What happened
Shares of Genesco (GCO 0.46%), the diversified footwear company and owner of Journeys, Schuh, and Johnston & Murphy, posted mostly weak results in its second-quarter earnings report but still beat estimates and raised its guidance for the full year, which was enough to please the market.
As of 11:42 a.m. ET, the stock was up 11.7%.
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So what
Overall comparable sales at the company were down 2%, with store-based comps down 6% and online sales up 14%.
Comps rose 12% at Johnston & Murphy and 17% at Schuh but were down 11% at Journeys, the company's biggest retail segment.
Consequently, total revenue fell 2% to $523 million, but that beat the analyst consensus at $497.3 million.
Gross margin in the quarter improved 20 basis points to 47.7%, and e-commerce sales represented 21% of retail sales, up from 18% in the quarter a year ago.
Selling, general, and administrative expenses jumped in part due to a reversal of performance-based compensation expense a year ago, and the company finished the quarter with an adjusted loss of $0.85 per share, down from a $0.59-per-share profit in the quarter a year ago, but that still topped estimates at a loss of $1.23.
That figure also excludes a $28.5 million pre-tax goodwill impairment charge due to a dispute with a Genesco Brands Group licensor.
CEO Mimi Vaughn cited a challenging operating environment but said trends improved at Journeys, which Schuh and Johnston & Murphy continue to outperform. She also said the company is planning to close around 100 Journeys stores to reduce costs by $40 million.
Now what
Genesco's business is seasonal, weighted toward the back-to-school and holiday shopping seasons, meaning the second-quarter loss isn't as concerning as it might seem.
Looking ahead, the company maintained its forecast of $2.00 to $2.50 in adjusted EPS and raised its revenue guidance to a decline of 2%–4%, compared to an earlier decline of 4%–5%.
While the business still has plenty of room for improvement, this was a solid quarter in a difficult retail environment for the footwear stock.
