Genesco Reports Fourth Quarter and Fiscal 2003 Sales and Earnings
The items in the fourth quarter of fiscal 2003 include the cost of recognizing the asset impairment in 14 under-performing retail stores identified as suitable for closing if acceptable lease terminations can be negotiated, the payments related to the termination of one of those leases, and severance payments. The majority of these items relate to the Johnston & Murphy division.
Earnings before discontinued operations for the fourth quarter (reported pursuant to Generally Accepted Accounting Principles and including the listed items) were $14.2 million, or $0.56 per diluted share, this year, compared to $15.8 million, or $0.61 per diluted share, for the fourth quarter of fiscal 2002. Net sales for the fourth quarter were $250 million compared to $222 million in the earlier period.
For the year ended February 1, 2003, earnings before discontinued operations were $38.4 million, or $1.55 per diluted share, excluding the items shown on the table, compared with $38.0 million, or $1.52 per diluted share, excluding the items shown on the table for fiscal 2002. Earnings before discontinued operations (reported pursuant to Generally Accepted Accounting Principles and including the listed items) for fiscal 2003 were $36.4 million, or $1.47 per diluted share, compared with $38.3 million, or $1.54 per diluted share, for the previous year. Net sales for fiscal 2003 increased 11% to $828 million versus $746 million the previous year.
Genesco President and Chief Executive Officer Hal N. Pennington, said, "Fiscal 2003 represented another good year for Genesco, with double-digit sales growth and solid earnings. We also continued to strengthen our balance sheet and ended the year with $56 million in cash."
"We saw particular strength in our retail operations during the year," Pennington continued. "Total retail sales expanded 14% to $702 million and overall same store sales increased 3%. We also opened 97 stores to end the year with 991 stores in 46 states and Puerto Rico. Although we experienced a period of retail weakness in the month of December, we finished the year on a positive note, with January giving us some of our strongest same store sales increases of the year.
"Journeys net sales increased 13% during the quarter and same store sales rose 1%. Unit comps for the quarter were up 4%. Journeys net sales for the year increased 14% to $436 million and same store sales were flat, while unit comps for the full year increased 4% as well. We opened 12 Journeys stores during the quarter and 61 stores for the full year and ended fiscal 2003 with 579 stores in operation. In addition, we opened 21 Journeys Kidz stores for the full year and ended fiscal 2003 with 35 stores in operation. In a year of changing fashion, Journeys again benefited from its focus on understanding its customers and offering them the right product in the right shopping environment. Journeys remains the franchise footwear retailer for teenagers and we will continue to capitalize on our position in the market."
Pennington continued, "The Underground Station/Jarman Group had another strong quarter, with sales increasing 13% to $48 million and overall same- store sales up 9%. For the year, total sales increased 23% to $148 million and same-store sales rose 14%. We opened 4 Underground Station stores during the quarter to end the year with a total of 229 stores - 114 Underground Station stores and 115 Jarman stores, in operation. Given our success with this concept, based on understanding and serving an underserved customer, we see the potential to grow Underground Station to a 400-store chain in the future.
"Johnston & Murphy's net sales were $43 million for the fourth quarter compared with $42 million a year ago, and same-store sales declined 3%. For the full year, net sales were $165 million and same-store sales were flat. Johnston & Murphy continued to be negatively impacted by a very promotional retail environment. We believe that we have put a strategy in place that will further Johnston & Murphy's strong brand equity and ultimately return the division to more acceptable levels of profitability."
"Dockers sales were up 33% for the quarter to $19 million, and increased 11% for the year to $78 million. We continue to see positive results from new introductions such as Gortex and our Air Cushion System (ACS) product line. Dockers Footwear combines a strong brand and a superlative product offering for a price / value relationship that we believe is the best in its market today."
Pennington concluded, "Genesco is a highly diversified footwear business, supported by powerful concepts and brands that occupy leadership positions within their respective markets. We are committed to executing a strategy that will result in long-term growth and increased shareholder value."
This release contains forward-looking statements, including those regarding the Company's sales and earnings outlook and all other statements not addressing solely historical facts or present conditions. Actual results could turn out materially different from the expectations reflected in these statements. A number of factors could cause differences. These include continuing weakness in consumer demand for products sold by the Company, which could lead to lower than expected sales and product margins and, consequently, profits. They also include changes in buying patterns by significant wholesale customers, disruptions in product supply or distribution, further unfavorable trends in foreign exchange rates and other factors affecting the cost of products, changes in business strategies by the Company's competitors, the Company's ability to open, staff and support additional retail stores on schedule and at acceptable expense levels, variations from expected pension- related charges caused by conditions in the financial markets, and the outcome of litigation and environmental matters involving the Company. Forward- looking statements reflect the expectations of the Company at the time they are made. The Company disclaims any obligation to update such statements.
Genesco, based in Nashville, sells footwear and accessories in more than 990 retail stores in the U.S., principally under the names Journeys, Journeys Kidz, Johnston & Murphy, Jarman and Underground Station, and on internet websites www.journeys.com and www.johnstonmurphy.com . The Company also sells footwear at wholesale under its Johnston & Murphy brand and under the licensed Dockers brand. Additional information on Genesco and its operating divisions may be accessed at its website www.genesco.com .
GENESCO INC.
Consolidated Earnings Summary
Fourth Quarter Fiscal Year Ended
In Thousands 2003 2002* 2003 2002*
Net sales $249,715 $222,477 $828,307 $746,157
Cost of sales 133,477 119,014 438,231 396,891
Selling and administrative
expenses 88,744 76,318 320,833 280,712
Restructuring and other
charges(1) 2,549 5,395 2,549 5,126
Earnings from operations before
interest 24,945 21,750 66,694 63,428
Interest expense, net 2,114 1,982 7,870 7,564
Pretax earnings 22,831 19,768 58,824 55,864
Income tax expense 8,658 3,957 22,379 17,541
Earnings before discontinued
operations 14,173 15,811 36,445 38,323
Provision for discontinued
operations, net (165) (545) (165) (1,253)
Net Earnings $14,008 $15,266 $36,280 $37,070
Earnings Per Share Information
Fourth Quarter Fiscal Year Ended
In Thousands (except per share
amounts) 2003 2002 2003 2002
Preferred dividend requirements $73 $74 $294 $294
Average common shares - Basic
EPS 21,710 21,810 21,821 21,881
Basic earnings per share:
Before discontinued
operations $0.65 $0.72 $1.66 $1.74
Net earnings $0.64 $0.70 $1.65 $1.68
Average common and common
equivalent shares - Diluted
EPS 26,988 27,171 27,152 27,293
Diluted earnings per share:
Before discontinued
operations $0.56 $0.61 $1.47 $1.54
Net earnings $0.55 $0.59 $1.47 $1.49
(1) Restructuring and other charges includes $0.3 million of
inventory write-down in Fiscal 2002.
* Certain amounts have been reclassified to conform to current
presentation.
GENESCO INC.
Consolidated Earnings Summary
Fourth Quarter Fiscal Year Ended
In Thousands 2003 2002 2003 2002
Sales:
Journeys $139,566 $123,198 $436,498 $381,736
Underground Station/Jarman
Group 48,129 42,623 147,926 120,242
Johnston & Murphy 43,000 42,376 165,269 167,488
Licensed Brands(1) 18,979 14,280 78,497 76,691
Corporate and Other 41 -- 117 --
Net Sales $249,715 $222,477 $828,307 $746,157
Pretax Earnings (Loss):
Journeys $22,050 $19,854 $53,214 $51,925
Underground Station/Jarman
Group 5,656 5,684 12,096 5,319
Johnston & Murphy 2,806 2,655 9,270 14,125
Licensed Brands(2) 1,089 1,005 8,506 8,001
Corporate and Other (4,100) (2,470) (13,205) (10,782)
Other charges(3) (2,556) (4,978) (3,187) (5,160)
Operating income 24,945 21,750 66,694 63,428
Interest, net 2,114 1,982 7,870 7,564
Total Pretax Earnings 22,831 19,768 58,824 55,864
Income tax expense 8,658 3,957 22,379 17,541
Earnings before discontinued
operations 14,173 15,811 36,445 38,323
Provision for discontinued
operations (165) (545) (165) (1,253)
Net Earnings $14,008 $15,266 $36,280 $37,070
(1) Includes Nautica sales of $6.1 million for Fiscal 2002.
(2) Includes Nautica operating losses of $0.1 million and $0.6 million for
the fourth quarter and year of Fiscal 2002.
(3) Includes impairment and other charges of $2.6 million in the
fourth quarter and year of Fiscal 2003 and $0.6 million of
professional fees, severance and litigation in Fiscal 2003.
Included in the fourth quarter of Fiscal 2002 is a restructuring
charge of $5.4 million offset by unusual credits for litigation,
severance and insurance of $0.4 million. Included in Fiscal 2002 is a
restructuring charge of $5.1 million, litigation and severance
charges of $0.4 and an unusual credit of $0.3 million for life
insurance proceeds.
GENESCO INC.
Consolidated Balance Sheet
February 1, February 2,
In Thousands 2003 2002
Assets
Cash and short-term investments $55,929 $46,384
Accounts receivable 19,412 19,857
Inventories 168,622 142,856
Other current assets 18,295 20,659
Total current assets 262,258 229,756
Plant, equipment and capital leases 127,542 112,550
Other non-current assets 29,414 20,749
Non-currrent assets of discontinued operations* -- 499
Total Assets $419,214 $363,554
Liabilities and Shareholders' Equity
Accounts payable $43,660 $26,112
Other current liabilities 44,606 48,114
Total current liabilities 88,266 74,226
Long-term debt 103,245 103,245
Other long-term liabilities 44,924 24,896
Shareholders' equity 182,779 161,187
Total Liabilities and Shareholders' Equity $419,214 $363,554
* Non-current assets of discontinued operations include Volunteer Leather.
GENESCO INC.
Retail Units Operated - Twelve Months Ended February 1, 2003
Balance Balance
02/02/02 Open Conversions Close 02/01/03
Journeys Group 533 82 0 1 614
Journeys 519 61 0 1 579
Journeys Kidz 14 21 0 0 35
Underground Station/
Jarman Group 227 11 0 9 229
Underground Station 97 11 8 2 114
Jarman Retail 130 0 (8) 7 115
Johnston & Murphy 148 4 0 4 148
Shops 116 2 0 3 115
Factory Outlets 32 2 0 1 33
Total Retail Units 908 97 0 14 991
Retail Units Operated - Three Months Ended February 1, 2003
Balance Balance
11/02/02 Open Conversions Close 02/01/03
Journeys Group 601 13 0 0 614
Journeys 567 12 0 0 579
Journeys Kidz 34 1 0 0 35
Underground Station/
Jarman Group 228 4 0 3 229
Underground Station 108 4 3 1 114
Jarman Retail 120 0 (3) 2 115
Johnston & Murphy 151 0 0 3 148
Shops 117 0 0 2 115
Factory Outlets 34 0 0 1 33
Total Retail Units 980 17 0 6 991
Constant Store Sales
Three Months Ended Twelve Months Ended
February 1, February 2, February 1, February 2,
2003 2002 2003 2002
Journeys 1% 3% 0% 6%
Underground Station/
Jarman Group 9% -2% 14% -4%
Underground Station 17% -5% 18% -3%
Jarman Retail 3% 0% 12% -4%
Johnston & Murphy -3% -4% 0% -9%
Shops -2% -7% 0% -10%
Factory Outlets -7% 9% -1% -4%
Total Constant Store Sales 2% 1% 3% 1%
GENESCO INC.
Earnings Per Share Information
Fourth Quarter - Fiscal 2003
In Thousands (except per share amounts)
Income Shares Amount
Basic earnings per share:
Earnings before discontinued
operations as reported $14,173 21,710 $ 0.65(1)
Unusual items:
Impairments and other charges
(net of tax) 1,580 21,710 0.07
Other adjustments (net of tax) 4 21,710 0.00
Adjusted totals $15,757 21,710 $ 0.72
(1) Includes adjustment of $73,000 for preferred dividends in the fourth
quarter of Fiscal 2003.
Diluted earnings per share:
Earnings before discontinued
operations as reported $14,173 26,988 $ 0.56(2)
Unusual items:
Impairments and other charges
(net of tax) 1,580 26,988 0.06
Other adjustments (net of tax) 4 26,988 0.00
Adjusted totals $15,757 26,988 $ 0.62
(2) Includes adjustments of $73,000 for preferred dividends and
$968,000 for interest add back in the fourth quarter of Fiscal 2003.
Fourth Quarter - Fiscal 2002
In Thousands (except per share amounts)
Income Shares Amount
Basic earnings per share:
Earnings before discontinued
operations as reported $15,811 21,810 $ 0.72(1)
Unusual items:
Restructuring and other charges
(net of tax) 3,373 21,810 0.15
Insurance proceeds (326) 21,810 (0.01)
Other adjustments (net of tax) (56) 21,810 0.00
Adjustment of tax liability (3,452) 21,810 (0.16)
Adjusted totals $15,350 21,810 $ 0.70
(1) Includes adjustment of $74,000 for preferred dividends in the fourth
quarter of Fiscal 2002.
Diluted earnings per share:
Earnings before discontinued
operations as reported $15,811 27,171 $ 0.61(2)
Unusual items:
Restructuring and other charges
(net of tax) 3,373 27,171 0.13
Insurance proceeds (326) 27,171 (0.01)
Other adjustments (net of tax) (56) 27,171 0.00
Adjustment of tax liability (3,452) 27,171 (0.13)
Adjusted totals $15,350 27,171 $ 0.60
(2) Includes adjustments of $74,000 for preferred dividends and $968,000
for interest add back in the fourth quarter of Fiscal 2002.
GENESCO INC.
Earnings Per Share Information
Fiscal 2003
In Thousands (except per share
amounts) Income Shares Amount
Basic earnings per share:
Earnings before discontinued
operations as reported $36,445 21,821 $ 1.66(1)
Unusual items:
Impairments and other charges
(net of tax) 1,580 21,821 0.07
Other adjustments (net of tax) 396 21,821 0.02
Adjusted totals $38,421 21,821 $ 1.75
(1) Includes adjustment of $294,000 for preferred dividends in Fiscal
2003.
Diluted earnings per share:
Earnings before discontinued
operations as reported $36,445 27,152 $ 1.47(2)
Unusual items:
Impairments and other charges
(net of tax) 1,580 27,152 0.06
Other adjustments (net of tax) 396 27,152 0.01
Adjusted totals $38,421 27,152 $ 1.55
(2) Includes adjustments of $294,000 for preferred dividends and
$3,871,000 for interest add back in Fiscal 2003.
Fiscal 2002
In Thousands (except per share
amounts) Income Shares Amount
Basic earnings per share:
Earnings before discontinued
operations as reported $38,323 21,881 $ 1.74(1)
Unusual items:
Restructuring and other charges
(net of tax) 3,200 21,881 0.15
Insurance proceeds (326) 21,881 (0.02)
Other adjustments (net of tax) 225 21,881 0.01
Adjustment of tax liability (3,452) 21,881 (0.16)
Adjusted totals $37,970 21,881 $ 1.72
(1) Includes adjustment of $294,000 for preferred dividends in Fiscal
2002.
Diluted earnings per share:
Earnings before discontinued
operations as reported $38,323 27,293 $ 1.54(2)
Unusual items:
Restructuring and other charges
(net of tax) 3,200 27,293 0.12
Insurance proceeds (326) 27,293 (0.01)
Other adjustments (net of tax) 225 27,293 0.01
Adjustment of tax liability (3,452) 27,293 (0.13)
Adjusted totals $37,970 27,293 $ 1.52
(2) Includes adjustments of $294,000 for preferred dividends and
$3,875,000 for interest add back in Fiscal 2002.
SOURCE Genesco Inc.
CONTACT: financial, James S. Gulmi, +1-615-367-8325, or
media, Claire S. McCall, +1-615-367-8283, both of Genesco Inc.
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