gco-8k_20201204.htm
false 0000018498 0000018498 2020-12-04 2020-12-04

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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): December 4, 2020  (December 4, 2020)

 

GENESCO INC.

(Exact name of registrant as specified in its charter)

 

Tennessee

1-3083

62-0211340

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

 

 

1415 Murfreesboro Pike

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))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of exchange on which registered

Common Stock, $1.00 par value

GCO

New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 


 

ITEM 2.02.  RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On December 4, 2020, Genesco Inc. issued a press release announcing results of operations for the fiscal third quarter ended October 31, 2020. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

On December 4, 2020, 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

 

Description

 

 

 

99.1

 

Press Release issued by Genesco Inc. dated December 4, 2020

 

 

 

99.2

 

Genesco Inc. Third Fiscal Quarter Ended October 31, 2020 Summary Results

 

 

 

104

 

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.

 

 

 

GENESCO INC.

 

 

 

Date: December 4, 2020

 

By:

 

/s/ Scott E. Becker

 

 

Name:

 

Scott E. Becker

 

 

Title:

 

Senior Vice President, Secretary and

General Counsel

 

 

gco-ex991_7.htm

Exhibit 99.1

 

 

 

 

GENESCO INC. REPORTS FISCAL 2021 THIRD QUARTER RESULTS

-Company Reports Return to Profitability-

-Sequential Improvement in Both Revenue and Gross Margin-

 

 

Third Quarter Fiscal 2021 Financial Summary

Net sales decreased 11% from last year to $479 million with stores open 95% of days

Highlighted by strong 62% e-commerce comp growth

Inventory down 22%

GAAP EPS from continuing operations was $0.52

Non-GAAP EPS from continuing operations was $0.851

Paid down $178 million of debt  

 

NASHVILLE, Tenn., Dec. 4, 2020 --- Genesco Inc. (NYSE: GCO) today reported GAAP earnings from continuing operations per diluted share of $0.52 for the three months ended October 31, 2020, compared to $1.31 per diluted share in the third quarter last year.  Adjusted for the excluded items in both periods, the Company reported third quarter earnings from continuing operations per diluted share of $0.85, compared to $1.33 per diluted share last year.

 

Mimi E. Vaughn, Genesco board chair, president and chief executive officer, said, “We successfully navigated with executional excellence through a back-to-school season like none other to deliver sales results that exceeded expectations and returned the Company to profitability. Journeys and Schuh performed well despite recent pressures, underscoring the strong strategic market positions and tremendous customer loyalty both have built over time, along with the ability to pivot and capitalize on the accelerated shift to online spending. At the same time, Johnston & Murphy’s business has been slower to recover as the brand’s competitive space faces stronger headwinds from the pandemic. Total net revenue decreased 11%, a meaningful improvement compared with our second quarter performance, as more stores were open and digital sales remained robust. With the decisive cost cutting actions we took early in the outbreak and one-time expense relief benefits, combined with better gross margins, solid profitability in our ecommerce channel and a lower tax rate, we dramatically improved our bottom line on a sequential basis with adjusted earnings per share coming in at $0.85.

 

 

 

______________________

1Excludes retail store asset impairment charges and a change in vacation policy, net of tax effect in the third quarter of Fiscal 2021 (“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 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.


 


“We believe we have the right assortments and are ready for this holiday season; that said, consumer demand has been very different this year due to the pandemic, which has caused us to take a conservative approach to our outlook. In November, we faced headwinds from the re-closure of stores in North America and the U.K., but most stores have since reopened at this time. For the Black Friday weekend, as expected, traffic was more subdued than usual, but for the month of November, sales were in line with our expectations with an even heavier mix of digital versus store sales. With the vast majority of the holiday season ahead of us, we believe we are well positioned to meet demand regardless of when and how the consumer decides to shop thanks to the technology investments we’ve made in our stores and ecommerce platforms.  It’s a privilege to lead a team that is facing the challenges brought by COVID-19 head on, adapting continuously to the dynamic retail environment. This is bolstering my optimism that we will successfully weather this storm and emerge strong to take advantage of the many opportunities the pandemic has created.”

 

Store Re-opening Update

As of December 4, 2020, the Company is operating in 97% of its locations, including approximately 1,150 Journeys, 170 Johnston & Murphy and 110 Schuh locations.

 

Third Quarter Review

Net sales for the third quarter of Fiscal 2021 decreased 11% to $479 million from $537 million in the third quarter of Fiscal 2020.  This sales decrease was driven by lower store comps reflecting decreased back-to-school sales, continued pressure at Johnston & Murphy and the impact from store closures during the quarter, partially offset by digital comp growth of 62%. Stores were open about 95% of days. Although the Company has disclosed comparable sales for the third quarter Fiscal 2021, it believes that overall sales is a more meaningful metric during this period due to the impact of COVID-19.

 

Comparable Sales

 

 

 

Comparable Same Store and Direct Sales:

3QFY21

3QFY20

Journeys Group

(6)%

4%

Schuh Group

1%

3%

Johnston & Murphy Group

(43)%

(6)%

Total Genesco Comparable Sales

(9)%

3%

    

Same Store Sales

(18)%

1%

Comparable Direct Sales

62%

19%

 

Overall sales were down 10% for Journeys, 3% at Schuh, and 45% at J&M while sales were up 91% at Licensed Brands due to the Togast acquisition in the fourth quarter last year.

 

Third quarter gross margin this year was 47.1%, down 210 basis points, compared with 49.2% last year. The decrease as a percentage of sales is due primarily to the mix of our businesses, increased markdowns and inventory reserves at Johnston & Murphy and higher shipping and warehouse expense in all of our retail divisions driven by the increase in penetration of e-commerce, partially offset by decreased markdowns at Journeys.

 

Adjusted selling and administrative expense for the third quarter this year decreased 10 basis points as a percentage of net sales.  On a dollar basis, expenses decreased 11% compared to the same period last year due primarily to reduced occupancy expense, driven by rent abatement agreements with

 


landlords and savings from the government program in the U.K. to provide property tax relief, as well as reduced selling salaries and bonus expense.

 

Genesco’s GAAP operating income for the third quarter was $8.2 million, or 1.7% of sales this year compared to $25.9 million, or 4.8% of sales last year.  Adjusted for the excluded items in both periods, operating income for the third quarter was $13.9 million this year compared to $26.7 million last year.  Adjusted operating margin was 2.9% of sales in the third quarter of Fiscal 2021 and 5.0% last year.

 

The effective tax rate for the quarter was -7.4% in Fiscal 2021 compared to 25.4% last year.  The adjusted tax rate, reflecting excluded items, was 4.4% in Fiscal 2021 compared to 26.2% last year.  The lower adjusted tax rate for this year primarily reflects the impact of the Company’s performance in foreign jurisdictions for which no income tax benefit or expense is recorded in Fiscal 2021.

 

GAAP earnings from continuing operations were $7.5 million in the third quarter of Fiscal 2021, compared to $19.0 million in the third quarter last year.  Adjusted for the excluded items in both periods, the third quarter earnings from continuing operations were $12.1 million, or $0.85 earnings per share in Fiscal 2021, compared to $19.4 million, or $1.33 earnings per share last year.

 

Cash, Borrowings and Inventory

Cash and cash equivalents at October 31, 2020, were $115.1 million, compared with $55.8 million at November 2, 2019.  Cash decreased $184.1 million during the third quarter driven primarily by a use of cash in financing activities of $177.8 million to pay down debt and $11.0 million for capital expenditures and other activities, partially offset by operating activities generating $4.7 million.  Total debt at the end of the third quarter of Fiscal 2021 was $32.9 million compared with $79.5 million at the end of last year’s third quarter. Total unused availability as of October 31, 2020 was $249.4 million.  Inventories decreased 22% in the third quarter of Fiscal 2021 on a year-over-year basis.  

 

Capital Expenditures and Store Activity

For the third quarter, capital expenditures were $8 million, related primarily to digital and omni-channel initiatives.  Depreciation and amortization was $11 million.  During the quarter, the Company opened seven new stores and closed seven stores.  The Company ended the quarter with 1,476 stores compared with 1,492 stores at the end of the third quarter last year, or a decrease of 1%.  Square footage was down 1% on a year-over-year basis.

 

Share Repurchases

The Company did not repurchase any shares during the third quarter of Fiscal 2021.  

 

Fiscal 2021 Outlook

Due to the continued uncertainty in the overall economy driven by COVID-19, the Company is not providing guidance at this time.

 

Conference Call, Management Commentary and Investor Presentation

The Company has posted detailed financial commentary and a supplemental financial presentation of third quarter results on its website, www.genesco.com, in the investor relations section. The Company’s live conference call on December 4, 2020, 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 the performance outlook for the Company 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 projections reflected in forward-looking statements, including as a result of the effects of COVID-19 on the Company’s business including whether there are periods of increases in the number of COVID-19 cases in locations in which the Company operates, further closures of stores due to COVID-19, weakness in store and shopping mall traffic, restrictions on operations imposed by government entities and landlords, changes in public safety and health requirements, the Company’s ability to adequately staff stores, limitations on the Company’s ability to provide adequate personal protective equipment to employees, and the Company’s ability to maintain social distancing requirements; 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; the imposition of tariffs on products 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; 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 weakness in the U.K. market; 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, including for example, the COVID-19 coronavirus; 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 of certain leases; 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 eliminate stranded costs associated with dispositions, including the sale of the Lids Sport Group business; the Company’s ability to realize anticipated cost savings, including rent savings; 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; 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, sells footwear and accessories in more than 1,475 retail stores throughout the U.S., Canada, the United Kingdom and the Republic of Ireland, principally under the names Journeys, Journeys Kidz, Schuh, Schuh Kids, Little Burgundy, Johnston & Murphy, and on internet websites www.journeys.com, www.journeyskidz.com, www.journeys.ca, www.littleburgundyshoes.com, www.schuh.co.uk, www.johnstonmurphy.com, www.johnstonmurphy.ca, and www.dockersshoes.com.   In addition, Genesco sells wholesale footwear under its Johnston & Murphy brand, the licensed Dockers brand, the licensed Levi’s brand, the licensed Bass brand, and other brands. For more information on Genesco and its operating divisions, please visit www.genesco.com.

 

 

Genesco Inc. Financial Contacts

Mimi E. Vaughn

Board Chair, President and Chief Executive Officer

(615) 367-7386

mvaughn@genesco.com

 

Dave Slater

Vice President, Financial Planning & Analysis and IR

(615) 367-7604

dslater@genesco.com

 

Genesco Inc. Media Contact

Claire S. McCall

Director, Corporate Relations

(615) 367-8283

cmccall@genesco.com

 

 

 

 


 

GENESCO INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)

 

 

 

Quarter 3

 

 

Quarter 3

 

 

 

Oct. 31,

2020

 

 

% of

Net Sales

 

 

Nov. 2,

2019

 

 

% of

Net Sales

 

Net sales

 

$

479,280

 

 

 

100.0

%

 

$

537,263

 

 

 

100.0

%

Cost of sales

 

 

253,776

 

 

 

52.9

%

 

 

273,061

 

 

 

50.8

%

Gross margin

 

 

225,504

 

 

 

47.1

%

 

 

264,202

 

 

 

49.2

%

Selling and administrative expenses

 

 

210,961

 

 

 

44.0

%

 

 

237,460

 

 

 

44.2

%

Asset impairments and other, net

 

 

6,359

 

 

 

1.3

%

 

 

799

 

 

 

0.1

%

Operating income

 

 

8,184

 

 

 

1.7

%

 

 

25,943

 

 

 

4.8

%

Other components of net periodic benefit income

 

 

(182

)

 

 

0.0

%

 

 

(92

)

 

 

0.0

%

Interest expense, net

 

 

1,404

 

 

 

0.3

%

 

 

602

 

 

 

0.1

%

Earnings from continuing operations before income taxes

 

 

6,962

 

 

 

1.5

%

 

 

25,433

 

 

 

4.7

%

Income tax expense (benefit)

 

 

(514

)

 

 

-0.1

%

 

 

6,454

 

 

 

1.2

%

Earnings from continuing operations

 

 

7,476

 

 

 

1.6

%

 

 

18,979

 

 

 

3.5

%

Loss from discontinued operations, net of tax

 

 

(10

)

 

 

0.0

%

 

 

(80

)

 

 

0.0

%

Net Earnings

 

$

7,466

 

 

 

1.6

%

 

$

18,899

 

 

 

3.5

%

Basic earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Before discontinued operations

 

$

0.52

 

 

 

 

 

 

$

1.31

 

 

 

 

 

Net earnings

 

$

0.52

 

 

 

 

 

 

$

1.31

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Before discontinued operations

 

$

0.52

 

 

 

 

 

 

$

1.31

 

 

 

 

 

Net earnings

 

$

0.52

 

 

 

 

 

 

$

1.30

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

14,283

 

 

 

 

 

 

 

14,465

 

 

 

 

 

Diluted

 

 

14,362

 

 

 

 

 

 

 

14,529

 

 

 

 

 

 


 

GENESCO INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)

 

 

 

Nine Months Ended

 

 

Nine Months Ended

 

 

 

Oct. 31,

2020

 

 

% of

Net Sales

 

 

Nov. 2,

2019

 

 

% of

Net Sales

 

Net sales

 

$

1,149,729

 

 

 

100.0

%

 

$

1,519,487

 

 

 

100.0

%

Cost of sales

 

 

637,081

 

 

 

55.4

%

 

 

773,844

 

 

 

50.9

%

Gross margin

 

 

512,648

 

 

 

44.6

%

 

 

745,643

 

 

 

49.1

%

Selling and administrative expenses

 

 

587,264

 

 

 

51.1

%

 

 

705,811

 

 

 

46.5

%

Goodwill impairment

 

 

79,259

 

 

 

6.9

%

 

 

 

 

 

0.0

%

Asset impairments and other, net

 

 

15,953

 

 

 

1.4

%

 

 

1,843

 

 

 

0.1

%

Operating income (loss)

 

 

(169,828

)

 

 

-14.8

%

 

 

37,989

 

 

 

2.5

%

Other components of net periodic benefit income

 

 

(488

)

 

 

0.0

%

 

 

(271

)

 

 

0.0

%

Interest expense, net

 

 

4,178

 

 

 

0.4

%

 

 

783

 

 

 

0.1

%

Earnings (loss) from continuing operations before income taxes

 

 

(173,518

)

 

 

-15.1

%

 

 

37,477

 

 

 

2.5

%

Income tax expense (benefit)

 

 

(27,446

)

 

 

-2.4

%

 

 

11,235

 

 

 

0.7

%

Earnings (loss) from continuing operations

 

 

(146,072

)

 

 

-12.7

%

 

 

26,242

 

 

 

1.7

%

Loss from discontinued operations, net of tax

 

 

(275

)

 

 

0.0

%

 

 

(420

)

 

 

0.0

%

Net Earnings (Loss)

 

$

(146,347

)

 

 

-12.7

%

 

$

25,822

 

 

 

1.7

%

Basic earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Before discontinued operations

 

$

(10.29

)

 

 

 

 

 

$

1.64

 

 

 

 

 

Net earnings (loss)

 

$

(10.31

)

 

 

 

 

 

$

1.61

 

 

 

 

 

Diluted earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Before discontinued operations

 

$

(10.29

)

 

 

 

 

 

$

1.63

 

 

 

 

 

Net earnings (loss)

 

$

(10.31

)

 

 

 

 

 

$

1.60

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

14,191

 

 

 

 

 

 

 

16,023

 

 

 

 

 

Diluted

 

 

14,191

 

 

 

 

 

 

 

16,136

 

 

 

 

 

 


 

GENESCO INC.

Sales/Earnings Summary by Segment

(in thousands)

(Unaudited)

 

 

 

Quarter 3

 

 

Quarter 3

 

 

 

Oct. 31,

2020

 

 

% of

Net Sales

 

 

Nov. 2,

2019

 

 

% of

Net Sales

 

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Journeys Group

 

$

317,682

 

 

 

66.3

%

 

$

354,920

 

 

 

66.1

%

Schuh Group

 

 

90,021

 

 

 

18.8

%

 

 

92,899

 

 

 

17.3

%

Johnston & Murphy Group

 

 

39,655

 

 

 

8.3

%

 

 

72,703

 

 

 

13.5

%

Licensed Brands

 

 

31,922

 

 

 

6.7

%

 

 

16,726

 

 

 

3.1

%

Corporate and Other

 

 

 

 

 

0.0

%

 

 

15

 

 

 

0.0

%

Net Sales

 

$

479,280

 

 

 

100.0

%

 

$

537,263

 

 

 

100.0

%

Operating income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Journeys Group

 

$

24,035

 

 

 

7.6

%

 

$

28,955

 

 

 

8.2

%

Schuh Group

 

 

6,766

 

 

 

7.5

%

 

 

4,369

 

 

 

4.7

%

Johnston & Murphy Group

 

 

(11,137

)

 

 

-28.1

%

 

 

3,715

 

 

 

5.1

%

Licensed Brands

 

 

792

 

 

 

2.5

%

 

 

(27

)

 

 

-0.2

%

Corporate and Other(1)

 

 

(12,272

)

 

 

-2.6

%

 

 

(11,069

)

 

 

-2.1

%

Operating income

 

 

8,184

 

 

 

1.7

%

 

 

25,943

 

 

 

4.8

%

Other components of net periodic benefit income

 

 

(182

)

 

 

0.0

%

 

 

(92

)

 

 

0.0

%

Interest, net

 

 

1,404

 

 

 

0.3

%

 

 

602

 

 

 

0.1

%

Earnings from continuing operations before income taxes

 

 

6,962

 

 

 

1.5

%

 

 

25,433

 

 

 

4.7

%

Income tax expense (benefit)

 

 

(514

)

 

 

-0.1

%

 

 

6,454

 

 

 

1.2

%

Earnings from continuing operations

 

 

7,476

 

 

 

1.6

%

 

 

18,979

 

 

 

3.5

%

Loss from discontinued operations, net of tax

 

 

(10

)

 

 

0.0

%

 

 

(80

)

 

 

0.0

%

Net Earnings

 

$

7,466

 

 

 

1.6

%

 

$

18,899

 

 

 

3.5

%

 

 

(1)

Includes a $6.4 million charge in the third quarter of Fiscal 2021 for retail store asset impairments.  Includes a $0.8 million charge in the third quarter of Fiscal 2020 for retail store and intangible asset impairments.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

GENESCO INC.

Sales/Earnings Summary by Segment

(in thousands)

(Unaudited)

 

 

 

 

Nine Months Ended

 

 

Nine Months Ended

 

 

 

Oct. 31,

2020

 

 

% of

Net Sales

 

 

Nov. 2,

2019

 

 

% of

Net Sales

 

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Journeys Group

 

$

763,238

 

 

 

66.4

%

 

$

994,067

 

 

 

65.4

%

Schuh Group

 

 

208,918

 

 

 

18.2

%

 

 

262,219

 

 

 

17.3

%

Johnston & Murphy Group

 

 

102,601

 

 

 

8.9

%

 

 

214,704

 

 

 

14.1

%

Licensed Brands

 

 

74,972

 

 

 

6.5

%

 

 

48,392

 

 

 

3.2

%

Corporate and Other

 

 

 

 

 

0.0

%

 

 

105

 

 

 

0.0

%

Net Sales

 

$

1,149,729

 

 

 

100.0

%

 

$

1,519,487

 

 

 

100.0

%

Operating income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Journeys Group

 

$

(2,888

)

 

 

-0.4

%

 

$

59,260

 

 

 

6.0

%

Schuh Group

 

 

(15,158

)

 

 

-7.3

%

 

 

(1,020

)

 

 

-0.4

%

Johnston & Murphy Group

 

 

(38,964

)

 

 

-38.0

%

 

 

10,339

 

 

 

4.8

%

Licensed Brands

 

 

(2,931

)

 

 

-3.9

%

 

 

151

 

 

 

0.3

%

Corporate and Other(1)

 

 

(30,628

)

 

 

-2.7

%

 

 

(30,741

)

 

 

-2.0

%

Goodwill Impairment

 

 

(79,259

)

 

 

-6.9

%

 

 

 

 

 

0.0

%

Operating income (loss)

 

 

(169,828

)

 

 

-14.8

%

 

 

37,989

 

 

 

2.5

%

Other components of net periodic benefit income

 

 

(488

)

 

 

0.0

%

 

 

(271

)

 

 

0.0

%

Interest, net

 

 

4,178

 

 

 

0.4

%

 

 

783

 

 

 

0.1

%

Earnings (loss) from continuing operations before income taxes

 

 

(173,518

)

 

 

-15.1

%

 

 

37,477

 

 

 

2.5

%

Income tax expense (benefit)

 

 

(27,446

)

 

 

-2.4

%

 

 

11,235

 

 

 

0.7

%

Earnings (loss) from continuing operations

 

 

(146,072

)

 

 

-12.7

%

 

 

26,242

 

 

 

1.7

%

Loss from discontinued operations, net of tax

 

 

(275

)

 

 

0.0

%

 

 

(420

)

 

 

0.0

%

Net Earnings (Loss)

 

$

(146,347

)

 

 

-12.7

%

 

$

25,822

 

 

 

1.7

%

 

 

(1)

Includes a $16.0 million charge in the first nine months of Fiscal 2021 which includes a $5.3 million charge for trademark impairment and an $11.1 million charge for retail store asset impairments, partially offset by a $(0.4) million gain for the release of an earnout related to the Togast acquisition. Includes a $1.8 million charge in the first nine months of Fiscal 2020 for retail store and intangible asset impairments.

 


 

GENESCO INC.

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)

 

 

 

 

Oct. 31,

2020

 

 

Nov. 2,

2019

 

Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

115,061

 

 

$

55,826

 

Accounts receivable

 

 

35,592

 

 

 

34,849

 

Inventories

 

 

370,699

 

 

 

473,940

 

Other current assets

 

 

62,606

 

 

 

36,179

 

Total current assets

 

 

583,958

 

 

 

600,794

 

Property and equipment

 

 

210,834

 

 

 

261,281

 

Operating lease right of use assets

 

 

640,078

 

 

 

750,855

 

Goodwill and other intangibles

 

 

67,793

 

 

 

122,803

 

Other non-current assets

 

 

33,837

 

 

 

49,759

 

Total Assets

 

$

1,536,500

 

 

$

1,785,492

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

 

Accounts payable

 

$

151,978

 

 

$

195,906

 

Current portion long-term debt

 

 

 

 

 

17,146

 

Current portion operating lease liabilities

 

 

196,603

 

 

 

145,788

 

Other current liabilities

 

 

84,061

 

 

 

89,684

 

Total current liabilities

 

 

432,642

 

 

 

448,524

 

Long-term debt

 

 

32,850

 

 

 

62,368

 

Long-term operating lease liabilities

 

 

560,082

 

 

 

663,168

 

Other long-term liabilities

 

 

40,954

 

 

 

37,984

 

Equity

 

 

469,972

 

 

 

573,448

 

Total Liabilities and Equity

 

$

1,536,500

 

 

$

1,785,492

 

 

 


 

GENESCO INC.

Store Count Activity

 

 

 

 

 

Balance

02/02/2019

 

 

Open

 

 

Close

 

 

Balance

02/01/2020

 

 

Open

 

 

Close

 

 

Balance

10/31/2020

 

Journeys Group

 

 

1,193

 

 

 

8

 

 

 

30

 

 

 

1,171

 

 

 

8

 

 

 

11

 

 

 

1,168

 

Schuh Group

 

 

136

 

 

 

1

 

 

 

8

 

 

 

129

 

 

 

1

 

 

 

3

 

 

 

127

 

Johnston & Murphy Group

 

 

183

 

 

 

3

 

 

 

6

 

 

 

180

 

 

 

4

 

 

 

3

 

 

 

181

 

Total Retail Units

 

 

1,512

 

 

 

12

 

 

 

44

 

 

 

1,480

 

 

 

13

 

 

 

17

 

 

 

1,476

 

 

 

 

 

GENESCO INC.

Store Count Activity

 

 

 

 

Balance

08/01/2020

 

 

Open

 

 

Close

 

 

Balance

10/31/2020

 

Journeys Group

 

 

1,169

 

 

 

5

 

 

 

6

 

 

 

1,168

 

Schuh Group

 

 

127

 

 

0

 

 

0

 

 

 

127

 

Johnston & Murphy Group

 

 

180

 

 

 

2

 

 

 

1

 

 

 

181

 

Total Retail Units

 

 

1,476

 

 

 

7

 

 

 

7

 

 

 

1,476

 

 

 

 

 

 

 

GENESCO INC.

Comparable Sales

 

 

 

Quarter 3

 

 

Nine Months Ended

 

 

 

Oct. 31,

2020(1)

 

 

Nov. 2,

2019

 

 

Oct. 31,

2020(1)

 

 

Nov. 2,

2019

 

Journeys Group

 

 

(6

)%

 

 

4

%

 

NA

 

 

 

5

%

Schuh Group

 

 

1

%

 

 

3

%

 

NA

 

 

 

2

%

Johnston & Murphy Group

 

 

(43

)%

 

 

(6

)%

 

NA

 

 

 

(2

)%

Total Comparable Sales

 

 

(9

)%

 

 

3

%

 

NA

 

 

 

4

%

Same Store Sales

 

 

(18

)%

 

 

1

%

 

NA

 

 

 

2

%

Comparable Direct Sales

 

 

62

%

 

 

19

%

 

 

88

%

 

 

18

%

 

 

 

(1)

As a result of store closures in the first half of the year in response to the COVID-19 pandemic, the Company has not included year to date Fiscal 2021 comparable sales, except for comparable direct sales, as it believes that overall net sales is a more meaningful metric during this period.

 

 

 

 

 

 

 

 

 

 

 

 


 

GENESCO INC.

COVID-19 Related Adjustments

Decrease (Increase) to Pretax Earnings

(in thousands)

(Unaudited)

 

 

 

 

 

Quarter 3

 

Nine Months

 

 

 

 

Oct. 31, 2020

 

Oct. 31, 2020

 

Schuh goodwill impairment

 

 

$

 

$

79,259

 

Incremental retail store asset impairment (1)

 

 

 

5,828

 

 

9,564

 

Trademark impairment (1)

 

 

 

 

 

5,260

 

Release of Togast earnout (1)

 

 

 

 

 

(441

)

Adjustments for excess inventory (2)

 

 

 

1,051

 

 

5,328

 

Non-productive compensation (3) and (4)

 

 

 

2,574

 

 

7,262

 

UK property tax relief (3)

 

 

 

(3,922

)

 

(9,412

)

Rent abatements and temporary rent concessions (3) and (5)

 

 

 

(8,224

)

 

(11,153

)

Incremental bad debt reserve (3)

 

 

 

(67

)

 

2,998

 

Other (3) and (6)

 

 

 

275

 

 

1,169

 

Total COVID-19 related pretax adjustments

 

 

$

(2,485

)

$

89,834

 

 

(1)

Included in asset impairments and other, net on the Condensed Consolidated Statements of Operations.

(2)

Estimated impact of COVID-19 upon permanent markdowns and inventory markdown reserves.  Included in cost of sales on the Condensed Consolidated Statements of Operations.

(3)

Included in selling and administrative expenses on the Condensed Consolidated Statements of Operations.

(4)

Certain compensation paid to furloughed workers and commission based associates, net of the CARES Act, UK and Canadian government relief.

(5)

Estimated impact of abatements from prior periods as well as temporary rent savings agreements that are being recognized when executed.

(6)

Includes primarily severance and increased cleaning and personal protective equipment expenses in the third quarter and first nine months of Fiscal 2021 and is partially offset by the reversal of percentage rent for the first nine months of Fiscal 2021.

 

 

 

 


 

Schedule B

Genesco Inc.

Adjustments to Reported Earnings from Continuing Operations

Three Months Ended October 31, 2020 and November 2, 2019

The Company believes that disclosure of earnings (loss) and earnings (loss) per share from continuing operations and operating income (loss) 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.

 

 

 

Quarter 3

 

 

 

October 31, 2020

 

 

November 2, 2019

 

In Thousands (except per share amounts)

 

Pretax