Genesco Earnings Call Insights: Comp Improvement and Incremental Gains

Genesco (NYSE:GCO) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.

Comp Improvement

Scott Krasik – BB&T Capital Markets: Bob, good to see the sequential improvement in the Lids comps, can you drill down a little bit more on the categories that you’re seeing the improvement in? Then secondly to the fact that you had a little bit of excess inventory in some of these categories mean that you’re expecting an even better comp improvement and if so, why?

Robert J. Dennis – Chairman, President and CEO: A lot of the orders get placed further back and so, our expectations for comps, as we went through the fourth quarter, obviously came down, but we brought in what we brought in and we can adjust the inventory with future receipts. Then as Jim Gulmi mentioned, the excess inventory sits in basically Yankee hats and Cub hats and product that we think doesn’t have mark down risk. So, we’re not very worried about it. The mix of the business, Scott, hasn’t changed that much. So, the improvement has come across the board, and we are doing a really big business in Snapbacks. We got more price competitive within the fourth quarter near the end of it, and we’ve maintained that position. So that has allowed us to continue to do a lot of business in that category. It’s a very fast category and as Jim noted, our percent of sales for Snaps are much higher than the percent of inventory, and so we feel like we’re in a very good position there, but there really hasn’t been a big move other than the tests we’ve done with a number of the fitted categories we brought in the new programs and the freshness I think has helped the business a little bit. But we are anxious to see if we can get more traction on those fitted programs and actually take share from Snaps. The customer right now is still all over Snaps.

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Scott Krasik – BB&T Capital Markets: Do you have any – I was glad to hear you say that the competition maybe has abated a little bit. Is there any belief on your side that that’s permanent, if so why?

Robert J. Dennis – Chairman, President and CEO: Not sure, Scott. Our team thinks that a lot of them look for holiday items and so it was brought into those stores as a holiday item. In some instances and this is not across the board but I think the vendors recognized that (over) distribution carries a little bit of risk. So that can be a factor. Then also we got more aggressive on price. So we made it a little more difficult. The thing that you have to realize in the hat business and maybe they also woke up to this is, that part of the hat business is fast and that most of those non-traditional guys are not set up for fast fashion. So we are freshening up that cabinet on a regular basis and they if did one big buy, they probably saw a deterioration in their sell-throughs because what was fresh at the beginning wasn’t very fresh at the end…

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