Genesco Reports Third Quarter Sales Increase of 6% and EPS of $0.33
NASHVILLE, Tenn., Nov. 27 /PRNewswire/ -- Genesco Inc. (NYSE: GCO) today reported earnings before discontinued operations of $8.0 million, or $0.33 per diluted share, for the third quarter ended November 3, 2001, compared with $8.8 million, or $0.36 per diluted share, for the third quarter last year. Net sales for the quarter increased 5.6% to $186.0 million from $176.1 million in the third quarter a year ago.
Genesco Chairman and Chief Executive Officer Ben T. Harris said, "Despite the unprecedented circumstances of the last two months, which have adversely affected the general retail environment, we were still able to grow our top line, register a positive same store sales gain and report earnings per share within our previously announced range of guidance."
Harris continued, "Journeys' 8% same store sales gain for the quarter, after a 14% increase last year, is further evidence of the ongoing strength and resilience of the concept. Total sales for Journeys increased 23% to $97.1 million and we ended the quarter with 513 stores in operation.
"We were also pleased with the solid improvement in the Jarman Group, with total sales up 7% to $29.6 million and total same store sales down only 3%. The continued quarter-to-quarter improvement indicates that efforts to bring the merchandising and operational disciplines responsible for Journeys' performance into the Jarman Group are proving successful."
Harris further commented, "Johnston & Murphy, while susceptible to economic trends and the challenging department store environment, continues to be a profitable business. However, we believe that we need to improve our focus on the Johnston & Murphy customer, particularly in the product area. We have recently named David Zumbach as chief executive officer of Johnston & Murphy. David's keen marketing perspective and strong leadership skills will be invaluable as we look to revitalize the business and return it to historic rates of growth. We remain focused on controlling inventories and reducing expenses through this challenging climate.
"Dockers Footwear performed well at retail, but sales declined slightly during the quarter to $18.0 million, due primarily to efforts in the volume moderate distribution channels to control inventory levels by slowing purchases. We believe that our ability to provide the market with updated styles and our ongoing commitment to quality and value will ensure that Dockers remains an important resource for retailers in the future."
Earlier this month, the Company announced that it had reached an agreement with the Michigan Department of Environmental Quality to contribute a lump sum toward sediment removal in a lake adjacent to the Company's former leather tannery in Whitehall, Michigan. The agreement, which resolves a longstanding dispute with Michigan environmental authorities over what the authorities claim was tannery-related contamination in the lake, releases Genesco from further state claims related to lake sediments for a payment of $3.35 million, much of which the Company has provided for in earlier periods. The Company has provided for the remainder of the contribution with an additional after-tax charge to discontinued operations of approximately $700,000 in the third quarter. This charge is not reflected in earnings per share from continuing operations.
For the nine months ended November 3, 2001, earnings before discontinued operations were $22.5 million, or $0.92 per diluted share, compared with $20.5 million, or $0.86 per diluted share, last year. Net sales for the nine months increased 12.5% to $524.4 million from $466.0 million for the same period a year ago.
Genesco stated that it now expects fiscal 2002 sales to range from $744 million to $751 million and diluted earnings per share to range from $1.47 to $1.52. For fiscal 2003, the Company expects sales and diluted earnings per share to increase by 10% to 15% and 5% to 10% respectively.
Harris concluded, "While the economic environment is unquestionably challenging and we must be realistic in our expectations, we remain enthusiastic about the potential in all our businesses. We look for Journeys and the Jarman Group, which together will represent about 70% of our business, to outperform the industry, for Dockers to hold its strong position in its market and for Johnston & Murphy to improve its focus and build on its heritage."
The Company's live conference call on November 27, 2001, at 8:00 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 February 2, 2002, during the call. To listen live, please go to the website at least 15 minutes early to register, download and install any necessary software. A replay will be available shortly after the call for 14 days.
This release includes certain forward-looking statements, including all statements that do not refer to past or present events or conditions. Actual results could differ materially from those reflected by the forward-looking statements in this release and a number of factors may adversely affect future results, liquidity and capital resources. These factors include lower than expected consumer demand for the Company's products, whether caused by further weakening in the overall economy or by changes in fashions or tastes that the Company fails to anticipate or respond appropriately to, changes in buying patterns by significant wholesale customers, disruptions in product supply or distribution, the inability to adjust inventory levels to sales and changes in business strategies by the Company's competitors. Any greater than expected weakness in demand or disruption in supply could have an especially pronounced effect on the Company's performance in the fourth quarter, because of the importance of the Holiday selling season. Other factors that could cause results to differ from expectations include the Company's ability to open, staff and support additional retail stores on schedule and at acceptable expense levels and the outcome of litigation and environmental matters involving the Company. The impact of the September terrorist attacks on the United States, the responses by the U. S. government, and their effects on consumer demand, product supply and distribution and other conditions, limit the Company's ability to predict results and increase the uncertainty inherent in forward-looking statements. Forward-looking statements reflect the expectations of the Company at the time they are made, and investors should rely on them only as expressions of opinion about what may happen in the future and only at the time they are made. The Company undertakes no obligation to update any forward-looking statement.
Genesco, based in Nashville, sells footwear and accessories in more than 875 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(1)
Three Months Ended
November 3, October 28,
In Thousands 2001 2000
Net sales $185,955 $176,086
Cost of sales 99,937 93,424
Selling and administrative
expenses 70,935 66,242
Restructuring credit(2) -- --
Earnings from operations
before interest 15,083 16,420
Interest expense, net 2,159 2,080
Earnings before income taxes
and discontinued operations 12,924 14,340
Income tax expense 4,898 5,555
Earnings before discontinued
operations 8,026 8,785
Discontinued operations (net
of tax):
Operating income (loss) -- --
Provision for discontinued
operations (708) --
Net Earnings $7,318 $8,785
(1) Certain reclassifications have been made to prior periods to account
for shipping and handling fees as revenue.
(2) Adjustment to Nautica closedown provision in second quarter of Fiscal
2002 including a $0.1 million reversal of inventory writedown.
GENESCO INC.
Consolidated Earnings Summary(1)
Nine Months Ended
November 3, October 28,
In Thousands 2001 2000
Net sales $524,416 $465,973
Cost of sales 278,000 246,039
Selling and administrative
expenses 204,951 180,769
Restructuring credit(2) (269) --
Earnings from operations
before interest 41,734 39,165
Interest expense, net 5,582 5,594
Earnings before income taxes
and discontinued operations 36,152 33,571
Income tax expense 13,605 13,062
Earnings before discontinued
operations 22,547 20,509
Discontinued operations (net
of tax):
Operating income (loss) -- (226)
Provision for discontinued
operations (708) (2,975)
Net Earnings $21,839 $17,308
(1) Certain reclassifications have been made to prior periods to
account for shipping and handling fees as revenue.
(2) Adjustment to Nautica closedown provision in second quarter of Fiscal
2002 including a $0.1 million reversal of inventory writedown.
Earnings Per Share Information
Three Months Ended
November 3, October 28,
In Thousands (except per share 2001 2000
amounts)
Preferred dividend
requirements $73 $75
Average common shares - Basic
EPS 21,907 21,470
Basic earnings per share:
Before discontinued operations $0.36 $0.41
Net earnings $0.33 $0.41
Average common and common
equivalent shares -
Diluted EPS 27,234 26,977
Diluted earnings per share:
Before discontinued operations $0.33 $0.36
Net earnings $0.30 $0.36
Earnings Per Share Information
Nine Months Ended
November 3, October 28,
In Thousands (except per share 2001 2000
amounts)
Preferred dividend
requirements $220 $225
Average common shares - Basic
EPS 21,905 21,518
Basic earnings per share:
Before discontinued operations $1.02 $0.94
Net earnings $0.99 $0.79
Average common and common
equivalent shares -
Diluted EPS 27,334 26,995
Diluted earnings per share:
Before discontinued operations $0.92 $0.86
Net earnings $0.90 $0.74
GENESCO INC.
Consolidated Earnings Summary
Three Months Ended
November 3, October 28,
In Thousands 2001 2000
Sales:
Journeys $97,143 $78,766
Jarman 29,592 27,531
Johnston & Murphy 41,145 47,179
Licensed Brands(1) 18,075 22,610
Net Sales 185,955 176,086
Pretax Earnings (Loss):
Journeys $12,666 $10,886
Jarman (264) 1,870
Johnston & Murphy 2,868 5,720
Licensed Brands(2) 2,006 1,535
Corporate and Other (2,193) (3,591)
Nonrecurring charges(3) -- --
Operating income 15,083 16,420
Interest, net 2,159 2,080
Total Pretax Earnings 12,924 14,340
Income tax expense 4,898 5,555
Earnings before discontinued
operations 8,026 8,785
Discontinued operations (net
of tax):
Operating income (loss) -- --
Provision for discontinued
operations (708) --
Net Earnings $7,318 $8,785
(1) Includes Nautica sales of $0.1 million, $4.0 million, $6.1 million and
$15.6 million for the third quarter and nine months of Fiscal 2002 and
2001, respectively.
(2) Includes Nautica operating losses of $0.0 million, $1.0 million, $0.7
million and $2.2 million for the third quarter and nine months of
Fiscal 2002 and 2001, respectively.
(3) Includes litigation and severance charges offset by an adjustment to
the Nautica closedown provision of $0.3 million in the nine months of
Fiscal 2002.
GENESCO INC.
Consolidated Earnings Summary
Nine Months Ended
November 3, October 28,
In Thousands 2001 2000
Sales:
Journeys $258,538 $196,658
Jarman 77,619 69,049
Johnston & Murphy 125,732 136,166
Licensed Brands(1) 62,527 64,100
Net Sales 524,416 465,973
Pretax Earnings (Loss):
Journeys $32,071 $23,967
Jarman (365) 3,063
Johnston & Murphy 11,526 17,025
Licensed Brands(2) 6,996 4,142
Corporate and Other (8,313) (9,032)
Nonrecurring charges(3) (181) -
Operating income 41,734 39,165
Interest, net 5,582 5,594
Total Pretax Earnings 36,152 33,571
Income tax expense 13,605 13,062
Earnings before discontinued
operations 22,547 20,509
Discontinued operations (net
of tax):
Operating income (loss) -- (226)
Provision for discontinued
operations (708) (2,975)
Net Earnings $21,839 $17,308
(1) Includes Nautica sales of $0.1 million, $4.0 million, $6.1 million and
$15.6 million for the third quarter and nine months of Fiscal 2002 and
2001, respectively.
(2) Includes Nautica operating losses of $0.0 million, $1.0 million, $0.7
million and $2.2 million for the third quarter and nine months of
Fiscal 2002 and 2001, respectively.
(3) Includes litigation and severance charges offset by an adjustment to
the Nautica closedown provision of $0.3 million in the nine months of
Fiscal 2002.
GENESCO INC.
Consolidated Balance Sheet
November 3, October 28,
In Thousands 2001 2000
Assets
Cash and short-term
investments $9,926 $16,060
Accounts receivable 26,334 30,493
Inventories 183,676 154,102
Other current assets 28,553 24,802
Current assets of discontinued
operations* -- 3,834
Total current assets 248,489 229,291
Plant, equipment and capital
leases 104,336 85,386
Other non-current assets 19,639 18,486
Non-current assets of
discontinued operations* 535 563
Total Assets $372,999 $333,726
Liabilities and Shareholders'
Equity
Total current liabilities 95,478 96,544
Long-term debt and capital
leases 103,272 103,526
Other long-term liabilities 11,132 10,852
Shareholders' equity 163,117 122,804
Total Liabilities and
Shareholders' Equity $372,999 $333,726
-
Current and non-current assets of discontinued operations include Volunteer Leather.
GENESCO INC.
Retail Units Operated - Nine Months Ended November 3, 2001
Balance Balance
2/3/01 Open Conv Close 11/3/01
Journeys 425 78 0 2 501
Journeys Kidz 0 12 0 0 12
Jarman Group 207 28 0 10 225
Jarman Retail 150 0 (7) 9 134
Underground Station 57 28 7 1 91
Johnston & Murphy 147 8 0 7 148
Shops 115 7 0 7 115
Factory Outlets 32 1 0 0 33
Total Retail Units 779 126 0 19 886
Retail Units Operated - Three Months Ended November 3, 2001
Balance Balance
8/4/01 Open Conv Close 11/3/01
Journeys 462 40 0 1 501
Journeys Kidz 8 4 0 0 12
Jarman Group 217 11 0 3 225
Jarman Retail 138 0 (1) 3 134
Underground Station 79 11 1 0 91
Johnston & Murphy 144 6 0 2 148
Shops 112 5 0 2 115
Factory Outlets 32 1 0 0 33
Total Retail Units 831 61 0 6 886
Constant Store Sales
Three Months Ended Nine Months Ended
November 3, October 28, November 3, October 28,
2001 2000 2001 2000
Journeys 8% 14% 7% 14%
Jarman Group -3% 9% -5% 7%
Jarman Retail -4% 6% -7% 3%
Underground Station -2% 33% -1% 33%
Johnston & Murphy -16% 2% -11% 4%
Shops -18% 3% -12% 5%
Factory Outlets -8% 0% -9% 1%
Total Constant Store
Sales 1% 10% 1% 10%
SOURCE Genesco Inc.
CONTACT: Financial, James S. Gulmi, +1-615-367-8325, or Media, Claire S. McCall, +1-615-367-8283, both of Genesco Inc./