Genesco ‘Advancing” Plans to Sell Lids
Genesco is “advancing” plans to sell sports fan retailer Lids and has “narrowed the alternatives” for the business, CEO Robert Dennis told analysts in releasing earnings.
Genesco, which acquired Lids in 2004, moved in February to put the 1,159-store chain up for sale. Lids “struggles with store traffic” in a market that is “between trends,” Dennis said. Its operating income fell 63 percent to $1.1 million in Q2 ended Aug. 4 as revenue slipped 7.4 percent to $166.8 million on a five percent decline in same-store sales.
“We have seen this in the past with snapbacks, knits, bucket hats and most recently dad hats” that hit their peak in 2016, Dennis said. Lids NFL-related business also was “off significantly” in 2017, tied largely to high-profile players being injured and high-profile teams underperforming; the chain won’t “pick much of that’ lost business this year, Dennis said. It’s too early to “get a good read” on sales prospects for the current NFL season, he said.
Genesco expects to close 44 Lids stores this year, on top of shutting 81 in the year ended Feb. 3, 2018. It operated Lids (853), Lids Locker Room and Clubhouse (184) and Locker Room By Lids (122) stores as of Feb. 3, the latter as leased operations inside Macy’s locations.
Meanwhile, Genesco’s licensing business (it both operates retail stores and is a branded footwear licensee) narrowed its operating loss to $396,000 in Q2 ended Aug. 4 from $1 million a year earlier. Licensing revenue rose 4.7 percent to $15.3 million despite the ending on Jan. 30, 2018of a three-year agreement with G-III Apparel Group for Bass men’s and women’s footwear. Genesco also has a licensing agreement with Levi Strauss & Co. for Dockers men’s footwear that expires on Nov. 30.
Overall, Genesco’s Q2 net loss narrowed to $15,000 from $3.9 million a year ago as revenue rose six percent to $653.8 million as its Journeys footwear chain reported a 10 percent gain in same-store sales.
Genesco, Mimi Vaughn, CFO,615-367-7000