News Release

NASHVILLE, Tenn., Aug. 29, 2013 /PRNewswire/ -- Genesco Inc. (NYSE: GCO) today announced estimated results of continuing operations for the second quarter ended August 3, 2013, and a potential change in accounting for certain bonus awards payable under the Company's EVA Incentive Plan as discussed below under the heading "Potential Accounting Correction."  In order to provide an estimate on a comparable basis with previously reported periods, and assuming for this purpose the continued application of the Company's historical method of accounting for such bonus awards, which is under review by the Company and its independent auditors, the Company estimates earnings from continuing operations for the second quarter ended August 3, 2013 would be $12.1 million, or $0.52 per diluted share, compared to previously reported earnings from continuing operations of $10.6 million, or $0.44 per diluted share, for the second quarter ended July 28, 2012.  The Company's current estimate of the maximum effect of any potential accounting change on reported earnings and diluted earnings per share for the second quarter of Fiscal 2014 and other periods is set out in Schedule C to this announcement.

Fiscal 2014 second quarter results are expected to reflect expenses of $0.7 million, or $0.04 per diluted share after tax, including $2.8 million of expenses related to deferred purchase price payments in connection with the acquisition of Schuh Group Limited, which are required to be expensed as compensation because the payment is contingent upon the payees' continued employment,  and $1.2 million for other legal matters, network intrusion expenses and asset impairment charges, partially offset by a net gain of $3.3 million on the  termination of  the lease of a New York City Journeys store location. Last year's  second quarter results included $3.3 million, or $0.06 per diluted share after tax, in deferred purchase price payments in connection with the acquisition of Schuh Group Limited and asset impairment charges, decreased by tax rate adjustments.

Adjusted for the items described above in both periods and before any adjustments related to the matters discussed under the heading "Potential Accounting Correction," below, earnings from continuing operations were $13.2 million, or $0.56  per diluted share, for the second quarter of Fiscal 2014, compared to earnings from continuing operations of $12.1 million, or $0.50 per diluted share, for the second quarter of Fiscal 2013.  For consistency with Fiscal 2014's previously announced earnings expectations and with previously reported adjusted results for the prior year period, the Company believes that the disclosure of the results from continuing operations adjusted for these items will be useful to investors. A reconciliation of earnings and earnings per share from continuing operations in accordance with U.S. Generally Accepted Accounting Principles with the adjusted earnings and earnings per share numbers presented in this paragraph is set forth on Schedule B to this press release.

Net sales for the second quarter of Fiscal 2014 increased 5.7% to $574.7 million from $543.5 million in the second quarter of Fiscal 2013, reflecting a comparable store sales decrease of 2%.  The Lids Sports Group's comparable store sales decreased by 3%, the Journeys Group decreased by 1%, Schuh Group decreased by 7%, and Johnston & Murphy Retail increased by 7%.

Robert J. Dennis, chairman, president and chief executive officer of Genesco, said, "We are disappointed that our second quarter performance fell short of expectations.  Sales trends proved to be more challenging as the quarter progressed and results came in below our plan. The third quarter has gotten off to a difficult start with comparable sales down 3% through  Saturday, August 24. Despite our current sales trajectory we remain optimistic that we can deliver a modest comp improvement in the fourth quarter based primarily on a product mix shift in footwear that moves in our favor and easier comparisons for Journeys and Lids."

Dennis also discussed the Company's updated outlook.  "Based on second quarter performance and month to date results for August, we are lowering our outlook for Fiscal 2014. We now expect adjusted Fiscal 2014 diluted earnings per share, prior to any change in accounting for the Company's bonus accruals, to be in the range of $5.20 to $5.30, a 3% to 5% increase over Fiscal 2013's adjusted earnings per share of $5.06, down from our previously issued guidance of $5.57 to $5.67. Consistent with our previous guidance, these expectations do not include non-cash asset impairments , network intrusion expenses and other legal matters offset in part by the net gain on the lease termination.  We estimate that these items will be in the range of $1.0 million to $2.0 million pretax, or $0.02 to $0.05 per share, after tax, in Fiscal 2014. They also do not reflect compensation expense associated with the Schuh deferred purchase price as described above, which is currently estimated at approximately $11.5 million, or $0.49 per diluted share, or any additional expense related to the potential change in accounting for the Company's EVA Incentive Plan bonus accruals, which we believe could range as high as $12.7 million pretax, or $0.32 per share, after tax, for the full year. This guidance assumes a comparable sales increase in the low single digit range for the full fiscal year, including a low single digit decline in the third quarter and a low to mid-single digit increase in the fourth quarter."  A reconciliation of the adjusted financial measures cited in the guidance to their corresponding measures as reported pursuant to U.S. Generally Accepted Accounting Principles is included in Schedule B to this press release.

Dennis concluded, "We continue to feel good about the strategic strengths of each of our businesses and the long-term growth prospects for our Company. We've successfully navigated through uncertain consumer environments before and I'm confident we are doing the right things to ensure we once again emerge with our dominant market positions intact."

Potential Accounting Correction
Under the Company's EVA Incentive Plan, bonus awards in excess of a specified cap in any year are retained and paid out over the three subsequent years, subject to reduction or elimination by deteriorating operating performance or subject to forfeiture if the participant voluntarily resigns from employment with the Company or is terminated for cause before the retained amount is paid.  Historically, the Company has accrued the full amount of the retained bonus in the year in which it was determined.

The Company is considering with its independent auditors whether U.S. GAAP requires that the retained bonus be expensed across the three-year period rather than fully accrued in the year it is determined because the participant forfeits the retained bonus if he or she voluntarily resigns or is terminated for cause before the retained bonus is paid out and because payment of the retained amount remains subject to performance throughout the three-year payment period.  The Company expects to reach a conclusion regarding the occurrence of an error and implement any required accounting changes for all affected periods before it files its Quarterly Report on Form 10-Q for the quarter ended August 3, 2013.  Depending on the materiality of any required changes, the Company may restate certain prior financial statements.  Schedule C to this announcement assumes the conclusion requires a restatement of results for prior years and sets forth the Company's current estimate of the maximum effect of any potential accounting change on reported earnings and diluted earnings per share from continuing operations for each of the fiscal years ended 2012 and 2013 and for the first and second fiscal quarters of Fiscal 2013 and Fiscal 2014.

Conference Call and Management Commentary
The Company has posted detailed financial commentary in writing on its website, www.genesco.com, in the investor relations section. The Company's live conference call on August 29, 2013 at 7:30 a.m. (Central time), may be accessed through the Company's internet website, www.genesco.com. To listen live, please go to the website at least 15 minutes early to register, download and install any necessary software.

Cautionary Note Concerning Forward-Looking Statements
This release contains forward-looking statements, including those regarding the performance outlook for the Company and its individual businesses (including, without limitation, sales, margins and earnings) and all other statements not addressing solely historical facts or present conditions. Actual results could vary materially from the expectations reflected in these statements. A number of factors could cause differences.  These include adjustments to estimates reflected in forward-looking statements, including whether an accounting error has occurred, the estimated effects of any potential change in accounting related to the matters discussed in this announcement under the heading "Potential Accounting Changes" for historic and future periods; the amount of required accruals related to the earn-out bonus potentially payable to Schuh management based on the achievement of certain performance objectives; the timing and amount of non-cash asset impairments related to retail store fixed assets or to intangible assets of acquired businesses; weakness in the consumer economy; competition in the Company's markets; inability of customers to obtain credit; fashion trends that affect the sales or product margins of the Company's retail product offerings; changes in buying patterns by significant wholesale customers; bankruptcies or deterioration in financial condition of significant wholesale customers; disruptions in product supply or distribution; unfavorable trends in fuel costs, foreign exchange rates, foreign labor and material costs, and other factors affecting the cost of products; the Company's ability to continue to complete and integrate acquisitions, expand its business and diversify its product base; and changes in the timing of holidays or in the onset of seasonal weather affecting period-to-period sales comparisons. Additional factors that could affect the Company's prospects and cause differences from expectations include the ability to build, open, staff and support additional retail stores and to renew leases in existing stores and maintain reductions in occupancy costs achieved in recent lease negotiations, and to conduct required remodeling or refurbishment on schedule and at expected expense levels; deterioration in the performance of individual businesses or of the Company's market value relative to its book value, resulting in impairments of fixed assets or intangible assets or other adverse financial consequences; unexpected changes to the market for the Company's shares; variations from expected pension-related charges caused by conditions in the financial markets; and the outcome of litigation, investigations and environmental matters involving the Company. Additional factors are cited in the "Risk Factors," "Legal Proceedings" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of, and elsewhere in, our SEC filings, copies of which may be obtained from the SEC website, www.sec.gov, or by contacting the investor relations department of Genesco via our website, www.genesco.com. Many of the factors that will determine the outcome of the subject matter of this release are beyond Genesco's ability to control or predict. Genesco undertakes no obligation to release publicly the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Forward-looking statements reflect the expectations of the Company at the time they are made. The Company disclaims any obligation to update such statements.

About Genesco Inc.
Genesco Inc., a Nashville-based specialty retailer, sells footwear, headwear, sports apparel and accessories in more than 2,480 retail stores throughout the U.S., Canada, the United Kingdom and the Republic of Ireland, principally under the names Journeys, Journeys Kidz, Shi by Journeys, Underground by Journeys, Schuh, Lids, Locker Room by Lids, Johnston & Murphy, and on internet websites www.journeys.com, www.journeyskidz.com, www.shibyjourneys.com, www.undergroundbyjourneys.com, www.schuh.co.uk, www.johnstonmurphy.com,  www.lids.com,  www.lids.ca, www.lidslockerroom.com, www.lidsteamsports.com, www.lidsclubhouse.com , www.suregripfootwear.com and www.dockersshoes.com.  In addition, the Company sells wholesale footwear under its Johnston & Murphy brand, the licensed Dockers brand, SureGrip, and other brands, and operates the Lids Team Sports team dealer business. For more information on Genesco and its operating divisions, please visit www.genesco.com.

SOURCE Genesco Inc.

Financial Contact: James S. Gulmi (615) 367-8325, Media Contact: Claire S. McCall (615) 367-8283