Genesco Reports Third Quarter Results
--Diluted Earnings Per Share Before Discontinued Operations Increase 27% to
$0.62--
--Raises Fiscal 2006 Guidance--
NASHVILLE, Tenn., Nov. 22 /PRNewswire-FirstCall/ -- Genesco Inc. (NYSE: GCO) today reported earnings before discontinued operations of $16.2 million, or $0.62 per diluted share, for the third quarter ended October 29, 2005. This compares with earnings before discontinued operations of $12.4 million, or $0.49 per diluted share, for the third quarter last year. Net sales for the third quarter of fiscal 2006 increased 10% to $316 million compared to $288 million for the third quarter of fiscal 2005.
Genesco's third quarter earnings reflect a pre-tax gain of $0.9 million, or approximately $0.02 per diluted share, associated with the conclusion of the settlement of a California employment class action more favorably than originally anticipated offset by a pre-tax expense of $0.6 million, or approximately $0.01 per diluted share, related to uninsured property damage from the hurricanes during the quarter.
Genesco Chairman, President and Chief Executive Officer Hal N. Pennington, said, "Our third quarter performance, which once again exceeded expectations, was driven primarily by same store sales gains and gross margin expansion. These results were particularly gratifying given the external challenges we faced during the quarter -- including hurricanes and rising gasoline prices -- and some difficult internal comparisons against the previous year.
"Net sales at Journeys rose 11% to approximately $153 million, and both same store sales and footwear unit comps increased 5% for the quarter. The Journeys business was strong across the board. In December, Journeys will open its 700th store, an important milestone that reflects the vibrancy and national appeal of the brand. In addition to seeking further growth in its mall-based store count, Journeys' growth plans include opening additional stores in major city street locations following a successful opening on 34th Street in Manhattan, as well as testing other non-mall venues. Additionally, the continuing strength of the Journeys Kidz business has led us to accelerate our store opening plans for that concept for next year to more than double this year's level.
"Net sales at Hat World increased 15% to $68 million and same store sales were up 1%, which was in line with expectations, and on top of a 12% comp increase a year ago. Despite the tough comparisons to the robust demand generated by last year's World Series, the Major League Baseball business was on plan, and the NFL, NBA and NHL products all performed well. Hat World remains on track to open about 96 new stores this year, up from 55 last year, and we expect it will have approximately 642 stores in operation at the end of fiscal 2006.
"Net sales for the Underground Station Group, which includes Jarman, increased 12% to $38 million and comparable store sales rose 9%. Comparable store sales at Jarman declined 5%. Underground Station registered another strong same store sales result, accelerating to a 13% comp increase, following a 12% gain in the second quarter and an 11% increase in the first quarter. Underground Station again expanded its operating margin in the quarter by 300 basis points to 5.1%, driven by better gross margins and improved expense leverage.
"Johnston & Murphy's net sales were up 2% for the quarter to $39 million, same store sales for Johnston & Murphy shops increased 6%, and footwear unit comps rose 7%. As anticipated, Johnston & Murphy's earnings declined modestly, primarily due to increased investment in brand advertising. Johnston & Murphy continued to experience growth in casual and dress casual footwear and registered solid gains in its accessory business as well.
"Sales of Dockers Footwear were $17 million compared to $18 million for the same period a year ago. The Stain Defender and Pro Style product has continued to perform strongly and the early response to its Spring 2006 offering is good."
Genesco also stated that it is revising its fiscal 2006 guidance upward. The Company now expects sales for the year to be approximately $1.28 billion and earnings per share to range from $2.34 to $2.35, including the previously announced charge of approximately $0.04 per share associated with the settlement of a class action lawsuit (adjusted for its more favorable than expected conclusion, as discussed above.)
Pennington concluded, "As we look toward the holiday selling season, we feel good about our product assortment, brand positioning and forward momentum. We remain focused on improving our platform for growth and driving increased shareholder value into the future."
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, including 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, 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 availability or distribution, 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), 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 22, 2005, 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 1,700 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 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 and Perry Ellis brands. 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
In Thousands 29, 2005 30, 2004 29, 2005 30, 2004
Net sales $316,336 $288,398 $877,589 $759,863
Cost of sales 154,825 145,030 430,567 383,928
Selling and administrative
expenses 133,225 119,492 385,429 330,841
Restructuring and other, net (789) 664 2,255 572
Earnings from operations before
interest 29,075 23,212 59,338 44,522
Interest expense, net 2,669 3,138 7,941 7,916
Earnings before income taxes
from continuing operations 26,406 20,074 51,397 36,606
Income tax expense 10,168 7,691 19,967 13,592
Earnings from continuing
operations 16,238 12,383 31,430 23,014
Provision for discontinued
operations, net (95) (440) (30) (461)
Net Earnings $16,143 $11,943 $31,400 $22,553
Earnings Per Share Information
Three Months Ended Nine Months Ended
In Thousands October October October October
(except per share amounts) 29, 2005 30, 2004 29, 2005 30, 2004
Preferred dividend requirements $67 $73 $209 $219
Average common shares - Basic EPS 22,797 22,041 22,675 21,902
Basic earnings per share:
Before discontinued operations $0.71 $0.56 $1.38 $1.04
Net earnings $0.71 $0.54 $1.38 $1.02
Average common and common
equivalent shares - Diluted EPS 27,346 26,388 27,106 26,256
Diluted earnings per share:
Before discontinued operations $0.62 $0.49 $1.22 $0.94
Net earnings $0.61 $0.47 $1.22 $0.92
GENESCO INC.
Consolidated Earnings Summary
Three Months Ended Nine Months Ended
October October October October
In Thousands 29, 2005 30, 2004 29, 2005 30, 2004
Sales:
Journeys $153,109 $137,985 $400,881 $358,011
Underground Station Group 38,395 34,273 110,417 97,864
Hat World 68,330 59,477 199,532 135,518
Johnston & Murphy 38,981 38,256 121,497 118,210
Licensed Brands 17,457 18,334 45,065 50,037
Corporate and Other 64 73 197 223
Net Sales $316,336 $288,398 $877,589 $759,863
Pretax Earnings (Loss):
Journeys $21,551 $17,830 $42,270 $33,076
Underground Station Group 1,965 720 3,900 862
Hat World 7,615 7,612 22,355 16,614
Johnston & Murphy 1,404 1,881 6,352 5,666
Licensed Brands 1,781 2,140 3,545 5,195
Corporate and Other* (5,241) (6,971) (19,084) (16,891)
Operating income 29,075 23,212 59,338 44,522
Interest, net 2,669 3,138 7,941 7,916
Total Pretax Earnings 26,406 20,074 51,397 36,606
Income tax expense 10,168 7,691 19,967 13,592
Earnings (loss) from continuing
operations 16,238 12,383 31,430 23,014
Provision for discontinued
operations, net (95) (440) (30) (461)
Net Earnings $16,143 $11,943 $31,400 $22,553
*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 the litigation settlement in the third
quarter of Fiscal 2006 and a $1.7 million charge for the litigation
settlement for the nine months of Fiscal 2006. In addition, the third
quarter and nine months of fiscal 2006 include a $0.6 million charge
for uninsured property damage from the hurricanes during the quarter.
Includes $0.7 million and $1.2 million of other charges for asset
impairment and lease terminations in the third quarter and nine months
of Fiscal 2005, respectively, offset by a $0.6 million pension
curtailment gain in the nine months of Fiscal 2005.
GENESCO INC.
Consolidated Balance Sheet
October 29, October 30,
In Thousands 2005 2004
Assets
Cash and cash equivalents $33,398 $15,012
Accounts receivable 22,738 18,823
Inventories 292,798 265,733
Other current assets 26,011 23,905
Total current assets 374,945 323,473
Property and equipment 181,630 168,202
Other non-current assets 159,130 163,775
Total Assets $715,705 $655,450
Liabilities and Shareholders' Equity
Accounts payable $115,993 $93,541
Current portion - long-term debt - 17,000
Other current liabilities 62,671 57,197
Total current liabilities 178,664 167,738
Long-term debt 151,250 175,250
Other long-term liabilities 74,076 73,211
Shareholders' equity 311,715 239,251
Total Liabilities and Shareholders'
Equity $715,705 $655,450
GENESCO INC.
Retail Units Operated - Nine Months Ended October 29, 2005
Balance Acquisi-
01/31/04 tions Open Conv Close
Journeys 665 37 0 7
Journeys 625 35 0 6
Journeys Kidz 40 2 0 1
Underground Station Group 233 21 0 25
Underground Station 137 21 12 5
Jarman Retail 96 0 (12) 20
Hat World 0 503 55 0 6
Johnston & Murphy 148 7 0 13
Shops 115 3 0 11
Factory Outlets 33 4 0 2
Total Retail Units 1,046 503 120 0 51
Retail Units Operated - Nine Months Ended October 29, 2005
Balance Balance
01/29/05 Open Conv Close 10/29/05
Journeys 695 34 0 5 724
Journeys 654 33 0 4 683
Journeys Kidz 41 1 0 1 41
Underground Station Group 229 15 0 14 230
Underground Station 165 15 2 6 176
Jarman Retail 64 0 (2) 8 54
Hat World 552 73 0 4 621
Johnston & Murphy 142 4 0 3 143
Shops 107 4 0 2 109
Factory Outlets 35 0 0 1 34
Total Retail Units 1,618 126 0 26 1,718
Retail Units Operated - Three Months Ended October 29, 2005
Balance Balance
07/30/05 Open Conv Close 10/29/05
Journeys 711 15 0 2 724
Journeys 670 15 0 2 683
Journeys Kidz 41 0 0 0 41
Underground Station Group 226 11 0 7 230
Underground Station 168 11 0 3 176
Jarman Retail 58 0 0 4 54
Hat World 593 30 0 2 621
Johnston & Murphy 142 2 0 1 143
Shops 107 2 0 0 109
Factory Outlets 35 0 0 1 34
Total Retail Units 1,672 58 0 12 1,718
Constant Store Sales
Three Months Ended Nine Months Ended
October October October October
29, 2005 30, 2004 29, 2005 30, 2004
Journeys 5% 7% 6% 6%
Underground Station Group 9% -5% 9% -6%
Underground Station 13% -2% 12% -5%
Jarman Retail -5% -9% 0% -7%
Johnston & Murphy 5% -1% 6% 2%
Shops 6% 0% 6% 2%
Factory Outlets 5% -2% 5% 3%
Total Constant Store Sales 6% 4% 7% 3%
Hat World 1% 12% 4% -
April 1, 2004 - October 30, 2004 - - - 15%
SOURCE Genesco Inc.
-0- 11/22/2005
/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
JE-DL
-- CLTU006 --
6073 11/22/2005 07:38 EST http://www.prnewswire.com