Genesco Reports Fourth Quarter and Fiscal 2006 Results
--Company Reports Fourth Quarter Diluted EPS Before Discontinued Operations of
$1.15 and Fiscal 2006 Diluted EPS Before Discontinued Operations of $2.38--
NASHVILLE, Tenn., March 2 /PRNewswire-FirstCall/ -- Genesco Inc. (NYSE: GCO) today reported earnings before discontinued operations of $31.2 million, or $1.15 per diluted share, for the fourth quarter ended January 28, 2006. Earnings before discontinued operations were $25.4 million, or $0.97 per diluted share, for the fourth quarter ended January 29, 2005. Net sales for the fourth quarter of fiscal 2006 increased 15% to $406 million compared to $353 million for the fourth quarter of fiscal 2005.
For the fiscal year ended January 28, 2006, the Company reported earnings before discontinued operations of $62.6 million, or $2.38 per diluted share. Earnings before discontinued operations were $48.5 million, or $1.92 per diluted share, in fiscal 2005. Net sales for fiscal 2006 increased 15% to $1.28 billion compared to $1.11 billion for fiscal 2005.
Genesco Chairman, President and Chief Executive Officer Hal N. Pennington, said, "A strong fourth quarter concluded another strong year for Genesco. During the year we successfully executed our strategic plan, enhancing our leadership position in the market by opening 155 net new stores, expanding our mall and non-mall presence, and launching a test of a promising new retail concept. At the same time, we increased sales by 15%, expanded margins and generated double digit bottom line growth. These results reflect the talent and dedication of the entire Genesco organization.
"Net sales at Journeys increased 17.5% to approximately $193 million in the fourth quarter, same store sales rose more than 10% and footwear unit comps increased 12%. Fashion athletic, fusion, board sport and women's fashion and casual footwear all performed well in the quarter. With more than 700 stores, an unparalleled selection of product, powerful vendor relationships and a world class merchandising team, Journeys remains the destination retailer for teenagers and young adults for footwear and accessories. Its success in both mall and non-mall locations -- including lifestyle centers, outlets and city streets -- supports its potential for ongoing growth.
"An important component of our growth strategy is to leverage our platform and extend our brand strength and expertise across new concepts. In doing so, we see the opportunity to grow with our customer from toddler to teenager to adult. We have been successful with Journeys Kidz and we are now planning a more aggressive store roll-out for it in fiscal 2007. We have recently opened our first Shi by Journeys store designed to cater to fashionable women in their early 20s to mid 30s, continuing to serve an important Journeys customer as her tastes, needs and lifestyle change. While it is still very early in the testing process, we are encouraged by the store's initial performance.
"Hat World registered another strong quarter, with total sales up 21% to $98 million. Same store sales rose 6%, matching a 6% gain in the same period last year that was driven in part by strong demand for Boston Red Sox products associated with the team's 2005 World Series victory. The Major League Baseball and NFL categories continued to perform well in the fourth quarter of fiscal 2006. We continue to roll out embroidery machines, which represent an attractive add-on business in the larger stores. Given its versatility, illustrated by successful operations not only in malls, but also in airports, outlets, street locations, tourist destinations and kiosks, we remain confident about Hat World's significant growth potential. We plan to open 85 new Lids locations in fiscal 2007 and believe that we can eventually grow this chain to at least 900 stores in North America.
"Net sales for the Underground Station Group, which includes Jarman, increased 7% to $54 million and comparable store sales rose 4% in the fourth quarter. Underground Station posted a solid 6% comparable store gain, primarily driven by increased average selling prices. Throughout the year, the Underground Station team continued to execute its long-term strategic plan, growing the number of Underground Station locations while reducing the Jarman store base in a financially prudent manner. We ended the year with 180 Underground Station stores, up approximately 9% from the previous year, and 49 Jarman stores, roughly half the number of Jarman stores in operation two years ago. We are pleased with our progress at Underground Station and remain encouraged about its prospects for the future.
"Johnston & Murphy continued to deliver improved results during the fourth quarter, with net sales increasing 9% to $49 million and same store sales up 9%. Johnston & Murphy's performance for both the fourth quarter and the year was driven by meaningful gains in dress casual and casual footwear, coupled with growth in non footwear categories, which now include luggage, belts, socks, outerwear and personal leather goods. Over the past two years we have worked hard to reposition the Johnston & Murphy brand to broaden its appeal and attract new consumers, while at the same time driving gains in gross margin and profitability. Our results reflect our success so far, and we will continue to focus on improving our operations.
"Fourth quarter sales of Licensed Brands were $14 million, essentially flat with a year ago and in line with our projections. Early indications of stronger demand for Dockers Footwear's spring product make us optimistic about the opportunities for improvements in the business in the upcoming year."
Genesco also reaffirmed its fiscal 2007 guidance. The Company now expects sales of approximately $1.46 billion for the year and diluted earnings per share to be approximately $2.62. The earnings per share estimate includes expected FAS 123 (R) stock incentive expense and the amortization of recently granted restricted stock totaling approximately $0.17 per share. Last year's EPS reflected expenses of $0.01 per share related to employee restricted stock grants in the third quarter.
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 vary materially from the expectations reflected in these statements. A number of factors could cause differences. These include weakness in consumer demand for products sold by the Company, fashion trends that affect the sales or product margins of the Company's retail product offerings, changes in the timing of holidays or in the onset of seasonal weather affecting period to period sales comparisons, 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 (including pricing and promotional discounts), the ability to open, staff and support additional retail stores on schedule and at acceptable expense levels and to renew leases in existing 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.
The Company's live conference call on March 2, 2006, 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.
Genesco Inc., a Nashville-based specialty retailer, sells footwear, headwear and accessories in more than 1,750 retail stores in the United States and Canada, principally under the names Journeys, Journeys Kidz, Johnston & Murphy, Underground Station, Hat World, Lids, Hat Zone, Cap Factory, Head Quarters and Cap Connection, and on internet websites www.journeys.com , www.journeyskidz.com , www.undergroundstation.com , www.johnstonmurphy.com, www.lids.com, www.hatworld.com, and www.lidscyo.com. The Company also sells footwear at wholesale under its Johnston & Murphy brand and under the licensed Dockers and Perry Ellis brands. Additional information on Genesco and its operating divisions may be accessed at its website www.genesco.com.
Consolidated Earnings Summary
Fourth Quarter Fiscal Year Ended
In Thousands 2006 2005 2006 2005
Net sales $406,287 $352,818 $1,283,876 $1,112,681
Cost of sales 200,902 177,669 631,469 561,597
Selling and administrative
expenses 151,898 130,958 537,327 461,799
Restructuring and other,
net (2) 649 2,253 1,221
Earnings from operations 53,489 43,542 112,827 88,064
Interest expense, net 2,416 3,046 10,357 10,962
Earnings before income
taxes from continuing
operations 51,073 40,496 102,470 77,102
Income tax expense 19,877 15,050 39,844 28,642
Earnings from continuing
operations 31,196 25,446 62,626 48,460
Earnings from (provision for)
discontinued operations, net 90 250 60 (211)
Net Earnings $31,286 $25,696 $62,686 $48,249
Earnings Per Share Information
Fourth Quarter Fiscal Year Ended
In Thousands (except per
share amounts) 2006 2005 2006 2005
Preferred dividend
requirements $64 $73 $273 $292
Average common shares
- Basic EPS 23,193 22,326 22,804 22,008
Basic earnings per share:
Before discontinued
operations $1.34 $1.14 $2.73 $2.19
Net earnings $1.35 $1.15 $2.74 $2.18
Average common and common
equivalent shares
- Diluted EPS 27,672 26,833 27,265 26,377
Diluted earnings per share:
Before discontinued
operations $1.15 $0.97 $2.38 $1.92
Net earnings $1.15 $0.98 $2.38 $1.91
Consolidated Earnings Summary
Fourth Quarter Fiscal Year Ended
In Thousands 2006 2005 2006 2005
Sales:
Journeys $192,635 $163,931 $593,516 $521,942
Underground Station
Group 53,637 50,175 164,054 148,039
Hat World 97,739 80,752 297,271 216,270
Johnston & Murphy 48,518 44,389 170,015 162,599
Licensed Brands 13,665 13,471 58,730 63,508
Corporate and Other 93 100 290 323
Net Sales $406,287 $352,818 $1,283,876 $1,112,681
Operating Income (Loss):
Journeys $31,076 $26,989 $73,346 $60,065
Underground Station
Group 6,990 6,101 10,890 6,963
Hat World 17,778 13,908 40,133 30,522
Johnston & Murphy 4,044 3,564 10,396 9,230
Licensed Brands 622 880 4,167 6,075
Corporate and Other* (7,021) (7,900) (26,105) (24,791)
Earnings from operations 53,489 43,542 112,827 88,064
Interest, net 2,416 3,046 10,357 10,962
Earnings before income
taxes from continuing
operations 51,073 40,496 102,470 77,102
Income tax expense 19,877 15,050 39,844 28,642
Earnings from continuing
operations 31,196 25,446 62,626 48,460
Earnings from (provision
for) discontinued
operations 90 250 60 (211)
Net Earnings $31,286 $25,696 $62,686 $48,249
* Includes $0.6 million of other charges for asset impairment and lease
terminations and a $1.7 million charge for the litigation settlement
in Fiscal 2006. Includes $0.6 million and $1.2 million of other
charges for asset impairment and lease terminations in the fourth
quarter and year of Fiscal 2005 offset by a $0.6 million pension
curtailment gain in Fiscal 2005.
Consolidated Balance Sheet
January 28, January 29,
In Thousands 2006 2005
Assets
Cash and cash equivalents $61,591 $60,068
Accounts receivable 21,171 17,906
Inventories 230,648 207,197
Other current assets 28,918 20,748
Total current assets 342,328 305,919
Property and equipment 188,047 168,670
Other non-current assets 156,883 160,982
Total Assets $687,258 $635,571
Liabilities and Shareholders' Equity
Accounts payable $75,068 $65,599
Current portion - long-term debt - -
Other current liabilities 82,274 64,075
Total current liabilities 157,342 129,674
Long-term debt 106,250 161,250
Other long-term liabilities 74,915 72,582
Shareholders' equity 348,751 272,065
Total Liabilities and Shareholders' Equity $687,258 $635,571
Retail Units Operated - Twelve Months Ended January 28, 2006
Balance Acqui-
01/31/04 sitions Open Conv Close
Journeys 665 37 0 7
Journeys 625 35 0 6
Journeys Kidz 40 2 0 1
Underground Station Group 233 21 0 25
Underground Station 137 21 12 5
Jarman Retail 96 0 (12) 20
Hat World 0 503 55 0 6
Johnston & Murphy 148 7 0 13
Shops 115 3 0 11
Factory Outlets 33 4 0 2
Total Retail Units 1,046 503 120 0 51
Retail Units Operated - Twelve Months Ended January 28, 2006
Balance Balance
01/29/05 Open Conv Close 01/28/06
Journeys 695 71 0 5 761
Journeys 654 61 0 4 711
Journeys Kidz 41 10 0 1 50
Underground Station Group 229 21 0 21 229
Underground Station 165 21 2 8 180
Jarman Retail 64 0 (2) 13 49
Hat World 552 96 0 7 641
Johnston & Murphy 142 5 0 5 142
Shops 107 4 0 4 107
Factory Outlets 35 1 0 1 35
Total Retail Units 1,618 193 0 38 1,773
Retail Units Operated - Three Months Ended January 28, 2006
Balance Balance
10/29/05 Open Conv Close 01/28/06
Journeys Group 724 37 0 0 761
Journeys 683 28 0 0 711
Journeys Kidz 41 9 0 0 50
Underground Station Group 230 6 0 7 229
Underground Station 176 6 0 2 180
Jarman Retail 54 0 0 5 49
Hat World 621 23 0 3 641
Johnston & Murphy 143 1 0 2 142
Shops 109 0 0 2 107
Factory Outlets 34 1 0 0 35
Total Retail Units 1,718 67 0 12 1,773
Constant Store Sales
Three Months Twelve Months
Ended Ended
Jan. 28, Jan. 29, Jan. 28, Jan. 29,
2006 2005 2006 2005
Journeys 10% 4% 7% 5%
Underground Station/Jarman Group 4% 3% 7% -3%
Underground Station 6% 5% 10% -2%
Jarman Retail -2% -2% -1% -6%
Johnston & Murphy 9% 3% 7% 3%
Shops 10% 3% 7% 2%
Factory Outlets 5% 4% 5% 4%
Total Constant Store Sales 9% 4% 7% 3%
Hat World 6% 6% 4%
April 1, 2004 - January 29, 2005 11%
SOURCE Genesco Inc.
-0- 03/02/2006
/CONTACT: Financial, James S. Gulmi, +1-615-367-8325, or Media, Claire S.
McCall, +1-615-367-8283, both of Genesco Inc./
/Company News On-Call: http://www.prnewswire.com/comp/352750.html/
/Web site: http://www.genesco.com
http://www.journeys.com
http://www.journeyskidz.com
http://www.undergroundstation.com
http://www.johnstonmurphy.com
http://www.lids.com
http://www.hatworld.com
http://www.lidscyo.com /
(GCO)
CO: Genesco Inc.
ST: Tennessee
IN: TEX REA
SU: ERN
DL-CF
-- CLTH003 --
6924 03/02/2006 07:35 EST http://www.prnewswire.com