Genesco Q4 Earnings Miss Estimates, Journeys Sales Increase Y/Y

Genesco Inc. GCO reported mixed fourth-quarter fiscal 2025 results, wherein the top and bottom lines lagged the Zacks Consensus Estimate. However, both metrics increased year over year.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.The company delivered a strong finish to the year, with fiscal fourth-quarter sales and gross margin exceeding expectations, and operating income rising significantly from the prior year. Achieving key priorities in fiscal 2025 led to improved comparable sales and profitability, setting the stage for further progress. With a footwear-focused strategy and Journeys' growth plan at the core, the company is confident in its ability to build on the momentum in fiscal 2026, and drive long-term profitable growth and shareholder value.Genesco Inc. Price, Consensus and EPS Surprise  Genesco Inc. price-consensus-eps-surprise-chart | Genesco Inc. QuoteGCO’s Quarterly Performance: Key InsightsThis retailer of branded footwear and accessories posted adjusted quarterly earnings of $3.26 per share, which underperformed the Zacks Consensus Estimate of $3.31. However, the bottom-line figure increased 25.9% from $2.59 in the prior-year period.Net sales of this Zacks Rank #2 (Buy) company rose 0.9% year over year to $745.9 million and lagged the Zacks Consensus Estimate of $785 million. Overall sales growth in the fiscal fourth quarter was primarily driven by a 5% increase at Journeys, partially offset by declines of 3% at Schuh, 6% at Johnston & Murphy and 12% at Genesco Brands.There was a 10% year-over-year increase in comparable sales, which included an 18% rise in e-commerce comparable sales and a 6% jump in same-store sales. However, the overall increase was partially offset by the negative impacts of the 53-week calendar shift, which added an extra week to the fourth quarter of fiscal 2024 and moved a higher-volume sales week into the third quarter of this year, along with the effects of net store closures.On a segment basis, comparable sales increased 14% at the Journeys, 2% at the Schuh and flat year over year at the Johnston & Murphy. The Zacks Consensus Estimate for comparable sales growth was pegged at 14% for Journeys and 3% for Schuh in the quarter under review.GCO’s Margin & Cost UpdateGross profit rose 2.2% year over year to $349.6 million, while the gross margin expanded 60 basis points (bps) year over year to 46.9%. This improvement was primarily driven by reduced markdowns at Journeys, and higher margins at Genesco Brands and Johnston & Murphy, partially offset by increased promotional activity at Schuh.Selling and administrative costs edged down 0.6% to $301.8 million. However, as a percentage of sales, the same fell 60 bps to 40.5%. This decrease was primarily led by lower occupancy costs, reduced selling salaries and other expense reductions from cost-saving initiatives, partially offset by higher marketing expenses and increased performance-based incentive compensation.Adjusted operating income was $47.9 million, up from $38.5 million in the prior-year quarter. The adjusted operating margin increased 120 bps to 6.4%.Genesco’s Financial SnapshotGCO ended the quarter with approximately $34 million in cash, no long-term debt and $547 million in shareholders’ equity. As of Feb. 1, 2025, inventories were $425.2 million, increasing 12.2% year over year. This increase was driven by higher inventory levels at Journeys, Johnston & Murphy, and Genesco Brands, partially offset by a decline at Schuh.The company did not repurchase any shares in the fiscal fourth quarter. However, throughout fiscal 2025, it repurchased 399,633 shares for $9.8 million at an average price of $24.49 per share. As of Feb.1, 2025, $42.3 million remained available under the expanded share repurchase authorization announced in June 2023.GCO’s Store UpdateThe capital expenditure for the fiscal fourth quarter totaled $14 million, primarily allocated to retail stores, as well as digital and omnichannel initiatives. The company opened four stores and closed 28 in the quarter, ending with 1,278 stores, a 5% decrease from 1,341 stores at the end of the prior-year quarter. Total square footage declined 3% year over year.GCO Stock Past Three-Month Performance Image Source: Zacks Investment Research Sneak Peek Into GCO’s OutlookFor fiscal 2026, the company expects overall comparable sales to increase 2-4%, driven by Journeys. Total sales are expected to be flat to up 1% year over year, factoring in a negative impact of approximately $14 million from foreign exchange and $30 million from store closures. By division, total year-end sales are expected to show a low-single-digit increase for Journeys. Schuh is anticipated to see slightly positive comparable sales, but total sales are projected to decline in the low-single digits due to foreign exchange headwinds. Johnston & Murphy’s total sales are expected to rise in the low-single digits, whereas Genesco Brands’ sales are forecast to decline in the low-single digits due to the expiration of certain licenses.The gross margin is expected to decline 20-30 basis points due to lower margins at Genesco Brands as inventory is cleared following the exit of licenses, product mix at Journeys and channel mix at Johnston & Murphy. SG&A expenses as a percentage of sales are expected to leverage 50-70 basis points due to store fleet optimization and cost-saving initiatives implemented over the past two years.Adjusted earnings per share from continuing operations are projected between $1.30 and $1.70. Capital expenditure for fiscal 2026 is projected between $50 million and $65 million. The guidance assumes no additional share repurchases, resulting in an estimated average share count of 11.3 million for fiscal 2026. Shares of the company have lost 37.9% in the past three months compared with the industry’s 19.3% decline.Other Stocks to ConsiderSome other top-ranked stocks are Boot Barn Holdings, Inc. BOOT, Deckers Outdoor Corporation DECK and lululemon athletica inc. LULU.Boot Barn is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Boot Barn’s fiscal 2025 earnings and revenues indicates growth of 21.4% and 14.9%, respectively, from the fiscal 2024 reported levels. BOOT delivered a trailing four-quarter average earnings surprise of 7.2%.Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It currently carries a Zacks Rank #2.The Zacks Consensus Estimate for DECK’s fiscal 2025 earnings and revenues implies growth of 21% and 15.6%, respectively, from the year-ago actuals. DECK delivered a trailing four-quarter average earnings surprise of 36.8%.lululemon is a yoga-inspired athletic apparel company that creates lifestyle components. It has a Zacks Rank of 2 at present. LULU delivered a 6.7% earnings surprise in the last reported quarter. The consensus estimate for lululemon’s fiscal 2025 earnings and revenues indicates growth of 12.5% and 9.7%, respectively, from the fiscal 2024 reported levels. LULU delivered a trailing four-quarter average earnings surprise of 6.7%.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Deckers Outdoor Corporation (DECK): Free Stock Analysis Report lululemon athletica inc. (LULU): Free Stock Analysis Report Boot Barn Holdings, Inc. (BOOT): Free Stock Analysis Report Genesco Inc. (GCO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks