"We are pleased with our second quarter performance, which combined with our first quarter results, represent a strong start to Fiscal 2023 on top of last year's stimulus-induced spending environment. Strength from our Schuh and Johnston & Murphy businesses and careful expense control helped offset softness late in the quarter versus expectations at Journeys to deliver earnings ahead of projections", commented Mimi E. Vaughn, Genesco board chair, president and chief executive officer.

Second Quarter Results

In the second quarter of fiscal 2023, Genesco's net sales declined by 4%, reaching 535 million US dollars, as compared to 555 million US dollars in the same period of fiscal 2022, when sales benefited from the distribution of stimulus funds. The company reported, however, that net sales grew by 10%, on a comparable basis to fiscal 2020, before the COVID-19 pandemic breakout.

Overall, in the three months to the 30^th of June, sales at Journeys, the group's main business, declined by 7%, amounting to 321.3 million US dollars, by 7% at Schuh (up by 9% on a constant currency basis), totalling 101.5 million US dollars, and by 10% at Licenced Brands, adding up to 37.7 million US dollars, as compared to the same quarter of fiscal 2022. These results were partially offset by a 22% increase in sales at Johnston & Murphy, which generated 74.8 million US dollars.

Genesco's gross margin contracted 160 basis points year-over-year to 47.5% in this second quarter, reflecting the "increased markdowns in the Journeys business as they returned more normalized promotional environment and higher freight and logistics costs in the Johnston & Murphy business".

In the second quarter of the current fiscal year, net earnings from continuing operations totalled 7.7 million US dollars, as compared to 10.9 million US and 0.8 million US dollars in the second quarter of fiscal 2022 and 2020, respectively. Adjusted second net earnings from continuing operations corresponded to 7.7 million US dollars, or 0.59 US dollars per share, as compared to 15.3 million US dollars, or 1.05 US dollars per share, in the second quarter of last year, or 0.15 US dollars per share, in the second quarter of fiscal 2020.

Fiscal 2023 Outlook

"While we've seen nicely improved trends through August and we saw a good start to the back-to-school season, sales didn't achieve levels contemplated in our previous guidance. With these current trends and in light of the current impact inflation is having on consumer discretionary spending we believe it's prudent to take a more conservative approach to our back half outlook", added Mimi E. Vaughn.

For fiscal 2023, the company is now expecting sales to be down by 3% to flat, as compared to the prior guidance of growth of up to 1% to 3%, and adjusted diluted earnings per share from continuing operations in the range of 6.25 US dollars to 7.00 US dollars (prior guidance: 7.00 US dollars to 7.75 US dollars).