Genesco is tapping into the renewed focus on athletic in the mall, deciding to add Nike to their broad breadth of footwear suppliers at Journeys and Underground Station. The company said it will add Nike to a “majority” of Underground Station stores and 35 Journeys stores in Q1 2004. GCO said they think “Nike is more appropriate for Underground at this time”.
The company cited a combination of unseasonably warm weather throughout much of the country and a merchandise trend that extended the demand for athletic footwear later into the season, slowing the transition into seasonal casual shoes.
The Athletic business was 44% of Journeys business, up from 33% last year. Management said they were going to increase its commitment to fashion athletic. Athletic is only 17% of Undergrounds sales and the company feels they could be stronger there. The Nike push should add some strength. Comp store sales at Underground Station fell 7.0% in the third quarter, compared to an increase of more than 21% last year.
Genesco will also be promoting more in 2004, indicating in a call with analysts that they will not be promoting fresh, first-line products.
GCO shares were down 15.3% for the week to close at $15.85 on Friday after third quarter earnings fell just a penny short of analysts expectations. What appeared to drive shares lower was the companys Q4 EPS guidance that fell short of analysts estimates of 80 cents per share. GCO is forecasting earnings in the range of 63 cents to 67 cents per share on sales of $251 million to $254 million.
Genesco also forecast fiscal 2004 profit from $1.16 to $1.20 a share, including a charge of 8 cents a share, on sales in the $836 million to $839 million range. Analysts were looking for $1.41 a share.
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