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Big quarterly loss by Lids sends Genesco's stock reeling

June 5, 2018

Zionsville-based Lids Sports Group suffered a $5.4 million loss in its latest quarter, dragging down overall results for corporate parent Genesco Inc.

Shares in Nashville, Tennessee-based Genesco fell about 14 percent, to $38.65 each, Tuesday morning after it released its first quarter earnings report.

Lids, which sells caps and other athletic apparel, had sales of $159 million, down 10.3 percent compared with the same period a year ago.

Comparable sales at Lids—a figure that includes both in-store and online purchases—decreased 7 percent. Comparable sales measure revenue from stores and online channels that have been in operation for at least a year. They are considered an important performance metric in the retail industry.

Lids had 1,141 stores at the end of the quarter, including 122 locations in Macy’s department stores. That was down from 1,240 stores a year ago.

Genesco announced in February that it planned to sell Lids and focus on its core business of selling footwear. During a conference call with investors Tuesday morning, Genesco CEO Robert Dennis declined to provide updates or answer questions about Lids’ status, saying the company will refrain from comment until there is news to report.

Revenue from Lids accounted for 25 percent of Genesco’s quarterly sales. Genesco’s other holdings include Journeys Group, Johnston & Murphy Group, Europe-based Schuh Group and a licensed branding operation. 

As a whole, Genesco suffered a quarterly loss of $2.3 million, or 12 cents per share, compared with an $885,000 profit, or 5 cents per share, during the same period a year earlier.

Genesco’s sales for the quarter totaled $645 million, up less than 1 percent over the same period in 2017. Comparable sales were down 1 percent.

The company reiterated its full-year guidance, saying it expects adjusted earnings in the range of $3.05 to $3.45 per share and comparable sales in the range of flat to 2 percent growth. That guidance includes full-year comparable sales declines at both Lids and Schuh, with comparable sales increases at Journeys and Johnston & Murphy.

Genesco said it expects Lids’ comparable sales to decline for the full year within a range of 1 percent to 3 percent.

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