Genesco Reports Third Quarter Fiscal 2009 Results
--Company Reports Earnings of $0.43 Per Share Before Discontinued Operations--
NASHVILLE, Tenn., Nov. 25 /PRNewswire-FirstCall/ -- Genesco Inc. (NYSE: GCO) reported earnings from continuing operations of $9.5 million, or $0.43 per diluted share, for the third quarter ended November 1, 2008. These results include $2.5 million of restructuring charges and merger-related expenses, offset by an approximately equivalent after-tax amount of favorable adjustment to the Company's provision for income taxes. In the third quarter last year, the Company reported earnings from continuing operations of $5.6 million, or $0.23 per diluted share. Last year's results included $6.2 million of merger-related and restructuring expenses. Adjusting for these items, earnings from continuing operations would have been $10.0 million, or $0.39 per diluted share, in the third quarter last year.
Because of the magnitude of the merger-related expenses in last year's results and for consistency with this year's previously announced results and earnings expectations, which excluded the listed items, the Company believes that disclosure of earnings from continuing operations adjusted for these 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 on Schedule B to this press release.
Net sales for the third quarter of fiscal 2009 increased by 5% to $390 million, compared to net sales for the third quarter of the previous year of $372 million. Comparable store sales for the Company increased 2%.
Third Quarter Business Unit Performance
Genesco President and Chief Executive Officer Robert J. Dennis said, "Our third quarter results reflect solid performances at Journeys, Hat World and Dockers, partially offset by challenges at Johnston & Murphy."
"Net sales in the Journeys Group grew 10% from the prior year period to $201 million. Same store sales for the Journeys Group were up 5% for the quarter and same store sales in the Journeys stores were up 4%, compared to a 3% decline last year. Footwear unit comps in Journeys rose 2% and average selling price increased 4% in the quarter. The solid results were driven by continued strength in Journeys' skate and women's boot business.
"Net sales in the Hat World Group increased 6% from the prior year period to approximately $93 million and same store sales increased 2% in the third quarter, with urban stores up 4% and non-urban stores up 2%. Core and fashion Major League Baseball performed well and action brands were also very strong. Hat World once again generated significant operating margin expansion in the quarter.
"Net sales for the Underground Station Group were $24 million for the third quarter. Same store sales increased 1% from the prior year period and footwear unit comps rose 10%. Despite the modest comp gain, Underground Station essentially met its profit expectations due to better than expected gross margins driven by changes in product mix.
"Johnston & Murphy Group's net sales were approximately $42 million, with wholesale sales down 2% from the third quarter last year. Same store sales for the Johnston & Murphy shops declined 16% from the prior year period. Johnston & Murphy's business continues to be negatively affected by the economic climate.
"Third quarter sales of Licensed Brands increased 3% from the third quarter last year to approximately $30 million. Dockers(R) Footwear sales increased 11% during the quarter driven by a solid performance in the moderate and specialty footwear chains and a positive response to a new product line."
Fiscal 2009 Outlook
As previously reported, based on a same store sales range of negative 1% to negative 4% for the fourth quarter, the Company expects to report earnings per diluted share in the range of $1.06 to $1.20 for the fourth quarter (calculated on the same basis as the Company's previous annual guidance and reconciled to U.S. GAAP on Schedule C).
Cautionary Note Concerning Forward-Looking Statements
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 adjustments to estimates reflected in forward- looking statements, continuing weakness in the consumer economy, fashion trends that affect the sales or product margins of the Company's retail product offerings, inability of customers to obtain credit, 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, bankruptcies or deterioration in financial condition of significant wholesale customers, disruptions in product supply or distribution, further unfavorable trends in fuel costs, 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 previously announced store closing plans on schedule and at expected expense levels, unexpected changes to the market for our shares, the impact of any future stock repurchases, 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, http://www.sec.gov , or by contacting the investor relations department of Genesco via our website, http://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 November 25, 2008, at 7:30 a.m. (Central time) may be accessed through the Company's internet website, http://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 2,225 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 http://www.journeys.com , http://www.journeyskidz.com , http://www.shibyjourneys.com , http://www.undergroundstation.com , http://www.johnstonmurphy.com , http://www.dockersshoes.com , and http://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 http://www.genesco.com .
GENESCO INC.
Consolidated Earnings Summary
Three Months Ended Nine Months Ended
November 1, November 3, November 1, November 3,
In Thousands 2008 2007 2008 2007
Net sales $389,767 $372,496 $1,099,840 $1,035,124
Cost of sales 191,853 184,445 539,207 511,610
Selling and administrative
expenses 179,365 174,194 532,831 499,326
Restructuring and other, net 2,284 56 (196,293) 6,809
Earnings from operations 16,265 13,801 224,095 17,379
Interest expense, net 2,480 3,504 6,797 8,906
Earnings before income taxes
from continuing operations 13,785 10,297 217,298 8,473
Income tax expense 4,322 4,687 82,872 3,600
Earnings from continuing
operations 9,463 5,610 134,426 4,873
Provision for discontinued
operations (25) (10) (5,479) (1,235)
Net Earnings $9,438 $5,600 $128,947 $3,638
Earnings Per Share Information
Three Months Ended Nine Months Ended
November 1, November 3, November 1, November 3,
2008 2007 2008 2007
In Thousands (except per
share amounts)
Preferred dividend
requirements $49 $49 $148 $167
Average common shares - Basic
EPS 18,638 22,454 19,401 22,420
Basic earnings per share:
Before discontinued
operations $0.51 $0.25 $6.92 $0.21
Net earnings $0.50 $0.25 $6.64 $0.15
Average common and common
equivalent shares -
Diluted EPS 23,375 26,918 24,170 22,994
Diluted earnings per share:
Before discontinued
operations $0.43 $0.23 $5.64 $0.20
Net earnings $0.43 $0.23 $5.41 $0.15
GENESCO INC.
Consolidated Earnings Summary
Three Months Ended Nine Months Ended
November 1, November 3, November 1, November 3,
In Thousands 2008 2007 2008 2007
Sales:
Journeys Group $200,745 $182,587 $530,467 $486,599
Underground Station Group 24,266 26,792 76,867 81,122
Hat World Group 93,131 87,815 283,037 257,119
Johnston & Murphy Group 41,785 46,403 132,370 138,354
Licensed Brands 29,649 28,769 76,542 71,357
Corporate and Other 191 130 557 573
Net Sales $389,767 $372,496 $1,099,840 $1,035,124
Operating Income (Loss):
Journeys Group $16,901 $15,336 $24,587 $27,136
Underground Station Group (2,234) (2,930) (6,253) (9,991)
Hat World Group 6,721 4,639 21,900 14,709
Johnston & Murphy Group 1,525 4,377 8,202 12,459
Licensed Brands 3,892 4,019 9,538 9,193
Corporate and Other* (10,540) (11,640) 166,121 (36,127)
Earnings from operations 16,265 13,801 224,095 17,379
Interest, net 2,480 3,504 6,797 8,906
Earnings before income taxes
from continuing operations 13,785 10,297 217,298 8,473
Income tax expense 4,322 4,687 82,872 3,600
Earnings from continuing
operations 9,463 5,610 134,426 4,873
Provision for discontinued
operations (25) (10) (5,479) (1,235)
Net Earnings $9,438 $5,600 $128,947 $3,638
* Includes $2.3 million of other charges in the third quarter of Fiscal
2009 which includes $1.9 million in asset impairments and $0.4 million
for lease terminations and includes $196.3 million credit in the first
nine months of 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 offset by $5.5 million in asset
impairments, $1.2 million for lease terminations and $1.1 million for
other legal matters. The third quarter and nine months of Fiscal 2009
also includes $0.2 million and $7.8 million, respectively, of merger
related expenses.
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 and $0.3 million for lease terminations offset by $0.3
million in excise tax refunds. The third quarter and nine months of
Fiscal 2008 also includes $6.1 million and $11.6 million, respectively,
of merger-related expenses.
GENESCO INC.
Consolidated Balance Sheet
November 1, November 3,
In Thousands 2008 2007
Assets
Cash and cash equivalents $16,000 $17,980
Accounts receivable 30,727 29,213
Inventories 379,614 395,965
Other current assets 42,631 52,716
Total current assets 468,972 495,874
Property and equipment 245,364 250,020
Other non-current assets 177,525 171,524
Total Assets $891,861 $917,418
Liabilities and Shareholders' Equity
Accounts payable $153,043 $138,844
Other current liabilities 77,098 62,068
Total current liabilities 230,141 200,912
Long-term debt 135,920 215,220
Other long-term liabilities 89,897 89,767
Shareholders' equity 435,903 411,519
Total Liabilities and Shareholders' Equity $891,861 $917,418
GENESCO INC.
Retail Units Operated - Nine Months Ended November 1, 2008
Balance
02/03/07 Open Conv Close
Journeys Group 853 118 0 4
Journeys 768 41 0 4
Journeys Kidz 73 42 0 0
Shi by Journeys 12 35 0 0
Underground Station Group 223 2 0 33
Hat World Group 785 98 0 21
Johnston & Murphy Group 148 11 0 5
Shops 109 8 0 4
Factory Outlets 39 3 0 1
Total Retail Units 2,009 229 0 63
Retail Units Operated - Nine Months Ended November 1, 2008
Balance Balance
02/02/08 Open Conv Close 11/01/08
Journeys Group 967 43 0 2 1,008
Journeys 805 15 0 2 818
Journeys Kidz 115 22 0 0 137
Shi by Journeys 47 6 0 0 53
Underground Station Group 192 0 0 8 184
Hat World Group 862 30 0 13 879
Johnston & Murphy Group 154 6 0 3 157
Shops 113 4 0 3 114
Factory Outlets 41 2 0 0 43
Total Retail Units 2,175 79 0 26 2,228
Retail Units Operated - Three Months Ended November 1, 2008
Balance Balance
08/02/08 Open Conv Close 11/01/08
Journeys Group 993 15 0 0 1,008
Journeys 813 5 0 0 818
Journeys Kidz 128 9 0 0 137
Shi by Journeys 52 1 0 0 53
Underground
Station Group 185 0 0 1 184
Hat World Group 869 14 0 4 879
Johnston & Murphy Group 155 3 0 1 157
Shops 112 3 0 1 114
Factory Outlets 43 0 0 0 43
Total Retail Units 2,202 32 0 6 2,228
Constant Store Sales
Three Months Ended Nine Months Ended
November 1, November 3, November 1, November 3,
2008 2007 2008 2007
Journeys Group 5% -3% 3% -2%
Underground Station Group 1% -19% 7% -21%
Hat World Group 2% 2% 4% -1%
Johnston & Murphy Group -15% 2% -7% 3%
Shops -16% 3% -7% 4%
Factory Outlets -10% -2% -7% 3%
Total Constant Store Sales 2% -3% 2% -4%
Schedule B
Genesco Inc.
Adjustments to Reported Earnings from Continuing Operations
Three Months Ended November 1, 2008 and November 3, 2007
3 mos Impact 3 mos Impact
In Thousands (except per Nov 1, 2008 on EPS Nov 3, 2007 on EPS
share amounts)
Earnings from continuing
operations, as reported $9,463 $0.43 $5,610 $0.23
Adjustments: (1)
Merger-related expenses 141 - 3,698 0.14
Impairment & lease
termination charges 1,356 0.06 52 0.00
Other legal matters 7 - - -
(Higher)/lower effective
tax rate (1,463) (0.06) 599 0.02
Adjusted earnings from
continuing operations (2) $9,504 $0.43 $9,959 $0.39
(1) All adjustments are net of tax. The tax rate for the third quarter
of Fiscal 2009 before the impact of the settlement of merger-related
litigation and deductibility of prior year merger-related expenses
and a positive adjustment of $1.2 million of a previously accrued FIN
48 item is 40.8% excluding a FIN 48 discreet item of $73,000. The
tax rate for the third quarter of Fiscal 2008 is 39.7%.
(2) Reflects 23.4 million share count which includes convertible shares
and common stock equivalents.
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 C
Genesco Inc.
Adjustments to Forecasted Earnings from Continuing Operations
Fourth Quarter Ending January 31, 2009
High Guidance Low Guidance
In Thousands (except per share amounts) Fiscal 2009 Fiscal 2009
Forecasted earnings from
continuing operations $26,654 $1.15 $23,303 1.01
Adjustments: (1)
Impairment and lease termination charges 1,892 0.08 1,892 0.08
Lower effective tax rate (791) (0.03) (791) (0.03)
Adjusted forecasted earnings from
continuing operations (2) $27,755 $1.20 $24,404 $1.06
(1) All adjustments are net of tax. The tax rate for Fiscal 2009 before
the impact of the settlement of merger-related litigation and
deductibility of prior year merger-related expenses is 40.8%
excluding FIN 48 discreet items of $62,000.
(2) Reflects 23.6 million share count which includes convertible shares
and 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.
Genesco Inc.
Adjustments to Forecasted Earnings from Continuing Operations
Fiscal Year Ending January 31, 2009
High Guidance Low Guidance
In Thousands (except per share amounts) Fiscal 2009 Fiscal 2009
Forecasted earnings from
continuing operations $161,083 $6.80 $157,943 $6.67
Adjustments: (1)
Settlement of merger-related litigation (120,812) (5.03) (120,812) (5.03)
Merger-related expenses 4,627 0.19 4,627 0.19
Impairment and lease termination charges 5,898 0.25 5,898 0.25
Other legal matters 639 0.03 639 0.03
Lower effective tax rate (6,789) (0.28) (6,789) (0.28)
Adjusted forecasted earnings from
continuing operations $44,646 $1.96 $41,506 $1.83
(1) All adjustments are net of tax. 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 a positive
adjustment of $1.2 million of a previously accrued FIN 48 item is
40.8% excluding FIN 48 discreet items of $288,000.
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.
-0- 11/25/2008
/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 /
(GCO)
CO: Genesco Inc.
ST: Tennessee
IN: REA FAS TEX
SU: ERN ERP CCA
BF-JK
-- CLTU008 --
2834 11/25/2008 07:31 EST http://www.prnewswire.com