• Q2 earnings fall to US$4.8m
  • Costs weigh on earnings
  • Sales increase 7.1%

Genesco has revealed a "disappointing" second-quarter in which the US apparel and footwear retailer reported a decline in earnings and lowered full-year expectations.

Earnings almost halved to US$4.8m in the three months to 2 August, from $8.5m a year earlier.

The results reflect expenses of $3.6m, including $2.2m of costs related to its Schuh Group acquisition, and $1.4m in network intrusion expenses, asset impairment charges and other legal matters.

Net sales increased 7.1% to $615m from $575m in the second quarter of fiscal 2014. Consolidated comparable sales, including same store sales and comparable e-commerce and catalogue sales, increased 2%.

CEO Robert Dennis, said: "We are disappointed with our second-quarter earnings performance. Solid comparable sales gains and a strong top-line performance in our direct businesses were not enough to offset a sales and gross margin shortfall versus plan at the Lids Sports Group. The third quarter is off to a solid start, with consolidated comparable sales for the company up 4% through 23 August."

Based on the second quarter performance, and slightly lower expectations for Lids, the company is forecasting adjusted full-year diluted EPS of $5.10 to $5.20, down from previous guidance of $5.40 to $5.55.

This guidance assumes a comparable sales increase in the low single-digit range.

Dennis concluded: "We continue to believe our longer-term future is compelling based on the strength of our brands and the numerous omni-channel initiatives that are helping fortify their strategic positions."