NASHVILLE, Tenn. - Genesco Inc . (NYSE: NYSE:GCO) reported a significant earnings miss in its fourth quarter, with adjusted EPS coming in at $2.59, notably below the analyst consensus of $3.04. The company's revenue for the quarter was $739 million, exceeding the consensus estimate of $722.66 million.
Despite the revenue beat, the footwear-focused company's stock plummeted by 16.54% following the announcement, indicating a stark reaction from investors to the earnings shortfall and a weaker-than-expected outlook for Fiscal 2025.
The company's earnings were impacted by a challenging retail environment, as highlighted by Mimi E. Vaughn, Genesco’s Board Chair, President, and Chief Executive Officer. Vaughn pointed out the significant shift in consumer shopping behavior, particularly at the company's Journeys stores, where shoppers focused almost exclusively on key footwear items, moving away from boots.
This shift put pressure on the core product assortment more than anticipated at the beginning of the fourth quarter. Despite these challenges, Genesco achieved record sales for Schuh and Johnston & Murphy.
For the fourth quarter, net sales increased 2% to $739 million compared to the same period last year, which had 13 weeks. However, comparable sales were down 4%, with a 7% decrease in stores and a 5% increase in direct sales. E-commerce sales represented 27% of retail sales, up from 25% last year.
Looking ahead, Genesco provided guidance for Fiscal 2025, expecting adjusted diluted earnings per share from continuing operations in the range of $0.60 to $1.00. This forecast is significantly below the analyst consensus of $2.48 and assumes no further share repurchases and a tax rate of 26%.
Thomas A. George, Genesco’s Chief Financial Officer, commented on the difficult operating environment and the urgent actions being taken to improve the core product assortment. However, he anticipates the current sales dynamic to remain a significant headwind in the first half of Fiscal 2025.
The company's performance and guidance indicate that while it has navigated through a tough retail landscape, further efforts are needed to align with the evolving consumer demands and market conditions.
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