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Genesco's (GCO) Comps Decline 3%, Online Business Strong

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Amid a challenging retail landscape, Genesco Inc. GCO reported soft sales performance for the quarter-to-date period ended Dec 26, 2020. Apparently, comparable sales (comps), including both stores and direct sales, dropped 3% for the same period. Moreover, same-store sales tumbled 14%. Nonetheless, its e-commerce sales jumped 49% on a comparable basis. The overall comps decline was primarily due to a significant drop at Johnston & Murphy Group and soft Journeys Group. Going by divisions, comps plunged 34% at Johnston & Murphy Group and 4% at Journeys Group, while the metric increased 29% at Schuh Group.

We note that Genesco's comp policy excludes any store shut for seven consecutive days or more. Hence, comps exclude periods of time for which stores were shuttered for seven consecutive days or more due to the pandemic. Markedly, the company's stores remained open for about 90% of the possible days in fiscal November and December. Schuh's stores were operating for roughly 50% of this period.

Coming to sales data, Genesco's overall sales also fell 8% for the quarter-to-date period ended Dec 26, 2020. Going by divisions, sales plunged 3% at Johnston & Murphy Group, 5% at Journeys Group, and 9% at Schuh Group. On the flip side, sales at Licensed Brands climbed 201%. Further, total store sales fell 21% while total direct sales increased 48%.

Given the tough backdrop due to the pandemic, management remains encouraged with the overall performance during the holiday period. While Journeys Group continued to witness robust full-price selling, Schuh Group generated better-than-expected results despite significant mandated store closures. Management further added that fiscal January has kicked off to a solid start with positive comps. This builds optimism regarding the possibility of fiscal 2021 ending on a good note.


 

We note that shares of this Zacks Rank #3 (Hold) company rose 11.7% during the trading session on Jan 11. Over the past three months, the Nashville, TN-based company has seen its shares increase 77.1%, outperforming the industry’s 55.2% rally. The company has been witnessing strength in its online business, with robust gains in both traffic and conversion. It has been making investments across mobile, websites and distribution centers. It has also introduced services like Klarna at Journeys. Klarna, which has a pay-in-4 installment option, is expected to boost customers’ shopping experience and in turn the company’s top line.

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