As has been the case in the past, gains at family-footwear retailer Journeys were offset by a soft performance from hats-and-sports-apparel seller Lids.
This time around, Journeys experienced a 1 percent gain in comparable-store sales while Lids saw a 2 percent decline in comps.
“The second quarter was a bit more challenging than we expected, as positive momentum at Journeys was offset by increasing headwinds at Lids,” said Genesco president and CEO Robert Dennis in a release. “Journeys comps improved significantly, as we emerged from the latest fashion cycle.”
Throughout much of 2015, Lids experienced a bit of a lull while Journeys enjoyed solid momentum. More recently, after Genesco divested the Team Sports segment of Lids, performance at the chain gained more traction — bolstered by a fan-favorite Cub’s World Series win in 2016. Around the same time, Journeys experienced negative momentum after the firm overstocked on canvas styles for the 2016 back-to-school period at a time when teens and young adults were more interested in retro and other athletic footwear styles. Those trends continued into Q1 of 2017 when Journeys comps declined 5 percent while Lids’ comps improved 1 percent.
Now, Dennis said the firm is seeing improved trends at Journeys as well as the firm’s Schuh Group while Lids is once again becoming a concern. (Schuh’s Q2 comps increased 3 percent.)
“The positive sales trends we experienced at Journeys and Schuh during the second quarter accelerated nicely during August in the important back-to-school selling period, and we believe that both businesses are in stronger merchandise positions heading into the holiday season compared with a year ago,” Dennis said. “Unfortunately, current trends at Lids continue to run well below our expectations which will make it more difficult to lap the tough comparisons we face beginning in October from last year’s Cubs World Series win.”
Overall, Genesco’s second-quarter sales decreased 1.4 percent, to $617 million, missing Wall Street’s bets for sales of $626.9 million.
The company also posted a net loss of $3.9 million, or 20 cents per diluted share, compared to net income of $14.5 million, or 72 cents per diluted share, in the comparable period. On an adjusted basis, net losses were $2 million, or 10 cents per diluted share, which was greater than analysts’ prediction for losses of 8 cents per share.
Citing “the anemic level of mall traffic year-to-date and the more pronounced shift in consumer spending away from stores to online,” Dennis said the firm downward adjusted its full-year outlook.
Genesco now expects adjusted diluted earnings per share for the year in the range of $3.35 to $3.65, compared to the previously issued guidance range of $3.90 to $4.05, “a wider range than usual given some of the opportunities and challenges in our business,” Genesco’s chief noted.
As of 11:15 a.m. ET, Genesco’s shares were in the red nearly 12 percent, to $22.52.