Genesco Inc. (NYSE:GCO) Q1 2017 Earnings Conference Call - Preliminary Transcript

May 26, 2016 • 08:30 am ET

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Genesco Inc. (NYSE:GCO) Q1 2017 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Good day, everyone, and welcome to the Genesco First Quarter fiscal 2017 conference call. Just a reminder, today's call is being recorded.

Participants on the call expect to make forward-looking statements. These statements reflect the participants expectations[Technical Issues] Due to the length of recent conference calls, participants will have the opportunity for one question and one follow up during the question-and-answer

Session. I will now turn the call over the Bob Dennis, Genesco's, Chairman, President, and Chief Executive Officer. Please go ahead, sir.

Executive
Bob Dennis

Good morning, and thank you for being with us. I'm joined today by our Chief Financial Officer, Mimi Vaughn. Our bottom-line results for the first quarter improved from a year ago and exceeded our expectations, driven by a significantly better performance

From the Lids Sports Group. Adjusted earnings per share were $0.62, up from $0.51 last year. Comparable sales increased 1%, at the lower end of

Expected range, but gross margin was considerably better than anticipated and was the major contributor to the better results for the quarter.

Comps in our US businesses were solid in the quarter first two months of the quarter, benefiting from the catch-up in income tax refunds and an

Earlier Easter. The comps for the full quarter, however, reflected a significant slowdown during the during the last two weeks of April that led to the 1% comp overall. Over in the UK, the retail environment remained challenging throughout the quarter,

Particularly at the end, resulting in negative comps for our business there. A major contributor to the improvement in first-quarter profitability was the significant

Swing at Lids, as we began to gain traction, turning thatbusiness around following multiple initiatives we executed during fiscal 16. This included reducing Lids' retail

Inventories 25% by year end through heightened promotional activity that we ramped up throughout the year and especially intensified in the fourth quarter. This allowed us to start fiscal 17 in a much cleaner inventory position to drive full-price selling and higher margins. In addition, while sales in Q1 were challenged by the offset to Ohio State winning the College Football Championship last year, we benefited from a favorable NBA playoff lineup and a strong start to the baseball season.

Beyond the benefits coming from clean inventory and fresh receipts, Lids'shipping and warehousing costs, which is part of reported gross margin, improved due to recent technology investments, warehouse consolidation,and other initiatives that have driven supply chain efficiencies. I'd like to give a shout out to the entire Lids Team. This Team has worked hard and persevered through a very difficult year and a half to get thebusiness back on solid footing, including the past three months when everyone carried additional weight as we transitioned to new Leadership. Thank you, and congratulations on a fine first quarter. And I also want to welcome David Baxter to the Genesco family. David officially joins us next week as Chief Executive Officer of the Lids Sports Group. David has spent the majority of his career in key senior