Genesco Reports Third Quarter Results
-- Company Reports Third Quarter Diluted EPS Before Discontinued Operations of
$0.55 -- -- Raises Fiscal 2005 Guidance; Announces Preliminary Fiscal 2006 Guidance --
NASHVILLE, Tenn., Nov. 18 /PRNewswire-FirstCall/ -- Genesco Inc. (NYSE: GCO) today reported earnings before discontinued operations of $12.5 million, or $0.55 per diluted share, for the third quarter ended October 30, 2004. The results included expenses of $0.02 per share related to the closing of certain Jarman retail stores in connection with the Company's plan to accelerate the conversion of Jarman to Underground Station stores and retail store asset impairments. Net earnings were $9.4 million, or $0.42 per diluted share, for the third quarter last year. Net sales for the third quarter of fiscal 2005 increased 36% to $288 million compared to $212 million for the third quarter of fiscal 2004.
Genesco Chairman, President and Chief Executive Officer Hal N. Pennington, said, "Our third quarter results highlight the significant progress we have made across the board in our programs to improve our operating platform and promote long-term growth and profitability. We look forward to building on the momentum we have created in the marketplace.
"Net sales at Journeys increased 13% to approximately $138 million, same store sales rose 7% and footwear unit comps increased 10%. Once again, we benefited from the strong trend in fashion athletic footwear. As we move into the holiday selling season, we are confident that Journeys is well positioned from a merchandising perspective and we are excited about our prospects.
"The Underground Station Group, including the Jarman stores, reported a same store sales decrease of 5%. The Underground Station stores' same store sales declined only 2%, which compares to a 7% decline for the same period last year. We have taken a number of steps to enhance the operations of Underground Station and the business has improved considerably since the beginning of the year. Importantly, these trends have continued into the fourth quarter so far. We recognize that there is a tremendous opportunity in this underserved niche and we remain committed to leveraging Underground Station's unique position in the market.
"Hat World posted another excellent quarter, with total sales up 23% and same store sales up 12%, primarily driven by increased demand for core sports product, as well as by strength in the fashion and branded businesses. During the quarter, Hat World opened 25 stores, including its first campus-area location and its first two stores in Puerto Rico. Hat World has so far delivered on the high expectations we brought to its acquisition, and we remain focused on realizing its potential.
"We continued to make meaningful progress at Johnston & Murphy. Operating margin rose 370 basis points to 4.9%, as gross margin increased due to better sourcing, less promotional selling and a higher mix of premium product. For some time, we have been focused on profitable sales and margin improvement and it is gratifying to see the positive results of our efforts. As we head into the next stage of our strategic plan, we are working hard to enhance our brand image further and to update our store design in order to attract new customers.
"Finally, Dockers Footwear's sales rose 8% to approximately $18 million, primarily due to the strength of the Stain Defender product. Dockers also experienced a substantial increase in gross margin, which helped drive a 400 basis point increase in operating margin to 11.7%. Dockers has continued to perform well in the moderately priced men's shoe environment, which underscores the strength of the brand and is a testimony to the strength of its design, marketing and sales teams."
Genesco also stated that it is revising upward its fiscal 2005 guidance. The Company now expects sales of approximately $1.1 billion for the year and diluted earnings per share to range from $2.01 to $2.02, including previously announced charges of approximately $0.07 to $0.08 per share primarily associated with the planned closing of Jarman and other underperforming stores. The Company noted that, if shares of its common stock close above $26.54 for 10 of the last 30 days of the fourth quarter, or if certain proposed changes in accounting standards governing the contingent conversion feature of the Company's 4-1/8% convertible subordinated debentures become effective, the shares underlying the debentures must be included in diluted shares outstanding for purposes of the earnings per share calculation for the quarter and year. Assuming that the shares are included, diluted earnings per share guidance for the year would be adjusted to a range of $1.81 to $1.82 per share, including the previously announced store related charges.
Genesco also announced preliminary sales and diluted earnings per share guidance for the fiscal year ending January 28, 2006. The Company expects net sales for fiscal 2006 to range from $1.2 billion to $1.3 billion and diluted earnings per share to range from $2.37 to $2.41, assuming the convertible shares are not included in the calculation, or from $2.11 to $2.15, if the convertible shares are included.
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, changes in business strategies by the Company's competitors (including pricing and promotional discounts), the integration of the Hat World acquisition, 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 18, 2004, 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.
Genesco Inc., a Nashville-based specialty retailer, sells footwear,
headwear and accessories in more than 1,600 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 http://www.journeys.com , http://www.journeyskidz.com ,
http://www.undergroundstation.com , http://www.johnstonmurphy.com ,
http://www.lids.com , http://www.hatworld.com, and http://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 http://www.genesco.com .
GENESCO INC.
Consolidated Earnings Summary
Three Months Ended Nine Months Ended
Oct. 30, Nov. 1, Oct. 30, Nov. 1,
In Thousands 2004 2003 2004 2003
Net sales $288,398 $212,483 $759,863 $584,707
Cost of sales 145,030 113,355 383,928 313,998
Selling and administrative
expenses 119,251 82,426 330,596 243,350
Restructuring and other, net 667 - 627 (139)
Earnings from operations before
interest and other 23,450 16,702 44,712 27,498
Loss on early retirement of
debt - - - 2,581
Interest expense, net 3,138 1,510 7,916 5,691
Earnings before income taxes
from continuing operations 20,312 15,192 36,796 19,226
Income tax expense 7,783 5,780 13,668 7,368
Earnings from continuing
operations 12,529 9,412 23,128 11,858
Provision for discontinued
operations, net (440) - (461) -
Net Earnings $12,089 $9,412 $22,667 $11,858
Earnings Per Share Information
Three Months Ended Nine Months Ended
In Thousands (except per Oct. 30, Nov. 1, Oct. 30, Nov. 1,
share amounts) 2004 2003 2004 2003
Preferred dividend requirements $73 $74 $219 $221
Average common shares -
Basic EPS 22,041 21,751 21,902 21,750
Basic earnings per share:
Before discontinued
operations $0.57 $0.43 $1.05 $0.54
Net earnings $0.55 $0.43 $1.02 $0.54
Average common and common
equivalent shares - Diluted EPS 22,489 22,081 22,357 22,055
Diluted earnings per share:
Before discontinued
operations $0.55 $0.42 $1.02 $0.53
Net earnings $0.54 $0.42 $1.00 $0.53
GENESCO INC.
Consolidated Earnings Summary
Three Months Ended Nine Months Ended
Oct. 30, Nov. 1, Oct. 30, Nov. 1,
In Thousands 2004 2003 2004 2003
Sales:
Journeys $137,985 $121,602 $358,011 $317,791
Underground Station Group 34,273 34,996 97,864 100,291
Hat World 59,477 - 135,518 -
Johnston & Murphy 38,256 38,760 118,210 118,368
Dockers 18,334 17,023 50,037 48,033
Corporate and Other 73 102 223 224
Net Sales $288,398 $212,483 $759,863 $584,707
Pretax Earnings (Loss):
Journeys $17,967 $16,484 $33,297 $28,758
Underground Station Group 770 1,390 907 3,181
Hat World 7,681 - 16,767 -
Johnston & Murphy 1,866 455 5,492 2,429
Dockers 2,140 1,315 5,195 3,605
Corporate and Other* (6,974) (2,942) (16,946) (10,475)
Operating income 23,450 16,702 44,712 27,498
Loss on early retirement of
debt - - - 2,581
Interest, net 3,138 1,510 7,916 5,691
Total Pretax Earnings 20,312 15,192 36,796 19,226
Income tax expense 7,783 5,780 13,668 7,368
Earnings from continuing
operations 12,529 9,412 23,128 11,858
Provision for discontinued
operations (440) - (461) -
Net Earnings $12,089 $9,412 $22,667 $11,858
* Includes $0.7 million and $0.6 million of other charges for asset
impairment and lease terminations in the third quarter and nine months
of Fiscal 2005 offset by a $0.6 million pension curtailment gain in the
nine months of Fiscal 2005 and a $0.1 million restructuring adjustment
in the nine months of Fiscal 2004.
GENESCO INC.
Consolidated Balance Sheet
October 30, November 1,
In Thousands 2004 2003
Assets
Cash and cash equivalents $15,012 $44,306
Accounts receivable 18,823 18,731
Inventories 265,733 205,918
Other current assets 28,216 22,526
Total current assets 327,784 291,481
Property and equipment 152,125 126,842
Other non-current assets 161,530 27,303
Total Assets $641,439 $445,626
Liabilities and Shareholders' Equity
Accounts payable $93,541 $78,318
Current portion - long-term debt 17,000 -
Other current liabilities 68,609 40,647
Total current liabilities 179,150 118,965
Long-term debt 175,250 86,250
Other long-term liabilities 44,320 45,827
Shareholders' equity 242,719 194,584
Total Liabilities and Shareholders' Equity $641,439 $445,626
GENESCO INC.
Retail Units Operated - Nine Months Ended October 30, 2004
Balance
02/01/03 Open Conv Close
Journeys 614 55 0 4
Journeys 579 50 0 4
Journeys Kidz 35 5 0 0
Underground Station Group 229 18 0 14
Underground Station 114 18 8 3
Jarman Retail 115 0 (8) 11
Hat World/Lids 0 0 0 0
Johnston & Murphy 148 7 0 7
Shops 115 5 0 5
Factory Outlets 33 2 0 2
Total Retail Units 991 80 0 25
Retail Units Operated - Nine Months Ended October 30, 2004
Balance Acquisi- Balance
01/31/04 tions Open Conv Close 10/30/04
Journeys 665 26 0 4 687
Journeys 625 25 0 4 646
Journeys Kidz 40 1 0 0 41
Underground Station Group 233 15 0 17 231
Underground Station 137 15 9 3 158
Jarman Retail 96 0 (9) 14 73
Hat World/Lids 0 503 43 0 3 543
Johnston & Murphy 148 4 0 10 142
Shops 115 0 0 9 106
Factory Outlets 33 4 0 1 36
Total Retail Units 1,046 503 88 0 34 1,603
Retail Units Operated - Three Months Ended October 30, 2004
Balance Balance
07/31/04 Open Conv Close 10/30/04
Journeys 680 8 0 1 687
Journeys 639 8 0 1 646
Journeys Kidz 41 0 0 0 41
Underground Station Group 230 7 0 6 231
Underground Station 148 7 5 2 158
Jarman Retail 82 0 (5) 4 73
Hat World/Lids 519 25 0 1 543
Johnston & Murphy 142 1 0 1 142
Shops 107 0 0 1 106
Factory Outlets 35 1 0 0 36
Total Retail Units 1,571 41 0 9 1,603
Constant Store Sales
Three Months Ended Nine Months Ended
Oct. 30, Nov. 1, Oct. 30, Nov. 1,
2004 2003 2004 2003
Journeys 7% -1% 6% -1%
Underground Station Group -5% -9% -6% -5%
Underground Station -2% -7% -5% 2%
Jarman Retail -9% -11% -7% -12%
Johnston & Murphy -1% 1% 2% -2%
Shops 0% -1% 2% -3%
Factory Outlets -2% 7% 3% 2%
Total Constant Store Sales 4% -2% 3% -2%
Hat World/Lids 12% -
April 1, 2004 -
October 30, 2004 15% -
SOURCE Genesco Inc.
-0- 11/18/2004
/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 TEX
SU: ERN ERP CCA MAV
DL-KM
-- CLTH023 --
1733 11/18/2004 07:33 EST http://www.prnewswire.com