Genesco Reports Third Quarter Fiscal 2007 Results
--Company Reports Third Quarter Diluted EPS of $0.62 Before Discontinued
Operations--
--Increases Earnings Per Share Guidance for Fiscal 2007--
NASHVILLE, Tenn., Nov. 21 /PRNewswire-FirstCall/ -- Genesco Inc. (NYSE: GCO) today reported earnings before discontinued operations of $16.0 million, or $0.62 per diluted share, for the third quarter ended October 28, 2006. Earnings before discontinued operations were $16.2 million, or $0.62 per diluted share, for the third quarter ended October 29, 2005. Earnings before discontinued operations for the third quarter of this year reflected SFAS 123(R) share-based compensation and restricted stock expense of $1.7 million before taxes, or $0.04 per diluted share. Earnings from the third quarter last year reflected income of $0.8 million, or $0.02 per diluted share, primarily from an excess litigation provision. Net sales for the third quarter of fiscal 2007 increased 15% to $364 million compared to $316 million for the third quarter of fiscal 2006.
Genesco Chairman and Chief Executive Officer Hal N. Pennington, said, "Our better than expected third quarter results were driven by excellent performances at Journeys and Journeys Kidz, Johnston & Murphy and Dockers. While we expect the Underground Station business to remain challenging in the fourth quarter, our confidence that the strength we have seen in these other businesses will continue in the Holiday selling season is reflected in our increased earnings guidance for the full fiscal year.
"Net sales at Journeys Group increased 20% to approximately $184 million, same store sales rose 9% and footwear unit comps increased 18% in the third quarter. As expected, many of the same trends that produced success in the second quarter continued through Back-to-School. Journeys Kidz again reported strong growth, with sales up 55% and comparable store sales up 9%. Additionally, we remain pleased with the performance of Shi by Journeys. We feel very good about our merchandise assortment and the continuing momentum of the entire Journeys' group as we look forward to the Holiday selling season.
"Net sales at Hat World Group increased 13% to approximately $78 million and same store sales declined 1%, primarily reflecting weakness in Hat World stores serving the urban markets. We are forecasting a modest comparable sales improvement in the fourth quarter and we remain on track to open 101 new stores, representing a 14% increase in the store base, in the fiscal year. Hat World remains a high margin, highly profitable business with significant expansion opportunities and we remain very excited about its potential.
"Net sales for the Underground Station Group, which includes the Jarman stores, were $35 million and same store sales declined 11% in the third quarter. Same store sales at Underground Station fell 11% primarily due to continued weakness in men's athletic and urban markets in general. Our fourth quarter expectations do not reflect an improvement in the Underground Station business. Longer term, Underground Station is working to improve its women's product offering and non-footwear assortment.
"Johnston & Murphy Group's net sales increased 14% to approximately $44 million. Wholesale sales increased 25% and same store sales rose 6%. Johnston & Murphy's expanded dress and dress casual collection continues to gain retail shelf space and both footwear and non-footwear products are performing extremely well in the Johnston & Murphy stores. Sales growth and gross margin improvement combined to double operating margin compared to last year.
"Third quarter sales of licensed brands increased 31% to approximately $23 million. The entire Dockers' Footwear product line is retailing well and backlog is strong."
Genesco said that it is raising its earnings per share guidance for the year ending February 3, 2007. The Company now expects sales of approximately $1.45 billion and diluted earnings per share of $2.55 to $2.57 for the year. For the fourth quarter, the Company expects sales of approximately $467 million to $470 million. It reiterated its previously announced expectation for fourth quarter earnings in the range of $1.29 to $1.31 per diluted share. The earnings per share estimates include expected SFAS 123(R) share-based compensation and restricted stock expense totaling approximately $0.17 per share for the year and $0.05 per share for the fourth 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, and competition in the Company's markets. The effects of any demand-related factors in the Holiday selling season could be particularly significant to the Company's business. Additional factors that could affect the Company's prospects and cause differences from expectations include 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 November 21, 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 1,900 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 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 Nine Months Ended
October October October October
28, 29, 28, 29,
In Thousands 2006 2005 2006 2005
Net sales $364,298 $316,336 $983,617 $877,589
Cost of sales 182,844 154,825 487,404 430,567
Selling and administrative
expenses 150,992 133,225 433,477 385,429
Restructuring and other, net 1,083 (789) 1,672 2,255
Earnings from operations 29,379 29,075 61,064 59,338
Interest expense, net 2,948 2,669 7,022 7,941
Earnings before income taxes from
continuing operations 26,431 26,406 54,042 51,397
Income tax expense 10,456 10,168 21,457 19,967
Earnings from continuing
operations 15,975 16,238 32,585 31,430
Provision for discontinued
operations (98) (95) (287) (30)
Net Earnings $15,877 $16,143 $32,298 $31,400
Earnings Per Share Information
Three Months Ended Nine Months Ended
October October October October
28, 29, 28, 29,
In Thousands (except per share 2006 2005 2006 2005
amounts)
Preferred dividend requirements $64 $67 $192 $209
Average common shares - Basic EPS 22,284 22,797 22,771 22,675
Basic earnings per share:
Before discontinued operations $0.71 $0.71 $1.42 $1.38
Net earnings $0.71 $0.71 $1.41 $1.38
Average common and common
equivalent shares - Diluted EPS 26,624 27,346 27,111 27,106
Diluted earnings per share:
Before discontinued operations $0.62 $0.62 $1.26 $1.22
Net earnings $0.62 $0.61 $1.25 $1.22
Consolidated Earnings Summary
Three Months Ended Nine Months Ended
October October October October
28, 29, 28, 29,
In Thousands 2006 2005 2006 2005
Sales:
Journeys Group $184,391 $153,109 $462,560 $400,881
Underground Station Group 34,981 38,395 105,854 110,417
Hat World Group 77,503 68,330 226,697 199,532
Johnston & Murphy Group 44,467 38,981 130,414 121,497
Licensed Brands 22,844 17,457 57,759 45,065
Corporate and Other 112 64 333 197
Net Sales $364,298 $316,336 $983,617 $877,589
Operating Income (Loss):
Journeys Group $25,260 $21,551 $46,346 $42,270
Underground Station Group (631) 1,965 27 3,900
Hat World Group 7,710 7,615 22,334 22,355
Johnston & Murphy Group 3,193 1,404 8,500 6,352
Licensed Brands 2,326 1,781 5,390 3,545
Corporate and Other* (8,479) (5,241) (21,533) (19,084)
Earnings from operations 29,379 29,075 61,064 59,338
Interest, net 2,948 2,669 7,022 7,941
Earnings before income taxes from
continuing operations 26,431 26,406 54,042 51,397
Income tax expense 10,456 10,168 21,457 19,967
Earnings from continuing
operations 15,975 16,238 32,585 31,430
Provision for discontinued
operations (98) (95) (287) (30)
Net Earnings $15,877 $16,143 $32,298 $31,400
*Includes $1.1 million and $1.7 million of other charges in the third
quarter and nine months of Fiscal 2007, respectively, for asset
impairment and lease terminations. Includes $0.1 million and $0.6
million of other charges for asset impairment and lease terminations in
the third quarter and nine months of Fiscal 2006, respectively, and a
$0.9 million credit due to a favorable adjustment to a litigation
settlement in the third quarter of Fiscal 2006 and a $1.7 million
charge for a litigation settlement for the nine months of Fiscal 2006.
Consolidated Balance Sheet
October 28, October 29,
In Thousands 2006 2005
Assets
Cash and cash equivalents $18,638 $33,398
Accounts receivable 24,401 22,738
Inventories 344,309 292,798
Other current assets 33,122 26,011
Total current assets 420,470 374,945
Property and equipment 213,974 181,630
Other non-current assets 158,111 159,130
Total Assets $792,555 $715,705
Liabilities and Shareholders' Equity
Accounts payable $135,614 $115,993
Current portion - long-term debt - -
Other current liabilities 62,862 62,671
Total current liabilities 198,476 178,664
Long-term debt 158,250 151,250
Other long-term liabilities 78,722 74,076
Shareholders' equity 357,107 311,715
Total Liabilities and Shareholders' Equity $792,555 $715,705
Retail Units Operated - Nine Months Ended October 28, 2006
Balance
01/29/05 Open Conv Close
Journeys Group 695 71 0 5
Journeys 654 60 0 4
Journeys Kidz 41 10 0 1
Shi by Journeys 0 1 0 0
Underground Station Group 229 21 0 21
Underground Station 165 21 2 8
Jarman Retail 64 0 (2) 13
Hat World Group 552 96 0 7
Johnston & Murphy Group 142 5 0 5
Shops 107 4 0 4
Factory Outlets 35 1 0 1
Total Retail Units 1,618 193 0 38
Retail Units Operated - Nine Months Ended October 28, 2006
Balance Balance
01/28/06 Open Conv Close 10/28/06
Journeys Group 761 71 0 3 829
Journeys 710 44 0 3 751
Journeys Kidz 50 18 0 0 68
Shi by Journeys 1 9 0 0 10
Underground Station Group 229 10 0 10 229
Underground Station 180 10 3 0 193
Jarman Retail 49 0 (3) 10 36
Hat World Group 641 83 0 6 718
Johnston & Murphy Group 142 11 0 4 149
Shops 107 6 0 3 110
Factory Outlets 35 5 0 1 39
Total Retail Units 1,773 175 0 23 1,925
Retail Units Operated - Three Months Ended October 28, 2006
Balance Balance
07/29/06 Open Conv Close 10/28/06
Journeys Group 806 25 0 2 829
Journeys 736 17 0 2 751
Journeys Kidz 64 4 0 0 68
Shi by Journeys 6 4 0 0 10
Underground Station Group 231 3 0 5 229
Underground Station 189 3 1 0 193
Jarman Retail 42 0 (1) 5 36
Hat World Group 685 34 0 1 718
Johnston & Murphy Group 148 4 0 3 149
Shops 109 3 0 2 110
Factory Outlets 39 1 0 1 39
Total Retail Units 1,870 66 0 11 1,925
Constant Store Sales
Three Months Ended Nine Months Ended
October October October October
28, 29, 28, 29,
2006 2005 2006 2005
Journeys Group 9% 5% 5% 6%
Underground Station Group -11% 9% -7% 9%
Underground Station -11% 13% -6% 12%
Jarman Retail -10% -5% -10% 0%
Hat World Group -1% 1% 0% 4%
Johnston & Murphy Group 6% 5% 2% 6%
Shops 7% 6% 2% 6%
Factory Outlets 3% 5% -1% 5%
Total Constant Store Sales 4% 6% 2% 7%
SOURCE Genesco Inc.
-0- 11/21/2006
/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 ERP CCA
MM-JE
-- CLTU010 --
7972 11/21/2006 07:36 EST http://www.prnewswire.com