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): December 5, 2014 (December 5, 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 December 5, 2014, Genesco Inc. issued a press release announcing results of operations for the fiscal third quarter ended November 1, 2014. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
On December 5, 2014, Genesco Inc. also posted on its website, www.genesco.com, commentary by its chief financial officer on the quarterly 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 2015’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 5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.
On December 5, 2014, the Company also announced that James S. Gulmi, the Company's Senior Vice President-Finance and Chief Financial Officer will retire from the Chief Financial Officer role at the end of the Company's current fiscal year on January 31, 2015. Mr. Gulmi will continue to serve as a Senior Advisor to the Company during the Company's fiscal year ending January 30, 2016.
Mimi E. Vaughn, 48, will succeed Mr. Gulmi as Chief Financial Officer upon his retirement. Ms. Vaughn joined the Company as Vice President-Strategic Planning and Business Development in 2003, was promoted to Senior Vice President-Strategy and Business Development in 2006, and has been serving as Senior Vice President-Strategy and Shared Services since 2009.
A copy of the press release announcing the retirement of Mr. Gulmi and the appointment of Ms. Vaughn is attached hereto as Exhibit 99.3 to this Current Report on Form 8-K.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
The following exhibits are furnished herewith:
Exhibit Number | Description | |
99.1 | Press Release dated December 5, 2014, issued by Genesco Inc. | |
99.2 | Genesco Inc. Third Fiscal Quarter Ended November 1, 2014 Chief Financial Officer’s Commentary | |
99.3 | Press Release dated December 5, 2014, issued by Genesco Inc. | |
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 5, 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 December 5, 2014 | |||
99.2 | Genesco Inc. Third Fiscal Quarter Ended November 1, 2014 Chief Financial Officer’s Commentary | |||
99.3 | Press Release dated December 5, 2014 | |||
EXHIBIT 99.1
Financial Contact: James S. Gulmi (615) 367-8325
Media Contact: Claire S. McCall (615) 367-8283
GENESCO REPORTS THIRD QUARTER FISCAL 2015 RESULTS
-Revises Fiscal 2015 Outlook-
NASHVILLE, Tenn., Dec. 5, 2014 --- Genesco Inc. (NYSE:GCO) today reported results for the third quarter ended November 1, 2014. In a separate press release issued today, the Company announced that James S. Gulmi plans to retire from the role of chief financial officer at the end of the fiscal year and that he will be succeeded as chief financial officer by Mimi E. Vaughn, currently the Company’s Senior Vice President-Strategy and Shared Services.
Earnings from continuing operations for the third quarter of Fiscal 2015 were $28.8 million, or $1.21 per diluted share, compared to earnings from continuing operations of $27.8 million, or $1.18 per diluted share, for the third quarter ended November 2, 2013. Fiscal 2015 third quarter results reflect pretax items of $2.0 million, or $0.07 per diluted share after tax, including $1.0 million related to deferred purchase price payments in connection with the acquisition of Schuh Group Limited; and $1.0 million in network intrusion expenses and asset impairment charges. They also reflect the favorable resolution of formerly uncertain tax positions taken by Schuh at the time of the acquisition, resulting in the write-off of an indemnification asset of $7.1 million and the reversal of a corresponding FIN 48 provision, with essentially no net after-tax effect on earnings for the quarter. Fiscal 2014 third quarter results reflect pretax items of $8.5 million, or $0.25 per diluted share after tax, including $4.0 million of expenses related to the change in accounting for deferred bonuses, $3.0 million related to deferred purchase price payments in connection with the acquisition of Schuh Group Limited; and $1.5 million for network intrusion expenses, asset impairment charges and other legal matters.
Adjusted for the items described above in both periods, earnings from continuing operations were $30.3 million, or $1.28 per diluted share, for the third quarter of Fiscal 2015, compared to earnings from continuing operations of $33.8 million, or $1.43 per diluted share, for the third quarter of Fiscal 2014. For consistency with Fiscal 2015'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 third quarter of Fiscal 2015 increased 8% to $723 million from $666 million in the third quarter of Fiscal 2014. Consolidated third quarter 2015 comparable sales, including same store sales and comparable e-commerce and catalog sales, increased 3%, with a 6% increase in the Journeys Group, a 1% increase in the Lids Sports Group, and flat comparable sales in the Schuh and Johnston & Murphy Groups.
Robert J. Dennis, chairman, president and chief executive officer of Genesco, said, “We delivered solid top-line growth in the third quarter, driven by better than expected sales in the Journeys Group. Sales in our other divisions, except for the Lids Sports Group, were essentially on plan. At the Lids Sports Group, lower than planned sales caused negative expense leverage and lower gross margins, resulting in a shortfall in earnings that was not offset by the other divisions’ performance.
EXHIBIT 99.1
“The fourth quarter has started off well, with consolidated comparable sales up 9% through December 2, 2014.”
Dennis also discussed the Company’s updated outlook. “Based on our third quarter performance and expectations for additional margin pressure in the Lids Sports Group in the fourth quarter, we are revising our full year outlook. We now expect adjusted diluted earnings per share to be in the range of $4.75 to $4.85, compared to Fiscal 2014's adjusted earnings per share of $5.09, down from our previously issued guidance of $5.10 to $5.20. Consistent with our previous guidance, these expectations do not include non-cash asset impairments and other charges, partially offset by a gain on a lease termination in the first quarter this year, which we estimate will be in the range of $2.9 million to $3.4 million pretax, or $0.08 to $0.09 per share, after tax, in Fiscal 2015. These expectations also do not reflect a $5.7 million, or $0.15 per diluted share, change in the first quarter related to the change in accounting for bonus awards. Finally, the expected earnings per share do not reflect compensation expense associated with the Schuh deferred purchase price as described above, which is currently estimated at approximately $7.3 million, or $0.31 per diluted share, for the full year. This guidance assumes a comparable sales increase 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 continue to be confident in the long-term outlook for our Company and believe the actions we are taking to improve our earnings power will begin to yield positive results next year.”
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 December 5, 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 (including, without limitation, sales, expenses, margins and earnings) and all other statements not addressing solely historical facts or present conditions. Actual results could vary materially from the expectations reflected in these statements. A number of factors could cause differences. These include adjustments to estimates 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; the effectiveness of our omnichannel initiatives, 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; changes in the timing of holidays or in the onset of seasonal weather affecting period-to-period sales comparisons; and the performance of athletic teams, the participants in major sporting events
EXHIBIT 99.1
such as the Super Bowl and World Series, developments with respect to certain individual athletes, and other sports-related events or changes that may affect period-to-period comparisons in the Company’s Lids Sports Group retail business. 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 2,830 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, Schuh, Schuh Kids, Lids, Locker Room by Lids, Lids Clubhouse, Johnston & Murphy, and on internet websites www.journeys.com, www.journeyskidz.com, www.shibyjourneys.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, 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 Trask brand, the licensed Dockers brand, SureGrip, and other brands. For more information on Genesco and its operating divisions, please visit www.genesco.com.
GENESCO INC. | |||||||||||||||
Consolidated Earnings Summary | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
November 1, | November 2, | November 1, | November 2, | ||||||||||||
In Thousands | 2014 | 2013 | 2014 | 2013 | |||||||||||
Net sales | $ | 722,915 | $ | 666,332 | $ | 1,967,214 | $ | 1,832,466 | |||||||
Cost of sales | 364,426 | 334,171 | 991,036 | 919,060 | |||||||||||
Selling and administrative expenses* | 310,893 | 283,702 | 894,469 | 829,506 | |||||||||||
Asset impairments and other, net | 1,036 | 1,480 | 1,347 | (4,331 | ) | ||||||||||
Earnings from operations | 46,560 | 46,979 | 80,362 | 88,231 | |||||||||||
Indemnification asset write-off | 7,050 | — | 7,050 | — | |||||||||||
Interest expense, net | 891 | 1,190 | 2,374 | 3,369 | |||||||||||
Earnings from continuing operations | |||||||||||||||
before income taxes | 38,619 | 45,789 | 70,938 | 84,862 | |||||||||||
Income tax expense | 9,869 | 17,993 | 23,322 | 34,092 | |||||||||||
Earnings from continuing operations | 28,750 | 27,796 | 47,616 | 50,770 | |||||||||||
Provision for discontinued operations | (88 | ) | (46 | ) | (287 | ) | (270 | ) | |||||||
Net Earnings | $ | 28,662 | $ | 27,750 | $ | 47,329 | $ | 50,500 | |||||||
*Includes $1.0 million and $6.3 million, respectively, in deferred payments related to the Schuh acquisition for the third quarter and first nine months ended November 1, 2014, respectively, and $3.0 million and $8.7 million for the third quarter and first nine months ended November 2, 2013, respectively.
Earnings Per Share Information | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
November 1, | November 2, | November 1, | November 2, | ||||||||||||
In Thousands (except per share amounts) | 2014 | 2013 | 2014 | 2013 | |||||||||||
Preferred dividend requirements | $ | — | $ | — | $ | — | $ | 33 | |||||||
Average common shares - Basic EPS | 23,602 | 23,329 | 23,489 | 23,299 | |||||||||||
Basic earnings per share: | |||||||||||||||
From continuing operations | $ | 1.22 | $ | 1.19 | $ | 2.03 | $ | 2.18 | |||||||
Net earnings | $ | 1.21 | $ | 1.19 | $ | 2.01 | $ | 2.17 | |||||||
Average common and common | |||||||||||||||
equivalent shares - Diluted EPS | 23,760 | 23,604 | 23,691 | 23,619 | |||||||||||
Diluted earnings per share: | |||||||||||||||
From continuing operations | $ | 1.21 | $ | 1.18 | $ | 2.01 | $ | 2.15 | |||||||
Net earnings | $ | 1.21 | $ | 1.18 | $ | 2.00 | $ | 2.14 | |||||||
GENESCO INC. | |||||||||||||||
Consolidated Earnings Summary | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
November 1, | November 2, | November 1, | November 2, | ||||||||||||
In Thousands | 2014 | 2013 | 2014 | 2013 | |||||||||||
Sales: | |||||||||||||||
Journeys Group | $ | 303,781 | $ | 281,093 | $ | 802,742 | $ | 760,707 | |||||||
Schuh Group | 101,959 | 92,556 | 283,005 | 242,988 | |||||||||||
Lids Sports Group | 220,038 | 199,154 | 608,621 | 569,515 | |||||||||||
Johnston & Murphy Group | 65,965 | 61,689 | 184,357 | 173,372 | |||||||||||
Licensed Brands | 30,981 | 31,630 | 87,735 | 84,854 | |||||||||||
Corporate and Other | 191 | 210 | 754 | 1,030 | |||||||||||
Net Sales | $ | 722,915 | $ | 666,332 | $ | 1,967,214 | $ | 1,832,466 | |||||||
Operating Income (Loss): | |||||||||||||||
Journeys Group | $ | 35,047 | $ | 32,268 | $ | 61,544 | $ | 56,198 | |||||||
Schuh Group (1) | 3,949 | 1,945 | (1,389 | ) | (4,131 | ) | |||||||||
Lids Sports Group | 8,606 | 11,996 | 25,217 | 35,517 | |||||||||||
Johnston & Murphy Group | 4,505 | 4,833 | 8,577 | 10,432 | |||||||||||
Licensed Brands | 3,082 | 4,112 | 8,476 | 8,504 | |||||||||||
Corporate and Other (2) | (8,629 | ) | (8,175 | ) | (22,063 | ) | (18,289 | ) | |||||||
Earnings from operations | 46,560 | 46,979 | 80,362 | 88,231 | |||||||||||
Indemnification asset write-off | 7,050 | — | 7,050 | — | |||||||||||
Interest, net | 891 | 1,190 | 2,374 | 3,369 | |||||||||||
Earnings from continuing operations | |||||||||||||||
before income taxes | 38,619 | 45,789 | 70,938 | 84,862 | |||||||||||
Income tax expense | 9,869 | 17,993 | 23,322 | 34,092 | |||||||||||
Earnings from continuing operations | 28,750 | 27,796 | 47,616 | 50,770 | |||||||||||
Provision for discontinued operations | (88 | ) | (46 | ) | (287 | ) | (270 | ) | |||||||
Net Earnings | $ | 28,662 | $ | 27,750 | $ | 47,329 | $ | 50,500 | |||||||
(1)Includes $1.0 million and $6.3 million, respectively, in deferred payments related to the Schuh acquisition for the third quarter and first nine months ended November 1, 2014, respectively, and $3.0 million and $8.7 million for the third quarter and first nine months ended November 2, 2013, respectively.
(2)Includes a $1.0 million charge in the third quarter of Fiscal 2015 which includes $0.6 million for network intrusion expenses and $0.4 million for asset impairments. Includes a $1.3 million charge for the first nine months of Fiscal 2015 which includes a $3.3 million gain on a lease termination, partially offset by $2.4 million for network intrusion expenses, $1.6 million for asset impairments and $0.6 million for other legal matters. Includes a $1.5 million charge in the third quarter of Fiscal 2014 which includes $0.8 million for network intrusion expenses, $0.4 million for asset impairments and $0.3 million for other legal matters. Includes $4.3 million income for the first nine months of Fiscal 2014 which includes an $8.3 million gain on a lease termination, partially offset by $1.8 million for asset impairments, $1.4 million for network intrusion expenses and $0.8 million for other legal matters.
GENESCO INC. | |||||||
Consolidated Balance Sheet | |||||||
November 1, | November 2, | ||||||
In Thousands | 2014 | 2013 | |||||
Assets | |||||||
Cash and cash equivalents | $ | 38,026 | $ | 32,250 | |||
Accounts receivable | 71,796 | 64,235 | |||||
Inventories | 737,577 | 694,256 | |||||
Other current assets | 83,653 | 78,820 | |||||
Total current assets | 931,052 | 869,561 | |||||
Property and equipment | 314,664 | 268,985 | |||||
Other non-current assets | 423,529 | 407,257 | |||||
Total Assets | $ | 1,669,245 | $ | 1,545,803 | |||
Liabilities and Equity | |||||||
Accounts payable | $ | 248,782 | $ | 265,067 | |||
Current portion long-term debt | 35,347 | 5,596 | |||||
Other current liabilities | 200,593 | 139,324 | |||||
Total current liabilities | 484,722 | 409,987 | |||||
Long-term debt | 79,688 | 92,361 | |||||
Other long-term liabilities | 134,177 | 181,857 | |||||
Equity | 970,658 | 861,598 | |||||
Total Liabilities and Equity | $ | 1,669,245 | $ | 1,545,803 | |||
GENESCO INC. | ||||||||||||||||||||||||||
Retail Units Operated - Nine Months Ended November 1, 2014 | ||||||||||||||||||||||||||
Balance | Acqui- | Balance | Acqui- | Balance | ||||||||||||||||||||||
2/2/2013 | sitions | Open | Close | 2/1/2014 | sitions | Open | Close | 11/1/2014 | ||||||||||||||||||
Journeys Group | 1,157 | — | 39 | 28 | 1,168 | — | 26 | 11 | 1,183 | |||||||||||||||||
Journeys | 820 | — | 20 | 13 | 827 | — | 14 | 4 | 837 | |||||||||||||||||
Underground by Journeys | 130 | — | — | 13 | 117 | — | — | 4 | 113 | |||||||||||||||||
Journeys Kidz | 156 | — | 19 | 1 | 174 | — | 12 | 2 | 184 | |||||||||||||||||
Shi by Journeys | 51 | — | — | 1 | 50 | — | — | 1 | 49 | |||||||||||||||||
Schuh Group | 92 | — | 29 | 22 | 99 | — | 11 | 4 | 106 | |||||||||||||||||
Schuh UK* | 70 | — | 29 | 9 | 90 | — | 10 | 4 | 96 | |||||||||||||||||
Schuh ROI | 9 | — | — | — | 9 | — | 1 | — | 10 | |||||||||||||||||
Schuh Concessions* | 13 | — | — | 13 | — | — | — | — | — | |||||||||||||||||
Lids Sports Group** | 1,053 | 15 | 102 | 37 | 1,133 | 56 | 215 | 27 | 1,377 | |||||||||||||||||
Johnston & Murphy Group | 157 | — | 13 | 2 | 168 | — | 8 | 5 | 171 | |||||||||||||||||
Shops | 102 | — | 6 | 2 | 106 | — | 3 | 3 | 106 | |||||||||||||||||
Factory Outlets | 55 | — | 7 | — | 62 | — | 5 | 2 | 65 | |||||||||||||||||
Total Retail Units | 2,459 | 15 | 183 | 89 | 2,568 | 56 | 260 | 47 | 2,837 | |||||||||||||||||
Permanent Units* | 2,446 | 15 | 173 | 69 | 2,565 | 56 | 260 | 44 | 2,837 | |||||||||||||||||
Retail Units Operated - Three Months Ended November 1, 2014 | |||||||||||||||
Balance | Acqui- | Balance | |||||||||||||
8/2/2014 | sitions | Open | Close | 11/1/2014 | |||||||||||
Journeys Group | 1,172 | — | 14 | 3 | 1,183 | ||||||||||
Journeys | 829 | — | 9 | 1 | 837 | ||||||||||
Underground by Journeys | 115 | — | — | 2 | 113 | ||||||||||
Journeys Kidz | 179 | — | 5 | — | 184 | ||||||||||
Shi by Journeys | 49 | — | — | — | 49 | ||||||||||
Schuh Group | 99 | — | 7 | — | 106 | ||||||||||
Schuh UK* | 90 | — | 6 | — | 96 | ||||||||||
Schuh ROI | 9 | — | 1 | — | 10 | ||||||||||
Lids Sports Group** | 1,233 | 37 | 114 | 7 | 1,377 | ||||||||||
Johnston & Murphy Group | 170 | — | 2 | 1 | 171 | ||||||||||
Shops | 106 | — | 1 | 1 | 106 | ||||||||||
Factory Outlets | 64 | — | 1 | — | 65 | ||||||||||
Total Retail Units | 2,674 | 37 | 137 | 11 | 2,837 | ||||||||||
Permanent Units* | 2,674 | 37 | 137 | 11 | 2,837 | ||||||||||
*Excludes Schuh Concessions and temporary "pop-up" locations.
**Includes 190 Locker Room by Lids in Macy's stores as of November 1, 2014.
Comparable Sales (including same store and comparable direct sales) | |||||||||||
Three Months Ended | Nine Months Ended | ||||||||||
November 1, | November 2, | November 1, | November 2, | ||||||||
2014 | 2013 | 2014 | 2013 | ||||||||
Journeys Group | 6 | % | (2 | )% | 4 | % | (2 | )% | |||
Schuh Group | — | % | (10 | )% | 0 | % | (9 | )% | |||
Lids Sports Group | 1 | % | 5 | % | — | % | (1 | )% | |||
Johnston & Murphy Group | — | % | 7 | % | — | % | 7 | % | |||
Total Comparable Sales | 3 | % | (1 | )% | 2 | % | (2 | )% | |||
Schedule B
Genesco Inc. | ||||||||||||
Adjustments to Reported Earnings from Continuing Operations | ||||||||||||
Three Months Ended November 1, 2014 and November 2, 2013 | ||||||||||||
Three | Impact on | Three | Impact on | |||||||||
Months | Diluted | Months | Diluted | |||||||||
In Thousands (except per share amounts) | Oct 2014 | EPS | Oct 2013 | EPS | ||||||||
Earnings from continuing operations, as reported | $ | 28,750 | $ | 1.21 | $ | 27,796 | $ | 1.18 | ||||
Adjustments: (1) | ||||||||||||
Impairment charges | 244 | 0.01 | 215 | 0.01 | ||||||||
Deferred payment - Schuh acquisition | 1,017 | 0.04 | 2,949 | 0.12 | ||||||||
Indemnification asset write-off | 7,050 | 0.3 | — | — | ||||||||
Change in accounting for bonus awards | — | — | 2,541 | 0.11 | ||||||||
Other legal matters | 38 | — | 169 | 0.01 | ||||||||
Network intrusion expenses | 388 | 0.02 | 536 | 0.02 | ||||||||
Higher (lower) effective tax rate | (7,185 | ) | (0.30 | ) | (382 | ) | (0.02 | ) | ||||
Adjusted earnings from continuing operations (2) | $ | 30,302 | $ | 1.28 | $ | 33,824 | $ | 1.43 | ||||
(1) All adjustments are net of tax where applicable. The tax rate for the third quarter of Fiscal 2015 is 36.4% excluding a FIN 48 discrete item of less than $0.1 million. The tax rate for the third quarter of Fiscal 2014 is 37.6% excluding a FIN 48 discrete item of less than $0.1 million.
(2) EPS reflects 23.8 million and 23.6 million share count for Fiscal 2015 and 2014, 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.
Schedule B
Genesco Inc. | |||||||||
Adjustments to Reported Operating Income | |||||||||
Three Months Ended November 1, 2014 and November 2, 2013 | |||||||||
Three Months Ended November 1, 2014 | |||||||||
Operating | Bonus Adj | Adj Operating | |||||||
In Thousands | Income | and Other | Income | ||||||
Journeys Group | $ | 35,047 | $ | — | $ | 35,047 | |||
Schuh Group* | 3,949 | 1,017 | 4,966 | ||||||
Lids Sports Group | 8,606 | — | 8,606 | ||||||
Johnston & Murphy Group | 4,505 | — | 4,505 | ||||||
Licensed Brands | 3,082 | — | 3,082 | ||||||
Corporate and Other | (8,629 | ) | 1,036 | (7,593 | ) | ||||
Total Operating Income | $ | 46,560 | $ | 2,053 | $ | 48,613 | |||
*Schuh Group adjustments include $1.0 million in deferred purchase price payments.
Three Months Ended November 2, 2013 | |||||||||
Operating | Bonus Adj | Adj Operating | |||||||
In Thousands | Income | and Other | Income | ||||||
Journeys Group | $ | 32,268 | $ | 968 | $ | 33,236 | |||
Schuh Group* | 1,945 | 3,903 | 5,848 | ||||||
Lids Sports Group | 11,996 | — | 11,996 | ||||||
Johnston & Murphy Group | 4,833 | 10 | 4,843 | ||||||
Licensed Brands | 4,112 | 4 | 4,116 | ||||||
Corporate and Other | (8,175 | ) | 3,598 | (4,577 | ) | ||||
Total Operating Income | $ | 46,979 | $ | 8,483 | $ | 55,462 | |||
*Schuh Group adjustments include $3.0 million in deferred purchase price payments.
Schedule B
Genesco Inc. | ||||||||||||
Adjustments to Reported Earnings from Continuing Operations | ||||||||||||
Nine Months Ended November 1, 2014 and November 2, 2013 | ||||||||||||
Nine | Impact on | Nine | Impact on | |||||||||
Months | Diluted | Months | Diluted | |||||||||
In Thousands (except per share amounts) | Oct 2014 | EPS | Oct 2013 | EPS | ||||||||
Earnings from continuing operations, as reported | $ | 47,616 | $ | 2.01 | $ | 50,770 | $ | 2.15 | ||||
Adjustments: (1) | ||||||||||||
Impairment charges | 1,023 | 0.04 | 1,108 | 0.05 | ||||||||
Deferred payment - Schuh acquisition | 6,346 | 0.27 | 8,651 | 0.36 | ||||||||
Indemnification asset write-off | 7,050 | 0.30 | — | — | ||||||||
Gain on lease termination | (2,104 | ) | (0.09 | ) | (2,077 | ) | (0.09 | ) | ||||
Change in accounting for bonus awards | 3,575 | 0.15 | 10,319 | 0.44 | ||||||||
Other legal matters | 437 | 0.02 | 471 | 0.02 | ||||||||
Network intrusion expenses | 1,509 | 0.06 | 896 | 0.04 | ||||||||
Higher (lower) effective tax rate | (7,838 | ) | (0.33 | ) | (877 | ) | (0.04 | ) | ||||
Adjusted earnings from continuing operations (2) | $ | 57,614 | $ | 2.43 | $ | 69,261 | $ | 2.93 | ||||
(1) All adjustments are net of tax where applicable. The tax rate for the first nine months of Fiscal 2015 is 36.9% excluding a FIN 48 discrete item of less than $0.1 million. The tax rate for the first nine months of Fiscal 2014 is 37.3% excluding a FIN 48 discrete item of $0.1 million.
(2) EPS reflects 23.7 million and 23.6 million share count for Fiscal 2015 and 2014, 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.
Schedule B
Genesco Inc. | |||||||||
Adjustments to Reported Operating Income | |||||||||
Nine Months Ended November 1, 2014 and November 2, 2013 | |||||||||
Nine Months Ended November 1, 2014 | |||||||||
Operating | Bonus Adj | Adj Operating | |||||||
In Thousands | Income | and Other | Income | ||||||
Journeys Group | $ | 61,544 | $ | 4,919 | $ | 66,463 | |||
Schuh Group* | (1,389 | ) | 6,346 | 4,957 | |||||
Lids Sports Group | 25,217 | — | 25,217 | ||||||
Johnston & Murphy Group | 8,577 | 25 | 8,602 | ||||||
Licensed Brands | 8,476 | — | 8,476 | ||||||
Corporate and Other | (22,063 | ) | 2,082 | (19,981 | ) | ||||
Total Operating Income | $ | 80,362 | $ | 13,372 | $ | 93,734 | |||
*Schuh Group adjustments include $6.3 million in deferred purchase price payments.
Nine Months Ended November 2, 2013 | |||||||||
Operating | Bonus Adj | Adj Operating | |||||||
In Thousands | Income | and Other | Income | ||||||
Journeys Group | $ | 56,198 | $ | 7,028 | $ | 63,226 | |||
Schuh Group* | (4,131 | ) | 12,595 | 8,464 | |||||
Lids Sports Group | 35,517 | 1,676 | 37,193 | ||||||
Johnston & Murphy Group | 10,432 | 23 | 10,455 | ||||||
Licensed Brands | 8,504 | — | 8,504 | ||||||
Corporate and Other | (18,289 | ) | 4,441 | (13,848 | ) | ||||
Total Operating Income | $ | 88,231 | $ | 25,763 | $ | 113,994 | |||
*Schuh Group adjustments include $8.7 million in deferred purchase price payments.
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 | $ | 102,079 | $ | 4.31 | $ | 99,397 | $ | 4.20 | ||||
Adjustments: (1) | ||||||||||||
Asset impairment and other charges | 1,830 | 0.08 | 2,146 | 0.09 | ||||||||
Change in accounting for bonus awards | 3,575 | 0.15 | 3,575 | 0.15 | ||||||||
Deferred payment - Schuh acquisition | 7,346 | 0.31 | 7,346 | 0.31 | ||||||||
Adjusted forecasted earnings from continuing operations (2) | $ | 114,830 | $ | 4.85 | $ | 112,464 | $ | 4.75 | ||||
(1) All adjustments are net of tax where applicable. The forecasted tax rate for Fiscal 2015 is approximately 36.9% excluding a FIN 48 discrete item of $0.1 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 2015
THIRD QUARTER ENDED NOVEMBER 1, 2014
Consolidated Results
Third Quarter
Sales
Third quarter net sales increased 8.5% to $723 million in Fiscal 2015 from $666 million in Fiscal 2014. Comparable sales for Genesco and each of its business segments, including both same store sales and comparable sales from the Company’s direct (e-commerce and catalog) businesses for the quarter, were as follows:
Comparable Sales | ||
3rd Qtr | 3rd Qtr | |
Same Store Sales: | FY15 | FY14 |
Journeys Group | 6% | (2)% |
Schuh Group | (2)% | (9)% |
Lids Sports Group | 1% | 3% |
Johnston & Murphy Group | 1% | 8% |
Total Genesco | 3% | (1)% |
3rd Qtr | 3rd Qtr | |
Comparable Direct Sales: | FY15 | FY14 |
Journeys Group | 22% | 6% |
Schuh Group | 16% | (11)% |
Lids Sports Group | 3% | 40% |
Johnston & Murphy Group | (6)% | 6% |
Total Genesco | 9% | 8% |
3rd Qtr | 3rd Qtr | |
Same Store and Comparable Direct Sales: | FY15 | FY14 |
Journeys Group | 6% | (2)% |
Schuh Group | 0% | (10)% |
Lids Sports Group | 1% | 5% |
Johnston & Murphy Group | 0% | 7% |
Total Genesco | 3% | (1)% |
Through December 2, 2014, fourth quarter same store sales increased 7% and direct sales increased 22% on a comparable basis; and combined comparable sales increased 9%.
Gross Margin
Third quarter gross margin was 49.6% this year compared with 49.8% last year, primarily reflecting lower gross margins in Schuh, Lids, and Johnston & Murphy.
Exhibit 99.2
SG&A
Selling and administrative expense for the third quarter increased to 43.0% of sales from 42.6% for the same period last year. Included in expenses this quarter is $1.0 million, or $0.04 per diluted share, in expense related to deferred purchase price in the Schuh acquisition. A deferred purchase price cash payment of £15 million was paid in June 2014. The remaining deferred purchase price cash payment of £10 million is due in June 2015 if the payees remain employed until the payment date. As we have discussed before, because of the retention feature, U.S. GAAP requires deferred purchase price payments to be expensed as compensation. Last year, expenses in the quarter included $3.0 million, or $0.12 per diluted share, of deferred purchase price. Last year’s expenses also included $4.0 million, or $0.11 per diluted share, recognized in connection with a change to the accounting treatment of “banked” bonuses under the Company’s EVA Incentive Plan. During the first quarter of this year, an amendment to the EVA Incentive Plan had the result of restoring the accounting treatment of banked bonuses that had been in effect prior to the accounting change last year. With the Plan amendment, the Company recorded a one-time charge of $5.7 million in the first quarter this year, representing the total of all “banked” bonuses as of the date of the amendment. Consequently, SG&A expense for the third quarter this year does not include any amortization of banked bonuses. Excluding the deferred purchase price expense from both periods and the effects of the bonus-related accounting change from last year, SG&A as a percent of sales increased to 42.9% from 41.5% 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. Accounting for 70 basis points of the year-over-year increase in SG&A expense as a percent of sales is the effect of a small positive accrual for EVA bonuses in the quarter this year compared to a large reversal of previous EVA bonus accrual in the third quarter last year.
Also included in third quarter SG&A expense, but not eliminated from the adjusted expense, is $4.2 million, or $0.14 per diluted share, this year, and $3.9 million, or $0.13 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 £28 million including payroll taxes 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, there have been quarterly accruals for a portion of this payment, reflecting an estimate of the probability, based on Schuh’s performance, that it will be earned. We anticipate that the final contingent bonus accrual will occur in the fourth quarter of the current fiscal year.
Asset Impairment and Other Items
The asset impairment and other charge of $1.0 million for the third quarter of Fiscal 2015 included network intrusion expenses of $0.6 million and asset impairments of $0.4 million. Last year’s third quarter asset impairment and other charge of $1.5 million included a $0.8 million charge for network intrusion expenses, a $0.4 million charge for asset impairments, and a $0.3 million charge for other legal matters.
The asset impairment and other charge, the deferred purchase price expense, and the effects of the bonus-related accounting change referenced above are collectively referred to as “Excluded Items” in the discussion below.
Operating Income
Genesco’s operating income for the third quarter was $46.6 million this year compared with $47.0 million last year. Adjusted for the Excluded Items in both periods, operating income for the third quarter was
Exhibit 99.2
$48.6 million this year compared with $55.5 million last year. Adjusted operating margin was 6.7% of sales in the third quarter this year and 8.3% 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.
Interest Expense
Net interest expense for the quarter was $0.9 million, compared with $1.2 million for the same period last year.
Pretax Earnings
Pretax earnings for the quarter were $38.6 million this year and $45.8 million last year. Included in this year’s pretax earnings is an indemnification asset write-off of $7.1 million related to formerly uncertain tax positions that were taken by Schuh at the time of the purchase by Genesco, which were favorably resolved during the quarter. (The favorable resolution also resulted in the reversal of a corresponding FIN 48 provision, discussed below, under the heading “Taxes.”) Adjusted for the Excluded Items in both years and for the indemnification asset write-off this year, pretax earnings for the quarter were $47.7 million this year compared to $54.3 million 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.
Taxes
The effective tax rate for the quarter was 25.6% this year compared to 39.3% last year. The adjusted tax rate, reflecting the exclusion of the Excluded Items and the reversal of the FIN 48 provision related to the uncertain tax positions of Schuh covered by the indemnification asset discussed above, was 36.5% this year and 37.7% last year. The net impact was nearly zero between the indemnification asset write-off and the adjustment of the provision for the previously uncertain tax position.
Earnings From Continuing Operations After Taxes
Earnings from continuing operations were $28.8 million, or $1.21 per diluted share, in the third quarter this year, compared to earnings of $27.8 million, or $1.18 per diluted share, in the third quarter last year. Adjusted for the Excluded Items in both periods and the indemnification asset write-off, third quarter earnings from continuing operations were $30.3 million, or $1.28 per diluted share this year, compared with $33.8 million, or $1.43 per diluted share, 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 third quarter increased 10.5% to $220 million from $199 million last year.
Same store sales for the quarter increased 1% this year compared to 3% last year. Comparable direct sales increased 3% compared to 40% last year. Comparable sales, including both same store and comparable direct sales, increased 1% this year compared to 5% last year. Through December 2, 2014, same store sales for the fourth quarter increased 2%; e-commerce sales increased 6%; and combined comparable sales increased 2%.
Exhibit 99.2
The Group’s gross margin as a percent of sales decreased 100 basis points due primarily to increased promotional activity, increased shipping and warehouse expense and changes in sales mix. Adjusted SG&A expense as a percent of sales increased 120 basis points from 45.5% to 46.7%, due primarily to increased occupancy expenses driven by square footage growth of more than 20% this year and increased selling salaries.
The Group’s third quarter operating income was $8.6 million, or 3.9% of sales, down from $12.0 million, or 6.0% of sales, last year.
Journeys Group
Journeys Group’s sales for the quarter increased 8.1% to $304 million from $281 million last year.
Same store sales for the Group were up 6%, compared with a 2% decrease last year; comparable direct sales increased 22% this year and 6% last year. Combined comparable sales increased 6% this year compared with a 2% decrease last year. Through December 2, 2014, same store sales for the fourth quarter increased 13%; comparable direct sales increased 20%; and combined comparable sales increased 13%.
Gross margin for the Journeys Group increased 60 basis points in the quarter due primarily to lower markdowns.
The Journeys Group’s adjusted SG&A expense increased 80 basis points as a percent of sales for the third quarter, reflecting increased bonus expenses.
The Journeys Group’s adjusted operating income for the quarter was $35.0 million, or 11.5% of sales, compared to $33.2 million, or 11.8% 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.
Schuh Group
Schuh Group’s sales in the third quarter were $102 million, compared to $93 million last year, an increase of 10.2%. Same store sales decreased 2% in the quarter compared to a 9% decrease last year; direct sales increased 16% compared to an 11% decrease last year; and total comparable sales were flat compared to a 10% decrease last year. Through December 2, 2014, same store sales for the fourth quarter increased 3%; comparable direct sales increased 39%; and total comparable sales increased 9%.
Schuh Group’s gross margin was down 100 basis points in the quarter due primarily to increased markdowns and shipping and warehouse expenses. Schuh Group’s adjusted SG&A expense increased 40 basis points due to a higher bonus accrual in the third quarter this year compared to the same period last year.
Schuh Group’s adjusted operating income was $5.0 million, or 4.9% of sales compared with $5.8 million, or 6.3% 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.
Johnston & Murphy Group
Johnston & Murphy Group’s third quarter sales increased 6.9%, to $66 million, compared to $62 million in the third quarter last year.
Exhibit 99.2
Same store sales increased 1%; direct sales decreased 6%; and combined comparable sales were flat on top of a 7% increase last year. Direct sales represented about 8% of Johnston & Murphy Group’s sales this quarter. Through December 2, 2014, same store sales for the fourth quarter decreased 1%; e-commerce and catalog sales increased 22%; and combined comparable sales increased 3%.
Johnston & Murphy’s gross margin for the Group decreased 210 basis points in the quarter primarily due to increased markdowns and shipping and warehouse expenses. SG&A expense as a percent of sales decreased by 110 basis points, due primarily to decreased bonus and advertising expenses. The Group’s adjusted operating income was $4.5 million or 6.8% of sales, compared to operating income of $4.8 million, or 7.8% 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.
Licensed Brands
Licensed Brands’ sales decreased 2.1% to $31 million in the third quarter this year, compared to $32 million in the third quarter last year. Gross margin was up 160 basis points, due primarily to changes in product mix.
SG&A expense as a percent of sales was up 460 basis points primarily due to license agreement expense and increased bonus, shipping and warehouse and advertising expenses.
Adjusted operating income for the quarter was $3.1 million or 9.9% of sales, compared with $4.1 million, or 13.0% 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 $8.6 million or 1.2% of sales, compared with $8.2 million or 1.2% of sales last year. Adjusted for the applicable Excluded Items, corporate expenses were $7.6 million this year compared to $4.6 million last year, primarily due to increased bonus expense as a result of the reversal of bonus accruals 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.
Balance Sheet
Cash
Cash at the end of the third quarter was $38 million compared with $32 million last year. We ended the quarter with $115 million in debt, compared with $98 million last year. This year’s debt included $53 million in U.K. debt and $62 million in U.S. revolver borrowings. Last year’s third quarter included $79 million in revolver borrowings and $19 million in U.K. debt.
Inventory
Inventories increased 6% in the third quarter on a year-over-year basis. Retail inventory per square foot decreased 3%.
Equity
Equity was $971 million at quarter-end, compared with $862 million last year.
Exhibit 99.2
Capital Expenditures and Store Count
For the third quarter, capital expenditures were $33 million and depreciation and amortization was $19 million. During the quarter, we acquired 37 stores, opened 41 new stores and closed 11 stores. Excluding Locker Room by Lids in Macy’s stores, we ended the quarter with 2,647 stores compared with 2,513 stores at the end of the third quarter last year, or an increase of 5%. During the quarter, we opened 96 Macy’s locations. Square footage increased 9% on a year-over-year basis, including the Macy’s locations. The store count as of November 1, 2014 included:
Lids stores (including 117 stores in Canada) | 941 |
Lids Locker Room Stores (including 37 stores in Canada) | 213 |
Lids Clubhouse stores | 33 |
Journeys stores (including 34 stores in Canada) | 837 |
Journeys Kidz stores | 184 |
Shï by Journeys stores | 49 |
Underground by Journeys stores | 113 |
Schuh Stores (including 6 Kids stores) | 106 |
Johnston & Murphy Stores and Factory stores (including 7 stores in Canada) | 171 |
Total Stores | 2,647 |
Locker Room by Lids in Macy’s stores | 190 |
Total Stores and Macy’s Locations | 2,837 |
Exhibit 99.2
For Fiscal 2015, we are forecasting capital expenditures of approximately $136 million and depreciation and amortization of about $74 million. Our current store openings and closing plans by chain are as follows:
Actual | Projected | Projected | Projected | Projected | ||
Jan 2014 | New | Acquisitions | Conversions | Closings | Jan 2015 | |
Journeys Group | 1,168 | 35 | (13) | 1,190 | ||
Journeys stores (U.S.) | 796 | 12 | (5) | 803 | ||
Journeys stores (Canada) | 31 | 4 | 0 | 35 | ||
Journeys Kidz stores | 174 | 19 | (2) | 191 | ||
Shï by Journeys | 50 | 0 | (1) | 49 | ||
Underground by Journeys | 117 | 0 | (5) | 112 | ||
Johnston & Murphy Group | 168 | 8 | (6) | 170 | ||
Schuh Group | 96 | 13 | (1) | 108 | ||
Schuh Stores | 92 | 11 | (1) | 102 | ||
Schuh Kids | 4 | 2 | 0 | 6 | ||
Lids Sports Group | 1,133 | 218 | 56 | 0 | (27) | 1,380 |
Lids hat stores (U.S.) | 820 | 23 | 1 | (18) | 826 | |
Lids hat stores (Canada) | 110 | 9 | (2) | 117 | ||
Lids Locker Room, Locker Room by Lids in Macy’s stores & Lids Clubhouse | 203 | 186* | 56 | (1) | (7) | 437 |
Total Permanent Stores | 2,565 | 274* | 56 | 0 | (47) | 2,848 |
Schuh “pop-up” stores | 3 | 0 | 0 | 0 | (3) | 0 |
Total Stores | 2,568 | 274 | 56 | 0 | (50) | 2,848 |
*Includes 165 Locker Room by Lids in Macy’s stores
Comparable Sales Assumptions in Fiscal 2015 Guidance
Our guidance for Fiscal 2015 assumes comparable sales (including both same store sales and comparable direct sales) for the fourth quarter for each retail segment by quarter as follows:
Actual | Actual | Actual | Guidance | ||
Q1 | Q2 | Q3 | Q4 | FY15 | |
Journeys Group | 1% | 5% | 6% | 8 - 9% | 5 - 6% |
Lids Sports Group | 1% | (2%) | 1% | 1 - 2% | 0 - 1% |
Schuh Group | (1%) | 1% | 0% | 2 - 3% | 0 - 1% |
Johnston & Murphy Group | (1%) | 2% | 0% | 0 - 1% | 0 - 1% |
Total Genesco | 1% | 2% | 3% | 4 - 5% | 2 - 3% |
Exhibit 99.2
Cautionary Note Concerning Forward-Looking Statements
This presentation contains forward-looking statements, including those regarding the performance outlook for the Company and its individual businesses (including, without limitation, sales, expenses, margins and earnings) and all other statements not addressing solely historical facts or present conditions. Actual results could vary materially from the expectations reflected in these statements. A number of factors could cause differences. These include adjustments to estimates 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; the effectiveness of our omnichannel initiatives, 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; changes in the timing of holidays or in the onset of seasonal weather affecting period-to-period sales comparisons; and the performance of athletic teams, the participants in major sporting events such as the Super Bowl and World Series, developments with respect to certain individual athletes, and other sports-related events or changes that may affect period-to-period comparisons in the Company’s Lids Sports Group retail business. 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.
EXHIBIT 99.3
Financial Contact: James S. Gulmi (615) 367-8325
Media Contact: Claire S. McCall (615) 367-8283
GENESCO ANNOUNCES CHIEF FINANCIAL OFFICER
SUCCESSION PLANS
NASHVILLE, Tenn., Dec. 5, 2014 -Genesco Inc. (NYSE: GCO) announced that James S. Gulmi, senior vice president and chief financial officer, has made the decision to retire from the role of chief financial officer at the end of its current fiscal year. Gulmi, who has served as Genesco’s chief financial officer since 1986, and who joined the Company in 1971, is expected to continue as senior advisor to the Company for at least the next year. He will be succeeded as chief financial officer by Mimi E. Vaughn, the Company’s current senior vice president - strategy and shared services.
Vaughn joined Genesco as vice president - strategy and business development in 2003, was promoted to senior vice president - strategy and business development in 2006, and was named senior vice president - strategy and shared services in 2009.
Prior to joining the Company, Vaughn was executive vice president of business development and marketing and acting chief financial officer for Link2Gov Corporation in Nashville. From 1993 to 1999, she was a consultant at McKinsey & Company, based in Atlanta. During her tenure at McKinsey, Vaughn advised senior executives and board members, specializing in the consumer and retail sectors. Before joining McKinsey, Vaughn held corporate finance positions at Goldman, Sachs & Company, Wasserstein Perella & Company, Inc., and Drexel Burnham Lambert.
“Jim Gulmi’s service for 28 years as Genesco’s chief financial officer is remarkable for more than its duration. Serving with six different chief executive officers, Jim has been the constant thread running through successive chapters of a long and successful transformation of the Company into a market-leading specialty retailer. I am pleased that Jim has agreed to continue as senior advisor to the Company for at least the next year,” said Genesco’s Chairman, President and Chief Executive Officer Robert J. Dennis.
“We are fortunate to have Mimi Vaughn as a highly-qualified internal successor to Jim as chief financial officer. Mimi’s 11 years of experience at Genesco and her knowledge of our business and industry gained from her focus on strategy will serve her and the Company well in her new role. Her appointment implements a longstanding succession plan for the CFO role, which has given her and Jim time to plan a smooth transition.”
Parag Desai will succeed Vaughn as senior vice president - strategy and shared services. In this role, he will assist in the development and implementation of the Company’s strategy and will oversee
shared services functions, including information technology, corporate logistics and human resources.
Desai has more than 18 years of experience developing strategies for businesses given changes in consumer behavior, channels and technology. He spent 14 years with McKinsey & Company, including seven years as a partner. He was part of the firm's global retail leadership team and a core member of the consumer practice both in the Americas and in Australia. In addition to McKinsey, Desai has held business development and technology positions at Outpace Systems and Booz Allen & Hamilton.
Dennis added, “We are pleased to welcome Parag Desai to the Company as Mimi’s successor in the leadership of strategy and shared services. He brings a wealth of relevant experience and a fresh perspective that we look forward to drawing upon as we continue to look toward Genesco’s future.”
EXHIBIT 99.3
About Genesco Inc.
Genesco Inc., a Nashville-based specialty retailer, sells footwear, headwear, sports apparel and accessories in more than 2,830 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, Schuh, Schuh Kids, Lids, Locker Room by Lids, Lids Clubhouse, Johnston & Murphy, and on internet websites www.journeys.com, www.journeyskidz.com, www.shibyjourneys.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, 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 Trask brand, the licensed Dockers brand, SureGrip, and other brands. For more information on Genesco and its operating divisions, please visit www.genesco.com.