Genesco Inc. is starting to see some positive signs in the mall and is looking to turn the corner soon, raising its earnings guidance for the current year to deliver EPS in the $1.37 to $1.44 per share range on sales between $901 million and $920 million. In November, the company forecasted earnings of $1.36 to $1.41 a share on sales of $911 million to $916 million. The revised estimate including charges of approximately 9 cents per share associated with the planned closing of Jarman and other underperforming stores in fiscal 2005.

The guidance does not include any impact from the company’s pending acquisition of Hat World.

The revised estimate was undoubtedly prompted by a strong earnings performance in the fourth quarter ended January 31 and expectations of improved athletic footwear business as they close the Jarman stores in favor of the Underground Station format. Net earnings for Q4 were up 20.7% to $16.9 million, or 77 cents per diluted share, compared with $14.0 million, or 55 cents per diluted share, for the year-ago period.

Net sales for the fourth quarter of fiscal 2004 were $253 million compared to $250 million for the fourth quarter of fiscal 2003.

Comparable store sales were “flat” at Journeys, impacted a bit by lower average selling prices in footwear. Footwear unit comps were up 6%, but ASP was down 8% due to “product mix”. GCO sees the trend “moderating” in the current year. February comps were up more than 10%. Journeys Kids had a 16% comp store sales gain for the quarter.

Athletic footwear was 37% of total quarter sales at Journeys, up from 28% last year. Women’s was 40%, up from 33% last year.

Journeys indicated that Converse, Phat Farm, Saucony, adidas, Vans, Etnies, and DC Shoes were all key brands for the unit. They will be introducing Tommy Girl to the mix this spring and now have Nike AF1 for 35 doors. Nike “Indy” product will be in 85 doors in June.

The Journeys unit showed better-than-expected gross margins due to lower markdown levels. Pre-tax earnings for the unit were up 18.2% to $26.1 million for the quarter versus $22.1 million in the year-ago period.

The Underground Station/Jarman Group unit saw comp store sales fall “about 8%” in the fourth quarter, compared to an increase of 9% last year. Underground Station stores comps were down 7% versus a 17% gain in the year-ago period. February comps were “flat”.

The business was reportedly impacted by a decline in demand for Euro-casual and utility-inspired products, which came in below both plan and last year. Underground Station is focusing more attention going forward on the women's and fashion athletic businesses.

Key brands that will see increased focus include Nike, adidas, K-Swiss, Phat Farm, Fubu, and Tommy Girl. Women’s was 24% of the business for the quarter, up from 14% in Q4 LY. Athletic was 15% of business up from 9% in the year-ago quarter. Station had Nike AF1 for 85 doors and Jordan and other LE product in a fewer number of doors.

GCO will close 34 Jarman stores over the year and convert the remaining 62 stores to Underground Station stores “as quickly as it is financially feasible”.

Pre-tax earnings in the Jarman/Underground Station unit were down 12.0% fro the quarter to $5.0 million versus $5.7 million in the year-ago period.