Genesco Inc. is struggling to find its footing.
The Nashville, Tenn.-based company, which notably offloaded its beleaguered Lids Sports Group business in December, said fourth-quarter earnings missed the mark. It is renewing its focus on footwear to get back on track.
As of 10:15 a.m. ET, Genesco saw its stock drop 5.8 percent to $43.80. The company reported a fourth-quarter loss of $64 million, or $3.29 per share.
Adjusted earnings per diluted share, which account for discontinued operations, were $2.18 — well under analysts’ expectations of $2.33 — versus earnings of $1.85 per share the previous year. Revenues also slid 2 percent to $675 million, while profit was down 38.6 percent to $29.7 million.
However, the company — parent to teen mall staple Journeys and shoe firms Johnston & Murphy and Schuh — posted comps that increased 4 percent, with stores growing 3 percent and direct-to-consumer up 10 percent.
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“The strength of our U.S. retail footwear concepts fueled our highest annual comparable sales increase in three years,” chairman, president and CEO Robert J. Dennis said in a statement. “Our top-line performance included positive store comps, which, along with our recent cost-reduction efforts, allowed us to leverage our brick-and-mortar expense structure.”
The quarter included the company’s sale of Lids through a $100 million cash agreement with FanzzLids Holdings following increased pressure from activist investors to let go of the struggling entity. Sports licensing and e-commerce firm Fanatics Inc. also made a minority investment in FanzzLids as part of a commercial arrangement connected with the deal, which was concluded on the last day of Genesco’s fiscal year. (The company recorded a loss of $98.3 million on the sale.)
“With the sale of the Lids Sports Group completed in early February, we began fiscal 2020 as a footwear-focused company,” Dennis explained. “Our strong strategic positioning, close connection with our customers and enduring leadership positions are what make each of our footwear businesses distinctive. With the new strategic course we have set for Genesco, we believe we are now in a stronger position to unlock the potential of our combined footwear businesses, utilize the platforms we have for future growth and generate greater shareholder value this year and over the long term.”
For the full year, Genesco posted a net loss of $51.9 million. Revenues improved 3 percent to $2.2 billion, compared with $2.1 billion the previous year, while same-store sales also rose 5 percent. Adjusted earnings per diluted share, not including Lids, were up 23 percent at $3.28.
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