The formerly high-flying shares of Genesco fell almost 10 percent in Friday morning trading after the shoe and hat retailer said its November sales were lower than last year's even after backing out the impact of Superstorm Sandy.
At about 11:20 a.m., Genesco stock (Ticker: GCO) were changing hands around $54.85, down about 9.4 percent on the day. Volume was very heavy, with more than double the average daily volume trading in the first two hours of the session.
Spooking investors was a 4 percent drop in same-store sales in November, which led the Genesco team to lower its same-store sales forecast for the fourth quarter to flat. Chairman, President and CEO Bob Dennis said consumers remain interested in spending around events — back-to-school activity was strong and Thanksgiving weekend sales were up in the low-single-digit range — but retreat without such stimuli.
The stock's drop at the open was not reversed despite the best efforts of Dennis, who said on his team's conference call that Genesco's business did better than it at first appears even though November was a tough month for many retailers. The main one-time factors affecting sales were Sandy, the rolling over of big 2011 sales from the company's St. Louis Cardinals stores and the National Hockey League lockout, especially in Canada.
The November numbers overshadowed strong third-quarter numbers that handily beat analysts' expectations, with adjusted earnings per share coming in at $1.44 versus $1.27. Adjusted profits were $34.5 million compared to $29.1 million a year ago, as total sales rose 8 percent to $664 million and operating profits climbed 14 percent to $52.4 million.