Genesco Reports Third Quarter Fiscal 2008 Results
- Company Reports Earnings of $0.23 Per Share Before Discontinued Operations, Including Merger-Related Expenses, Asset Impairment Charges and Store Closing
Costs of Approximately $0.16 Per Share -
NASHVILLE, Tenn., Nov. 29 /PRNewswire/ -- Genesco Inc. (NYSE: GCO) today reported earnings of $5.6 million before discontinued operations, or $0.23 per diluted share, for the third quarter ended November 3, 2007. Results for the quarter included $6.2 million pretax, or approximately $0.16 per diluted share, in litigation and other expenses related to the Company's proposed merger with a subsidiary of The Finish Line Inc., retail store asset impairment charges and costs related to the previously announced decision to close certain underperforming stores, primarily in the Underground Station Group. For the third quarter ended October 28, 2006, earnings before discontinued operations were $16.0 million, or $0.62 per diluted share. Results for the quarter last year include $1.1 million pretax, or approximately $0.02 per share, of retail store asset impairment charges. Net sales for the third quarter of fiscal 2008 increased 2.3% to $372 million, compared to $364 million for the third quarter of fiscal 2007.
Genesco Chairman and Chief Executive Officer Hal N. Pennington said, "Our third quarter results continued to reflect generally challenging economic conditions and a difficult retail environment, especially in footwear.
"Net sales in the Journeys Group were approximately $183 million in the third quarter, and same store sales declined 3%. The benefit we expected from the shift in sales tax holidays and the onset of the back to school season from the second quarter last year to the third quarter this year was more than offset by the general weakness of the retail footwear climate and significant underperformance by one line of shoes that performed very strongly for the Journeys Group in the third quarter last year. While there remains some uncertainty in the marketplace, we believe Journeys is well positioned for the holiday selling season.
"Net sales in the Hat World Group increased 13% to approximately $88 million, and same store sales rose 2% in the third quarter. Hat World's core business, particularly Major League Baseball products, performed well during the quarter, as did branded action product. However, Hat World sacrificed some gross margin in connection with a program designed to adjust MLB fashion inventory levels. We completed that program during the third quarter and expect it to benefit future performance.
"Net sales for the Underground Station Group, which includes the remaining Jarman stores, were $27 million, and same store sales declined 19%. Same store sales again reflected the weak urban market, a difficult Nike comparison, especially during the early part of the quarter, and an ongoing transition into the chain's new merchandising strategy. While the general retail environment and the urban market remain challenging, we expect Underground Station to benefit from new merchandising strategies in the holiday season and from easier comparisons with last year, especially since Nike sales were less meaningful in the fourth quarter last year.
"Johnston & Murphy Group's net sales increased 4% to approximately $46 million in the third quarter. Same store sales for the shops were up 3% and operating margin for the Johnston & Murphy Group increased 220 basis points to 9.4%, reflecting the continuing strength of the brand.
"Third quarter sales of Licensed Brands increased 26% to approximately $29 million, and operating margin increased 380 basis points to 14% reflecting the continuing strength of Dockers Footwear, sales of which increased approximately 9%, and additional sales related to the introduction of a line of footwear sourced for limited distribution under a new license arrangement. Even in a very challenging retail environment our target consumers are continuing to respond very positively to the product styling, comfort and value found in Dockers Footwear, and our retail customers are very happy with the performance. We believe we are poised for continued success."
This release contains forward-looking statements, including those regarding the performance outlook for the Company and its individual businesses, 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 uncertainty regarding the effect and timing of the Company's proposed merger with a subsidiary of The Finish Line, Inc. and litigation and investigations in connection with the merger, 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, foreign labor and materials costs, and other factors affecting the cost of products, and competition in the Company's markets. 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, the ability to negotiate acceptable lease terminations and otherwise to execute the store closing plan referred to in this release on schedule and at expected 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. Additional factors are cited in the "Risk Factors," "Legal Proceedings" and "Management Discussion and Analysis of Results of Operations and Financial Condition" sections of, and elsewhere, in our SEC filings, copies of which may be obtained 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.
The Company's live conference call on November 29, 2007, 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 2,150 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, www.johnstonmurphy.com, www.lids.com and www.lidskids.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
November 3, October 28, November 3, October 28,
In Thousands 2007 2006 2007 2006
Net sales $372,496 $364,298 $1,035,124 $ 983,617
Cost of sales 184,445 182,844 511,610 487,404
Selling and administrative
expenses 174,194 150,992 499,326 433,477
Restructuring and other, net 56 1,083 6,809 1,672
Earnings from operations 13,801 29,379 17,379 61,064
Interest expense, net 3,504 2,948 8,906 7,022
Earnings before income taxes
from continuing operations 10,297 26,431 8,473 54,042
Income tax expense 4,687 10,456 3,600 21,457
Earnings from continuing
operations 5,610 15,975 4,873 32,585
Provision for discontinued
operations (10) (98) (1,235) (287)
Net Earnings $5,600 $15,877 $3,638 $32,298
Earnings Per Share Information
Three Months Ended Nine Months Ended
In Thousands (except November 3, October 28, November 3, October 28,
per share amounts) 2007 2006 2007 2006
Preferred dividend
requirements $49 $64 $167 $192
Average common shares
- Basic EPS 22,454 22,284 22,420 22,771
Basic earnings per share:
Before discontinued
operations $0.25 $0.71 $0.21 $1.42
Net earnings $0.25 $0.71 $0.15 $1.41
Average common and common
equivalent shares -
Diluted EPS 26,918 26,624 22,994 27,111
Diluted earnings per share:
Before discontinued
operations $0.23 $0.62 $0.20 $1.26
Net earnings $0.23 $0.62 $0.15 $1.25
GENESCO INC.
Consolidated Earnings Summary
Three Months Ended Nine Months Ended
November 3, October 28, November 3, October 28,
In Thousands 2007 2006 2007 2006
Sales:
Journeys Group $182,587 $184,391 $486,599 $462,560
Underground Station
Group 26,792 34,981 81,122 105,854
Hat World Group 87,815 77,503 257,119 226,697
Johnston & Murphy Group 46,403 44,467 138,354 130,414
Licensed Brands 28,769 22,844 71,357 57,759
Corporate and Other 130 112 573 333
Net Sales $372,496 $364,298 $1,035,124 $983,617
Operating Income (Loss):
Journeys Group $15,336 $25,260 $27,136 $46,346
Underground Station
Group (2,930) (631) (9,991) 27
Hat World Group 4,639 7,710 14,709 22,334
Johnston & Murphy Group 4,377 3,193 12,459 8,500
Licensed Brands 4,019 2,326 9,193 5,390
Corporate and Other* (11,640) (8,479) (36,127) (21,533)
Earnings from operations 13,801 29,379 17,379 61,064
Interest, net 3,504 2,948 8,906 7,022
Earnings before income taxes
from continuing operations 10,297 26,431 8,473 54,042
Income tax expense 4,687 10,456 3,600 21,457
Earnings from continuing
operations 5,610 15,975 4,873 32,585
Provision for discontinued
operations (10) (98) (1,235) (287)
Net Earnings $5,600 $15,877 $3,638 $32,298
*Includes $0.1 million of other charges in the third quarter of Fiscal
2008 for asset impairments and includes $6.8 million of other charges in
the first nine months of Fiscal 2008 of which $6.8 million is asset
impairments related to underperforming stores, primarily in the
Underground Station Group, and $0.3 million for lease terminations offset
by $0.3 million in excise tax refunds. Includes $1.1 million and $1.7
million of other charges in the third quarter and nine months of Fiscal
2007, respectively, for asset impairments and lease terminations. The
third quarter and nine months of Fiscal 2008 also includes $6.1 million
and $11.6 million, respectively, in expenses related to the Company's
proposed merger with a subsidiary of The Finish Line Inc.
GENESCO INC.
Consolidated Balance Sheet
November 3, October 28,
In Thousands 2007 2006
Assets
Cash and cash equivalents $17,980 $18,638
Accounts receivable 29,213 24,401
Inventories 395,965 344,309
Other current assets 52,716 33,122
Total current assets 495,874 420,470
Property and equipment 250,020 213,974
Other non-current assets 171,524 158,111
Total Assets $917,418 $792,555
Liabilities and Shareholders' Equity
Accounts payable $138,844 $135,614
Other current liabilities 62,068 62,862
Total current liabilities 200,912 198,476
Long-term debt 215,220 158,250
Other long-term liabilities 89,767 78,722
Shareholders' equity 411,519 357,107
Total Liabilities and Shareholders' Equity $917,418 $792,555
GENESCO INC.
Retail Units Operated - Nine Months Ended November 3, 2007
Balance Acquisitions Open Conv Close
01/28/06
Journeys Group 761 96 0 4
Journeys 710 61 0 3
Journeys Kidz 50 24 0 1
Shi by Journeys 1 11 0 0
Underground Station Group 229 11 0 17
Underground Station 180 11 3 1
Jarman Retail 49 0 (3) 16
Hat World Group 641 49 104 0 9
Johnston & Murphy Group 142 13 0 7
Shops 107 7 0 5
Factory Outlets 35 6 0 2
Total Retail Units 1,773 49 224 0 37
Balance Balance
02/03/07 Open Conv Close 11/03/07
Journeys Group 853 94 0 2 945
Journeys 768 36 0 2 802
Journeys Kidz 73 30 0 0 103
Shi by Journeys 12 28 0 0 40
Underground Station Group 223 2 0 10 215
Underground Station 193 2 2 4 193
Jarman Retail 30 0 (2) 6 22
Hat World Group 785 82 0 11 856
Johnston & Murphy Group 148 10 0 2 156
Shops 109 7 0 1 115
Factory Outlets 39 3 0 1 41
Total Retail Units 2,009 188 0 25 2,172
Retail Units Operated - Three Months Ended November 3, 2007
Balance Balance
08/04/07 Open Conv Close 11/03/07
Journeys Group 909 36 0 0 945
Journeys 789 13 0 0 802
Journeys Kidz 91 12 0 0 103
Shi by Journeys 29 11 0 0 40
Underground Station Group 219 1 0 5 215
Underground Station 193 1 1 2 193
Jarman Retail 26 0 (1) 3 22
Hat World Group 829 31 0 4 856
Johnston & Murphy Group 154 4 0 2 156
Shops 113 3 0 1 115
Factory Outlets 41 1 0 1 41
Total Retail Units 2,111 72 0 11 2,172
Constant Store Sales
Three Months Ended Nine Months Ended
November 3, October 28, November 3, October 28,
2007 2006 2007 2006
Journeys Group -3% 9% -2% 5%
Underground Station Group -19% -11% -21% -7%
Underground Station -20% -11% -22% -6%
Jarman Retail -9% -10% -12% -10%
Hat World Group 2% -1% -1% 0%
Johnston & Murphy Group 2% 6% 3% 2%
Shops 3% 7% 4% 2%
Factory Outlets -2% 3% 3% -1%
Total Constant Store Sales -3% 4% -4% 2%
SOURCE Genesco Inc.
-0- 11/29/2007
/CONTACT: Financial Contact, 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 /
(GCO)
CO: Genesco Inc.
ST: Tennessee
IN: TEX REA FAS
SU: ERN CCA
TP-DL
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4711 11/29/2007 07:29 EST http://www.prnewswire.com