Genesco Reports Second Quarter Results
NASHVILLE, Tenn., Aug 24, 2005 /PRNewswire-FirstCall via COMTEX/ -- Genesco Inc. (NYSE: GCO) today reported net earnings of $6.8 million, or $0.27 per diluted share, for the second quarter ended July 30, 2005. This compares with net earnings of $4.8 million, or $0.20 per diluted share, for the second quarter last year. Net sales for the second quarter of fiscal 2006 increased 12% to $275 million compared to $246 million for the second quarter of fiscal 2005.
Genesco Chairman, President and Chief Executive Officer Hal N. Pennington, said, "We are very pleased to have exceeded expectations once again with a strong second quarter performance. Our results were driven by positive comps in all our retail divisions and by continued operating margin expansion."
"Net sales at Journeys rose 12% to approximately $119 million, same store sales increased 6% and footwear unit comps were up 9%. Fashion athletic, Euro casuals, board sport shoes, and women's fashion footwear all performed well during the quarter. We are confident that Journeys is well positioned from a merchandising perspective for the fall and holiday selling seasons.
"Hat World posted another solid quarter. Total sales increased 19% to $69 million and same store sales were up 4%, which was on top of a 16% comp increase a year ago. Hat World continued to experience strong gains in both core and fashion Major League Baseball, and branded performance headwear, and we are excited about the opportunities for the upcoming NFL season. Our new stores -- both mall and non-mall locations --continue to perform well, highlighting Hat World's significant growth prospects.
"Comparable store sales for Underground Station increased 12%, driven by continued increases in average selling price and unit comps. Net sales for the Underground Station Group, which includes Jarman, increased 13% to $32 million and comparable store sales rose 9%. Comparable store sales at Jarman were up 1%. We remain focused on improving our platform and expanding Underground Station's leadership position in the mall.
"Johnston & Murphy's second quarter results reflect the success of the brand's initiatives to attract new consumers, update the retail stores and diversify its sourcing base. Net sales were up 4% to $41 million, same store sales increased 9%, representing Johnston & Murphy's biggest quarterly comp gain in some time. In addition, operating margin improved 230 basis points, to 5.9%. The excellent feedback we received from retailers at the recent WSA Shoe Show reinforces our confidence in the Johnston & Murphy brand, its product offering, and its business strategy.
"Sales of Dockers Footwear were roughly flat at $14 million. Dockers Footwear business continues to be impacted by a shift at retail to more private label footwear."
Genesco also stated that it is revising its fiscal 2006 guidance upward. The Company now expects sales for the year to be approximately $1.28 billion and earnings per share to range from $2.28 to $2.30, including a previously announced charge of approximately $0.06 per share associated with the settlement of a class action lawsuit.
Pennington concluded, "During the first six months of fiscal 2006 our entire organization performed at a very high level and our strong financial results and growing industry presence reflect tremendous effort. While we are proud of our recent accomplishments, our sights are set on the future and we continue to push ourselves to improve our operations and increase 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 vary materially from the expectations reflected in these statements. A number of factors could cause differences, including 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 availability or distribution, 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 August 24, 2005, 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 1,650 retail stores in the United States and Canada, principally under the names Journeys, Journeys Kidz, Johnston & Murphy, Underground Station, Hatworld, 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 brand. Additional information on Genesco and its operating divisions may be accessed at its website www.genesco.com.
GENESCO INC.
Consolidated Earnings Summary
Three Months Ended Six Months Ended
July 30, July 31, July 30, July 31,
In Thousands 2005 2004 2005 2004
Net sales $275,168 $245,939 $561,253 $471,465
Cost of sales 136,210 124,050 275,742 238,898
Selling and administrative
expenses 124,948 112,011 252,204 211,349
Restructuring and other, net 177 (160) 3,044 (92)
Earnings from operations before
interest and other 13,833 10,038 30,263 21,310
Interest expense, net 2,568 2,896 5,272 4,778
Earnings before income taxes
from continuing operations 11,265 7,142 24,991 16,532
Income tax expense* 4,499 2,317 9,799 5,901
Earnings from continuing
operations 6,766 4,825 15,192 10,631
Provision for discontinued
operations, net - (21) 65 (21)
Net Earnings $6,766 $4,804 $15,257 $10,610
* Includes favorable tax settlements of $0.4 million and $0.5 million in
the second quarter and six months of Fiscal 2005, respectively.
Earnings Per Share Information
Three Months Ended Six Months Ended
July 30, July 31, July 30, July 31,
In Thousands (except per
share amounts) 2005 2004 2005 2004
Preferred dividend requirements $69 $73 $142 $146
Average common shares - Basic EPS 22,702 21,903 22,613 21,833
Basic earnings per share:
Before discontinued
operations $0.29 $0.22 $0.67 $0.48
Net earnings $0.29 $0.22 $0.67 $0.48
Average common and common
equivalent shares -
Diluted EPS 27,142 26,290 27,020 26,208
Diluted earnings per share:
Before discontinued
operations $0.27 $0.20 $0.60 $0.45
Net earnings $0.27 $0.20 $0.61 $0.45
GENESCO INC.
Consolidated Earnings Summary
Three Months Ended Six Months Ended
July 30, July 31, July 30, July 31,
In Thousands 2005 2004 2005 2004
Sales:
Journeys $118,928 $105,785 $247,772 $220,026
Underground Station Group 32,186 28,462 72,022 63,591
Hat World 69,055 57,956 131,202 76,041
Johnston & Murphy 41,008 39,413 82,516 79,954
Licensed Brands 13,916 14,223 27,608 31,703
Corporate and Other 75 100 133 150
Net Sales $275,168 $245,939 $561,253 $471,465
Pretax Earnings (Loss):
Journeys $6,951 $6,083 $20,719 $15,246
Underground Station Group (681) (1,483) 1,935 142
Hat World 9,258 7,451 14,740 9,002
Johnston & Murphy 2,418 1,400 4,948 3,785
Licensed Brands 1,018 1,311 1,764 3,055
Corporate and Other* (5,131) (4,724) (13,843) (9,920)
Operating income 13,833 10,038 30,263 21,310
Interest, net 2,568 2,896 5,272 4,778
Total Pretax Earnings 11,265 7,142 24,991 16,532
Income tax expense** 4,499 2,317 9,799 5,901
Earnings (loss) from continuing
operations 6,766 4,825 15,192 10,631
Provision for discontinued
operations, net - (21) 65 (21)
Net Earnings $6,766 $4,804 $15,257 $10,610
*Includes $0.2 million and $0.4 million of other charges for asset
impairment and lease terminations in the second quarter and six months
of Fiscal 2006, respectively, and a $2.6 million charge for a litigation
settlement in the first six months of Fiscal 2006. Includes
$0.4 million and $0.5 million of other charges for asset impairment and
lease terminations in the second quarter and six months of Fiscal 2005,
respectively, offset by a $0.6 million pension curtailment gain in the
second quarter and six months of Fiscal 2005.
**Includes favorable tax settlements of $0.4 million and $0.5 million in
the second quarter and six months of Fiscal 2005, respectively.
GENESCO INC.
Consolidated Balance Sheet
July 30, July 31,
In Thousands 2005 2004
Assets
Cash and cash equivalents $38,848 $15,286
Accounts receivable 17,762 17,449
Inventories 270,688 263,377
Other current assets 23,790 20,260
Total current assets 351,088 316,372
Property and equipment 173,316 164,997
Other non-current assets 159,588 164,169
Total Assets $683,992 $645,538
Liabilities and Shareholders' Equity
Accounts payable $114,837 $104,468
Current portion - long-term debt - 13,000
Other current liabilities 53,966 41,102
Total current liabilities 168,803 158,570
Long-term debt 151,250 189,250
Other long-term liabilities 70,608 71,354
Shareholders' equity 293,331 226,364
Total Liabilities and Shareholders' Equity $683,992 $645,538
GENESCO INC.
Retail Units Operated - Six Months Ended July 30, 2005
Balance Acquisi-
01/31/04 tions 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 - Six Months Ended July 30, 2005
Balance Balance
01/29/05 Open Conv Close 07/30/05
Journeys 695 19 0 3 711
Journeys 654 18 0 2 670
Journeys Kidz 41 1 0 1 41
Underground Station Group 229 4 0 7 226
Underground Station 165 4 2 3 168
Jarman Retail 64 0 (2) 4 58
Hat World 552 43 0 2 593
Johnston & Murphy 142 2 0 2 142
Shops 107 2 0 2 107
Factory Outlets 35 0 0 0 35
Total Retail Units 1,618 68 0 14 1,672
Retail Units Operated - Three Months Ended July 30, 2005
Balance Balance
04/30/05 Open Conv Close 07/30/05
Journeys 701 10 0 0 711
Journeys 660 10 0 0 670
Journeys Kidz 41 0 0 0 41
Underground Station Group 227 2 0 3 226
Underground Station 166 2 1 1 168
Jarman Retail 61 0 (1) 2 58
Hat World 568 27 0 2 593
Johnston & Murphy 143 1 0 2 142
Shops 108 1 0 2 107
Factory Outlets 35 0 0 0 35
Total Retail Units 1,639 40 0 7 1,672
Constant Store Sales
Three Months Ended Six Months Ended
July 30, July 31, July 30, July 31,
2005 2004 2005 2004
Journeys 6% 2% 7% 5%
Underground Station Group 9% -10% 9% -6%
Underground Station 12% -11% 12% -6%
Jarman Retail 1% -9% 2% -6%
Johnston & Murphy 9% 0% 6% 4%
Shops 9% 0% 6% 3%
Factory Outlets 6% 0% 4% 6%
Total Constant Store Sales 7% -1% 7% 3%
Hat World 4% 16% 5% -
April 1, 2004 - July 31, 2004 - - - 17%
SOURCE Genesco Inc.
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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