by our Journeys business.”
Income Statement and Balance Sheet Highlights
Genesco Inc (GCO, Financial) reported an operating loss of $32.1 million, or 7.0% of sales, compared to $23.0 million, or 4.8% of sales, in the first quarter of last year. The adjusted operating loss was $30.0 million, compared to $22.7 million last year. The effective tax rate for the quarter was 26.7%, up from 23.7% in the same period last year.
| Quarter 1 | May 4, 2024 | % of Net Sales | April 29, 2023 | % of Net Sales |
|---|---|---|---|---|
| Net Sales | $457,597 | 100.0% | $483,332 | 100.0% |
| Gross Margin | $216,281 | 47.3% | $228,808 | 47.3% |
| Operating Loss | ($32,128) | -7.0% | ($22,997) | -4.8% |
| Net Loss | ($24,347) | -5.3% | ($18,890) | -3.9% |
Cash Flow and Inventory Management
As of May 4, 2024, Genesco Inc (GCO, Financial) had $19.2 million in cash, down from $31.8 million as of April 29, 2023. Total debt at the end of the first quarter was $59.4 million, compared to $118.2 million at the end of the previous year's first quarter. The company’s inventory decreased by 17% year-over-year.
Capital Expenditures and Store Activity
Capital expenditures for the first quarter were $6 million, primarily related to retail stores and digital and omnichannel initiatives. The company opened one store and closed 21 stores during the quarter, ending with 1,321 stores, a 5% decrease from the previous year.
Outlook for Fiscal 2025
Genesco Inc (GCO, Financial) reaffirmed its fiscal 2025 outlook, expecting total sales to decrease by 2% to 3% compared to Fiscal 2024. The company also expects adjusted diluted earnings per share from continuing operations to be in the range of $0.60 to $1.00.
For more detailed financial commentary and a supplemental financial presentation of first quarter results, visit the investor relations section on the company's website, www.genesco.com.
Explore the complete 8-K earnings release (here) from Genesco Inc for further details.
