Genesco Reports Third Quarter Fiscal 2010 Results
Adjusted for the listed items in both periods, earnings from continuing operations were
Net sales for the third quarter of Fiscal 2010 were
"We are raising our fiscal 2010 guidance to reflect our strong third quarter results, and now expect earnings per share of
"As we look ahead, we are confident about both our near and long-term opportunities. We continue to build on our leadership status in our niche markets and remain confident in our ability to execute a strategy that will result in long-term growth and increased shareholder value."
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, especially to the extent that it depresses sales during the Holiday season, 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 and 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
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GENESCO INC.
Consolidated Earnings Summary
Three Months Ended
------------------
Restated*
October 31, November 1,
In Thousands 2009 2008
------------ ---- ----
Net sales $390,302 $389,767
Cost of sales 190,136 191,853
Selling and administrative expenses 178,342 179,365
Restructuring and other, net 2,571 2,284
---------------------------- ----- -----
Earnings from operations 19,253 16,265
Loss on early retirement of debt - -
Interest expense, net 1,850 3,255
--------------------- ----- -----
Earnings before income taxes from
continuing operations 17,403 13,010
Income tax expense 5,880 4,019
------------------ ----- -----
Earnings from continuing operations 11,523 8,991
Provision for discontinued operations (80) (25)
------------------------------------- --- ---
Net earnings $11,443 $8,966
* Fiscal 2009 results restated as a result of retroactive application
of FSP APB 14-1.
Nine Months Ended
-----------------
Restated*
October 31, November 1,
In Thousands 2009 2008
------------ ---- ----
Net sales $1,095,326 $1,099,840
Cost of sales 535,993 539,207
Selling and administrative expenses 528,309 532,831
Restructuring and other, net 10,864 (196,293)
---------------------------- ------ --------
Earnings from operations 20,160 224,095
Loss on early retirement of debt 5,119 -
Interest expense, net 6,795 9,073
--------------------- ----- -----
Earnings before income taxes from
continuing operations 8,246 215,022
Income tax expense 4,989 81,982
------------------ ----- ------
Earnings from continuing operations 3,257 133,040
Provision for discontinued operations (298) (5,479)
------------------------------------- ---- ------
Net earnings $2,959 $127,561
* Fiscal 2009 results restated as a result of retroactive application
of FSP APB 14-1.
Earnings Per Share Information ==============================
Three Months Ended Nine Months Ended
------------------ -----------------
Restated Restated
October 31, November 1, October 31, November 1,
In Thousands (except
per share amounts) 2009 2008 2009 2008
-------------------- ---- ---- ---- ----
Preferred dividend
requirements $49 $49 $148 $148
Average common shares -
Basic EPS 21,952 18,638 20,868 19,401
Basic earnings per
share:
Before discontinued
operations $0.52 $0.48 $0.15 $6.85
Net earnings $0.52 $0.48 $0.13 $6.57
Average common and
common
equivalent shares -
Diluted EPS 23,741 23,375 21,086 24,170
Diluted earnings per
share:
Before discontinued
operations $0.50 $0.43 $0.15 $5.64
Net earnings $0.50 $0.43 $0.13 $5.41
GENESCO INC.
Consolidated Earnings Summary
Three Months Ended
------------------
Restated
October 31, November 1,
In Thousands 2009 2008
------------ ---- ----
Sales:
Journeys Group $198,407 $200,745
Underground Station Group 21,946 24,266
Hat World Group 105,739 93,131
Johnston & Murphy Group 40,361 41,785
Licensed Brands 23,701 29,649
Corporate and Other 148 191
------------------- --- ---
Net Sales $390,302 $389,767
========= ======== ========
Operating Income (Loss):
Journeys Group $17,902 $16,901
Underground Station Group (1,862) (2,234)
Hat World Group 7,010 6,721
Johnston & Murphy Group 1,660 1,525
Licensed Brands 3,921 3,892
Corporate and Other* (9,378) (10,540)
-------------------- ------ -------
Earnings from operations 19,253 16,265
Loss on early retirement of debt - -
Interest, net 1,850 3,255
------------- ----- -----
Earnings before income taxes from
continuing operations 17,403 13,010
Income tax expense 5,880 4,019
------------------ ----- -----
Earnings from continuing operations 11,523 8,991
Provision for discontinued operations (80) (25)
------------------------------------- --- ---
Net Earnings $11,443 $8,966
============ ======= ======
*Includes $2.6 million of other charges in the third quarter of
Fiscal 2010, primarily asset impairments and includes $10.9 million
of other charges in the first nine months of Fiscal 2010 which
includes $10.5 million in asset impairments, $0.3 million in other
legal matters and $0.1 million for lease terminations.
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 included $0.2 million and $7.8
million , respectively, of merger-related expenses.
Nine Months Ended
-----------------
Restated
October 31, November 1,
In Thousands 2009 2008
------------ ---- ----
Sales:
Journeys Group $523,846 $530,467
Underground Station Group 67,235 76,867
Hat World Group 313,373 283,037
Johnston & Murphy Group 118,745 132,370
Licensed Brands 71,654 76,542
Corporate and Other 473 557
------------------- --- ---
Net Sales $1,095,326 $1,099,840
========= ========== ==========
Operating Income (Loss):
Journeys Group $20,256 $24,587
Underground Station Group (6,101) (6,253)
Hat World Group 24,060 21,900
Johnston & Murphy Group 1,358 8,202
Licensed Brands 9,525 9,538
Corporate and Other* (28,938) 166,121
-------------------- ------- -------
Earnings from operations 20,160 224,095
Loss on early retirement of debt 5,119 -
Interest, net 6,795 9,073
------------- ----- -----
Earnings before income taxes from
continuing operations 8,246 215,022
Income tax expense 4,989 81,982
------------------ ----- ------
Earnings from continuing operations 3,257 133,040
Provision for discontinued operations (298) (5,479)
------------------------------------- ---- ------
Net Earnings $2,959 $127,561
============ ====== ========
*Includes $2.6 million of other charges in the third quarter of
Fiscal 2010, primarily asset impairments and includes $10.9 million
of other charges in the first nine months of Fiscal 2010 which
includes $10.5 million in asset impairments, $0.3 million in other
legal matters and $0.1 million for lease terminations.
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 included $0.2 million and $7.8
million , respectively, of merger-related expenses.
GENESCO INC.
Consolidated Balance Sheet
==========================
Restated
October 31, November 1,
In Thousands 2009 2008
------------ ---- ----
Assets
Cash and cash equivalents $23,620 $16,000
Accounts receivable 33,425 30,727
Inventories 359,684 379,614
Other current assets 56,855 42,631
-------------------- ------ ------
Total current assets 473,584 468,972
-------------------- ------- -------
Property and equipment 221,264 245,364
Other non-current assets 183,431 175,239
------------------------ ------- -------
Total Assets $878,279 $889,575
============ ======== ========
Liabilities and Shareholders' Equity
Accounts payable $152,273 $153,043
Other current liabilities 62,694 77,302
------------------------- ------ ------
Total current liabilities 214,967 230,345
------------------------- ------- -------
Long-term debt 29,042 130,319
Other long-term liabilities 112,279 89,693
Shareholders' equity 521,991 439,218
-------------------- ------- -------
Total Liabilities and Shareholders'
Equity $878,279 $889,575
=================================== ======== ========
GENESCO INC.
Retail Units Operated - Nine Months Ended October 31, 2009
Balance Balance
02/02/08 Open Close 01/31/09
Journeys Group 967 50 5 1012
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
===== === === =====
Acquisi- Balance
tion Open Close 10/31/09
Journeys Group 0 15 5 1,022
Journeys 0 8 5 819
Journeys Kidz 0 7 0 148
Shi by Journeys 0 0 0 55
Underground Station Group 0 0 6 174
Hat World Group 1 23 24 885
Johnston & Murphy Group 0 6 1 162
Shops 0 4 1 117
Factory Outlets 0 2 0 45
Total Retail Units 1 44 36 2,243
=== === === =====
Retail Units Operated - Three Months EndedOctober 31, 2009 ===========================================================
Balance Acquisi- Balance
08/01/09 ition Open Close 10/31/09
Journeys Group 1,021 0 1 0 1,022
Journeys 818 0 1 0 819
Journeys Kidz 148 0 0 0 148
Shi by Journeys 55 0 0 0 55
Underground Station Group 176 0 0 2 174
Hat World Group 883 1 10 9 885
Johnston & Murphy Group 161 0 2 1 162
Shops 117 0 1 1 117
Factory Outlets 44 0 1 0 45
Total Retail Units 2,241 1 13 12 2,243
================== ===== === === === =====
Constant Store Sales ====================
Three Months Ended Nine Months Ended
------------------ -----------------
October 31, November 1, October 31, November 1,
2009 2008 2009 2008
---- ---- ---- ----
Journeys Group -2% 5% -3% 3%
Underground Station
Group -6% 1% -10% 7%
Hat World Group 1% 2% 2% 4%
Johnston & Murphy Group -2% -15% -12% -7%
----------------------- --- --- --- ---
Total Constant Store
Sales -2% 2% -3% 2%
==================== === === === ===
Genesco Inc.
Adjustments to Reported Earnings from Continuing Operations
Three Months Ended October 31, 2009 and November 1, 2008
3 mos Impact 3 mos Impact
In Thousands (except per
share amounts) Oct 2009 on EPS Oct 2008 on EPS
-------- ------ -------- ------
Earnings from continuing
operations, as reported $11,523 $0.50 $8,991 $0.43
Adjustments: (1)
Merger-related expenses - - 141 -
Impairment & lease
termination charges 1,600 0.07 1,356 0.06
Other legal matters - - 7 -
Convertible debt interest
restatement (APB 14-1) 179 - 472 -
Higher effective tax rate
(2) (965) (0.04) (1,463) (0.06)
Adjusted earnings from
continuing operations (3) $12,337 $0.53 $9,504 $0.43
------- ----- ------ -----
(1) All adjustments are net of tax. The tax rate for the third quarter of Fiscal 2010 before a positive adjustment of$1.0 million for FIN 48 and other adjustments is 38.6% excluding a FIN 48 discreet item of$126,000 . 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 . (2) Includes added tax onFinish Line share appreciation and impact on EPS calculation from additional tax in Fiscal 2009. (3) Reflects 23.7 million share count for Fiscal 2010 and 23.4 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.
Genesco Inc.
Adjustments to Forecasted Earnings from Continuing Operations
Fiscal Year Ending January 30, 2010
Baseline Scenario High Guidance Low Guidance
In Thousands (except per share
amounts) Fiscal 2010 Fiscal 2010
----------- -----------
Forecasted earnings from
continuing operations $27,436 $1.25 $26,150 $1.19
Adjustments: (1)
Convertible debt interest
restatement (APB 14-1) 896 - 896 -
Impairment, other legal matters
and lease termination charges 9,335 0.40 9,335 0.40
Loss on early retirement of
debt 3,092 0.13 3,092 0.13
Higher effective tax rate 1,501 0.06 1,501 0.06
----- ---- ----- ----
Adjusted forecasted earnings
from continuing operations (2) $42,260 $1.84 $40,974 $1.78
------- ----- ------- -----
(1) All adjustments are net of tax. The forecasted tax rate for Fiscal 2010 for the baseline scenario is 39.7%. (2) Reflects 23.5 million share count for Fiscal 2010 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 29, 2011
Baseline Scenario High Guidance Low Guidance
In Thousands (except per
share amounts) Fiscal 2011 Fiscal 2011
----------- -----------
Forecasted earnings from
continuing operations $40,732 $1.73 $38,349 $1.63
Adjustments: (1)
Impairment and lease
termination charges 8,812 0.37 8,812 0.37
----- ---- ----- ----
Adjusted forecasted earnings
from continuing operations
(2) $49,544 $2.10 $47,161 $2.00
------- ----- ------- -----
(1) All adjustments are net of tax. The forecasted tax rate for Fiscal 2011 for the baseline scenario is 41.1%. (2) Reflects 23.8 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
Financial Contact: James S. Gulmi, +1-615-367-8325, Media Contact: Claire S. McCall, +1-615-367-8283, both of Genesco Inc.