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 13, 2014 (March 13, 2014)
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 13, 2014, Genesco Inc. issued a press release announcing results of operations for the fiscal fourth quarter and fiscal year ended February 1, 2014. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
On March 13, 2014, 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 2014’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 13, 2014, issued by Genesco Inc. | ||
99.2 | Genesco Inc. Fourth Fiscal Quarter Ended February 1, 2014 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 13, 2014 | 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 13, 2014 | |||
99.2 | Genesco Inc. Fourth Fiscal Quarter Ended February 1, 2014 Chief Financial Officer’s Commentary | |||
Exhibit 99.1
Financial Contact: James S. Gulmi (615) 367-8325
Media Contact: Claire S. McCall (615) 367-8283
GENESCO REPORTS FOURTH QUARTER,
FISCAL 2014 RESULTS
NASHVILLE, Tenn., March 13, 2014 --- Genesco Inc. (NYSE: GCO) today reported earnings from continuing operations for the 13-week period ended February 1, 2014, of $42.2 million, or $1.79 per diluted share, compared to earnings from continuing operations of $38.9 million, or $1.64 per diluted share, for the 14-week period ended February 2, 2013. Fiscal 2014 fourth quarter results reflect pretax items of $7.2 million, or $0.37 per share after tax, including $3.0 million of expenses related to deferred purchase price payments in connection with the acquisition of Schuh Group Limited, which are required to be expensed as compensation because the payment is contingent upon the payees’ continued employment; and $5.7 million for network intrusion expenses, other legal matters, a lease termination, and asset impairment charges, partially offset by a $1.5 million gain related to the change in accounting for deferred bonuses under the Company’s EVA Incentive Plan announced by the Company in September 2013. Fiscal 2013 fourth quarter results reflect pre-tax items of $19.2 million, or $0.52 per diluted share after tax, primarily including network intrusion expenses, deferred purchase price expenses and asset impairments, offset by a gain of $0.2 million from the change in accounting for deferred bonuses.
Adjusted for the items described above in both periods, earnings from continuing operations were $51.0 million, or $2.16 per diluted share, for the fourth quarter of Fiscal 2014, compared to earnings from continuing operations of $51.4 million, or $2.16 per diluted share, for the fourth quarter of Fiscal 2013. For consistency with Fiscal 2014'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 13-week fourth quarter of Fiscal 2014 decreased 0.5% to $793 million from $797 million in the 14-week fourth quarter of Fiscal 2013. Comparable sales in the fourth quarter 2014 increased 1% for the Company with a 4% increase in the Lids Sports Group, a flat comp in the Journeys Group, a 7% decrease in the Schuh Group, and an 11% increase in the Johnston & Murphy Group.
The Company also reported net sales for the 52-week period ended February 1, 2014, of $2.62 billion, an increase of 0.8% from net sales of $2.60 billion in the 53-week period ended February 2, 2013. Earnings from continuing operations for Fiscal 2014 were $93.0 million, or $3.94 per diluted share, compared to earnings from continuing operations of $112.9 million, or $4.69 per diluted share, for Fiscal 2013. Fiscal 2014 earnings reflect after-tax charges of $1.15 per diluted share, including the effects of the change in accounting for deferred bonuses under the EVA incentive plan, network intrusion-related expenses, compensation expense associated with the Schuh deferred purchase price, asset impairments, other legal matters, and a lease termination, partially offset by a gain on another lease termination. Fiscal 2013 earnings reflect after-tax charges of $0.37 per diluted share, including network intrusion-related expenses, compensation expense associated with the Schuh deferred purchase price, asset impairments, other legal matters, and an adjusted effective tax rate, offset by a $1.9 million gain related to the change in accounting for deferred bonuses.
Exhibit 99.1
Adjusted for the listed items in both years, earnings from continuing operations were $120.3 million, or $5.09 per diluted share, for Fiscal 2014, compared to earnings from continuing operations of $121.8 million, or $5.06 per diluted share, for Fiscal 2013. 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.
Robert J. Dennis, chairman, president and chief executive officer of Genesco, said, “Our Fiscal 2014 performance reflects a challenging selling environment throughout the year, including the fourth quarter. While our overall results were lower than we planned, we are confident the fundamentals of our business remain intact.
“The inconsistent sales patterns that characterized last year carried over into the start of Fiscal 2015 with comparable sales down 2% through Saturday, March 8, 2014. Following a difficult first week that was marked by severe winter storms in several of our key markets, comparable sales turned positive and margins have held up. However, we remain cautious in our outlook for the first half of the fiscal year given the lack of a strong new fashion driver in the teen footwear space and continued uncertainty around customer traffic.
“Based on current visibility, we expect adjusted Fiscal 2015 diluted earnings per share to be in the range of $5.40 to $5.55, which represents a 6% to 9% increase over Fiscal 2014’s adjusted earnings per share of $5.09. Consistent with previous guidance, these expectations do not include expected non-cash asset impairments and other charges, which are estimated in the range of $3.1 million to $4.5 million pretax, or $0.08 to $0.12 per share, after tax, in Fiscal 2015. They also do not reflect compensation expense associated with the Schuh deferred purchase price as described above, which is currently estimated at approximately $7.1 million, or $0.30 per diluted share, for the full year. This guidance assumes comparable sales increases in the low single digit range for the full fiscal 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, “We believe we have a sound plan in place that balances protecting near-term profitability with investments that bolster our omnichannel capabilities and expand the footprint of our underpenetrated retail concepts.”
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 13, 2014 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.
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 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 reflected in forward-looking statements, including the amount of required accruals related to the earn-out
Exhibit 99.1
bonus potentially payable to Schuh management based on the achievement of certain performance objectives; the timing and amount of non-cash asset impairments related to retail store fixed assets or to intangible assets of acquired businesses; weakness in the consumer economy; competition in the Company's markets; inability of customers to obtain credit; fashion trends that affect the sales or product margins of the Company's retail product offerings; changes in buying patterns by significant wholesale customers; bankruptcies or deterioration in financial condition of significant wholesale customers; 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 Company's ability to continue to complete and integrate acquisitions, expand its business and diversify its product base; and changes in the timing of holidays or in the onset of seasonal weather affecting period-to-period sales comparisons. 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; 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.
About Genesco Inc.
Genesco Inc., a Nashville-based specialty retailer, sells footwear, headwear, sports apparel and accessories in more than 2,550 retail stores and leased departments throughout the U.S., Canada, the United Kingdom and the Republic of Ireland, principally under the names Journeys, Journeys Kidz, Shi by Journeys, Underground by Journeys, Schuh, Lids, Locker Room by Lids, Lids Clubhouse, Johnston & Murphy, and on internet websites www.journeys.com, www.journeyskidz.com, www.shibyjourneys.com, www.undergroundbyjourneys.com, www.schuh.co.uk, www.johnstonmurphy.com, www.lids.com, www.lids.ca, www.lidslockerroom.com, www.lidsteamsports.com, www.lidsclubhouse.com , www.trask.com, www.suregripfootwear.com and www.dockersshoes.com. The Company’s Lids Sports Group division operates the Lids headwear stores and the lids.com website, the Locker Room by Lids and other team sports fan shops and single team clubhouse stores, and the Lids Team Sports team dealer business. In addition, Genesco sells wholesale footwear under its Johnston & Murphy brand, the recently relaunched Trask brand, the licensed Dockers brand, SureGrip, 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* | ||||||||||||||
Feb. 1, | Feb, 2, | Feb. 1, | Feb, 2, | ||||||||||||
In Thousands | 2014 | 2013 | 2014 | 2013 | |||||||||||
Net sales | $ | 792,506 | $ | 796,693 | $ | 2,624,972 | $ | 2,604,817 | |||||||
Cost of sales | 406,862 | 412,453 | 1,325,922 | 1,306,200 | |||||||||||
Selling and administrative expenses** | 304,768 | 305,292 | 1,134,274 | 1,111,717 | |||||||||||
Asset impairments and other, net | 5,672 | 16,141 | 1,341 | 17,037 | |||||||||||
Earnings from operations | 75,204 | 62,807 | 163,435 | 169,863 | |||||||||||
Interest expense, net | 1,206 | 1,406 | 4,575 | 5,031 | |||||||||||
Earnings from continuing operations | |||||||||||||||
before income taxes | 73,998 | 61,401 | 158,860 | 164,832 | |||||||||||
Income tax expense | 31,786 | 22,488 | 65,878 | 51,935 | |||||||||||
Earnings from continuing operations | 42,212 | 38,913 | 92,982 | 112,897 | |||||||||||
Provision for discontinued operations | (59 | ) | (150 | ) | (329 | ) | (462 | ) | |||||||
Net Earnings | $ | 42,153 | $ | 38,763 | $ | 92,653 | $ | 112,435 | |||||||
**Fourth quarter for the 13-week ended February 1, 2014 and 14-week period ended February 2, 2013. Fiscal 2014 for the 52-week period ended February 1, 2014 and Fiscal 2013 for the 53-week period ended February 2, 2013.
**Includes $3.0 million and $11.7 million in deferred payments related to the Schuh acquisition in the fourth quarter and fiscal year ended February 1, 2014, respectively, and $3.2 million and $12.1 million for the fourth quarter and fiscal year ended February 2, 2013, respectively.
Earnings Per Share Information | |||||||||||||||
Fourth Quarter | Fiscal Year Ended | ||||||||||||||
Feb. 1, | Feb, 2, | Feb. 1, | Feb, 2, | ||||||||||||
In Thousands (except per share amounts) | 2014 | 2013 | 2014 | 2013 | |||||||||||
Preferred dividend requirements | $ | — | $ | 33 | $ | 33 | $ | 147 | |||||||
Average common shares - Basic EPS | 23,291 | 23,377 | 23,297 | 23,584 | |||||||||||
Basic earnings per share: | |||||||||||||||
From continuing operations | $ | 1.81 | $ | 1.66 | $ | 3.99 | $ | 4.78 | |||||||
Net earnings | $ | 1.81 | $ | 1.66 | $ | 3.98 | $ | 4.76 | |||||||
Average common and common | |||||||||||||||
equivalent shares - Diluted EPS | 23,600 | 23,787 | 23,615 | 24,037 | |||||||||||
Diluted earnings per share: | |||||||||||||||
From continuing operations | $ | 1.79 | $ | 1.64 | $ | 3.94 | $ | 4.69 | |||||||
Net earnings | $ | 1.79 | $ | 1.63 | $ | 3.92 | $ | 4.68 | |||||||
Exhibit 99.1
GENESCO INC. | |||||||||||||||
Consolidated Earnings Summary | |||||||||||||||
Fourth Quarter | Fiscal Year Ended | ||||||||||||||
Feb. 1, | Feb, 2, | Feb. 1, | Feb, 2, | ||||||||||||
In Thousands | 2014 | 2013 | 2014 | 2013 | |||||||||||
Sales: | |||||||||||||||
Journeys Group | $ | 321,534 | $ | 337,493 | $ | 1,082,241 | $ | 1,111,490 | |||||||
Schuh Group | 121,744 | 126,762 | 364,732 | 370,480 | |||||||||||
Lids Sports Group | 251,481 | 240,503 | 820,996 | 791,255 | |||||||||||
Johnston & Murphy Group | 72,569 | 69,089 | 245,941 | 221,860 | |||||||||||
Licensed Brands | 24,926 | 22,526 | 109,780 | 108,498 | |||||||||||
Corporate and Other | 252 | 320 | 1,282 | 1,234 | |||||||||||
Net Sales | $ | 792,506 | $ | 796,693 | $ | 2,624,972 | $ | 2,604,817 | |||||||
Operating Income (Loss): | |||||||||||||||
Journeys Group | $ | 41,179 | $ | 42,302 | $ | 97,377 | $ | 109,953 | |||||||
Schuh Group (1) | 7,194 | 9,496 | 3,063 | 11,209 | |||||||||||
Lids Sports Group | 28,231 | 26,082 | 63,748 | 82,867 | |||||||||||
Johnston & Murphy Group | 7,206 | 6,746 | 17,638 | 15,696 | |||||||||||
Licensed Brands | 2,110 | 1,548 | 10,614 | 10,078 | |||||||||||
Corporate and Other (2) | (10,716 | ) | (23,367 | ) | (29,005 | ) | (59,940 | ) | |||||||
Earnings from operations | 75,204 | 62,807 | 163,435 | 169,863 | |||||||||||
Interest, net | 1,206 | 1,406 | 4,575 | 5,031 | |||||||||||
Earnings from continuing operations | |||||||||||||||
before income taxes | 73,998 | 61,401 | 158,860 | 164,832 | |||||||||||
Income tax expense | 31,786 | 22,488 | 65,878 | 51,935 | |||||||||||
Earnings from continuing operations | 42,212 | 38,913 | 92,982 | 112,897 | |||||||||||
Provision for discontinued operations | (59 | ) | (150 | ) | (329 | ) | (462 | ) | |||||||
Net Earnings | $ | 42,153 | $ | 38,763 | $ | 92,653 | $ | 112,435 | |||||||
(1)Includes $3.0 million and $11.7 million in deferred payments related to the Schuh acquisition in the fourth quarter and fiscal year ended February 1, 2014, respectively, and $3.2 million and $12.1 million for the fourth quarter and fiscal year ended February 2, 2013, respectively.
(2)Includes a $5.7 million charge in the fourth quarter of Fiscal 2014 which includes $1.9 million for network intrusion expenses, $1.6 million for a lease termination, $1.6 million for other legal matters and $0.6 million for asset impairments. Includes a $1.3 million charge in Fiscal 2014 which includes $3.3 million for network intrusion expenses, $2.3 million for asset impairments, $2.4 million for other legal matters and $1.6 million for a lease termination, partially offset by an $8.3 million gain on a lease termination. Includes a $16.1 million charge in the fourth quarter of Fiscal 2013 which includes $15.4 million for network intrusion expenses and $0.7 million for asset impairments. Includes a $17.0 million charge in Fiscal 2013 which includes $15.5 million for network intrusion expenses, $1.4 million for asset impairments and $0.1 million for other legal matters.
Exhibit 99.1
GENESCO INC. | |||||||
Consolidated Balance Sheet | |||||||
Feb. 1, | Feb. 2, | ||||||
In Thousands | 2014 | 2013 | |||||
Assets | |||||||
Cash and cash equivalents | $ | 59,447 | $ | 59,795 | |||
Accounts receivable | 52,646 | 48,214 | |||||
Inventories | 567,261 | 505,344 | |||||
Other current assets | 77,521 | 68,918 | |||||
Total current assets | 756,875 | 682,271 | |||||
Property and equipment | 280,037 | 241,669 | |||||
Other non-current assets | 402,372 | 402,132 | |||||
Total Assets | $ | 1,439,284 | $ | 1,326,072 | |||
Liabilities and Equity | |||||||
Accounts payable | $ | 145,483 | $ | 118,350 | |||
Current portion long-term debt | 6,793 | 5,675 | |||||
Other current liabilities | 153,302 | 151,174 | |||||
Total current liabilities | 305,578 | 275,199 | |||||
Long-term debt | 26,937 | 45,007 | |||||
Other long-term liabilities | 188,646 | 182,079 | |||||
Equity | 918,123 | 823,787 | |||||
Total Liabilities and Equity | $ | 1,439,284 | $ | 1,326,072 | |||
Exhibit 99.1
GENESCO INC. | ||||||||||||||||||||||||||
Retail Units Operated - Twelve Months Ended February 2, 2014 | ||||||||||||||||||||||||||
Balance | Acquisi- | Balance | Acquisi- | Balance | ||||||||||||||||||||||
1/28/2012 | tions | Open | Close | 2/2/2013 | tions | Open | Close | 2/1/2014 | ||||||||||||||||||
Journeys Group | 1,154 | — | 32 | 29 | 1,157 | — | 39 | 28 | 1,168 | |||||||||||||||||
Journeys | 812 | — | 22 | 14 | 820 | — | 20 | 13 | 827 | |||||||||||||||||
Underground by Journeys | 137 | — | — | 7 | 130 | — | — | 13 | 117 | |||||||||||||||||
Journeys Kidz | 152 | — | 9 | 5 | 156 | — | 19 | 1 | 174 | |||||||||||||||||
Shi by Journeys | 53 | — | 1 | 3 | 51 | — | — | 1 | 50 | |||||||||||||||||
Schuh Group | 78 | — | 16 | 2 | 92 | — | 29 | 22 | 99 | |||||||||||||||||
Schuh UK* | 56 | — | 15 | 1 | 70 | — | 29 | 9 | 90 | |||||||||||||||||
Schuh ROI | 8 | — | 1 | — | 9 | — | — | — | 9 | |||||||||||||||||
Schuh Concessions* | 14 | — | — | 1 | 13 | — | — | 13 | — | |||||||||||||||||
Lids Sports Group | 1,002 | 33 | 47 | 29 | 1,053 | 15 | 102 | 37 | 1,133 | |||||||||||||||||
Johnston & Murphy Group | 153 | — | 9 | 5 | 157 | — | 13 | 2 | 168 | |||||||||||||||||
Shops | 103 | — | 4 | 5 | 102 | — | 6 | 2 | 106 | |||||||||||||||||
Factory Outlets | 50 | — | 5 | — | 55 | — | 7 | — | 62 | |||||||||||||||||
Total Retail Units | 2,387 | 33 | 104 | 65 | 2,459 | 15 | 183 | 89 | 2,568 | |||||||||||||||||
Permanent Units* | 2,446 | 15 | 173 | 69 | 2,565 | |||||||||||||||||||||
Retail Units Operated - Three Months Ended February 1, 2014 | ||||||||||||||
Balance | Acquisi- | Balance | ||||||||||||
11/2/2013 | tions | Open | Close | 2/1/2014 | ||||||||||
Journeys Group | 1,161 | — | 16 | 9 | 1,168 | |||||||||
Journeys | 823 | — | 8 | 4 | 827 | |||||||||
Underground by Journeys | 121 | — | — | 4 | 117 | |||||||||
Journeys Kidz | 166 | — | 8 | — | 174 | |||||||||
Shi by Journeys | 51 | — | — | 1 | 50 | |||||||||
Schuh Group | 97 | — | 4 | 2 | 99 | |||||||||
Schuh UK* | 87 | — | 4 | 1 | 90 | |||||||||
Schuh ROI | 9 | — | — | — | 9 | |||||||||
Schuh Concessions* | 1 | — | — | 1 | — | |||||||||
Lids Sports Group | 1,114 | 8 | 25 | 14 | 1,133 | |||||||||
Johnston & Murphy Group | 165 | — | 3 | — | 168 | |||||||||
Shops | 105 | — | 1 | — | 106 | |||||||||
Factory Outlets | 60 | — | 2 | — | 62 | |||||||||
Total Retail Units | 2,537 | 8 | 48 | 25 | 2,568 | |||||||||
Permanent Units* | 2,532 | 8 | 48 | 23 | 2,565 | |||||||||
*Excludes Schuh Concessions, which are expected to close this year and temporary "pop-up" locations.
Exhibit 99.1
Genesco Inc. | |||||||||||
Comparable Sales (including same store and comparable direct sales) | |||||||||||
Fourth Quarter Ended | Fiscal Year Ended | ||||||||||
Feb. 1, | Feb. 2, | Feb. 1, | Feb. 2, | ||||||||
2014 | 2013 | 2014 | 2013 | ||||||||
Journeys Group | 0 | % | (1 | )% | (1 | )% | 6 | % | |||
Schuh Group | (7 | )% | 7 | % | (8 | )% | 8 | % | |||
Lids Sports Group | 4 | % | (10 | )% | 0 | % | (3 | )% | |||
Johnston & Murphy Group | 11 | % | 2 | % | 8 | % | 4 | % | |||
Total Comparable Sales | 1 | % | (2 | )% | (1 | )% | 3 | % | |||
Exhibit 99.1
Schedule B
Genesco Inc. | ||||||||||||
Adjustments to Reported Earnings from Continuing Operations | ||||||||||||
Fourth Quarter Ended February 1, 2014 and February 2, 2013 | ||||||||||||
Fourth | Impact on | Fourth | Impact on | |||||||||
Quarter | Diluted | Quarter | Diluted | |||||||||
In Thousands (except per share amounts) | Jan 2014 | EPS | Jan 2013 | EPS | ||||||||
Earnings from continuing operations, as reported | $ | 42,212 | $ | 1.79 | $ | 38,913 | $ | 1.64 | ||||
Adjustments: (1) | ||||||||||||
Impairment charges | 365 | 0.02 | 431 | 0.02 | ||||||||
Deferred payment - Schuh acquisition | 3,042 | 0.13 | 3,216 | 0.13 | ||||||||
Lease termination expense | 986 | 0.04 | — | — | ||||||||
Change in accounting for bonus awards | (935 | ) | (0.04 | ) | (115 | ) | — | |||||
Other legal matters | 1,017 | 0.04 | — | — | ||||||||
Network intrusion expenses | 1,196 | 0.05 | 9,831 | 0.41 | ||||||||
Higher (lower) effective tax rate | 3,128 | 0.13 | (896 | ) | (0.04 | ) | ||||||
Adjusted earnings from continuing operations (2) | $ | 51,011 | $ | 2.16 | $ | 51,380 | $ | 2.16 | ||||
(1) All adjustments are net of tax where applicable. The tax rate for the fourth quarter of Fiscal 2014 is 37.1% excluding a FIN 48 discrete item of $0.1 million. The tax rate for the fourth quarter of Fiscal 2013 is 36.2% excluding a FIN 48 discrete item of $0.1 million.
(2) EPS reflects 23.6 million and 23.8 million share counts for Fiscal 2014 and 2013, respectively, 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.
Genesco Inc. | |||||||||
Adjustments to Reported Operating Income | |||||||||
Fourth Quarter Ended February 1, 2014 | |||||||||
Three Months ended February 1, 2014 | |||||||||
Operating | Bonus Adj | Adj Operating | |||||||
In Thousands | Income | and Other | Income | ||||||
Journeys Group | $ | 41,179 | $ | 1,068 | $ | 42,247 | |||
Schuh Group* | 7,194 | 2,433 | 9,627 | ||||||
Lids Sports Group | 28,231 | — | 28,231 | ||||||
Johnston & Murphy Group | 7,206 | 11 | 7,217 | ||||||
Licensed Brands | 2,110 | 13 | 2,123 | ||||||
Corporate and Other | (10,716 | ) | 3,676 | (7,040 | ) | ||||
Total Operating Income | $ | 75,204 | $ | 7,201 | $ | 82,405 | |||
*Schuh Group adjustments include $3.0 million in deferred purchase price payments.
Exhibit 99.1
Schedule B
Genesco Inc. | |||||||||
Adjustments to Reported Operating Income | |||||||||
Fourth Quarter Ended February 2, 2013 | |||||||||
Three Months ended February 2, 2013 | |||||||||
Operating | Bonus Adj | Adj Operating | |||||||
In Thousands | Income | and Other | Income | ||||||
Journeys Group | $ | 42,302 | $ | 207 | $ | 42,509 | |||
Schuh Group* | 9,496 | 2,382 | 11,878 | ||||||
Lids Sports Group | 26,082 | 1,400 | 27,482 | ||||||
Johnston & Murphy Group | 6,746 | 10 | 6,756 | ||||||
Licensed Brands | 1,548 | — | 1,548 | ||||||
Corporate and Other | (23,367 | ) | 15,181 | (8,186 | ) | ||||
Total Operating Income | $ | 62,807 | $ | 19,180 | $ | 81,987 | |||
*Schuh Group adjustments include $3.2 million in deferred purchase price payments.
Genesco Inc. | ||||||||||||
Adjustments to Reported Earnings from Continuing Operations | ||||||||||||
Twelve Months Ended February 1, 2014 and February 2, 2013 | ||||||||||||
Impact on | Impact on | |||||||||||
12 mos | Diluted | 12 mos | Diluted | |||||||||
In Thousands (except per share amounts) | Jan 2014 | EPS | Jan 2013 | EPS | ||||||||
Earnings from continuing operations, as reported | $ | 92,982 | $ | 3.94 | $ | 112,897 | $ | 4.69 | ||||
Adjustments: (1) | ||||||||||||
Impairment charges | 1,473 | 0.06 | 887 | 0.04 | ||||||||
Deferred payment - Schuh acquisition | 11,693 | 0.50 | 12,070 | 0.50 | ||||||||
Gain on lease termination | (2,077 | ) | (0.09 | ) | — | — | ||||||
Lease termination expense | 986 | 0.04 | — | — | ||||||||
Change in accounting for bonus awards | 9,384 | 0.40 | (1,203 | ) | (0.05 | ) | ||||||
Other legal matters | 1,488 | 0.06 | 46 | — | ||||||||
Network intrusion expenses | 2,092 | 0.09 | 9,896 | 0.41 | ||||||||
Higher (lower) effective tax rate | 2,251 | 0.09 | (12,818 | ) | (0.53 | ) | ||||||
Adjusted earnings from continuing operations (2) | $ | 120,272 | $ | 5.09 | $ | 121,775 | $ | 5.06 | ||||
(1) All adjustments are net of tax where applicable. The tax rate for Fiscal 2014 is 37.2% excluding a FIN 48 discrete item of $0.2 million. The tax rate for Fiscal 2013 is 36.4% excluding a FIN 48 discrete item of $0.3 million.
(2) EPS reflects 23.6 million and 24.0 million share counts for Fiscal 2014 and 2013, respectively, 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 February 1, 2014 | |||||||||
Twelve Months ended February 1, 2014 | |||||||||
Operating | Bonus Adj | Adj Operating | |||||||
In Thousands | Income | and Other | Income | ||||||
Journeys Group* | $ | 97,377 | $ | 8,096 | $ | 105,473 | |||
Schuh Group** | 3,063 | 15,028 | 18,091 | ||||||
Lids Sports Group | 63,748 | 1,676 | 65,424 | ||||||
Johnston & Murphy Group | 17,638 | 34 | 17,672 | ||||||
Licensed Brands | 10,614 | 13 | 10,627 | ||||||
Corporate and Other* | (29,005 | ) | 8,117 | (20,888 | ) | ||||
Total Operating Income | $ | 163,435 | $ | 32,964 | $ | 196,399 | |||
*Journeys Group and Corporate adjustments include $3.5 million and $1.5 million, respectively, in bonus adjustments
resulting from the gain on a lease termination for a Journeys store in the second quarter.
**Schuh Group adjustments include $11.7 million in deferred purchase price payments.
Genesco Inc. | |||||||||
Adjustments to Reported Operating Income | |||||||||
Twelve Months Ended February 2, 2013 | |||||||||
Twelve Months ended February 2, 2013 | |||||||||
Operating | Bonus Adj | Adj Operating | |||||||
In Thousands | Income | and Other | Income | ||||||
Journeys Group | $ | 109,953 | $ | (3,024 | ) | $ | 106,929 | ||
Schuh Group* | 11,209 | 8,736 | 19,945 | ||||||
Lids Sports Group | 82,867 | 2,927 | 85,794 | ||||||
Johnston & Murphy Group | 15,696 | 41 | 15,737 | ||||||
Licensed Brands | 10,078 | (14 | ) | 10,064 | |||||
Corporate and Other | (59,940 | ) | 18,548 | (41,392 | ) | ||||
Total Operating Income | $ | 169,863 | $ | 27,214 | $ | 197,077 | |||
*Schuh Group adjustments include $12.0 million in deferred purchase price payments.
Exhibit 99.1
Schedule B
Genesco Inc. | ||||||||||||
Adjustments to Forecasted Earnings from Continuing Operations | ||||||||||||
Fiscal Year Ending January 31, 2015 | ||||||||||||
In Thousands (except per share amounts) | High Guidance | Low Guidance | ||||||||||
Fiscal 2015 | Fiscal 2015 | |||||||||||
Forecasted earnings from continuing operations | $ | 120,191 | $ | 5.08 | $ | 115,699 | $ | 4.89 | ||||
Adjustments: (1) | ||||||||||||
Asset impairment and other charges | 1,912 | 0.08 | 2,853 | 0.12 | ||||||||
Change in accounting for bonus awards | 2,117 | 0.09 | 2,117 | 0.09 | ||||||||
Deferred payment - Schuh acquisition | 7,079 | 0.30 | 7,079 | 0.30 | ||||||||
Adjusted forecasted earnings from continuing operations (2) | $ | 131,299 | $ | 5.55 | $ | 127,748 | $ | 5.40 | ||||
(1) All adjustments are net of tax where applicable. The forecasted tax rate for Fiscal 2015 is approximately 37.2% excluding a FIN 48 discrete item of $0.2 million.
(2) EPS reflects 23.7 million share count for Fiscal 2015 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 2014
FOURTH QUARTER ENDED FEBRUARY 1, 2014
Consolidated Results
Fourth Quarter
Sales
Net sales in the thirteen-week fourth quarter of Fiscal 2014 decreased 0.5% to $793 million from $797 million in the fourteen-week fourth quarter of Fiscal 2013. Net 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 were as follows:
Comparable Sales | ||||
4th Qtr | 4th Qtr | 12 Mos. | 12 Mos. | |
Same Store Sales: | FY14 | FY13 | FY14 | FY13 |
Journeys Group | -1% | -1% | -2% | 6% |
Schuh Group | -7% | 5% | -9% | 7% |
Lids Sports Group | 3% | -12% | -1% | -4% |
Johnston & Murphy Group | 7% | 0% | 7% | 3% |
Total Genesco | 0% | -4% | -2% | 3% |
4th Qtr | 4th Qtr | 12 Mos. | 12 Mos. | |
Comparable Direct Sales: | FY14 | FY13 | FY14 | FY13 |
Journeys Group | 20% | 14% | 18% | 8% |
Schuh Group | -7% | 17% | -4% | 13% |
Lids Sports Group | 18% | 27% | 26% | 9% |
Johnston & Murphy Group | 26% | 10% | 15% | 13% |
Total Genesco | 10% | 17% | 11% | 11% |
4th Qtr | 4th Qtr | 12 Mos. | 12 Mos. | |
Same Store and Comparable Direct Sales: | FY14 | FY13 | FY14 | FY13 |
Journeys Group | 0% | -1% | -1% | 6% |
Schuh Group | -7% | 7% | -8% | 8% |
Lids Sports Group | 4% | -10% | 0% | -3% |
Johnston & Murphy Group | 11% | 2% | 8% | 4% |
Total Genesco | 1% | -2% | -1% | 3% |
Through March 8, 2014 first quarter same store sales for the Company were down 2% and direct sales decreased 2% on a comparable basis; combined comparable sales were down 2%.
Exhibit 99.2
Gross Margin
Fourth quarter gross margin was 48.7% this year compared with 48.2% last year. All business units experienced stronger gross margin with the exception of Licensed Brands, which experienced some downward pressure on gross margin.
Asset Impairments and Other, Net
“Asset impairments and other” charges for the fourth quarter of Fiscal 2014 were $5.7 million. This amount is made up of expenses related to network intrusion litigation, asset impairments, retail store lease termination expenses, and other legal expenses. Last year’s fourth quarter charges of $16.1 million included expenses of $15.4 million related to assessments from the major credit card companies in connection with the network intrusion and asset impairments.
SG&A
Selling and administrative expense for the fourth quarter of Fiscal 2014 increased to 38.5% of sales from 38.3% for the same period last year. Included in expenses this quarter is $3.0 million, or $0.13 per diluted share, in expense related to deferred purchase price in the Schuh acquisition. The deferred purchase price payments, totaling £25 million, are due in June 2014 and 2015 if the payees remain employed until the payment dates. As we have discussed before, because of the retention feature, U.S. GAAP requires these deferred purchase price payments to be expensed as compensation. This is a non-cash expense until the payment conditions are satisfied. In addition, the quarter’s SG&A includes a gain of $1.5 million, or $0.04 per share, recognized in connection with the change in accounting for certain bonus awards payable under the Company’s EVA Incentive Plan disclosed by the company in the second quarter of Fiscal 2014, while last year’s fourth quarter SG&A expense reflects a gain of $0.2 million, or $0.00 per diluted share, recognized in connection with the accounting change. Excluding the deferred purchase price expense and the effects of the bonus related accounting charge in both periods, SG&A as a percent of sales was 38.3% for the fourth quarter this year, up 40 basis points from last year’s 37.9%. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measure is provided in the schedule posted on the Company’s website in conjunction with this document.
Also included in fourth quarter SG&A expense, but not eliminated from the adjusted expense, is $6.0 million or $0.20 per diluted share this year, and $6.3 million, or $0.20 per diluted share last year, related to a contingent bonus payment provided for in the Schuh acquisition. The purchase agreement calls for a total payment of up to £25 million to members of the Schuh management group payable in Fiscal 2016 if they have achieved certain earnings targets above the planned earnings on which we based our acquisition valuation. As we have discussed previously, we anticipate quarterly accruals through Fiscal 2015 for a portion of this payment, reflecting an estimate of the probability, based on Schuh’s performance, that it will be earned.
Operating Income
Genesco’s operating income for the fourth quarter was $75.2 million this year compared with $62.8 million last year. Operating income this year included $3.0 million in deferred purchase price expense and a gain of $1.5 million from the accounting change for bonus awards, as well as the $5.7 million network intrusion expenses, asset impairments, lease termination expenses, and other legal expenses discussed above. Last year, fourth quarter operating income included the $16.1 million of intrusion-related assessments and asset impairments discussed above. Excluding these items from both periods, adjusted operating income for the fourth quarter was $82.4 million this year compared with $82.0 million
Exhibit 99.2
last year. Adjusted operating margin was 10.4% in Fiscal 2014 and 10.3% in Fiscal 2013. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measure is posted on the Company’s website in conjunction with this document.
Interest Expense
Net interest expense for the quarter was $1.2 million, compared with $1.4 million for the same period last year.
Pretax Earnings
Pretax earnings for the quarter were $74.0 million, including the gain of $1.5 million related to the accounting change for bonus awards, the $5.7 million for network intrusion expenses, asset impairments, lease termination expense, and other legal matters, and the deferred purchase price-related expense of $3.0 million referred to above. Last year’s fourth quarter pretax earnings were $61.4 million, which reflected approximately $16.1 million of intrusion-related expenses and asset impairments, and $3.2 million of deferred purchase price expenses. Excluding these items from both years’ results, pretax earnings for the quarter were $81.2 million this year compared to $80.6 million last year. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measure is posted on the Company’s website in conjunction with this document.
Taxes
The effective tax rate for the quarter was 43.0% this year, compared to 36.6% last year. The adjusted tax rate, reflecting the exclusion of the expenses discussed above, was 37.1% this year compared to 36.2% last year. The difference in tax rate this year compared to last year is due primarily to the lower earnings contribution from Schuh, which carries a lower tax rate than the U.S. businesses.
Earnings From Continuing Operations After Taxes
Earnings from continuing operations were $42.2 million, or $1.79 per diluted share, in the fourth quarter this year, compared to earnings of $38.9 million, or $1.64 per diluted share, in the fourth quarter last year. Excluding the items discussed above and adjusting for this year’s higher tax rate, fourth quarter earnings from continuing operations were $51.0 million or $2.16 per diluted share this year, compared with $51.4 million or $2.16 per diluted share last year. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measure is posted on the Company’s website in conjunction with this document.
Fiscal Year 2014
Consolidated net sales increased 0.8% for Fiscal 2014. Adjusting for the 53rd week in Fiscal 2013, we estimate that the sales increase would have been 2%.
Same store sales for the year decreased 2% and comparable direct sales increased 11%. Comparable sales, including both same store sales and comparable direct sales, decreased 1%.
For the full year, operating income was $163.4 million compared to $169.9 million last year. Excluding the items discussed above, adjusted operating income was $196.4 million, compared to $197.1 million last year. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is provided in the schedule at the end of this document.
Exhibit 99.2
Diluted earnings per share from continuing operations for Fiscal 2014 decreased to $3.94 from $4.69 for Fiscal 2013. Excluding the items discussed above, adjusted earnings per share were $5.09 compared with $5.06 last year. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measure is provided in the schedule at the end of this document.
Segment Results
Lids Sports Group
Lids Sports Group’s sales for the fourth quarter increased 5% to $251 million from $241 million last year. Adjusted for the 53rd week in Fiscal 2013, we estimate that the sales increase would have been 11%.
Same store sales for the quarter increased 3% this year compared to a 12% decrease last year. Comparable direct sales increased 18% compared with an increase of 27% last year. Comparable sales, including both same store sales and comparable direct sales, increased 4% this year compared to a 10% decrease last year. Quarter-to-date same store sales through March 8, 2014 increased 3%; e-commerce sales increased 3%; and combined comparable sales increased 3%.
The Group’s gross margin as a percent of sales increased 30 basis points compared to last year, primarily due to an improved gross margin in our hat stores in the quarter. Adjusted SG&A expense as a percent of sales increased from 38.5% to 39.1% due to the reversal of bonus accruals in the fourth quarter last year.
The Group’s fourth quarter adjusted operating income was $28.2 million, or 11.2% of sales, compared with $27.5 million or 11.4% of sales 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.
For Fiscal 2014, the Group’s sales increased 4% to $821 million last year. Adjusting for last year’s 53rd week, we estimate the sales increase would have been 6% year-over-year.
Journeys Group
The Journeys Group’s sales for the quarter decreased 5% to $322 million from $337 million last year. Adjusted for the 53rd week in Fiscal 2013, we estimate that the sales decrease would have been 1%.
Same store sales for the Group were down 1%, compared with a 1% decrease last year; comparable direct sales increased 20% this quarter and 14% last year. Total comparable sales were flat for the quarter compared with 1% decrease last year. Quarter-to-date same store sales through March 8, 2014 decreased 2%; comparable direct sales increased 4%, and combined comparable sales decreased 2%.
Gross margin for the Journeys Group increased by about 70 basis points in the quarter due primarily to lower markdowns.
The Journeys Group’s SG&A expense, excluding the accounting change for bonus awards discussed above, increased by 20 basis points compared with last year. This was caused by increased advertising expenses related to paid search in our Journeys Direct business unit.
The Journeys Group’s adjusted operating income for the quarter was $42.2 million, or 13.1% of sales compared to $42.5 million, or 12.6% of sales 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.
Exhibit 99.2
For Fiscal Year 2014, the Group’s sales decreased 3% to $1.1 billion. Adjusting for last year’s 53 weeks, we estimate the sales decrease would have been 1% year over year.
Schuh Group
Schuh’s sales in the fourth quarter were $122 million, compared to $127 million last year, a decrease of 4%. Adjusting for last year’s 53rd week, we estimate that sales would have been flat. This year’s sales decrease was driven by a combined comparable sales decrease of 7%. Same store sales decreased 7% and comparable direct sales decreased 7% this year. E-commerce sales represented 16% of Schuh’s total sales for the quarter. Quarter-to-date same store sales through March 8, 2014 were down 8%; comparable direct sales decreased 8%; and combined comparable sales decreased 8%.
Schuh’s gross margin increased 20 basis points in the quarter.
Adjusted operating income was $9.6 million, or 7.9% of sales compared with $11.9 million last year or 9.4% of sales. Excluding the contingent bonus payout in both years of $6.0 million, in the current quarter and $6.3 million last year, Schuh’s operating margin would have been 12.8%, compared with 14.3% last year. The negative operating leverage was due to the negative comp as the actual adjusted SG&A in dollars was essentially flat in the quarter.
For Fiscal 2014, Schuh’s sales decreased 2% to $365 million. Adjusted operating income was $18.1 million compared to $19.9 million last year. Operating income as a percent of sales was 5.0% this year compared to 5.4%. Adjusting for the contingent bonus accrual, the operating margin would have been 8.6% of sales this year and 9.7% 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.
Johnston & Murphy Group
Johnston & Murphy Group’s fourth quarter sales increased 5%, to $73 million, compared to $69 million in the fourth quarter last year. Adjusted for the 53rd week in Fiscal 2013, the sales increase would have increased 10%.
Same store sales increased 7%; direct sales increased 26%; and combined comparable sales increased 11% on top of a 2% increase last year. Direct sales represented about 11% of Johnston & Murphy’s annual sales in Fiscal 2014. Quarter-to-date same store sales through March 8, 2014 were -6%; e-commerce and catalog sales were -6%; and combined comparable sales were -6%.
Johnston & Murphy’s gross margin increased by about 60 basis points for the quarter, due primarily to an increase in initial markons. SG&A expense as a percent of sales increased by 50 basis points due primarily to costs associated with the launching of the Trask brand and increased advertising expenses. Adjusted operating income was $7.2 million, or 9.9% of sales, compared with $6.8 million, or 9.8% of sales last year.
For the full Fiscal 2014, sales increased 11% to $246 million. Adjusted operating income increased by 12.3% to $17.7 million. Adjusted operating income as a percent of sales was 7.2% this year compared to 7.1% 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.
Exhibit 99.2
Licensed Brands
Licensed Brands’ sales increased 11% to $25 million in the fourth quarter this year, compared to $23 million in the fourth quarter last year. Adjusted for the 53rd week in Fiscal 2013, sales would have increased 15%. Gross margin was down 190 basis points due primarily to a higher mix of off price sales in the quarter.
SG&A expense was down 350 basis points due to primarily reflecting reductions in selling expense, co-op advertising and compensation.
Adjusted operating income for the quarter was $2.1 million, or 8.5% of sales, compared with $1.5 million, or 6.9% of sales last year.
For Fiscal 2014, Licensed Brands’ sales increased 1% to $110 million. Adjusted operating income was $10.6 million, or 9.7% of sales compared with $10.1 million, or 9.3% of sales 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.
Corporate
Corporate expenses were $10.7 million this year compared with $23.4 million last year. They included $5.7 million this year and $16.1 million last year in charges for network intrusion expenses, asset impairments, lease termination expenses and other legal expenses, and the effects of the change in accounting for bonus awards. Excluding these items, corporate expenses were $7.0 million this year compared with $8.2 million last year, primarily due to lower bonus accruals. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measure is posted on the Company’s website in conjunction with this document.
Balance Sheet
Cash
Cash at the end of the fourth quarter was $59 million compared with $60 million last year. We ended the quarter with $33.7 million in debt, compared with $50.7 million last year. All of the debt at the end of Fiscal 2014 is U.K. debt assumed in connection with the Schuh acquisition in Fiscal 2012 and new debt incurred in connection with the purchase of additional distribution center space in Fiscal 2014 for Schuh. There was no U.S. debt at the end of Fiscal 2014 and $27.7 million at the end of Fiscal 2013.
We spent $1.6 million in the fourth quarter of Fiscal 2014 in connection with retail acquisitions. For the full year in Fiscal 2014, we spent $13.6 million in connection with acquisitions.
We did not repurchase any stock in the fourth quarter. During Fiscal 2014, we repurchased 338,000 shares at a cost of $21 million, or $61.23 per share. Over the past two years, we have spent about $58 million repurchasing 984,000 shares at an average price of $59.30. We currently have $66 million remaining in the most recent buyback authorization.
Exhibit 99.2
Inventory
Fiscal 2014 year-end inventories were up 12% compared with Fiscal 2013. Retail inventories per square foot increased 6%, down from the 10% increase at the end of the third quarter. Wholesale inventories, which make up about 16% of total inventories, were up 11%. Roughly half of the wholesale inventory increase was caused by Licensed Brands’ decision to accelerate receipts to avoid any manufacturing disruptions arising from the Chinese New Year.
Equity
Equity was $918 million at quarter-end, compared with $824 million last year.
Capital Expenditures and Store Count
For the fourth quarter, capital expenditures were $22.8 million and depreciation and amortization expenses were $17.6 million. Excluding Locker Room by Lids in Macy’s stores and 3 Schuh pop-up stores, we ended the year with 2,539 stores compared with 2,459 stores at the end of last year, or an increase of 3.3%. Square footage increased 6.1% on a year-over-year basis, again excluding the Macy’s locations. During the year, we opened 26 Macy’s locations. The store count as of February 1, 2014 included:
Lids stores (including 110 stores in Canada) | 930 |
Lids Locker Room Stores | 128 |
Lids Clubhouse Stores | 49 |
Journeys Stores (including 31 Stores in Canada) | 827 |
Journeys Kidz Stores | 174 |
Shï by Journeys Stores | 50 |
Underground by Journeys Stores | 117 |
Schuh Stores (including 4 Kids Stores) | 96 |
Johnston & Murphy Stores and Factory Stores (including 7 stores in Canada) | 168 |
Total Stores | 2,539 |
Locker Room by Lids in Macy’s stores | 26 |
Schuh concessions and “pop-up” stores | 3 |
Total Stores and Macy’s Locations | 2,568 |
Exhibit 99.2
For Fiscal 2015, we are forecasting capital expenditures of approximately $149 million. We expect depreciation and amortization of about $80 million for the year. Our current store opening and closing plans by chain are as follows:
Actual | Projected | Projected | Projected | |||
Jan 2014 | New | Closings | Jan 2015 | |||
Journeys Group | 1,168 | 50 | (33) | 1,185 | ||
Journeys stores (U.S.) | 796 | 20 | (15) | 801 | ||
Journeys stores (Canada) | 31 | 5 | 0 | 36 | ||
Journeys Kidz stores | 174 | 25 | (3) | 196 | ||
Shï by Journeys | 50 | 0 | 0 | 50 | ||
Underground by Journeys | 117 | 0 | (15) | 102 | ||
Johnston & Murphy Group | 168 | 11 | (3) | 176 | ||
Schuh Group | 96 | 15 | 0 | 111 | ||
Schuh Stores | 92 | 12 | 0 | 104 | ||
Schuh Kids | 4 | 3 | 0 | 7 | ||
Lids Sports Group | 1,133 | 268 | (8) | 1,393 | ||
Lids hat stores (U.S.) | 820 | 30 | (7) | 843 | ||
Lids hat stores (Canada) | 110 | 15 | 0 | 125 | ||
Lids Locker Room, Locker Room by Lids in Macy’s stores & Lids Clubhouse | 203 | 223* | (1) | 425 | ||
Total Permanent Stores | 2,565 | 344* | (44) | 2,865 | ||
Schuh “pop-up” stores | 3 | 0 | (3) | 0 | ||
Total Stores | 2,568 | 344 | (47) | 2,865 | ||
*Includes 175 Locker Room by Lids in Macy’s stores
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 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 reflected in forward-looking statements, including the amount of required accruals related to the earn-out bonus potentially payable to Schuh management based on the achievement of certain performance objectives; the timing and amount of non-cash asset impairments related to retail store fixed assets or to intangible assets of acquired businesses; weakness in the consumer economy; competition in the Company's markets; inability of customers to obtain credit; fashion trends that affect the sales or product margins of the Company's retail product offerings; changes in buying patterns by significant wholesale customers; bankruptcies or deterioration in financial condition of significant wholesale customers; 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 Company's ability to continue to complete and integrate acquisitions, expand its business and diversify its product base; and changes in the timing of holidays or in the onset of seasonal weather affecting period-to-period sales comparisons. 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; 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.