UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): March 10, 2017 (March 10, 2017)
GENESCO INC.
(Exact Name of Registrant as Specified in Charter)
Tennessee | 1-3083 | 62-0211340 | ||||||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||
1415 Murfreesboro Road Nashville, Tennessee | 37217-2895 | |||||
(Address of Principal Executive Offices) | (Zip Code) | |||||
(615) 367-7000
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On March 10, 2017, Genesco Inc. issued a press release announcing results of operations for the fiscal fourth quarter and fiscal year ended January 28, 2017. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
On March 10, 2017, Genesco Inc. also posted on its website, www.genesco.com, commentary by its chief financial officer on the quarterly and annual results. A copy of the commentary 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 and commentary furnished herewith contain non-GAAP financial measures, including adjusted selling, general and administrative expense, operating earnings, pretax earnings, earnings from continuing operations and earnings per share from continuing operations, as discussed in the text of the release and commentary and as detailed on the reconciliation schedule attached to the press release and commentary. For consistency and ease of comparison with Fiscal 2017’s previously announced earnings expectations and 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 | Description | ||
99.1 | Press Release dated March 10, 2017, issued by Genesco Inc. | ||
99.2 | Genesco Inc. Fourth Fiscal Quarter Ended January 28, 2017 Chief Financial Officer’s Commentary | ||
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.
GENESCO INC. | ||||
Date: March 10, 2017 | By: | /s/ Roger G. Sisson | ||
Name: | Roger G. Sisson | |||
Title: | Senior Vice President, Secretary and General Counsel | |||
EXHIBIT INDEX
No. | Exhibit | |||
99.1 | Press Release dated March 10, 2017 | |||
99.2 | Genesco Inc. Fourth Fiscal Quarter Ended January 28, 2017 Chief Financial Officer’s Commentary | |||
Exhibit 99.1
Financial Contact: Mimi E. Vaughn (615) 367-7386
Media Contact: Claire S. McCall (615) 367-8283
GENESCO REPORTS FOURTH QUARTER FISCAL 2017 RESULTS
NASHVILLE, Tenn., March 10, 2017 --- Genesco Inc. (NYSE:GCO) today reported earnings from continuing operations for the fourth quarter ended January 28, 2017, of $46.8 million, or $2.40 per diluted share, compared to earnings from continuing operations of $45.0 million, or $2.07 per diluted share, for the fourth quarter ended January 30, 2016. Fiscal 2017 fourth quarter results reflect a pretax gain of $9.2 million, or $0.25 per diluted share after tax, including a gain on the sale of SureGrip Footwear of $12.3 million and a gain of $0.8 million on other legal matters, partially offset by $3.9 million of asset impairment charges, pension settlement expenses and other items. Fiscal 2016 fourth quarter results reflect a pretax gain of $0.8 million, or a $0.04 loss per diluted share after tax, including a gain on the sale of Lids Team Sports of $4.7 million, partially offset by $3.9 million of asset impairment charges, asset write-downs and network intrusion expenses.
Adjusted for the items described above in both periods, earnings from continuing operations were $41.8 million, or $2.15 per diluted share, for the fourth quarter of Fiscal 2017, compared to earnings from continuing operations of $45.8 million, or $2.11 per diluted share, for the fourth quarter of Fiscal 2016. For consistency with Fiscal 2017's previously announced earnings expectations and with previously reported adjusted results for the prior year period, the Company believes that the disclosure of the results from continuing operations adjusted for these items will be useful to investors. A reconciliation of earnings and earnings per share from continuing operations in accordance with U.S. Generally Accepted Accounting Principles with the adjusted earnings and earnings per share numbers presented in this paragraph is set forth on Schedule B to this press release.
Net sales for the fourth quarter of Fiscal 2017 decreased 5% to $883 million from $932 million in the fourth quarter of Fiscal 2016, reflecting the sale of the Lids Team Sports business in the fourth quarter of last year and a decrease of approximately 2% in sales from the remaining businesses. Consolidated fourth quarter 2017 comparable sales, including same store sales and comparable e-commerce and catalog sales were flat with an 8% increase in the Lids Sports Group, a 6% decrease in the Journeys Group, a 2% increase in the Schuh Group, and a 1% decrease in the Johnston & Murphy Group. Comparable sales for the Company reflected a 2% decrease in same store sales and a 12% increase in e-commerce sales.
The Company also reported net sales for the year ended January 28, 2017, of $2.9 billion, a decrease of 5% from net sales of $3.0 billion for the year ended January 30, 2016 reflecting the sale of the Lids Team Sports business in the fourth quarter of last year and a decrease of less than 1% in sales from the remaining businesses. Earnings from continuing operations for Fiscal 2017 were $97.9 million, or $4.85 per diluted share, compared to earnings from continuing operations of $95.4 million, or $4.15 per diluted share, for Fiscal 2016. Fiscal 2017 earnings reflect an after-tax gain of $0.52 per diluted share, including a $14.7 million gain on the sale of SureGrip Footwear and Lids Team Sports, an $8.9 million gain on network intrusion expenses as a result of a litigation settlement, and a $0.8 million gain on other legal matters, partially offset by $8.9 million in asset impairments and pension settlement expenses. Fiscal 2016 earnings reflect after-tax charges of $0.14 per diluted share, including $9.4 million in asset impairments, asset write-downs, network intrusion expenses, compensation expense associated with the
Exhibit 99.1
Schuh deferred purchase price, and other legal matters, partially offset by a $4.7 million gain on the sale of Lids Team Sports.
Adjusted for the listed items in both years, earnings from continuing operations were $87.2 million, or $4.33 per diluted share, for Fiscal 2017, compared to earnings from continuing operations of $98.6 million, or $4.29 per diluted share, for Fiscal 2016. For consistency with previously announced earnings expectations, which did not reflect the listed items, the Company believes that disclosure of earnings from continuing operations adjusted for those items will be useful to investors. A reconciliation of the adjusted financial measures to their corresponding measures as reported pursuant to U.S. Generally Accepted Accounting Principles is included in Schedule B to this press release.
The Company repurchased a total of 2.2 million shares of common stock in Fiscal 2017 at a total cost of $133 million and an average price of $61.81 per share. The Company did not repurchase any shares in the fourth quarter of Fiscal 2017. Through the end of fiscal February 2018, the Company had repurchased 138,900 shares at a total cost of $8 million and an average price of $59.49.
Robert J. Dennis, chairman, president and chief executive officer of Genesco, said, "Fourth quarter EPS came in above last year's levels and above expectations fueled in large part by better holiday selling than anticipated for most of our businesses. The strong gross margin and operating income recovery experienced at Lids and Schuh offset some impact of the significant fashion rotation at Journeys. January markdown and other assumptions proved to be conservative and we benefitted from a number of year-end items that contributed to the EPS beat as well. Year-over-year operating income was down, but EPS improved due to share buybacks and a lower tax rate.
"While Journeys has made good progress adjusting its assortment to better reflect current consumer demand, until it anniversaries the negative comps from last summer, we will continue to face headwinds. In addition, Fiscal 2018 is off to a sluggish start, as expected, with the delayed income tax refunds clouding visibility into our sales trends early in the year. This plus some uncertainty with the direction of the overall retail economy causes us to be cautious about the current year. We expect adjusted diluted earnings per share for the year in the range of $4.40 to $4.55.” These expectations do not include expected non-cash asset impairments and other charges, estimated in the range of $5.8 million to $6.8 million pretax, or $0.22 to $0.26 per share after tax, for the full fiscal year. This guidance assumes comparable sales increases in the 2% to 3% range for the full year. A reconciliation of the adjusted financial measures cited in the guidance to their corresponding measures as reported pursuant to U.S. Generally Accepted Accounting Principles is included in Schedule B to this press release.
Dennis concluded, “While the current retail operating environment remains challenging, we continue to be optimistic about our long-term prospects for growth and margin recovery due to the solid strategic positioning of our businesses and the strength of our disciplined operating teams.”
Conference Call and Management Commentary
The Company has posted detailed financial commentary in writing on its website, www.genesco.com, in the investor relations section. The Company's live conference call on March 10, 2017 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.
Exhibit 99.1
Cautionary Note Concerning Forward-Looking Statements
This release contains forward-looking statements, including those regarding the performance outlook for the Company and its individual businesses (including, without limitation, sales, expenses, margins and earnings) 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 adjustments to estimates and projections reflected in forward-looking statements, including the level and timing of promotional activity necessary to maintain inventories at appropriate levels; the timing and amount of non-cash asset impairments related to retail store fixed assets and intangible assets of acquired businesses; the effectiveness of the Company's omnichannel initiatives; costs associated with changes in minimum wage and overtime requirements; the level of chargebacks from credit card users for fraudulent purchases or other reasons; weakness in the consumer economy and retail industry; competition in the Company's markets; fashion trends that affect the sales or product margins of the Company's retail product offerings; weakness in shopping mall traffic and challenges to the viability of malls where the Company operates stores, related to planned closings of department stores or other factors; the imposition of tariffs on imported products or the disallowance of tax deductions on imported products; changes in buying patterns by significant wholesale customers; bankruptcies or deterioration in financial condition of significant wholesale customers or the inability of wholesale customers or consumers to obtain credit; disruptions in product supply or distribution; 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, including potential effects on consumer demand, currency exchange rates, and the supply chain; the Company's ability to continue to complete and integrate acquisitions, expand its business and diversify its product base; changes in the timing of holidays or in the onset of seasonal weather affecting period-to-period sales comparisons; and the performance of athletic teams, the participants in major sporting events such as the Super Bowl and World Series, developments with respect to certain individual athletes, and other sports-related events or changes that may affect period-to-period comparisons in the Company's Lids Sports Group retail businesses. Additional factors that could affect the Company's prospects and cause differences from expectations include the ability to build, open, staff and support additional retail stores and to renew leases in existing stores and control occupancy costs, and to conduct required remodeling or refurbishment on schedule and at expected expense levels; 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 or intangible assets or other adverse financial consequences; unexpected changes to the market for the Company's shares; variations from expected pension-related charges caused by conditions in the financial markets; disruptions in the Company’s information technology systems either by security breaches and incidents or by potential problems associated with the implementation of new or upgraded systems; 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, our 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 our 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.
Exhibit 99.1
About Genesco Inc.
Genesco Inc., a Nashville-based specialty retailer, sells footwear, headwear, sports apparel and accessories in more than 2,775 retail stores and leased departments throughout the U.S., Canada, the United Kingdom, the Republic of Ireland and Germany, principally under the names Journeys, Journeys Kidz, Shi by Journeys, Schuh, Schuh Kids, Little Burgundy, Lids, Locker Room by Lids, Lids Clubhouse, Johnston & Murphy, and on internet websites www.journeys.com, www.journeyskidz.com, www.journeys.ca, www.shibyjourneys.com, www.schuh.co.uk, www.littleburgundyshoes.com, www.johnstonmurphy.com, www.lids.com, www.lids.ca, www.lidslockerroom.com, www.lidsclubhouse.com, www.neweracap.com, www.trask.com, and www.dockersshoes.com. The Company's Lids Sports Group division operates the Lids headwear stores, the Locker Room by Lids and other team sports fan shops and single team clubhouse stores. In addition, Genesco sells wholesale footwear under its Johnston & Murphy brand, the Trask brand, the licensed Dockers brand, G.H. Bass & Co., and other brands. For more information on Genesco and its operating divisions, please visit www.genesco.com.
Exhibit 99.1
GENESCO INC. | |||||||||||||||
Consolidated Earnings Summary | |||||||||||||||
Fourth Quarter | Fiscal Year Ended | ||||||||||||||
Jan. 28, | Jan. 30, | Jan. 28, | Jan. 30, | ||||||||||||
In Thousands | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net sales | $ | 883,169 | $ | 932,214 | $ | 2,868,341 | $ | 3,022,234 | |||||||
Cost of sales | 465,712 | 509,058 | 1,450,815 | 1,578,768 | |||||||||||
Selling and administrative expenses* | 350,765 | 348,782 | 1,276,368 | 1,284,322 | |||||||||||
Asset impairments and other, net | 2,997 | 3,923 | (802 | ) | 7,893 | ||||||||||
Earnings from operations | 63,695 | 70,451 | 141,960 | 151,251 | |||||||||||
Gain on sale of SureGrip Footwear | (12,297 | ) | — | (12,297 | ) | — | |||||||||
Gain on sale of Lids Team Sports | 81 | (4,685 | ) | (2,404 | ) | (4,685 | ) | ||||||||
Interest expense, net | 1,316 | 1,500 | 5,247 | 4,403 | |||||||||||
Earnings from continuing operations | |||||||||||||||
before income taxes | 74,595 | 73,636 | 151,414 | 151,533 | |||||||||||
Income tax expense | 27,752 | 28,648 | 53,555 | 56,152 | |||||||||||
Earnings from continuing operations | 46,843 | 44,988 | 97,859 | 95,381 | |||||||||||
Provision for discontinued operations | (295 | ) | (324 | ) | (428 | ) | (812 | ) | |||||||
Net Earnings | $ | 46,548 | $ | 44,664 | $ | 97,431 | $ | 94,569 | |||||||
*Includes $1.5 million in deferred payments related to the Schuh acquisition for the fiscal year ended January 30, 2016.
Earnings Per Share Information | |||||||||||||||
Fourth Quarter | Fiscal Year Ended | ||||||||||||||
Jan. 28, | Jan. 30, | Jan. 28, | Jan. 30, | ||||||||||||
In Thousands (except per share amounts) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Average common shares - Basic EPS | 19,383 | 21,595 | 20,076 | 22,880 | |||||||||||
Basic earnings per share: | |||||||||||||||
From continuing operations | $ | 2.42 | $ | 2.08 | $ | 4.87 | $ | 4.17 | |||||||
Net earnings | $ | 2.40 | $ | 2.07 | $ | 4.85 | $ | 4.13 | |||||||
Average common and common | |||||||||||||||
equivalent shares - Diluted EPS | 19,493 | 21,693 | 20,172 | 23,000 | |||||||||||
Diluted earnings per share: | |||||||||||||||
From continuing operations | $ | 2.40 | $ | 2.07 | $ | 4.85 | $ | 4.15 | |||||||
Net earnings | $ | 2.39 | $ | 2.06 | $ | 4.83 | $ | 4.11 | |||||||
Exhibit 99.1
GENESCO INC. | |||||||||||||||
Consolidated Earnings Summary | |||||||||||||||
Fourth Quarter | Fiscal Year Ended | ||||||||||||||
Jan. 28, | Jan. 30, | Jan. 28, | Jan. 30, | ||||||||||||
In Thousands | 2017 | 2016 | 2017 | 2016 | |||||||||||
Sales: | |||||||||||||||
Journeys Group | $ | 391,132 | $ | 403,832 | $ | 1,251,646 | $ | 1,251,637 | |||||||
Schuh Group | 110,155 | 122,264 | 372,872 | 405,674 | |||||||||||
Lids Sports Group | 278,943 | 299,990 | 847,510 | 975,504 | |||||||||||
Johnston & Murphy Group | 82,083 | 81,081 | 289,324 | 278,681 | |||||||||||
Licensed Brands | 20,748 | 24,708 | 106,372 | 109,826 | |||||||||||
Corporate and Other | 108 | 339 | 617 | 912 | |||||||||||
Net Sales | $ | 883,169 | $ | 932,214 | $ | 2,868,341 | $ | 3,022,234 | |||||||
Operating Income (Loss): | |||||||||||||||
Journeys Group | $ | 36,118 | $ | 53,654 | $ | 85,875 | $ | 126,248 | |||||||
Schuh Group (1) | 10,883 | 8,244 | 20,530 | 19,124 | |||||||||||
Lids Sports Group | 20,221 | 10,140 | 41,563 | 17,040 | |||||||||||
Johnston & Murphy Group | 7,663 | 8,301 | 19,682 | 17,761 | |||||||||||
Licensed Brands | (210 | ) | 1,710 | 4,566 | 9,236 | ||||||||||
Corporate and Other (2) | (10,980 | ) | (11,598 | ) | (30,256 | ) | (38,158 | ) | |||||||
Earnings from operations | 63,695 | 70,451 | 141,960 | 151,251 | |||||||||||
Gain on sale of SureGrip Footwear | (12,297 | ) | — | (12,297 | ) | — | |||||||||
Gain on sale of Lids Team Sports | 81 | (4,685 | ) | (2,404 | ) | (4,685 | ) | ||||||||
Interest, net | 1,316 | 1,500 | 5,247 | 4,403 | |||||||||||
Earnings from continuing operations | |||||||||||||||
before income taxes | 74,595 | 73,636 | 151,414 | 151,533 | |||||||||||
Income tax expense | 27,752 | 28,648 | 53,555 | 56,152 | |||||||||||
Earnings from continuing operations | 46,843 | 44,988 | 97,859 | 95,381 | |||||||||||
Provision for discontinued operations | (295 | ) | (324 | ) | (428 | ) | (812 | ) | |||||||
Net Earnings | $ | 46,548 | $ | 44,664 | $ | 97,431 | $ | 94,569 | |||||||
(1)Includes $1.5 million in deferred payments related to the Schuh acquisition for the fiscal year ended January 30, 2016.
(2)Includes a $3.0 million charge in the fourth quarter of Fiscal 2017 which includes $2.5 million pension settlement expense and $1.4 million for asset impairments, partially offset by a $0.9 million gain for other legal matters. Includes a $0.8 million gain for Fiscal 2017 which includes an $8.9 million gain for network intrusion expenses as a result of a litigation settlement and a $0.8 million gain for other legal matters, partially offset by $6.4 million for asset impairments and a $2.5 million pension settlement expense.
Includes a $3.9 million charge in the fourth quarter of Fiscal 2016 which includes $2.5 million for asset write-downs, $1.3 million for asset impairments and $0.1 million for network intrusion expenses. Includes a $7.9 million charge for Fiscal 2016 which includes $3.1 million for asset impairments, $2.5 million for asset write-downs, $2.2 million for network intrusion expenses and $0.1 million for other legal matters.
Exhibit 99.1
GENESCO INC. | |||||||
Consolidated Balance Sheet | |||||||
Jan. 28, | Jan. 30, | ||||||
In Thousands | 2017 | 2016 | |||||
Assets | |||||||
Cash and cash equivalents | $ | 48,301 | $ | 133,288 | |||
Accounts receivable | 43,525 | 47,265 | |||||
Inventories | 563,677 | 529,758 | |||||
Other current assets | 82,664 | 89,775 | |||||
Total current assets | 738,167 | 800,086 | |||||
Property and equipment | 330,611 | 323,328 | |||||
Goodwill and other intangibles | 357,941 | 371,694 | |||||
Other non-current assets | 22,187 | 46,082 | |||||
Total Assets | $ | 1,448,906 | $ | 1,541,190 | |||
Liabilities and Equity | |||||||
Accounts payable | $ | 170,751 | $ | 154,241 | |||
Current portion long-term debt | 9,175 | 14,182 | |||||
Other current liabilities | 129,460 | 155,194 | |||||
Total current liabilities | 309,386 | 323,617 | |||||
Long-term debt | 73,730 | 97,583 | |||||
Pension liability | 6,265 | 9,957 | |||||
Deferred rent and other long-term liabilities | 137,004 | 153,250 | |||||
Equity | 922,521 | 956,783 | |||||
Total Liabilities and Equity | $ | 1,448,906 | $ | 1,541,190 | |||
Exhibit 99.1
GENESCO INC. | |||||||||||||||||||||||
Retail Units Operated - Twelve Months Ended January 28, 2017 | |||||||||||||||||||||||
Balance | Acquisi- | Balance | Balance | ||||||||||||||||||||
1/31/2015 | tions | Open | Close | 1/30/2016 | Open | Close | 1/28/2017 | ||||||||||||||||
Journeys Group | 1,182 | 37 | 29 | 26 | 1,222 | 51 | 24 | 1,249 | |||||||||||||||
Journeys | 834 | — | 13 | 5 | 842 | 18 | 11 | 849 | |||||||||||||||
Underground by Journeys | 110 | — | — | 12 | 98 | — | 3 | 95 | |||||||||||||||
Journeys Kidz | 189 | — | 16 | 5 | 200 | 33 | 3 | 230 | |||||||||||||||
Shi by Journeys | 49 | — | — | 3 | 46 | — | 7 | 39 | |||||||||||||||
Little Burgundy | — | 37 | — | 1 | 36 | — | — | 36 | |||||||||||||||
Schuh Group | 108 | — | 17 | — | 125 | 7 | 4 | 128 | |||||||||||||||
Lids Sports Group* | 1,364 | — | 27 | 59 | 1,332 | 15 | 107 | 1,240 | |||||||||||||||
Johnston & Murphy Group | 170 | — | 8 | 5 | 173 | 8 | 4 | 177 | |||||||||||||||
Shops | 105 | — | 3 | 5 | 103 | 5 | 2 | 106 | |||||||||||||||
Factory Outlets | 65 | — | 5 | — | 70 | 3 | 2 | 71 | |||||||||||||||
Total Retail Units | 2,824 | 37 | 81 | 90 | 2,852 | 81 | 139 | 2,794 | |||||||||||||||
Retail Units Operated - Three Months Ended January 28, 2017 | |||||||||||
Balance | Balance | ||||||||||
10/29/2016 | Open | Close | 1/28/2017 | ||||||||
Journeys Group | 1,237 | 19 | 7 | 1,249 | |||||||
Journeys | 847 | 5 | 3 | 849 | |||||||
Underground by Journeys | 96 | — | 1 | 95 | |||||||
Journeys Kidz | 218 | 14 | 2 | 230 | |||||||
Shi by Journeys | 40 | — | 1 | 39 | |||||||
Little Burgundy | 36 | — | — | 36 | |||||||
Schuh Group | 126 | 2 | — | 128 | |||||||
Lids Sports Group* | 1,267 | 2 | 29 | 1,240 | |||||||
Johnston & Murphy Group | 176 | 2 | 1 | 177 | |||||||
Shops | 105 | 1 | — | 106 | |||||||
Factory Outlets | 71 | 1 | 1 | 71 | |||||||
Total Retail Units | 2,806 | 25 | 37 | 2,794 | |||||||
*Includes 151 Locker Room by Lids in Macy's stores as of January 28, 2017.
Exhibit 99.1
Genesco Inc. | |||||||||||
Comparable Sales (including same store and comparable direct sales) | |||||||||||
Fourth Quarter Ended | Fiscal Year Ended | ||||||||||
Jan. 28, | Jan. 30, | Jan. 28, | Jan. 30, | ||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Journeys Group | (6 | )% | 5 | % | (4 | )% | 5 | % | |||
Schuh Group | 2 | % | (2 | )% | (1 | )% | 3 | % | |||
Lids Sports Group | 8 | % | 3 | % | 3 | % | 6 | % | |||
Johnston & Murphy Group | (1 | )% | 6 | % | 2 | % | 6 | % | |||
Total Comparable Sales | — | % | 4 | % | (1 | )% | 5 | % | |||
Exhibit 99.1
Schedule B
Genesco Inc. | |||||||||||||||||||
Adjustments to Reported Earnings from Continuing Operations | |||||||||||||||||||
Three Months Ended January 28, 2017 and January 30, 2016 | |||||||||||||||||||
Three Months ended | |||||||||||||||||||
January 28, 2017 | January 30, 2016 | ||||||||||||||||||
Net of | Per Share | Net of | Per Share | ||||||||||||||||
In Thousands (except per share amounts) | Pretax | Tax | Amounts | Pretax | Tax | Amounts | |||||||||||||
Earnings from continuing operations, as reported | $ | 46,843 | $ | 2.40 | $ | 44,988 | $ | 2.07 | |||||||||||
Pretax adjustments: | |||||||||||||||||||
Impairment charges | $ | 1,377 | 871 | 0.05 | $ | 1,346 | 846 | 0.04 | |||||||||||
Gain on sale of SureGrip Footwear | (12,297 | ) | (7,912 | ) | (0.40 | ) | — | — | — | ||||||||||
Gain on sale of Lids Team Sports | 81 | 55 | — | (4,685 | ) | (2,961 | ) | (0.13 | ) | ||||||||||
Pension settlement expense | 2,456 | 1,580 | 0.08 | — | — | — | |||||||||||||
Asset write-down | — | — | — | 2,475 | 1,564 | 0.07 | |||||||||||||
Other legal matters | (836 | ) | (537 | ) | (0.03 | ) | — | — | — | ||||||||||
Network intrusion expenses | — | — | — | 102 | 59 | — | |||||||||||||
Total adjustments | $ | (9,219 | ) | (5,943 | ) | (0.30 | ) | $ | (762 | ) | (492 | ) | (0.02 | ) | |||||
Resolution of income tax matters and other items | 926 | 0.05 | 1,290 | 0.06 | |||||||||||||||
Adjusted earnings from continuing operations (1) and (2) | $ | 41,826 | $ | 2.15 | $ | 45,786 | $ | 2.11 | |||||||||||
(1) The adjusted tax rate for the fourth quarter of Fiscal 2017 is 36.0% excluding a FIN 48 discrete item of less than $0.1 million. The adjusted tax rate for the fourth quarter of Fiscal 2016 is 37.1% excluding a FIN 48 discrete item of less than $0.1 million.
(2) EPS reflects 19.5 and 21.7 million share count for Fiscal 2017 and 2016, which includes common stock equivalents in both years.
The Company believes that disclosure of earnings and earnings 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.
Exhibit 99.1
Schedule B
Genesco Inc. | |||||||||
Adjustments to Reported Operating Income | |||||||||
Three Months Ended January 28, 2017 | |||||||||
Three Months ended January 28, 2017 | |||||||||
Operating | Adj Operating | ||||||||
In Thousands | Income | Other Adj | Income | ||||||
Journeys Group | $ | 36,118 | $ | — | $ | 36,118 | |||
Schuh Group | 10,883 | — | 10,883 | ||||||
Lids Sports Group | 20,221 | — | 20,221 | ||||||
Johnston & Murphy Group | 7,663 | — | 7,663 | ||||||
Licensed Brands | (210 | ) | — | (210 | ) | ||||
Corporate and Other | (10,980 | ) | 2,997 | (7,983 | ) | ||||
Total Operating Income | $ | 63,695 | $ | 2,997 | $ | 66,692 | |||
Genesco Inc. | |||||||||
Adjustments to Reported Operating Income | |||||||||
Three Months Ended January 30, 2016 | |||||||||
Three Months ended January 30, 2016 | |||||||||
Operating | Adj Operating | ||||||||
In Thousands | Income | Other Adj | Income | ||||||
Journeys Group | $ | 53,654 | $ | — | $ | 53,654 | |||
Schuh Group | 8,244 | — | 8,244 | ||||||
Lids Sports Group | 10,140 | — | 10,140 | ||||||
Johnston & Murphy Group | 8,301 | — | 8,301 | ||||||
Licensed Brands | 1,710 | — | 1,710 | ||||||
Corporate and Other | (11,598 | ) | 3,923 | (7,675 | ) | ||||
Total Operating Income | $ | 70,451 | $ | 3,923 | $ | 74,374 | |||
Exhibit 99.1
Schedule B
Genesco Inc. | |||||||||||||||||||
Adjustments to Reported Earnings from Continuing Operations | |||||||||||||||||||
Twelve Months Ended January 28, 2017 and January 30, 2016 | |||||||||||||||||||
Twelve Months ended | |||||||||||||||||||
January 28, 2017 | January 30, 2016 | ||||||||||||||||||
Net of | Per Share | Net of | Per Share | ||||||||||||||||
In Thousands (except per share amounts) | Pretax | Tax | Amounts | Pretax | Tax | Amounts | |||||||||||||
Earnings from continuing operations, as reported | $ | 97,859 | $ | 4.85 | $ | 95,381 | $ | 4.15 | |||||||||||
Pretax adjustments: | |||||||||||||||||||
Impairment charges | $ | 6,409 | 4,124 | 0.20 | $ | 3,125 | 1,975 | 0.09 | |||||||||||
Gain on sale of SureGrip Footwear | (12,297 | ) | (7,912 | ) | (0.39 | ) | — | — | — | ||||||||||
Gain on sale of Lids Team Sports | (2,404 | ) | (1,547 | ) | (0.08 | ) | (4,685 | ) | (2,961 | ) | (0.13 | ) | |||||||
Pension settlement expense | 2,456 | 1,580 | 0.08 | — | — | — | |||||||||||||
Deferred payment - Schuh acquisition | — | — | — | 1,490 | 1,490 | 0.06 | |||||||||||||
Asset write-down | — | — | — | 2,475 | 1,564 | 0.07 | |||||||||||||
Other legal matters | (746 | ) | (480 | ) | (0.02 | ) | 118 | 75 | — | ||||||||||
Network intrusion expenses | (8,921 | ) | (5,740 | ) | (0.28 | ) | 2,175 | 1,375 | 0.06 | ||||||||||
Total adjustments | $ | (15,503 | ) | (9,975 | ) | (0.49 | ) | $ | 4,698 | 3,518 | 0.15 | ||||||||
Resolution of income tax matters and other items | (639 | ) | (0.03 | ) | (271 | ) | (0.01 | ) | |||||||||||
Adjusted earnings from continuing operations (1) and (2) | $ | 87,245 | $ | 4.33 | $ | 98,628 | $ | 4.29 | |||||||||||
(1) The adjusted tax rate for Fiscal 2017 is 35.7% excluding a FIN 48 discrete item of $0.2 million. The adjusted tax rate for Fiscal 2016 is 36.8% excluding a FIN 48 discrete item of $0.1 million.
(2) EPS reflects 20.2 and 23.0 million share count for Fiscal 2017 and 2016, which includes common stock equivalents in both years.
The Company believes that disclosure of earnings and earnings 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.
Exhibit 99.1
Schedule B
Genesco Inc. | |||||||||
Adjustments to Reported Operating Income | |||||||||
Twelve Months Ended January 28, 2017 | |||||||||
Twelve Months ended January 28, 2017 | |||||||||
Operating | Adj Operating | ||||||||
In Thousands | Income | Other Adj | Income | ||||||
Journeys Group | $ | 85,875 | $ | — | $ | 85,875 | |||
Schuh Group | 20,530 | — | 20,530 | ||||||
Lids Sports Group | 41,563 | — | 41,563 | ||||||
Johnston & Murphy Group | 19,682 | — | 19,682 | ||||||
Licensed Brands | 4,566 | — | 4,566 | ||||||
Corporate and Other | (30,256 | ) | (802 | ) | (31,058 | ) | |||
Total Operating Income | $ | 141,960 | $ | (802 | ) | $ | 141,158 | ||
Genesco Inc. | |||||||||
Adjustments to Reported Operating Income | |||||||||
Twelve Months Ended January 30, 2016 | |||||||||
Twelve Months ended January 30, 2016 | |||||||||
Operating | Adj Operating | ||||||||
In Thousands | Income | Other Adj | Income | ||||||
Journeys Group | $ | 126,248 | $ | — | $ | 126,248 | |||
Schuh Group* | 19,124 | 1,490 | 20,614 | ||||||
Lids Sports Group | 17,040 | — | 17,040 | ||||||
Johnston & Murphy Group | 17,761 | — | 17,761 | ||||||
Licensed Brands | 9,236 | — | 9,236 | ||||||
Corporate and Other | (38,158 | ) | 7,893 | (30,265 | ) | ||||
Total Operating Income | $ | 151,251 | $ | 9,383 | $ | 160,634 | |||
*Schuh Group adjustments include $1.5 million in deferred purchase price payments.
Exhibit 99.1
Schedule B
Genesco Inc. | ||||||||||||
Adjustments to Forecasted Earnings from Continuing Operations | ||||||||||||
Fiscal Year Ending February 3, 2018 | ||||||||||||
In Thousands (except per share amounts) | High Guidance | Low Guidance | ||||||||||
Fiscal 2018 | Fiscal 2018 | |||||||||||
Forecasted earnings from continuing operations | $ | 84,146 | $ | 4.33 | $ | 80,511 | $ | 4.14 | ||||
Adjustments: (1) | ||||||||||||
Asset impairment and other charges | 3,736 | 0.19 | 4,380 | 0.23 | ||||||||
Tax impact for share-based awards | 587 | 0.03 | 587 | 0.03 | ||||||||
Adjusted forecasted earnings from continuing operations (2) | $ | 88,469 | $ | 4.55 | $ | 85,478 | $ | 4.40 | ||||
(1) All adjustments are net of tax where applicable. The forecasted tax rate for Fiscal 2018 is approximately 35.6%.
(2) EPS reflects 19.4 million share count for Fiscal 2018 which includes common stock equivalents.
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.
Exhibit 99.2
GENESCO INC.
CHIEF FINANCIAL OFFICER’S COMMENTARY
FISCAL YEAR 2017
FOURTH QUARTER ENDED JANUARY 28, 2017
Consolidated Results
Fourth Quarter
Sales
Fourth quarter net sales decreased 5.3% to $883 million in Fiscal 2017 from $932 million in Fiscal 2016 reflecting the sale of the Lids Team sports business in the fourth quarter of last year and a decrease of approximately 2% in sales from the remaining businesses. Comparable sales for Genesco and each of its business segments, including both same store sales and comparable sales from the Company’s direct (e-commerce and catalog) businesses for the quarter and fiscal year, were as follows:
Comparable Sales | ||||
4th Qtr | 4th Qtr | 12 mos | 12 mos | |
Same Store and Comparable Direct Sales: | FY17 | FY16 | FY17 | FY16 |
Journeys Group | (6)% | 5% | (4)% | 5% |
Schuh Group | 2% | (2)% | (1)% | 3% |
Lids Sports Group | 8% | 3% | 3% | 6% |
Johnston & Murphy Group | (1)% | 6% | 2% | 6% |
Total Genesco | 0% | 4% | (1)% | 5% |
The Company’s same store sales decreased 2% and comparable direct sales increased 12% for the fourth quarter of Fiscal 2017 compared to a 2% increase and 21% increase, respectively, in the same period last year. The Company’s same store sales decreased 2% and comparable direct sales increased 6% for Fiscal 2017 compared to a 4% increase and 24% increase, respectively, in Fiscal 2016.
Gross Margin
Fourth quarter gross margin was 47.3% for Fiscal 2017 compared with 45.4% last year, primarily due to higher gross margin in Lids Sports Group, reflecting a lower level of promotions in the retail business and the sale of Lids Team Sports, higher gross margin in Schuh Group, and to a lesser extent in Johnston & Murphy Group, partially offset by decreased gross margin in the other businesses.
SG&A
Selling and administrative expense for the fourth quarter this year was 39.7% of sales compared to 37.4% last year. The increase in expenses as a percentage of sales reflects increased expenses in all of the Company’s business segments and flat expenses in the Corporate segment. In addition, last year’s fourth quarter expenses included Lids Team Sports which operated at a lower level of expense than the retail businesses.
Exhibit 99.2
Asset Impairment and Other Items
The asset impairment and other charge of $3.0 million for the fourth quarter of Fiscal 2017 included $2.5 million in pension settlement expense and $1.4 million for asset impairments, partially offset by a $0.9 million gain for other legal matters. The previous year’s fourth quarter asset impairment and other charge of $3.9 million included an asset write-off of $2.5 million, asset impairments of $1.3 million and network intrusion expenses of $0.1 million. The asset impairment and other charge are referred to as “Excluded Items” in the discussion below.
Operating Income
Genesco’s operating income for the fourth quarter was $63.7 million in Fiscal 2017 compared with $70.5 million last year. Adjusted for the Excluded Items in both periods, operating income for the fourth quarter was $66.7 million in Fiscal 2017 compared with $74.4 million last year. Adjusted operating margin was 7.6% of sales in the fourth quarter of Fiscal 2017 and 8.0% last year. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is posted on the Company’s website in conjunction with this document.
Interest Expense
Net interest expense for the quarter was $1.3 million, compared with $1.5 million for the same period last year. Net interest expense decreased 12.3% in the fourth quarter of Fiscal 2017 primarily due to decreased borrowings in the UK compared to the previous year resulting from repayments on loans.
Pretax Earnings
Pretax earnings for the quarter were $74.6 million in Fiscal 2017 and $73.6 million last year. Included in Fiscal 2017’s pretax earnings is a gain on the sale of SureGrip Footwear of $12.3 million and Fiscal 2016’s pretax earnings include a gain on the sale of the Lids Team Sports business of $4.7 million. Adjusted for the Excluded Items in both years and for the gain on the sale of SureGrip Footwear this year and Lids Team Sports last year, pretax earnings for the quarter were $65.4 million in Fiscal 2017 compared to $72.9 million last year. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is posted on the Company’s website in conjunction with this document.
Taxes
The effective tax rate for the quarter was 37.2% in Fiscal 2017 compared to 38.9% last year. The adjusted tax rate, reflecting the exclusion of the Excluded Items and the gain on the sale of SureGrip Footwear and Lids Team Sports, was 36.0% in Fiscal 2017 and 37.1% last year. The year-over-year decrease in tax rates was primarily due to changes in the mix of U.S. and foreign earnings and the work opportunity tax credit.
Earnings From Continuing Operations After Taxes
Earnings from continuing operations were $46.8 million, or $2.40 per diluted share, in the fourth quarter of Fiscal 2017, compared to earnings of $45.0 million, or $2.07 per diluted share, in the fourth quarter last year. Adjusted for the Excluded Items in both periods and the gain on the sale of SureGrip Footwear in Fiscal 2017 and the gain on sale of Lids Team Sports in Fiscal 2016, fourth quarter earnings from continuing operations were $41.8 million, or $2.15 per diluted share in Fiscal 2017, compared with $45.8 million, or $2.11 per diluted share, last year. A reconciliation of non-GAAP financial measures to the
Exhibit 99.2
most directly comparable GAAP measures is posted on the Company’s website in conjunction with this document.
Fiscal Year 2017
Consolidated net sales decreased 5.1% for Fiscal 2017 reflecting the sale of the Lids Team sports business in the fourth quarter of last year and a decrease of less than 1% in sales from the remaining businesses.
Same store sales for the year decreased 2% and comparable direct sales increased 6%. Comparable sales, including both same store sales and comparable direct sales, decreased 1%.
For the full year, operating income was $142.0 million compared to $151.3 million the previous year. Adjusting for the Excluded Items in both periods and the gain on the sale of SureGrip Footwear in Fiscal 2017, the gain on the sale of Lids Team Sports in both periods and $1.5 million in Fiscal 2016 of deferred purchase price expense associated with acquisition of the Schuh business, adjusted operating income was $141.2 million for Fiscal 2017, compared to $160.6 million the previous year. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is posted on the Company’s website in conjunction with this document.
Diluted earnings per share from continuing operations for Fiscal 2017 increased to $4.85 from $4.15 for Fiscal 2016. Adjusted for the Excluded Items, the gains on the sale of the SureGrip and Lids Team Sports Businesses, and the Schuh deferred purchase price expenses, adjusted earnings per share were $4.33 in Fiscal 2017 compared with $4.29 in Fiscal 2016. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is posted on the Company’s website in conjunction with this document.
Segment Results
Lids Sports Group
Lids Sports Group’s sales for the fourth quarter of Fiscal 2017 decreased 7.0% to $279 million from $300 million last year. All of the decline in sales is due to the sale of the Lids Team sports business in the fourth quarter of last year, while sales of the remaining retail businesses operated during both periods increased approximately 5%. Comparable sales, including both same store and comparable direct sales, increased 8% in Fiscal 2017 compared to 3% last year.
The Group’s gross margin as a percent of sales increased 680 basis points with just over one-third of the improvement due to the sale of Lids Team Sports which had lower margins. The remaining improvement was due primarily to decreased promotional activity, and to a lesser extent decreased shipping and warehouse expense. SG&A expense as a percent of sales increased 280 basis points due in part to the sale of Lids Team Sports, which had lower SG&A expense. The remaining retail businesses in the Group were not able to leverage SG&A expense, primarily due to increased selling salaries and bonus expense.
The Group’s fourth quarter operating income was $20.2 million, or 7.2% of sales, up from $10.1 million, or 3.4% of sales, in Fiscal 2016.
For Fiscal 2017, the Group’s sales decreased 13.1% to $848 million from $976 million last year. Operating income was $41.6 million, or 4.9% of sales, up from $17.0 million, or 1.7% of sales, last year.
Exhibit 99.2
Journeys Group
Journeys Group’s sales for the fourth quarter of Fiscal 2017 decreased 3.1% to $391 million from $404 million last year. Combined comparable sales decreased 6% compared to a 5% increase last year.
Gross margin for the Journeys Group decreased 190 basis points in the quarter due primarily to higher markdowns and lower initial margin due to changes in product mix. The Group’s SG&A expense increased 220 basis points as a percent of sales for the fourth quarter, reflecting increased store-related expenses, primarily increases in rent and advertising expenses and higher credit card charges.
The Journeys Group’s operating income for the quarter was $36.1 million, or 9.2% of sales, compared to $53.7 million, or 13.3% of sales, last year.
For Fiscal 2017, the Group’s sales were flat at $1.3 billion. Operating income was $85.9 million, or 6.9% sales, compared to $126.2 million, or 10.1% of sales, last year.
Schuh Group
Schuh Group’s sales in the fourth quarter of Fiscal 2017 were $110 million, compared to $122 million last year, a decrease of 9.9%. Schuh Group sales were impacted by changes in exchange rates which reduced sales by $19.9 million in the fourth quarter of Fiscal 2017 compared to the same period last year and accounted for more than the entire decline in sales. Total comparable sales increased 2% compared to a 2% decrease last year.
Schuh Group’s gross margin increased 380 basis points in the quarter due primarily to less promotional activity and changes in sales mix and improved margins in certain product categories. Schuh Group’s SG&A expense increased 70 basis points primarily due to increased bonus expense.
Schuh Group’s operating income for the fourth quarter of Fiscal 2017 was $10.9 million, or 9.9% of sales, compared with $8.2 million, or 6.7% of sales, last year. The Group’s operating income was negatively impacted by $2.2 million due to changes in foreign exchange rates.
For Fiscal 2017, the Group’s sales decreased 8.1% to $373 million compared to $406 million for Fiscal 2016. In addition to a 1% decrease in comparable sales for the year, Schuh Group’s sales were negatively impacted by $49.3 million for the year by exchange rates. Adjusted operating income was $20.5 million, or 5.5% of sales, compared to $20.6 million, or 5.1% of sales, in Fiscal 2016. The Group’s operating income was negatively impacted by $4.1 million due to changes in foreign exchange rates. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is posted on the Company’s website in conjunction with this document.
Johnston & Murphy Group
Johnston & Murphy Group’s fourth quarter sales in Fiscal 2017 increased 1.2%, to $82 million, compared to $81 million in the fourth quarter of last year. Combined comparable sales decreased 1% compared to a 6% increase last year.
Gross margin for the Group increased 20 basis points in the quarter primarily due to lower freight costs. SG&A expense as a percent of sales increased 100 basis points, due to increased store-related expenses, primarily occupancy costs and selling salaries. The Group’s operating income was $7.7 million or 9.3% of sales, compared to operating income of $8.3 million, or 10.2% of sales in the fourth quarter of last year.
Exhibit 99.2
For Fiscal 2017, the Group’s sales increased 3.8% to $289 million compared to $279 million for Fiscal 2016. Operating income was $19.7 million, or 6.8% of sales, compared to $17.8 million, or 6.4% of sales, last year.
Licensed Brands
The Licensed Brands Group’s sales decreased 16.0% to $21 million in the fourth quarter of Fiscal 2017, compared to $25 million in the fourth quarter of Fiscal 2016. The Company sold SureGrip Footwear, included in the Licensed Brands segment, in January 2017. Gross margin decreased 160 basis points due to lower initial margins and increased closeouts.
SG&A expense as a percent of sales was up 630 basis points, primarily due to increased shipping and warehouse expense, royalty expense, advertising expense and bad debt expense.
The Group’s operating loss for the fourth quarter of Fiscal 2017 was ($0.2) million or (1.0%) of sales, compared with operating income of $1.7 million, or 6.9% of sales, for the same quarter last year.
For Fiscal 2017, Licensed Brands’ sales decreased 3.1% to $106 million compared to $110 million for the same period last year. Operating income was $4.6 million, or 4.3% of sales, compared to $9.2 million, or 8.4% of sales, for Fiscal 2016.
Corporate
Corporate expenses were $11.0 million or 1.2% of sales in the fourth quarter of Fiscal 2017, compared with $11.6 million or 1.2% of sales in the same quarter last year. Adjusted for the applicable Excluded Items, corporate expenses were $8.0 million for the quarter compared to $7.7 million last year, primarily due to increased bonus expense, partially offset by life insurance proceeds and decreased professional fees. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is posted on the Company’s website in conjunction with this document.
Balance Sheet
Cash
Cash at the end of the fourth quarter was $48 million compared with $133 million at the end of last year. We ended the quarter with $33 million in U.K. debt, compared with $54 million in U.K. debt last year. Domestic revolver borrowings were $50 million at the end of Fiscal 2017 compared to $58 million at the end of last year. The domestic revolver borrowings included $20 million related to Genesco (UK) Limited and $30 million related to GCO Canada. There were no U.S. revolver borrowings at the end of Fiscal 2017.
We did not repurchase any shares in the fourth quarter of Fiscal 2017. During Fiscal 2017, we repurchased 2.2 million shares at a cost of about $133 million, or $61.81 per share. Through fiscal February 2018, we have repurchased 138,900 shares at a cost of approximately $8 million, or $59.49 per share. As of the end of fiscal February 2018, we had about $32 million remaining under the most recent buyback authorization.
Inventory
Inventories increased 6% on a year-over-year basis. Retail inventory per square foot increased 7%.
Exhibit 99.2
Capital Expenditures and Store Count
For the fourth quarter, capital expenditures were $28 million and depreciation and amortization was $19 million. During the quarter, we opened 25 new stores and closed 37 stores. Excluding Locker Room by Lids in Macy’s stores, we ended the quarter with 2,643 stores compared with 2,667 stores at the end of the fourth quarter of last year, or a decrease of 1%. Square footage was flat on a year-over-year basis, both including the Macy’s locations and excluding them. The store count as of January 28, 2017 included:
Lids stores (including 112 stores in Canada) | 882 |
Lids Locker Room Stores (including 35 stores in Canada) | 181 |
Lids Clubhouse stores | 26 |
Journeys stores (including 44 stores in Canada) | 849 |
Little Burgundy stores | 36 |
Journeys Kidz stores | 230 |
Shï by Journeys stores | 39 |
Underground by Journeys stores | 95 |
Schuh Stores | 128 |
Johnston & Murphy Stores and Factory stores (including 7 stores in Canada) | 177 |
Total Stores | 2,643 |
Locker Room by Lids in Macy’s stores | 151 |
Total Stores and Macy’s Locations | 2,794 |
Exhibit 99.2
For Fiscal 2018, we are forecasting capital expenditures of approximately $135 to $145 million and depreciation and amortization of about $77 million. Projected square footage is expected to be down approximately 1% for Fiscal 2018. Our current store openings and closing plans by chain are as follows:
Actual | Projected | Projected | Projected | |||
Jan 2017 | New | Closings | Jan 2018 | |||
Journeys Group | 1,249 | 60 | (50) | 1,259 | ||
Journeys stores (U.S.) | 900 | 15 | (25) | 890 | ||
Journeys stores (Canada) | 44 | 5 | 0 | 49 | ||
Little Burgundy stores | 36 | 5 | 0 | 41 | ||
Journeys Kidz stores | 230 | 35 | (3) | 262 | ||
Shï by Journeys | 39 | 0 | (22) | 17 | ||
Johnston & Murphy Group | 177 | 9 | (5) | 181 | ||
Schuh Group | 128 | 10 | (3) | 135 | ||
Lids Sports Group | 1,240 | 22 | (75) | 1,187 | ||
Lids hat stores (U.S.) | 770 | 14 | (20) | 764 | ||
Lids hat stores (Canada) | 112 | 6 | (2) | 116 | ||
Locker Room stores (U.S) | 146 | 0 | (19) | 127 | ||
Locker Room stores (Canada) | 35 | 0 | (4) | 31 | ||
Clubhouse stores | 26 | 2 | (3) | 25 | ||
Locker Room by Lids (Macy’s) | 151 | 0 | (27) | 124 | ||
Total Stores | 2,794 | 101 | (133) | 2,762 | ||
Comparable Sales Assumptions in Fiscal 2018 Guidance
Our guidance for Fiscal 2018 assumes comparable sales (including both same store sales and comparable direct sales) for each retail segment by quarter as follows:
Guidance | Guidance | Guidance | Guidance | ||
Q1 | Q2 | Q3 | Q4 | FY18 | |
Journeys Group | (3) - (2)% | 3 - 4% | 4 - 5% | 4 - 5% | 3 - 4% |
Lids Sports Group | 1 - 2% | 2 - 3% | 2 - 3% | (2) - (1)% | 1 - 2% |
Schuh Group | 2 - 3% | 2 - 3% | 1 - 2% | 1 - 2% | 2 - 3% |
Johnston & Murphy Group | 0 - 1% | 2 - 3% | 3 - 4% | 3 - 4% | 2 - 3% |
Total Genesco | (1) - 0% | 2 - 3% | 3 - 4% | 2 - 3% | 2 - 3% |
Exhibit 99.2
Cautionary Note Concerning Forward-Looking Statements
This presentation contains forward-looking statements, including those regarding the performance outlook for the Company and its individual businesses (including, without limitation, sales, expenses, margins and earnings) 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 adjustments to estimates and projections reflected in forward-looking statements, including the level and timing of promotional activity necessary to maintain inventories at appropriate levels; the timing and amount of non-cash asset impairments related to retail store fixed assets and intangible assets of acquired businesses; the effectiveness of the Company’s omnichannel initiatives; costs associated with changes in minimum wage and overtime requirements; the level of chargebacks from credit card issuers for fraudulent purchases or other reasons; weakness in the consumer economy and retail industry; competition in the Company's markets; fashion trends that affect the sales or product margins of the Company's retail product offerings; weakness in shopping mall traffic and challenges to the viability of malls where the Company operates stores, related to planned closings of department stores or other factors; the imposition of tariffs on imported products or the disallowance of tax deductions on imported products; changes in buying patterns by significant wholesale customers; bankruptcies or deterioration in financial condition of significant wholesale customers or the inability of wholesale customers or consumers to obtain credit; disruptions in product supply or distribution; 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, including potential effects on consumer demand, currency exchange rates and the supply chain; the Company's ability to continue to complete and integrate acquisitions, expand its business and diversify its product base; changes in the timing of holidays or in the onset of seasonal weather affecting period-to-period sales comparisons; and the performance of athletic teams, the participants in major sporting events such as the Super Bowl and World Series, developments with respect to certain individual athletes, and other sports-related events or changes that may affect period-to-period comparisons in the Company’s Lids Sports Group retail businesses. Additional factors that could affect the Company's prospects and cause differences from expectations include the ability to build, open, staff and support additional retail stores and to renew leases in existing stores and control occupancy costs, and to conduct required remodeling or refurbishment on schedule and at expected expense levels; 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 or intangible assets or other adverse financial consequences; unexpected changes to the market for the Company's shares; variations from expected pension-related charges caused by conditions in the financial markets; disruptions in the Company’s information technology systems either by security breaches and incidents or by potential problems associated with the implementation of new or upgraded systems; 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, our 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 our website, www.genesco.com. Many of the factors that will determine the outcome of the subject matter of this presentation 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.