UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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☐
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On May 26, 2022, Genesco Inc. issued a press release announcing results of operations for the fiscal first quarter ended April 30, 2022. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
On May 26, 2022, the Company also posted on its website, www.genesco.com, a slide presentation with summary results. A copy of the slide presentation is furnished as Exhibit 99.2 to this Current Report on Form 8-K.
In addition to disclosing financial results calculated in accordance with United States generally accepted accounting principles (GAAP), the press release furnished herewith contains non-GAAP financial measures, including adjusted selling and administrative expense, operating income, pretax earnings, earnings from continuing operations and earnings per share from continuing operations, as discussed in the text of the release and as detailed on the reconciliation schedule attached to the press release. For consistency and ease of comparison with the adjusted results for the prior period announced last year, the Company believes that disclosure of the non-GAAP measures will be useful to investors.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
The following exhibits are furnished herewith:
Exhibit Number |
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Description |
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99.1 |
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99.2 |
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Genesco Inc. First Fiscal Quarter ended April 30, 2022 Summary Results |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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GENESCO INC. |
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Date: May 26, 2022 |
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By: |
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/s/ Thomas A. George |
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Name: |
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Thomas A. George |
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Title: |
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Senior Vice President and Chief Financial Officer |
Exhibit 99.1
GENESCO INC. REPORTS FISCAL 2023 FIRST QUARTER RESULTS
-- Profitability Exceeds Expectations --
-- Reaffirms Fiscal 2023 Outlook --
First Quarter Fiscal 2023 Financial Summary
NASHVILLE, Tenn., May 26, 2022 --- Genesco Inc. (NYSE: GCO) today reported GAAP earnings from continuing operations per diluted share of $0.37 for the three months ended April 30, 2022, compared to $0.60 in the first quarter last year and $0.36 per diluted share three years ago, prior to the pandemic. Adjusted for the Excluded Items in all periods, the Company reported first quarter earnings from continuing operations per diluted share of $0.44, compared to $0.79 last year and $0.33 per diluted share pre-pandemic.
Mimi E. Vaughn, Genesco board chair, president and chief executive officer, said, “We are very pleased with our start to fiscal 2023, particularly our ability to exceed profitability expectations. While the year ago period posed a difficult comparison due to government stimulus-fueled consumer spending, especially for our Journeys business, our top and bottom line performance on a multi-year basis underscores the success of our footwear focused strategy and our conviction that our company is fundamentally stronger than prior to the pandemic. Importantly, our business accelerated sequentially in April and thus far in May versus last year as inventory levels improved. Our work on increasing digital penetration, improving store economics, and growing branded sales has put us in a great position to drive profitable growth across all channels. We believe these results are a good indication of the positive things to come as we move into the back to school and holiday selling seasons.”
_____________________
1Excludes a gain related to the pension plan termination, retail store asset impairments and expenses related to the new headquarters building, net of tax effect in the first quarter of Fiscal 2023 (“Excluded Items”). A reconciliation of earnings/loss and earnings/loss per share from continuing operations in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) with the adjusted earnings/loss and earnings/loss per share numbers is set forth on Schedule B to this press release. The Company believes that disclosure of earnings/loss and earnings/loss per share from continuing operations adjusted for the items not reflected in the previously announced expectations will be meaningful to investors, especially in light of the impact of such items on the results.
Thomas A. George, Genesco chief financial officer, commented, “Our first quarter results were highlighted by strong full priced selling as we continue to experience healthy demand for our merchandise offerings. While sales would have been higher if not for inventory shortfalls, we are pleased that our top-line grew 5% versus the same pre-pandemic period three years ago with 90 fewer stores and adjusted operating income increased 14%. This combined with share repurchases, allowed us to achieve a 33% increase in adjusted EPS compared with pre-pandemic levels with the more efficient use of capital to drive these results. With this first quarter performance and updated outlook on the remainder of the year, we are reaffirming our expectations for adjusted earnings per share for Fiscal 2023 to range between $7.00 and $7.75. We still believe somewhere close to the middle of the range is where we will land.
First Quarter Review
Net sales for the first quarter of Fiscal 2023 decreased 3% to $521 million from $539 million in the first quarter of Fiscal 2022 and increased 5% from $496 million in the first quarter of Fiscal 2020, prior to the pandemic. The sales decrease compared to last year was driven by decreased comparable direct sales, partially offset by increased sales in the wholesale and store channels. The store channel increase was led by our Schuh business as their stores were only open 19% of possible days in the first quarter last year. As a result of store closures in response to the COVID-19 pandemic, the Company has not included first quarter comparable sales for this year or last year, except for comparable direct sales, as it believes that overall sales is a more meaningful metric for these periods. Comparable direct sales for the first quarter of Fiscal 2023 were down 26% compared to an increase of 43% for the first quarter of Fiscal 2022.
The overall sales decrease of 3% for the first quarter this year compared to the first quarter of Fiscal 2022 was led by Journeys where sales were down 16%, as Journeys was the biggest beneficiary of government stimulus in the first quarter last year and experienced a lack of inventory in the first quarter this year due to the impact of supply chain disruptions. The sales decrease in Journeys was partially offset by sales increases of 28% at Schuh, 46% at Johnston & Murphy and 5% at Licensed Brands.
First quarter gross margin this year was 48.3%, up 50 basis points, compared with 47.8% last year and down 110 basis points compared with 49.4% in Fiscal 2020. The increase as a percentage of sales as compared to Fiscal 2022 is due primarily to lower shipping and warehouse expense as a result of lower e-commerce penetration, increased full-priced selling and price increases partially offset by the channel mix impact of increased wholesale sales and increased freight and logistics costs.
Selling and administrative expense for the first quarter this year increased 230 basis points as a percentage of sales as compared with last year and decreased 90 basis points compared with Fiscal 2020. Adjusted selling and administrative expense for the first quarter this year increased 220 basis points as a percentage of sales compared with last year and decreased 120 basis points compared with Fiscal 2020. The increase as compared to Fiscal 2022 is due in large part to one-time benefits for rent credits and government tax relief in the first quarter of Fiscal 2022. In addition, increased selling salaries were partially offset by decreased performance-based compensation expense.
Genesco’s GAAP operating income for the first quarter was $8.2 million, or 1.6% of sales this year, compared with $15.5 million, or 2.9% of sales in the first quarter last year, and $9.1 million, or 1.8% of sales in the first quarter of Fiscal 2020. Adjusted for the Excluded Items in all periods, operating income for the first quarter was $9.5 million this year compared to $18.8 million last year and $8.4 million in the first quarter of Fiscal 2020. Adjusted operating margin was 1.8% of sales in the first quarter of Fiscal 2023, 3.5% in the first quarter last year and 1.7% in the first quarter of Fiscal 2020.
The effective tax rate for the quarter was 36.7% in Fiscal 2023 compared to 40.1% in the first quarter last year and 30.7% in the first quarter of Fiscal 2020. The adjusted tax rate, reflecting Excluded Items, was 34.7% in in the first quarter of Fiscal 2023 compared to 35.7% in the first quarter of last year and 31.3% in the first quarter of Fiscal 2020. The lower adjusted tax rate for Q1 this year as compared to Q1 last year reflects a reduction in the amount of foreign losses for which we are unable to recognize a tax benefit.
GAAP earnings from continuing operations were $5.0 million in the first quarter of Fiscal 2023, compared to $8.9 million in the first quarter last year and $6.5 million in the first quarter of Fiscal 2020. Adjusted for the Excluded Items in all periods, first quarter earnings from continuing operations were $5.9 million, or $0.44 per share, in Fiscal 2023, compared to $11.6 million, or $0.79 per share, in the first quarter of last year and $5.9 million, or $0.33 per share, in the first quarter of Fiscal 2020.
Cash, Borrowings and Inventory
Cash and cash equivalents at April 30, 2022, were $200.6 million, compared with $258.0 million at May 1, 2021. Total debt at the end of the first quarter of Fiscal 2023 was $14.7 million compared with $44.2 million at the end of last year’s first quarter. Inventories increased 33% in the first quarter of Fiscal 2023 on a year-over-year basis and increased 9% versus the first quarter of Fiscal 2020.
Capital Expenditures and Store Activity
For the first quarter, capital expenditures excluding the new headquarters building were $11 million, related primarily to digital and omnichannel initiatives. Depreciation and amortization was $11 million. During the quarter, the Company opened four stores and closed 15 stores. The Company ended the quarter with 1,414 stores compared with 1,444 stores at the end of the first quarter last year, or a decrease of 2%. Square footage was down 2% on a year-over-year basis.
Share Repurchases
The Company repurchased 102,895 shares during the first quarter of Fiscal 2023 at a cost of $6.5 million or an average of $63.17 per share. The Company currently has $100.3 million remaining on its expanded share repurchase authorization announced in February 2022.
Fiscal 2023 Outlook
The Company reaffirms its Fiscal 2023 full year EPS guidance:
Please refer to the Q1FY23 conference call and Q1FY23 Summary Results presentation for details regarding guidance assumptions.
__________________________
2A reconciliation of the adjusted financial measures cited in the guidance to their corresponding measures as reported pursuant to GAAP is included in Schedule B to this press release.
Conference Call, Management Commentary and Investor Presentation
The Company has posted detailed financial commentary and a supplemental financial presentation of first quarter results on its website, www.genesco.com, in the investor relations section. The Company's live conference call on May 26, 2022, at 7:30 a.m. (Central time), may be accessed through the Company's 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.
Safe Harbor Statement
This release contains forward-looking statements, including those regarding future sales, earnings, gross margins, expenses, capital expenditures, depreciation and amortization, tax rates, stores openings and closures and all other statements not addressing solely historical facts or present conditions. Forward- looking statements are usually identified by or are associated with such words as “intend,” “expect,” “believe,” “anticipate,” “optimistic” and similar terminology. Actual results could vary materially from the expectations reflected in these statements. A number of factors could cause differences. These include adjustments to projections reflected in forward-looking statements, including those resulting from the effects of COVID-19 on the Company’s business, including COVID-19 case spikes in locations in which the Company operates, additional stores closures due to COVID-19, weakness in store and shopping mall traffic, restrictions on operations imposed by government entities and/or landlords, changes in public safety and health requirements, and limitations on the Company’s ability to adequately staff and operate stores. Differences from expectations could also result from stores closures and effects on the business as a result of civil disturbances; the level and timing of promotional activity necessary to maintain inventories at appropriate levels; our ability to pass on price increases to our customers; the imposition of tariffs on product imported by the Company or its vendors as well as the ability and costs to move production of products in response to tariffs; the Company’s ability to obtain from suppliers products that are in-demand on a timely basis and effectively manage disruptions in product supply or distribution, including disruptions as a result of COVID-19 or geopolitical events; unfavorable trends in fuel costs, foreign exchange rates, foreign labor and material costs, and other factors affecting the cost of products; the effects of the British decision to exit the European Union and other sources of market weakness in the U.K. and Republic of Ireland; the effectiveness of the Company's omnichannel initiatives; costs associated with changes in minimum wage and overtime requirements; wage pressure in the U.S. and the U.K.; weakness in the consumer economy and retail industry; competition and fashion trends in the Company's markets; risks related to the potential for terrorist events; risks related to public health and safety
events; changes in buying patterns by significant wholesale customers; retained liabilities associated with divestitures of businesses including potential liabilities under leases as the prior tenant or as a guarantor; and changes in the timing of holidays or in the onset of seasonal weather affecting period-to-period sales comparisons. Additional factors that could cause differences from expectations include the ability to renew leases in existing stores and control or lower occupancy costs, and to conduct required remodeling or refurbishment on schedule and at expected expense levels; the Company’s ability to realize anticipated cost savings, including rent savings; the amount and timing of share repurchases; the Company’s ability to achieve expected digital gains and gain market share; 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, operating lease right of use assets or intangible assets or other adverse financial consequences and the timing and amount of such impairments or other consequences; unexpected changes to the market for the Company's shares or for the retail sector in general; costs and reputational harm as a result of disruptions in the Company’s business or information technology systems either by security breaches and incidents or by potential problems associated with the implementation of new or upgraded systems; the Company’s ability to realize any anticipated tax benefits; and the cost and 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, the Company’s SEC filings, copies of which may be obtained from the SEC website, www.sec.gov, or by contacting the investor relations department of Genesco via the Company’s website, 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.
About Genesco Inc.
Genesco Inc., a Nashville-based specialty retailer and branded company, sells footwear and accessories in more than 1,410 retail stores throughout the U.S., Canada, the United Kingdom and the Republic of Ireland, principally under the names Journeys, Journeys Kidz, Little Burgundy, Schuh, Schuh Kids, Johnston & Murphy, and on internet websites www.journeys.com, www.journeyskidz.com, www.journeys.ca, www.littleburgundyshoes.com, www.schuh.co.uk, www.schuh.ie, www.schuh.eu, www.johnstonmurphy.com, www.johnstonmurphy.ca, www.nashvilleshoewarehouse.com, and www.dockersshoes.com. In addition, Genesco sells footwear at wholesale under its Johnston & Murphy brand, the licensed Levi’s brand, the licensed Dockers brand, the licensed Bass brand, and other brands. Genesco is committed to progress in its diversity, equity and inclusion efforts, and the Company's environmental, social and governance stewardship. For more information on Genesco and its operating divisions, please visit www.genesco.com.
Genesco Inc. Financial Contact
Thomas A. George
(615) 367-7465
tgeorge@genesco.com
Genesco Inc. Media Contact
Claire S. McCall
(615) 367-8283
cmccall@genesco.com
GENESCO INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
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Quarter 1 |
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Quarter 1 |
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April 30, |
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% of |
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May 1, |
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% of |
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Net sales |
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$ |
520,748 |
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100.0 |
% |
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$ |
538,695 |
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|
|
100.0 |
% |
Cost of sales |
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269,304 |
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51.7 |
% |
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281,033 |
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52.2 |
% |
Gross margin |
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251,444 |
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|
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48.3 |
% |
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257,662 |
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|
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47.8 |
% |
Selling and administrative expenses |
|
|
243,481 |
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|
|
46.8 |
% |
|
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239,465 |
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|
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44.5 |
% |
Asset impairments and other, net |
|
|
(283 |
) |
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-0.1 |
% |
|
|
2,670 |
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|
|
0.5 |
% |
Operating income |
|
|
8,246 |
|
|
|
1.6 |
% |
|
|
15,527 |
|
|
|
2.9 |
% |
Other components of net periodic benefit cost (income) |
|
|
98 |
|
|
|
0.0 |
% |
|
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(39 |
) |
|
|
0.0 |
% |
Interest expense, net |
|
|
297 |
|
|
|
0.1 |
% |
|
|
729 |
|
|
|
0.1 |
% |
Earnings from continuing operations before income taxes |
|
|
7,851 |
|
|
|
1.5 |
% |
|
|
14,837 |
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|
|
2.8 |
% |
Income tax expense |
|
|
2,882 |
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|
|
0.6 |
% |
|
|
5,943 |
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|
|
1.1 |
% |
Earnings from continuing operations |
|
|
4,969 |
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|
|
1.0 |
% |
|
|
8,894 |
|
|
|
1.7 |
% |
Loss from discontinued operations, net of tax |
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(22 |
) |
|
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0.0 |
% |
|
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(16 |
) |
|
|
0.0 |
% |
Net Earnings |
|
$ |
4,947 |
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|
|
0.9 |
% |
|
$ |
8,878 |
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|
|
1.6 |
% |
Basic earnings per share: |
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|
|
|
|
|
|
|
|
|
|
|
||||
Before discontinued operations |
|
$ |
0.38 |
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|
|
|
|
$ |
0.62 |
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|
|
|
||
Net earnings |
|
$ |
0.38 |
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|
|
|
|
$ |
0.62 |
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|
|
|
||
Diluted earnings per share: |
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|
|
|
|
|
|
|
|
|
|
|
||||
Before discontinued operations |
|
$ |
0.37 |
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|
|
|
|
$ |
0.60 |
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|
|
|
||
Net earnings |
|
$ |
0.37 |
|
|
|
|
|
$ |
0.60 |
|
|
|
|
||
Weighted-average shares outstanding: |
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|
|
|
|
|
|
|
|
|
|
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||||
Basic |
|
|
12,961 |
|
|
|
|
|
|
14,287 |
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|
|
|
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Diluted |
|
|
13,369 |
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|
|
|
|
|
14,702 |
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GENESCO INC.
Sales/Earnings Summary by Segment
(in thousands)
(Unaudited)
|
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Quarter 1 |
|
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Quarter 1 |
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|
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April 30, |
|
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% of |
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May 1, |
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% of |
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Sales: |
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Journeys Group |
|
$ |
314,445 |
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|
|
60.4 |
% |
|
$ |
376,548 |
|
|
|
69.9 |
% |
Schuh Group |
|
|
88,159 |
|
|
|
16.9 |
% |
|
|
68,711 |
|
|
|
12.8 |
% |
Johnston & Murphy Group |
|
|
71,016 |
|
|
|
13.6 |
% |
|
|
48,762 |
|
|
|
9.1 |
% |
Licensed Brands |
|
|
47,128 |
|
|
|
9.1 |
% |
|
|
44,674 |
|
|
|
8.3 |
% |
Net Sales |
|
$ |
520,748 |
|
|
|
100.0 |
% |
|
$ |
538,695 |
|
|
|
100.0 |
% |
Operating income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Journeys Group |
|
$ |
14,930 |
|
|
|
4.7 |
% |
|
$ |
33,124 |
|
|
|
8.8 |
% |
Schuh Group |
|
|
(2,746 |
) |
|
|
-3.1 |
% |
|
|
(3,847 |
) |
|
|
-5.6 |
% |
Johnston & Murphy Group |
|
|
550 |
|
|
|
0.8 |
% |
|
|
(3,180 |
) |
|
|
-6.5 |
% |
Licensed Brands |
|
|
3,793 |
|
|
|
8.0 |
% |
|
|
2,561 |
|
|
|
5.7 |
% |
Corporate and Other(1) |
|
|
(8,281 |
) |
|
|
-1.6 |
% |
|
|
(13,131 |
) |
|
|
-2.4 |
% |
Operating income |
|
|
8,246 |
|
|
|
1.6 |
% |
|
|
15,527 |
|
|
|
2.9 |
% |
Other components of net periodic benefit cost (income) |
|
|
98 |
|
|
|
0.0 |
% |
|
|
(39 |
) |
|
|
0.0 |
% |
Interest, net |
|
|
297 |
|
|
|
0.1 |
% |
|
|
729 |
|
|
|
0.1 |
% |
Earnings from continuing operations before income taxes |
|
|
7,851 |
|
|
|
1.5 |
% |
|
|
14,837 |
|
|
|
2.8 |
% |
Income tax expense |
|
|
2,882 |
|
|
|
0.6 |
% |
|
|
5,943 |
|
|
|
1.1 |
% |
Earnings from continuing operations |
|
|
4,969 |
|
|
|
1.0 |
% |
|
|
8,894 |
|
|
|
1.7 |
% |
Loss from discontinued operations, net of tax |
|
|
(22 |
) |
|
|
0.0 |
% |
|
|
(16 |
) |
|
|
0.0 |
% |
Net Earnings |
|
$ |
4,947 |
|
|
|
0.9 |
% |
|
$ |
8,878 |
|
|
|
1.6 |
% |
GENESCO INC.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
|
|
April 30, 2022 |
|
|
May 1, 2021 |
|
||
Assets |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
200,623 |
|
|
$ |
258,044 |
|
Accounts receivable |
|
|
48,868 |
|
|
|
45,891 |
|
Inventories |
|
|
401,479 |
|
|
|
301,017 |
|
Other current assets(1) |
|
|
74,609 |
|
|
|
117,467 |
|
Total current assets |
|
|
725,579 |
|
|
|
722,419 |
|
Property and equipment |
|
|
219,421 |
|
|
|
208,759 |
|
Operating lease right of use assets |
|
|
508,986 |
|
|
|
639,575 |
|
Goodwill and other intangibles |
|
|
66,785 |
|
|
|
70,056 |
|
Other non-current assets |
|
|
27,671 |
|
|
|
21,558 |
|
Total Assets |
|
$ |
1,548,442 |
|
|
$ |
1,662,367 |
|
|
|
|
|
|
|
|
||
Liabilities and Equity |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
243,224 |
|
|
$ |
164,975 |
|
Current portion operating lease liabilities |
|
|
137,770 |
|
|
|
158,295 |
|
Other current liabilities |
|
|
83,882 |
|
|
|
112,648 |
|
Total current liabilities |
|
|
464,876 |
|
|
|
435,918 |
|
Long-term debt |
|
|
14,712 |
|
|
|
44,169 |
|
Long-term operating lease liabilities |
|
|
430,606 |
|
|
|
555,204 |
|
Other long-term liabilities |
|
|
37,910 |
|
|
|
48,068 |
|
Equity |
|
|
600,338 |
|
|
|
579,008 |
|
Total Liabilities and Equity |
|
$ |
1,548,442 |
|
|
$ |
1,662,367 |
|
(1) Includes prepaid income taxes of $47.1 million and $92.1 million at April 30, 2022 and May 1, 2021, respectively.
GENESCO INC.
Store Count Activity
|
|
Balance |
|
|
Open |
|
|
Close |
|
|
Balance |
|
|
Open |
|
|
Close |
|
|
Balance |
|
|||||||
Journeys Group |
|
|
1,159 |
|
|
|
5 |
|
|
|
29 |
|
|
|
1,135 |
|
|
|
3 |
|
|
|
8 |
|
|
|
1,130 |
|
Schuh Group |
|
|
123 |
|
|
|
0 |
|
|
|
0 |
|
|
|
123 |
|
|
|
1 |
|
|
|
2 |
|
|
|
122 |
|
Johnston & Murphy Group |
|
|
178 |
|
|
|
1 |
|
|
|
12 |
|
|
|
167 |
|
|
|
0 |
|
|
|
5 |
|
|
|
162 |
|
Total Retail Units |
|
|
1,460 |
|
|
|
6 |
|
|
|
41 |
|
|
|
1,425 |
|
|
|
4 |
|
|
|
15 |
|
|
|
1,414 |
|
GENESCO INC.
Comparable Sales(1)
|
|
Quarter 1 |
|
|||||
|
|
April 30, |
|
|
May 1, |
|
||
Comparable Direct Sales |
|
|
-26 |
% |
|
|
43 |
% |
Schedule B
Genesco Inc.
Adjustments to Reported Earnings from Continuing Operations
Three Months Ended April 30, 2022, May 1, 2021 and May 4, 2019
The Company believes that disclosure of earnings and earnings per share from continuing operations and operating income adjusted for the items not reflected in the previously announced expectations will be meaningful to investors, especially in light of the impact of such items on the results.
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
April 30, 2022 |
|
|
May 1, 2021 |
|
|
May 4, 2019 |
|
|||||||||||||||||||||
In Thousands (except per share amounts) |
Pretax |
|
Net of |
|
Per Share |
|
|
Pretax |
|
Net of |
|
Per Share |
|
|
Pretax |
|
Net of |
|
Per Share |
|
|||||||||
Earnings from continuing operations, as reported |
|
|
$ |
4,969 |
|
$ |
0.37 |
|
|
|
|
$ |
8,894 |
|
$ |
0.60 |
|
|
|
|
$ |
6,470 |
|
$ |
0.36 |
|
|||
Asset impairments and other adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Retail store asset impairment charges |
$ |
412 |
|
|
359 |
|
|
0.03 |
|
|
$ |
414 |
|
|
326 |
|
|
0.02 |
|
|
$ |
307 |
|
|
212 |
|
|
0.01 |
|
Gain on pension termination |
|
(695 |
) |
|
(511 |
) |
|
(0.04 |
) |
|
|
— |
|
|
— |
|
|
0.00 |
|
|
|
— |
|
|
— |
|
|
0.00 |
|
Fees related to shareholder activist |
|
— |
|
|
— |
|
|
0.00 |
|
|
|
2,256 |
|
|
1,600 |
|
|
0.11 |
|
|
|
— |
|
|
— |
|
|
0.00 |
|
Expenses related to new HQ building |
|
1,526 |
|
|
1,122 |
|
|
0.08 |
|
|
|
597 |
|
|
424 |
|
|
0.03 |
|
|
|
— |
|
|
— |
|
|
0.00 |
|
Gain on lease termination |
|
— |
|
|
— |
|
|
0.00 |
|
|
|
— |
|
|
— |
|
|
0.00 |
|
|
|
(1,000 |
) |
|
(689 |
) |
|
(0.04 |
) |
Gain on Hurricane Maria |
|
— |
|
|
— |
|
|
0.00 |
|
|
|
— |
|
|
— |
|
|
0.00 |
|
|
|
(38 |
) |
|
(26 |
) |
|
0.00 |
|
Total asset impairments and other adjustments |
$ |
1,243 |
|
|
970 |
|
|
0.07 |
|
|
$ |
3,267 |
|
|
2,350 |
|
|
0.16 |
|
|
$ |
(731 |
) |
|
(503 |
) |
|
(0.03 |
) |
Income tax expense adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other tax items |
|
|
|
(3 |
) |
|
(0.00 |
) |
|
|
|
|
400 |
|
|
0.03 |
|
|
|
|
|
(58 |
) |
|
0.00 |
|
|||
Total income tax expense adjustments |
|
|
|
(3 |
) |
|
(0.00 |
) |
|
|
|
|
400 |
|
|
0.03 |
|
|
|
|
|
(58 |
) |
|
0.00 |
|
|||
Adjusted earnings from continuing operations (1) and (2) |
|
|
$ |
5,936 |
|
$ |
0.44 |
|
|
|
|
$ |
11,644 |
|
$ |
0.79 |
|
|
|
|
$ |
5,909 |
|
$ |
0.33 |
|
|||
Schedule B
Genesco Inc.
Adjustments to Reported Operating Income and Selling and Administrative Expenses
Three Months Ended April 30, 2022, May 1, 2021 and May 4, 2019
|
|
April 30, 2022 |
|
|||||||||
In Thousands |
|
Operating |
|
|
Asset Impair |
|
|
Adj Operating |
|
|||
Journeys Group |
|
$ |
14,930 |
|
|
$ |
— |
|
|
$ |
14,930 |
|
Schuh Group |
|
|
(2,746 |
) |
|
|
— |
|
|
|
(2,746 |
) |
Johnston & Murphy Group |
|
|
550 |
|
|
|
— |
|
|
|
550 |
|
Licensed Brands |
|
|
3,793 |
|
|
|
— |
|
|
|
3,793 |
|
Corporate and Other |
|
|
(8,281 |
) |
|
|
1,243 |
|
|
|
(7,038 |
) |
Total Operating Income |
|
$ |
8,246 |
|
|
$ |
1,243 |
|
|
$ |
9,489 |
|
% of sales |
|
|
1.6 |
% |
|
|
|
|
|
1.8 |
% |
|
|
|
May 1, 2021 |
|
|||||||||
In Thousands |
|
Operating |
|
|
Asset Impair |
|
|
Adj Operating |
|
|||
Journeys Group |
|
$ |
33,124 |
|
|
$ |
— |
|
|
$ |
33,124 |
|
Schuh Group |
|
|
(3,847 |
) |
|
|
— |
|
|
|
(3,847 |
) |
Johnston & Murphy Group |
|
|
(3,180 |
) |
|
|
— |
|
|
|
(3,180 |
) |
Licensed Brands |
|
|
2,561 |
|
|
|
— |
|
|
|
2,561 |
|
Corporate and Other |
|
|
(13,131 |
) |
|
|
3,267 |
|
|
|
(9,864 |
) |
Total Operating Income |
|
$ |
15,527 |
|
|
$ |
3,267 |
|
|
$ |
18,794 |
|
% of sales |
|
|
2.9 |
% |
|
|
|
|
|
3.5 |
% |
|
|
|
May 4, 2019 |
|
|||||||||
In Thousands |
|
Operating |
|
|
Asset Impair |
|
|
Adj Operating |
|
|||
Journeys Group |
|
$ |
18,976 |
|
|
$ |
— |
|
|
$ |
18,976 |
|
Schuh Group |
|
|
(5,428 |
) |
|
|
— |
|
|
|
(5,428 |
) |
Johnston & Murphy Group |
|
|
5,106 |
|
|
|
— |
|
|
|
5,106 |
|
Licensed Brands |
|
|
429 |
|
|
|
— |
|
|
|
429 |
|
Corporate and Other |
|
|
(9,999 |
) |
|
|
(731 |
) |
|
|
(10,730 |
) |
Total Operating Income |
|
$ |
9,084 |
|
|
$ |
(731 |
) |
|
$ |
8,353 |
|
% of sales |
|
|
1.8 |
% |
|
|
|
|
|
1.7 |
% |
|
|
|
|
|
|||||||||
In Thousands |
|
April 30, 2022 |
|
|
May 1, 2021 |
|
|
May 2, 2019 |
|
|||
Selling and administrative expenses, as reported |
|
$ |
243,481 |
|
|
$ |
239,465 |
|
|
$ |
236,555 |
|
|
|
|
|
|
|
|
|
|
|
|||
Expenses related to new HQ building |
|
|
(1,526 |
) |
|
|
(597 |
) |
|
|
— |
|
Total adjustments |
|
|
(1,526 |
) |
|
|
(597 |
) |
|
|
— |
|
Adjusted selling and administrative expenses |
|
|
241,955 |
|
|
|
238,868 |
|
|
|
236,555 |
|
% of sales |
|
|
46.5 |
% |
|
|
44.3 |
% |
|
|
47.7 |
% |
Schedule B
Genesco Inc.
Adjustments to Forecasted Earnings from Continuing Operations
Fiscal Year Ending January 28, 2023
In millions (except per share amounts) |
|
High Guidance Fiscal 2023 |
|
|
Low Guidance Fiscal 2023 |
|
||||||||||
|
|
Net of Tax |
|
|
Per Share |
|
|
Net of Tax |
|
|
Per Share |
|
||||
Forecasted earnings from continuing operations |
|
$ |
102.0 |
|
|
$ |
7.59 |
|
|
$ |
91.6 |
|
|
$ |
6.81 |
|
Asset impairments and other adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Retail store asset impairments and other matters |
|
0.6 |
|
|
0.04 |
|
|
|
0.9 |
|
|
0.07 |
|
|||
New building costs |
|
1.6 |
|
|
0.12 |
|
|
1.6 |
|
|
0.12 |
|
||||
Total asset impairments and other adjustments (1) |
|
|
2.2 |
|
|
|
0.16 |
|
|
|
2.5 |
|
|
|
0.19 |
|
Adjusted forecasted earnings from continuing operations (2) |
|
$ |
104.2 |
|
|
$ |
7.75 |
|
|
$ |
94.1 |
|
|
$ |
7.00 |
|
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.
FY23 Q1 GENESCO Summary Results May 26, 2022 Exhibit 99.2
This release contains forward-looking statements, including those regarding future sales, earnings, gross margins, expenses, capital expenditures, depreciation and amortization, tax rates, stores openings and closures and all other statements not addressing solely historical facts or present conditions. Forward- looking statements are usually identified by or are associated with such words as “intend,” “expect,” “believe,” “anticipate,” “optimistic” and similar terminology. Actual results could vary materially from the expectations reflected in these statements. A number of factors could cause differences. These include adjustments to projections reflected in forward-looking statements, including those resulting from the effects of COVID-19 on the Company’s business, including COVID-19 case spikes in locations in which the Company operates, additional stores closures due to COVID-19, weakness in store and shopping mall traffic, restrictions on operations imposed by government entities and/or landlords, changes in public safety and health requirements, and limitations on the Company’s ability to adequately staff and operate stores. Differences from expectations could also result from stores closures and effects on the business as a result of civil disturbances; the level and timing of promotional activity necessary to maintain inventories at appropriate levels; our ability to pass on price increases to our customers; the imposition of tariffs on product imported by the Company or its vendors as well as the ability and costs to move production of products in response to tariffs; the Company’s ability to obtain from suppliers products that are in-demand on a timely basis and effectively manage disruptions in product supply or distribution, including disruptions as a result of COVID-19 or geopolitical events; unfavorable trends in fuel costs, foreign exchange rates, foreign labor and material costs, and other factors affecting the cost of products; the effects of the British decision to exit the European Union and other sources of market weakness in the U.K. and Republic of Ireland; the effectiveness of the Company's omnichannel initiatives; costs associated with changes in minimum wage and overtime requirements; wage pressure in the U.S. and the U.K.; weakness in the consumer economy and retail industry; competition and fashion trends in the Company's markets; risks related to the potential for terrorist events; risks related to public health and safety events; changes in buying patterns by significant wholesale customers; retained liabilities associated with divestitures of businesses including potential liabilities under leases as the prior tenant or as a guarantor; and changes in the timing of holidays or in the onset of seasonal weather affecting period-to-period sales comparisons. Additional factors that could cause differences from expectations include the ability to renew leases in existing stores and control or lower occupancy costs, and to conduct required remodeling or refurbishment on schedule and at expected expense levels; the Company’s ability to realize anticipated cost savings, including rent savings; the amount and timing of share repurchases; the Company’s ability to achieve expected digital gains and gain market share; 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, operating lease right of use assets or intangible assets or other adverse financial consequences and the timing and amount of such impairments or other consequences; unexpected changes to the market for the Company's shares or for the retail sector in general; costs and reputational harm as a result of disruptions in the Company’s business or information technology systems either by security breaches and incidents or by potential problems associated with the implementation of new or upgraded systems; the Company’s ability to realize any anticipated tax benefits; and the cost and 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, the Company’s SEC filings, copies of which may be obtained from the SEC website, www.sec.gov, or by contacting the investor relations department of Genesco via the Company’s website, 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. Safe Harbor Statement
We report consolidated financial results in accordance with generally accepted accounting principles (“GAAP”). However, to supplement these consolidated financial results our presentation includes certain non-GAAP financial measures such as earnings and earnings per share and operating income. This supplemental information should not be considered in isolation as a substitute for related GAAP measures. We believe that disclosure of earnings and earnings per share from continuing operations and operating income adjusted for the items not reflected in the previously announced expectations will be meaningful to investors, especially in light of the impact of such items on the results. Reconciliations of the non-GAAP supplemental information to the comparable GAAP measures can be found in the Appendix. NON-GAAP Financial Measures
Vision Our Footwear Focused Vision & Strategy
Strategic Initiatives/Pillars Our Footwear Focused Vision & Strategy
Q1 FY23 FY23 compared to FY22 The year ago period poses difficult comparisons as expected due to government stimulus-fueled consumer spending, especially for our Journeys business, as well as a number of one time expense benefits related to pandemic relief. Revenue decreased 3% and adjusted operating income was down 50% from $18.8 million to $9.5 million. Digital sales were down 29%, now representing 19% of total retail sales versus 25% in FY22; while wholesale and store sales increased over the same time as stores were open this year and shoppers resumed more normal activities. Gross margins continue to show strength, up 50 bps versus last year, due to reduced shipping costs as a result of lower digital penetration and continued full-price selling and limited markdown activity. Adjusted SG&A expense was up 220 bps versus last year driven in part by significant Covid rent credits and government relief in the prior year. Excluding the impact of the prior year credits, SG&A expense would have been 30 bps better as lower incentive-based compensation expense offset deleverage in selling salaries and other expenses. Adjusted EPS was $0.44 compared to $0.79 last year. Our business accelerated through the quarter this year with sequential improvement in both store and online in April and May to date versus last year, as inventory levels improved and tax refunds caught up with prior years’ levels.
Q1 FY23 FY23 compared to FY20 Compared with pre-pandemic Q1 FY20, revenue was up 5% despite having 90 fewer stores, and adjusted operating income was up 14%, from $8.4 million to $9.5 million. Digital sales were up almost 75% versus FY20, now representing 19% of total retail sales versus 11% in FY20; while wholesale sales increased meaningfully over the same time. Gross margins were down 110 bps reflecting a channel mix shift to more digital and wholesale sales as well as increased freight and logistics costs only partially offset by lower markdowns. Adjusted SG&A expense was down 120 basis points reflecting the channel mix shift and lower incentive-based compensation. Adjusted EPS was $0.44 compared to $0.33 in Q1 FY20. Our business accelerated through the quarter into May with sequential monthly improvement in both store and online compared to pre-pandemic levels, as inventory levels improved and tax refunds caught up with prior years’ levels. We continued to strengthen our business model with the more efficient use of capital to drive these results.
Q1 FY23 Key Earnings Highlights $521 MILLION IN SALES +5% vs. Q1 FY2020 +74% GROWTH IN E-COMMERCE SALES vs. Q1 FY2020 $0.37 GAAP EPS vs. $0.36 Q1 FY2020 $0.44 Non-GAAP EPS vs. $0.33 Q1 FY2020 GROSS MARGIN +50 bps vs. FY2022
Q1 FY23 Key Earnings Highlights
Q1 FY23 E-Commerce Sales Highlights (1) Retail sales represent combined store sales and e-commerce sales % of Retail Sales (1) 25% 19% 11% 31%
Q1 FY23 Total Sales
Q1 FY23 Sales by Segment FY20 Net Sales $495.7 Million FY23 Net Sales $520.7 Million FY22 Net Sales $538.7 Million Journeys Group Schuh Johnston & Murphy Group Licensed Brands
Q1 FY23 Adjusted Operating Income by Segment (1)
Q1 FY23 Inventory/Sales Change by Segment
Q1 FY23 Retail Stores Summary
Q1 FY23 vs Q1 FY22 Retail Square Footage For
FY23 Outlook (1) Note: See earnings call transcript for important details regarding guidance assumptions. Additional Commentary: Expect back half to be stronger than first half Q2 FY23 expect operating income similar to FY20 (1) On a Non-GAAP basis (2) Excludes projected spend for the new corporate headquarters building.
FY23 Projected Retail Store Count
FY23 Projected Capital Spending Omni-channel, IT, DC & Other New Stores & Remodels Projected FY23 CapEx $50-$55 Million(1) FY23 Projected Depreciation & Amortization = $45 Million (1) Excludes projected spend for the new corporate headquarters building. The projected capex for the new HQ in FY23 is approximately $11 million.
Appendix
Q1 FY23 Non-GAAP Reconciliation
Q1 FY23 Adjusted Selling and Administrative Expenses
FY23 Q1 GENESCO Summary Results May 26, 2022