Genesco Inc. (GCO) has reported a 20.34 percent fall in profit for the quarter ended Oct. 29, 2016. The company has earned $25.90 million, or $1.30 a share in the quarter, compared with $32.51 million, or $1.42 a share for the same period last year. On the other hand, adjusted net income from continuing operations for the quarter stood at $25.55 million, or $1.28 a share compared with $32.19 million or $1.40 a share, a year ago.
Revenue during the quarter dropped 8.15 percent to $710.82 million from $773.90 million in the previous year period. Gross margin for the quarter expanded 172 basis points over the previous year period to 50.03 percent. Total expenses were 94.32 percent of quarterly revenues, up from 93.27 percent for the same period last year. That has resulted in a contraction of 105 basis points in operating margin to 5.68 percent.
Operating income for the quarter was $40.35 million, compared with $52.05 million in the previous year period.
However, the adjusted operating income for the quarter stood at $40.94 million compared to $52.20 million in the prior year period. At the same time, adjusted operating margin contracted 99 basis points in the quarter to 5.76 percent from 6.75 percent in the last year period.
Robert J. Dennis, chairman, president and chief executive officer of Genesco, said, "Consolidated comparable sales for the third quarter came in ahead of our expectations, thanks to better than expected sales at the Lids Sports Group and Schuh Group. Our top-line performance, effective management of selling costs, and share repurchases made during the quarter allowed us to deliver earnings per share ahead of expectations. We were able to offset some of the bottom line pressure caused by negative expense leverage on lower sales versus last year through gross margin expansion, primarily a significant increase in the Lids Sports Group."
For financial year 2017, Genesco Inc. projects net income from continuing operations to be in the range of $76 million to $81.75 million. It expects adjusted net income from continuing operations to be in the range of $76.50 million to $80.56 million. It expects diluted earnings per share to be in the range of $3.77 to $4.06. It expects diluted earnings per share to be in the range of $3.80 to $4 on adjusted basis for the same period.
Working capital declines
Genesco Inc. has witnessed a decline in the working capital over the last year. It stood at $522.29 million as at Oct. 29, 2016, down 5.46 percent or $30.19 million from $552.48 million on Oct. 31, 2015. Current ratio was at 2.40 as on Oct. 29, 2016, up from 2.27 on Oct. 31, 2015.
Cash conversion cycle (CCC) has decreased to 33 days for the quarter from 119 days for the last year period. Days sales outstanding were almost stable at 7 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 92 days for the quarter compared with 172 days for the previous year period. At the same time, days payable outstanding went up to 66 days for the quarter from 62 for the same period last year.
Debt moves up
Genesco Inc. has witnessed an increase in total debt over the last one year. It stood at $226.25 million as on Oct. 29, 2016, up 5.35 percent or $11.48 million from $214.76 million on Oct. 31, 2015. Total debt was 14.17 percent of total assets as on Oct. 29, 2016, compared with 12.32 percent on Oct. 31, 2015. Debt to equity ratio was at 0.26 as on Oct. 29, 2016, up from 0.23 as on Oct. 31, 2015. Interest coverage ratio deteriorated to 27.12 for the quarter from 39.14 for the same period last year.
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