Genesco Reports Fourth Quarter Fiscal 2010 Results
Adjusted for the listed items in both periods, earnings from continuing operations were $27.7 million, or $1.16 per diluted share, for the fourth quarter of Fiscal 2010, compared to earnings from continuing operations of $23.9 million, or $1.06 per diluted share, for the fourth quarter of Fiscal 2009. For consistency with Fiscal 2010's previously announced earnings expectations, which did not reflect the listed items, the Company believes that disclosure of earnings from continuing operations adjusted for those items will be useful to investors. A reconciliation of the adjusted financial measures to their corresponding measures as reported pursuant to U.S. Generally Accepted Accounting Principles is included in Schedule B to this press release.
Net sales for the fourth quarter of Fiscal 2010 increased 6% to $479 million from $452 million in the fourth quarter of Fiscal 2009. Comparable store sales in the fourth quarter of Fiscal 2010 were flat with a year ago. Comparable store sales in the Hat World Group increased by 6%, the Journeys Group decreased by 3%, Underground Station decreased by 2%, and Johnston & Murphy Retail increased by 2%.
Robert J. Dennis, president and chief executive officer of Genesco, said, "Our fourth quarter earnings exceeded expectations, driven by strong sales at Hat World and our direct-to-consumer catalog and e-commerce businesses combined with higher gross margins for the Company and well managed expenses across all our divisions. This performance caps a year in which, despite a challenging retail environment, we generated almost $100 million in cash flow from operations and paid down all $32 million of our outstanding bank debt, to end with $82 million in cash and no debt.
"As we begin the new fiscal year, all of our businesses are performing above their fourth quarter comparable sales, with positive comparable store sales across the board. For February, comparable sales increased 10% for the Hat World Group, 4% for the Journeys Group, 13% for Underground Station, 4% for Johnston & Murphy Retail and 6% for the total Company. Including the 17% comparable sales increase for the direct businesses, the Company's comparable sales for February increased 7%.
"Especially given the strong start to the first quarter, we remain comfortable with our previously announced expectations for fiscal 2011 of earnings per share between $2.00 and $2.10. Consistent with previous years, this guidance does not include expected non-cash asset impairments which are projected to be approximately $9 million to $11 million, or $0.23 to $0.28 per share, in fiscal 2011. This guidance assumes full year comparable sales in the positive 2% to 3% range.
"We move forward confident that we have the right strategies in place at each of our operating segments. With a much stronger balance sheet than a year ago, we are better positioned to pursue multiple near-term growth opportunities that we have identified."
Fiscal Year 2010
The Company also reported earnings from continuing operations for the fiscal year ended January 30, 2010, of $29.1 million, or $1.31 per diluted share, compared to earnings from continuing operations of $156.2 million, or $6.72 per diluted share, for the fiscal year ended January 31, 2009. Fiscal 2010 earnings reflected charges of $0.56 per diluted share, including asset impairments, loss on early retirement of debt and tax rate adjustments, partially offset by a gain related to other legal matters. In addition, Fiscal 2010 reflected additional interest expense due to the adoption in the first quarter of Fiscal 2010 of FSP APB 14-1, a new accounting standard applicable to the Company's convertible debt. Fiscal 2009 earnings reflected a gain of $4.91 per diluted share from the settlement of merger-related litigation with The Finish Line offset by merger-related expenses, asset impairments, store closing costs and other items listed on Schedule B to this press release. Fiscal 2009 earnings also included a restatement of interest expense required by the adoption of APB 14-1, which required retroactive application resulting in additional interest costs.
Adjusted for the listed items in both years, earnings from continuing operations were $43.1 million, or $1.87 per diluted share, for Fiscal 2010, compared to earnings from continuing operations of $40.8 million, or $1.81 per diluted share, for Fiscal 2009. For consistency with previously announced earnings expectations, which did not reflect the listed items, the Company believes that disclosure of earnings from continuing operations adjusted for those items will be useful to investors. A reconciliation of the adjusted financial measures to their corresponding measures as reported pursuant to U.S. Generally Accepted Accounting Principles is included in Schedule B to this press release. Net sales for Fiscal 2010 increased 1% to $1.57 billion from $1.55 billion in Fiscal 2009.
Cautionary Note Concerning Forward-Looking Statements
This release contains forward-looking statements, including those regarding the performance outlook for the Company for Fiscal 2011, 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 continuing weakness in the consumer economy, 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 materials costs, and other factors affecting the cost of products, competition in the Company's markets and changes in the timing of holidays or in the onset of seasonal weather affecting periodtoperiod 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, to renew leases in existing stores 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 our 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.
Conference Call
The Company's live conference call on March 4, 2010, 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.
About Genesco Inc.
Genesco Inc., a Nashville-based specialty retailer, sells footwear, headwear and accessories in more than 2,270 retail stores in the United States and Canada, principally under the names Journeys, Journeys Kidz, Shi by Journeys, Johnston & Murphy, Underground Station, Hatworld, Lids, Hat Shack, Hat Zone, Head Quarters and Cap Connection, and on internet websites www.journeys.com, www.journeyskidz.com, www.shibyjourneys.com, www.undergroundstation.com, http://www.johnstonmurphy.com/www.dockersshoes.com, and www.lids.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
---------------------- ------------------------
Restated * Restated *
January 30, January 31, January 30, January 31,
In Thousands 2010 2009 2010 2009
---- ---- ---- ----
Net sales $479,026 $451,722 $1,574,352 $1,551,562
Cost of sales 242,489 232,373 778,482 771,580
Selling and
administrative
expenses 189,960 180,534 718,269 713,365
Restructuring
and other, net 2,497 (282) 13,361 (196,575)
----- ---- ------ --------
Earnings from
operations 44,080 39,097 64,240 263,192
Loss on early
retirement of debt 399 - 5,518 -
Interest expense, net 1,439 3,405 8,234 12,478
----- ----- ----- ------
Earnings before
income taxes
from continuing
operations 42,242 35,692 50,488 250,714
Income tax expense 16,413 12,513 21,402 94,495
------ ------ ------ ------
Earnings from
continuing operations 25,829 23,179 29,086 156,219
Earnings from (provision
for) discontinued
operations, net 25 16 (273) (5,463)
--- --- ---- ------
Net Earnings $25,854 $23,195 $28,813 $150,756
======= ======= ======= ========
* Fiscal 2009 results restated as a result of retroactive application of
FSP APB 14-1.
Earnings Per Share Information
Fourth Quarter Fiscal Year Ended
---------------------- ------------------------
In Thousands Restated * Restated *
(except per share January 30, January 31, January 30, January 31,
amounts) 2010 2009 2010 2009
---- ---- ---- ----
Preferred dividend
requirements $50 $50 $198 $198
Average common shares -
Basic EPS 23,279 18,737 21,471 19,235
Basic earnings per share:
Before discontinued
operations $1.11 $1.23 $1.35 $8.11
Net earnings $1.11 $1.23 $1.33 $7.83
Average common and common
equivalent shares -
Diluted EPS 23,981 23,223 23,500 23,911
Diluted earnings per share:
Before discontinued
operations $1.08 $1.05 $1.31 $6.72
Net earnings $1.08 $1.05 $1.30 $6.49
===== ===== ===== =====
GENESCO INC.
Consolidated Earnings Summary
Fourth Quarter Fiscal Year Ended
---------------------- -------------------------
Restated Restated
January 30, January 31, January 30, January 31,
In Thousands 2010 2009 2010 2009
---- ---- ---- ----
Sales:
Journeys Group $225,356 $229,541 $749,202 $760,008
Underground
Station Group 32,223 34,035 99,458 110,902
Hat World Group 152,403 122,409 465,776 405,446
Johnston & Murphy
Group 47,334 45,593 166,079 177,963
Licensed Brands 21,540 20,019 93,194 96,561
Corporate and Other 170 125 643 682
--- --- --- ---
Net Sales $479,026 $451,722 $1,574,352 $1,551,562
======== ======== ========== ==========
Operating Income (Loss):
Journeys Group $24,029 $24,463 $44,285 $49,050
Underground Station
Group 1,517 593 (4,584) (5,660)
Hat World Group 19,979 14,770 44,039 36,670
Johnston & Murphy
Group 4,126 1,867 5,484 10,069
Licensed Brands 2,847 2,387 12,372 11,925
Corporate and Other* (8,418) (4,983) (37,356) 161,138
------ ------ ------- -------
Earnings from
operations 44,080 39,097 64,240 263,192
Loss on early
retirement of debt 399 - 5,518 -
Interest, net 1,439 3,405 8,234 12,478
----- ----- ----- ------
Earnings Before income
taxes from continuing
operations 42,242 35,692 50,488 250,714
Income tax expense 16,413 12,513 21,402 94,495
------ ------ ------ ------
Earnings from
continuing operations 25,829 23,179 29,086 156,219
Earnings from (provision
for) discontinued
operations 25 16 (273) (5,463)
--- --- ---- ------
Net Earnings $25,854 $23,195 $28,813 $150,756
======= ======= ======= ========
*Includes $2.5 million of other charges in the fourth quarter of Fiscal
2010, which includes $2.9 million in asset impairments and $0.2 million
in lease terminations offset by $0.6 million in other legal matters.
Includes $13.4 million of other charges in Fiscal 2010 which includes
$13.3 million in asset impairments and $0.4 million for lease
terminations offset by $0.3 million in other legal matters. For Fiscal
2010, there is also an additional $0.1 million of charges related to
lease terminations that are included in cost of sales in the
consolidated earnings summary.
Includes a $0.3 million credit in the fourth quarter of Fiscal 2009
which includes a $3.8 million gain on a lease termination offset by $3.1
million in asset impairments and $0.4 million for lease terminations.
Includes a $196.6 million credit in Fiscal 2009 of which $204.1 million
were proceeds as a result of the settlement of merger-related litigation
with The Finish Line and its investment bankers and a $3.8 million gain
from a lease termination offset by $8.6 million in asset impairments,
$1.6 million in lease terminations and $1.1 million for other legal
matters. In the fourth quarter and year of Fiscal 2009, there is also an
additional $0.1 million and $0.2 million, respectively, of charges
related to lease terminations that are included in cost of sales on the
consolidated earnings summary. The fourth quarter and Fiscal 2009 also
included $0.2 million and $8.0 million, respectively, of merger-related
expenses.
GENESCO INC.
Consolidated Balance Sheet
Restated
January 30, January 31,
In Thousands 2010 2009
------------ ---- ----
Assets
Cash and cash equivalents $82,148 $17,672
Accounts receivable 27,217 23,744
Inventories 290,974 306,078
Other current assets 49,733 50,625
-------------------- ------ ------
Total current assets 450,072 398,119
-------------------- ------- -------
Property and equipment 216,293 239,681
Other non-current assets 197,287 178,263
------------------------ ------- -------
Total Assets $863,652 $816,063
============ ======== ========
Liabilities and Shareholders' Equity
Accounts payable $92,699 $73,143
Current portion - long-term debt - -
Other current liabilities 76,958 65,839
------------------------- ------ ------
Total current liabilities 169,657 138,982
------------------------- ------- -------
Long-term debt - 113,735
Other long-term liabilities 111,682 113,591
Shareholders' equity 582,313 449,755
-------------------- ------- -------
Total Liabilities and Shareholders' Equity $863,652 $816,063
========================================== ======== ========
GENESCO INC.
Retail Units Operated - Twelve Months Ended January 30, 2010
Balance Balance
02/02/08 Open Close 01/31/09
-------- ---- ----- --------
Journeys Group 967 50 5 1,012
Journeys 805 16 5 816
Journeys Kidz 115 26 0 141
Shi by Journeys 47 8 0 55
Underground Station
Group 192 0 12 180
Hat World Group 862 43 20 885
Johnston & Murphy
Group 154 9 6 157
Shops 113 6 5 114
Factory Outlets 41 3 1 43
--------------- --- --- --- ---
Total Retail Units 2,175 102 43 2,234
================== ===== === === =====
Balance
Acquisitions Open Close 01/30/10
------------ ---- ----- --------
Journeys Group 0 19 6 1,025
Journeys 0 9 6 819
Journeys Kidz 0 9 0 150
Shi by Journeys 0 1 0 56
Underground Station Group 0 0 10 170
Hat World Group 38 35 37 921
Johnston & Murphy Group 0 7 4 160
Shops 0 5 3 116
Factory Outlets 0 2 1 44
--------------- --- --- --- ---
Total Retail Units 38 61 57 2,276
================== === === === =====
Retail Units Operated - Three Months Ended January 30, 2010
Balance Acquisi- Balance
10/31/09 tions Open Close 01/30/10
-------- ------ ---- ----- --------
Journeys Group 1,022 0 4 1 1,025
Journeys 819 0 1 1 819
Journeys Kidz 148 0 2 0 150
Shi by Journeys 55 0 1 0 56
Underground Station Group 174 0 0 4 170
Hat World Group 885 37 12 13 921
Johnston & Murphy Group 162 0 1 3 160
Shops 117 0 1 2 116
Factory Outlets 45 0 0 1 44
--- --- --- --- ---
Total Retail Units 2,243 37 17 21 2,276
===== === === === =====
Constant Store Sales
Three Months Ended Twelve Months Ended
------------------ -------------------
January 30, January 31, January 30, January 31,
2010 2009 2010 2009
---- ---- ---- ----
Journeys Group -3% -2% -3% 1%
Underground Station Group -2% -12% -7% 0%
Hat World Group 6% -4% 3% 2%
Johnston & Murphy Group 2% -17% -8% -10%
--- --- --- ---
Total Constant Store Sales 0% -5% -2% 0%
=== === === ===
Schedule B
Genesco Inc.
Adjustments to Reported Earnings from Continuing Operations
Three Months Ended January 30, 2010 and January 31, 2009
In Thousands (except 3 mos Impact 3 mos Impact
per share amounts) Jan 2010 on EPS Jan 2009 on EPS
-------- ------ -------- ------
Earnings from continuing
operations, as reported $25,829 $1.08 $23,179 $1.05
Adjustments: (1)
Merger-related expenses - - 132 0.01
Impairment & lease
termination charges 1,927 0.08 2,254 0.10
Gain on lease termination - - (1,295) (0.06)
Other legal matters (382) (0.01) (13) -
Loss on early
retirement of debt 247 0.01 - -
Convertible debt interest
restatement (APB 14-1) 23 - 494 -
Lower (higher) effective
tax rate(2) 74 - (825) (0.04)
Adjusted earnings from
continuing operations(3) $27,718 $1.16 $23,926 $1.06
------- ----- ------- -----
(1) All adjustments are net of tax. The tax rate for the fourth quarter
of Fiscal 2010 is 38.2% excluding a FIN 48 discreet item of $0.2
million. The tax rate for the fourth quarter of Fiscal 2009 before
the impact of the settlement of merger-related litigation and
deductibility of prior year merger-related expenses and other listed
items above is 37.4%.
(2) Includes added tax on Finish Line share appreciation and impact on EPS
calculation from additional tax in Fiscal 2009.
(3) Reflects 24.0 million share count for Fiscal 2010 and 23.2 million
share count for Fiscal 2009 which includes convertible shares and
common stock equivalents in both years.
The Company believes that disclosure of earnings and earnings per share
from continuing operations on a pro forma basis adjusted for the items not
reflected in the previously announced expectations will be meaningful
to investors, in light of the impact of changes in effective tax rates and
other items not reflected in those expectations.
Schedule B
Genesco Inc.
Adjustments to Reported Earnings from Continuing Operations
Twelve Months Ended January 30, 2010 and January 31, 2009
In Thousands (except
per share amounts) 12 mos Impact 12 mos Impact
Jan 2010 on EPS Jan 2009 on EPS
-------- ------ -------- ------
Earnings from continuing
operations, as reported $29,086 $1.31 $156,219 $6.72
Adjustments: (1)
Settlement of merger-related
litigation - - (124,159) (5.19)
Merger-related expenses - - 4,884 0.20
Impairment & lease
termination charges 8,447 0.36 6,305 0.26
Gain on lease termination - - (1,258) (0.05)
Other legal matters (167) (0.01) 645 0.03
Loss on early retirement of debt 3,396 0.14 - -
Convertible debt interest
restatement (APB 14-1) 871 - 1,880 -
Interest on settlement income - - (419) (0.02)
Lower (higher) effective
tax rate(2) 1,508 0.07 (3,279) (0.14)
Adjusted earnings from
continuing operations(3) $43,141 $1.87 $40,818 $1.81
------- ----- ------- -----
(1) All adjustments are net of tax. The tax rate for Fiscal 2010
before a positive adjustment of $1.2 million for FIN 48 and other
adjustments is 38.45% excluding a FIN 48 discreet item of $0.5
million. The tax rate for Fiscal 2010 excludes the non-
deductibility of certain items incurred in connection with the
inducement of the conversion of the 4 1/8% Debentures for common
stock. The tax rate for Fiscal 2009 before the impact of the
settlement of merger-related litigation and deductibility of prior
year merger-related expenses and other listed items above is 39.2%.
(2) Includes added tax on Finish Line share appreciation and impact
on EPS calculation from additional tax in Fiscal 2009.
(3) Reflects 23.5 million share count for Fiscal 2010 and 23.9
million share count for Fiscal 2009 which includes convertible shares
and common stock equivalents in both years.
The Company believes that disclosure of earnings and earnings per
share from continuing operations on a pro forma basis adjusted for the
items not reflected in the previously announced expectations will be
meaningful to investors, in light of the impact of changes in effective
tax rates and other items not reflected in those expectations.
Schedule B
Genesco Inc.
Adjustments to Forecasted Earnings from Continuing Operations
Fiscal Year Ending January 29, 2011
In Thousands (except per High Guidance Low Guidance
share amounts) Fiscal 2011 Fiscal 2011
---------------- --------------
Forecasted earnings from continuing
operations $44,271 $1.84 $41,869 $1.74
Adjustments:(1)
Impairment and lease termination charges 6,108 0.26 6,108 0.26
----- ---- ----- ----
Adjusted forecasted earnings
from continuing operations(2) $50,379 $2.10 $47,977 $2.00
------- ----- ------- -----
(1) All adjustments are net of tax. The forecasted tax rate for Fiscal
2011 is 40.0%.
(2) Reflects 23.9 million share count for Fiscal 2011 which includes
common stock equivalents.
This reconciliation reflects estimates and current expectations of future
results. Actual results may vary materially from these expectations and
estimates, for reasons including those included in the discussion of
forward-looking statements elsewhere in this release. The Company
disclaims any obligation to update such expectations and estimates.
SOURCE Genesco Inc.