Genesco Reports Third Quarter Sales and Earnings
Company Reports Diluted Earnings per Share of $0.42; Discusses Expectations for Fourth Quarter and Fiscal 2005
NASHVILLE, Tenn., Nov. 20 /PRNewswire-FirstCall/ -- Genesco Inc. (NYSE: GCO) today reported net earnings of $9.4 million, or $0.42 per diluted share, for the third quarter ended November 1, 2003, compared with net earnings of $10.1 million, or $0.41 per diluted share, for the third quarter last year. Net sales for the quarter were $212.5 million compared to $213.2 million for the third quarter of fiscal 2003.
Genesco President and Chief Executive Officer Hal N. Pennington, said, "Better than expected gross margin and lower expenses enabled us to meet our earnings per share expectations for the quarter, even though sales were lower than we expected. Sales were affected by a combination of unseasonably warm weather throughout much of the country and a merchandise trend that extended the demand for athletic footwear later into the season, slowing the transition into seasonal casual shoes.
"Journeys' same store sales declined approximately 1% for the quarter, versus a 1% gain for the same period a year ago, and comps at Underground Station fell about 7%, compared to an increase of more than 21% last year. Both businesses were affected by the late onset of fall weather and by the athletic fashion trend. In response, we have taken a number of steps to improve our position for the holiday and spring selling seasons. On the product front, we have increased our commitment in fashion athletic footwear and reduced our exposure in the more fashion-oriented casual shoe categories. We believe that colder weather will improve sales in our traditional casual shoe business and we are well positioned in those brands. In addition, we plan to be more aggressive with promotions to drive traffic and generate sales. The Jarman stores' comparable sales declined 11% in the quarter.
"Dockers Footwear's sales declined 24% during the quarter; however, we believe this business is stabilizing and we look forward to a rebound in sales late in the first half of next year.
"Johnston & Murphy continues to make progress in its strategy of focusing on profitable sales and premium positioning. Accordingly, sales declined slightly, while both gross margin and operating income exceeded our expectations. In our Johnston & Murphy retail stores, same store sales rose 1% for the quarter. Average prices in the Johnston & Murphy shops increased 6%, again reflecting our focus on premium positioning and on dress casual styles."
Due to current market conditions the Company is taking a more conservative outlook for the fourth quarter of fiscal 2004. The Company now expects fourth quarter sales to range between $251 million and $254 million and earnings per share to range from $0.63 to $0.67. The Company also expects fiscal 2004 sales to range between $836 million and $839 million and earnings per share to range from $1.16 to $1.20, including the loss of $0.08 per diluted share on the early retirement of convertible debt refinanced in the second quarter. For fiscal 2005, the Company expects sales to range between $911 million and $916 million and earnings per share to range from $1.36 to $1.41.
Pennington concluded, "In this dynamic environment we believe our commitment to understanding our customer is more important than ever. Fortunately, we have the flexibility to move quickly in response to market changes. We remain confident that our brands continue to resonate with consumers and our concepts continue to occupy a compelling position in the marketplace."
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 turn out materially different 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 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, the Company's 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 20, 2003, at 10:00 a.m. (Central time) may be accessed through the Company's Internet website, www.genesco.com. The Company expects to discuss results from the third quarter, and its current expectations for the fourth quarter and fiscal year ending January 31, 2004, and the fiscal year ending January 29, 2005 during the call. To listen live, please go to the website at least 15 minutes early to register, download and install any necessary software.
Genesco, based in Nashville, sells footwear and accessories in more than 1,040 retail stores in the U.S., principally under the names Journeys, Journeys Kidz, Johnston & Murphy, Jarman and Underground Station, and on Internet websites www.journeys.com and www.johnstonmurphy.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 November November November
1, 2, 1, 2,
In Thousands 2003 2002 2003 2002
Net sales $212,483 $213,157 $584,707 $578,592
Cost of sales 113,355 112,318 313,998 304,754
Selling and administrative
expenses 82,426 82,197 243,350 232,089
Restructuring adjustment
(gain) -- -- (139) --
Earnings from operations
before interest and other 16,702 18,642 27,498 41,749
Loss on early retirement of
debt -- -- 2,581 --
Interest expense, net* 1,510 2,162 5,691 5,756
Pretax earnings 15,192 16,480 19,226 35,993
Income tax expense 5,780 6,373 7,368 13,721
Net Earnings $9,412 $10,107 $11,858 $22,272
Earnings Per Share Information
Three Months Ended Nine Months Ended
November November November November
1, 2, 1, 2,
In Thousands (except per 2003 2002 2003 2003
share amounts)
Preferred dividend
requirements $74 $73 $221 $221
Average common shares -
Basic EPS 21,751 21,785 21,750 21,858
Basic net earnings per share $0.43 $0.46 $0.54 $1.01
Average common and common
equivalent shares -
Diluted EPS 22,081 26,985 22,055 27,207
Diluted net earnings
per share $0.42 $0.41 $0.53 $0.92
* Includes $0.2 million additional net interest expense due to early
retirement of debt for the nine months of Fiscal 2004.
Consolidated Earnings Summary
Three Months Ended Nine Months Ended
November November November November
1, 2, 1, 2,
In Thousands 2003 2002 2003 2002
Sales:
Journeys $121,602 $113,777 $317,791 $296,932
Underground Station/Jarman
Group 34,996 36,415 100,291 99,797
Johnston & Murphy 38,760 40,363 118,368 122,269
Dockers 17,023 22,526 48,033 59,518
Corporate and Other 102 76 224 76
Net Sales $212,483 $213,157 $584,707 $578,592
Pretax Earnings (Loss):
Journeys $16,484 $15,464 $28,758 $31,164
Underground Station/Jarman
Group 1,390 2,637 3,181 6,440
Johnston & Murphy 455 992 2,429 6,464
Dockers 1,315 3,305 3,605 7,417
Corporate and Other* (2,942) (3,756) (10,475) (9,736)
Operating income 16,702 18,642 27,498 41,749
Loss on early retirement of
debt -- -- 2,581 --
Interest, net 1,510 2,162 5,691 5,756
Total Pretax Earnings 15,192 16,480 19,226 35,993
Income tax expense 5,780 6,373 7,368 13,721
Net Earnings $9,412 $10,107 $11,858 $22,272
* Includes $0.2 million of severance charges in the third quarter of
Fiscal 2003 and a $0.1 million restructuring adjustment and
$0.6 million of professional fees and severance charges in the
nine months of Fiscal 2004 and 2003, respectively.
Consolidated Balance Sheet
November 1, November 2,
In Thousands 2003 2002
Assets
Cash and short-term investments $44,306 $10,260
Accounts receivable 18,731 24,597
Inventories 205,918 199,773
Other current assets 25,364 29,140
Total current assets 294,319 263,770
Plant, equipment and capital
leases 126,842 129,271
Other non-current assets 24,465 13,124
Non-current assets of
discontinued operations* -- 1,140
Total Assets $445,626 $407,305
Liabilities and Shareholders'
Equity
Accounts payable $78,318 $50,839
Other current liabilities 40,647 45,381
Total current liabilities 118,965 96,220
Long-term debt 86,275 103,271
Other long-term liabilities 45,802 25,578
Shareholders' equity 194,584 182,236
Total Liabilities and
Shareholders' Equity $445,626 $407,305
* Non-current assets of discontinued operations include Volunteer
Leather.
Retail Units Operated - Nine Months Ended November 1, 2003
Con-
Balance ver- Balance
02/01/03 Open sions Close 11/01/03
Journeys 614 47 0 3 658
Journeys 579 42 0 3 618
Journeys Kidz 35 5 0 0 40
Underground Station/Jarman Group 229 14 0 6 237
Underground Station 114 14 6 2 132
Jarman Retail 115 0 (6) 4 105
Johnston & Murphy 148 5 0 1 152
Shops 115 3 0 0 118
Factory Outlets 33 2 0 1 34
Total Retail Units 991 66 0 10 1,047
Retail Units Operated - Three Months Ended November 1, 2003
Con-
Balance ver- Balance
08/02/03 Open sions Close 11/01/03
Journeys 641 19 0 2 658
Journeys 603 17 0 2 618
Journeys Kidz 38 2 0 0 40
Underground Station/Jarman Group 235 4 0 2 237
Underground Station 125 4 3 0 132
Jarman Retail 110 0 (3) 2 105
Johnston & Murphy 152 1 0 1 152
Shops 117 1 0 0 118
Factory Outlets 35 0 0 1 34
Total Retail Units 1,028 24 0 5 1,047
Constant Store Sales
Three Months Ended Nine Months Ended
November November November November
1, 2, 1, 2,
2003 2002 2003 2002
Journeys -1% 1% -1% -1%
Underground Station/Jarman Group -9% 15% -5% 17%
Underground Station -7% 21% 2% 19%
Jarman Retail -11% 10% -12% 16%
Johnston & Murphy 1% 4% -2% 1%
Shops -1% 6% -3% 1%
Factory Outlets 7% -2% 2% 1%
Total Constant Store Sales -2% 4% -2% 3%
SOURCE Genesco Inc.
-0- 11/20/2003
/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.journeys.com /
/Web site: http://www.johnstonmurphy.com /
/Web site: http://www.genesco.com /
(GCO)