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 11, 2016 (March 11, 2016)
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 11, 2016, Genesco Inc. issued a press release announcing results of operations for the fiscal fourth quarter and fiscal year ended January 30, 2016. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
On March 11, 2016, 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 2016’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 11, 2016, issued by Genesco Inc. | ||
99.2 | Genesco Inc. Fourth Fiscal Quarter Ended January 30, 2016 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 11, 2016 | 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 11, 2016 | |||
99.2 | Genesco Inc. Fourth Fiscal Quarter Ended January 30, 2016 Chief Financial Officer’s Commentary | |||
Exhibit 99.1
Financial Contact: Mimi E. Vaughn (615) 367-7386
Media Contact: Claire S. McCall (615) 367-8283
GENESCO REPORTS FOURTH QUARTER FISCAL 2016 RESULTS
NASHVILLE, Tenn., March 11, 2016 --- Genesco Inc. (NYSE:GCO) today reported earnings from continuing operations for the fourth quarter ended January 30, 2016, of $46.7 million, or $2.15 per diluted share, compared to earnings from continuing operations of $51.8 million, or $2.18 per diluted share, for the fourth quarter ended January 31, 2015. Fiscal 2016 fourth quarter results reflect a pretax gain of $3.4 million, or $0.04 per diluted share after tax, including a gain on the sale of Lids Team Sports of $7.3 million, partially offset by $3.9 million of asset impairment charges, asset write-downs and network intrusion expenses. Fiscal 2015 fourth quarter results reflect pretax items of $1.9 million, or $0.12 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 $0.9 million in network intrusion expenses and asset impairment charges.
Adjusted for the items described above in both periods, earnings from continuing operations were $45.8 million, or $2.11 per diluted share, for the fourth quarter of Fiscal 2016, compared to earnings from continuing operations of $54.7 million, or $2.30 per diluted share, for the fourth quarter of Fiscal 2015. For consistency with Fiscal 2016's previously announced earnings expectations and with previously reported adjusted results for the prior year period, the Company believes that the disclosure of the results from continuing operations adjusted for these items will be useful to investors. A reconciliation of earnings and earnings per share from continuing operations in accordance with U.S. Generally Accepted Accounting Principles with the adjusted earnings and earnings per share numbers presented in this paragraph is set forth on Schedule B to this press release.
Net sales for the fourth quarter of Fiscal 2016 increased 4.4% to $932 million from $893 million in the fourth quarter of Fiscal 2015. Consolidated fourth quarter 2016 comparable sales, including same store sales and comparable e-commerce and catalog sales, increased 4%, with a 5% increase in the Journeys Group, a 3% increase in the Lids Sports Group, a 2% decrease in the Schuh Group, and a 6% increase in the Johnston & Murphy Group. Comparable sales for the Company reflected a 2% increase in same store sales and a 21% increase in e-commerce sales.
The Company also reported net sales for the year ended January 30, 2016, of $3.0 billion, an increase of 5.7% from net sales of $2.9 billion for the year ended January 31, 2015. Earnings from continuing operations for Fiscal 2016 were $97.1 million, or $4.22 per diluted share, compared to earnings from continuing operations of $99.4 million, or $4.19 per diluted share, for Fiscal 2015. Fiscal 2016 earnings reflect after-tax charges of $0.07 per diluted share, including $9.4 million in asset impairments, asset write-downs, network intrusion expenses, compensation expense associated with the Schuh deferred purchase price, and other legal matters, partially offset by a $7.3 million gain on the sale of Lids Team Sports. Fiscal 2015 earnings reflect after-tax charges of $0.55 per diluted share, including, an indemnification asset write-off, network intrusion-related expenses, compensation expense associated with the Schuh deferred purchase price, effects of the change in accounting for deferred bonuses under the EVA incentive plan, asset impairments, and other legal matters, partially offset by a gain on a lease termination.
Exhibit 99.1
Adjusted for the listed items in both years, earnings from continuing operations were $98.6 million, or $4.29 per diluted share, for Fiscal 2016, compared to earnings from continuing operations of $112.3 million, or $4.74 per diluted share, for Fiscal 2015. For consistency with previously announced earnings expectations, which did not reflect the listed items, the Company believes that disclosure of earnings from continuing operations adjusted for those items will be useful to investors. A reconciliation of the adjusted financial measures to their corresponding measures as reported pursuant to U.S. Generally Accepted Accounting Principles is included in Schedule B to this press release.
The Company repurchased a total of 2.4 million shares of common stock in Fiscal 2016 at a total cost of $145 million and an average price of $60.79 per share. These purchases included 251,000 shares repurchased in the fourth quarter at a total cost of $16 million and an average price of $63.24. Through March 4, 2016, the Company had repurchased 480,500 shares at a total cost of $31 million and an average price of $64.40 in the first quarter of Fiscal 2017.
Robert J. Dennis, chairman, president and chief executive officer of Genesco, said, “Fourth quarter earnings came in just below our guidance range as a result of gross margin pressure related to our decision to make a final, aggressive push to complete our year-long program to right-size inventory in the Lids Sports Group and similarly aggressive efforts to clear inventory after a slow Holiday selling season at Schuh. Additionally, a later start to IRS tax refunds than in the previous year reduced comparable sales at the end of the quarter. While we are disappointed with our overall results, we are encouraged by the strong performance of Journeys and Johnston & Murphy and the work we’ve done to prepare the Company for sustained, profitable growth going forward.
“Comparable sales for the first quarter through March 5, 2016 increased 3% from the same period last year, reflecting in part the impact on early February sales from the delay in receipt of income tax refunds by customers, and recovery later in the month as tax refunds began.
“Based on the projected margin recovery at Lids Sports Group combined with modest overall comparable sales growth, we expect adjusted diluted earnings per share for the fiscal year ending January 28, 2017, in the range of $4.80 to $4.90, which represents a 12% to 14% increase over Fiscal 2016’s adjusted earnings per share of $4.29. These expectations do not include expected non-cash asset impairments and other charges, estimated in the range of $6.3 million to $6.8 million pretax, or $0.19 to $0.20 per share after tax, for the full fiscal year. This guidance assumes comparable sales increases in the 1% to 2% range for the full year." A reconciliation of the adjusted financial measures cited in the guidance to their corresponding measures as reported pursuant to U.S. Generally Accepted Accounting Principles is included in Schedule B to this press release.
Dennis concluded, “We begin Fiscal 2017 in a solid position to execute our long-term strategic plans. We look forward to realizing some of the benefits of last year’s hard work in the new fiscal 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 March 11, 2016 at 7:30 a.m. (Central time), may be accessed through the Company's internet website, www.genesco.com. To listen live, please go to the website at least 15 minutes early to register, download and install any necessary software.
Exhibit 99.1
Cautionary Note Concerning Forward-Looking Statements
This release contains forward-looking statements, including those regarding the performance outlook for the Company and its individual businesses (including, without limitation, sales, expenses, margins and earnings) and all other statements not addressing solely historical facts or present conditions. Actual results could vary materially from the expectations reflected in these statements. A number of factors could cause differences. These include adjustments to estimates reflected in forward-looking statements, including the level and timing of promotional activity necessary to maintain inventories at appropriate levels; the timing and amount of non-cash asset impairments related to retail store fixed assets and intangible assets of acquired businesses; the effectiveness of the Company’s omnichannel initiatives; weakness in the consumer economy and retail industry; competition in the Company's markets; fashion trends that affect the sales or product margins of the Company's retail product offerings; changes in buying patterns by significant wholesale customers; bankruptcies or deterioration in financial condition of significant wholesale customers or the inability of wholesale customers or consumers to obtain credit; disruptions in product supply or distribution; unfavorable trends in fuel costs, foreign exchange rates, foreign labor and material costs, and other factors affecting the cost of products; the 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 release are beyond Genesco's ability to control or predict. Genesco undertakes no obligation to release publicly the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Forward-looking statements reflect the expectations of the Company at the time they are made. The Company disclaims any obligation to update such statements.
Exhibit 99.1
About Genesco Inc.
Genesco Inc., a Nashville-based specialty retailer, sells footwear, headwear, sports apparel and accessories in more than 2,850 retail stores and leased departments throughout the U.S., Canada, the United Kingdom, the Republic of Ireland and Germany, principally under the names Journeys, Journeys Kidz, Shi by Journeys, Schuh, Schuh Kids, Little Burgundy, Lids, Locker Room by Lids, Lids Clubhouse, Johnston & Murphy, and on internet websites www.journeys.com, www.journeyskidz.com, www.shibyjourneys.com, www.schuh.co.uk, www.littleburgundyshoes.com, www.johnstonmurphy.com, www.lids.com, www.lids.ca, www.lidslockerroom.com, www.lidsclubhouse.com, http://shop.neweracap.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. In addition, Genesco sells wholesale footwear under its Johnston & Murphy brand, the Trask brand, the licensed Dockers brand, G.H. Bass, 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 | ||||||||||||||
Jan. 30, | Jan. 31, | Jan. 30, | Jan. 31, | ||||||||||||
In Thousands | 2016 | 2015 | 2016 | 2015 | |||||||||||
Net sales | $ | 932,214 | $ | 892,630 | $ | 3,022,234 | $ | 2,859,844 | |||||||
Cost of sales | 509,058 | 468,397 | 1,578,768 | 1,459,433 | |||||||||||
Selling and administrative expenses* | 348,782 | 336,395 | 1,284,322 | 1,230,864 | |||||||||||
Asset impairments and other, net | 3,923 | 934 | 7,893 | 2,281 | |||||||||||
Earnings from operations | 70,451 | 86,904 | 151,251 | 167,266 | |||||||||||
Gain on sale of Lids Team Sports | (7,331 | ) | — | (7,331 | ) | — | |||||||||
Indemnification asset write-off | — | — | — | 7,050 | |||||||||||
Interest expense, net | 1,500 | 853 | 4,403 | 3,227 | |||||||||||
Earnings from continuing operations | |||||||||||||||
before income taxes | 76,282 | 86,051 | 154,179 | 156,989 | |||||||||||
Income tax expense | 29,538 | 34,294 | 57,042 | 57,616 | |||||||||||
Earnings from continuing operations | 46,744 | 51,757 | 97,137 | 99,373 | |||||||||||
Provision for discontinued operations** | (324 | ) | (1,361 | ) | (812 | ) | (1,648 | ) | |||||||
Net Earnings | $ | 46,420 | $ | 50,396 | $ | 96,325 | $ | 97,725 | |||||||
*Includes $0.0 million and $1.5 million in deferred payments related to the Schuh acquisition in the fourth quarter and fiscal year ended January 30, 2016, respectively, and $1.0 million and $7.3 million for the fourth quarter and fiscal year ended January 31, 2015, respectively.
**Lids Team Sports does not qualify as a discontinued operation.
Earnings Per Share Information | |||||||||||||||
Fourth Quarter | Fiscal Year Ended | ||||||||||||||
Jan. 30, | Jan. 31, | Jan. 30, | Jan. 31, | ||||||||||||
In Thousands (except per share amounts) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Average common shares - Basic EPS | 21,595 | 23,563 | 22,880 | 23,507 | |||||||||||
Basic earnings per share: | |||||||||||||||
From continuing operations | $ | 2.16 | $ | 2.20 | $ | 4.25 | $ | 4.23 | |||||||
Net earnings | $ | 2.15 | $ | 2.14 | $ | 4.21 | $ | 4.16 | |||||||
Average common and common | |||||||||||||||
equivalent shares - Diluted EPS | 21,693 | 23,759 | 23,000 | 23,708 | |||||||||||
Diluted earnings per share: | |||||||||||||||
From continuing operations | $ | 2.15 | $ | 2.18 | $ | 4.22 | $ | 4.19 | |||||||
Net earnings | $ | 2.14 | $ | 2.12 | $ | 4.19 | $ | 4.12 | |||||||
Exhibit 99.1
GENESCO INC. | |||||||||||||||
Consolidated Earnings Summary | |||||||||||||||
Fourth Quarter | Fiscal Year Ended | ||||||||||||||
Jan. 30, | Jan. 31, | Jan. 30, | Jan. 31, | ||||||||||||
In Thousands | 2016 | 2015 | 2016 | 2015 | |||||||||||
Sales: | |||||||||||||||
Journeys Group | $ | 403,832 | $ | 376,734 | $ | 1,251,637 | $ | 1,179,476 | |||||||
Schuh Group | 122,264 | 123,942 | 405,674 | 406,947 | |||||||||||
Lids Sports Group | 299,990 | 294,040 | 975,504 | 902,661 | |||||||||||
Johnston & Murphy Group | 81,081 | 75,318 | 278,681 | 259,675 | |||||||||||
Licensed Brands | 24,708 | 22,380 | 109,826 | 110,115 | |||||||||||
Corporate and Other | 339 | 216 | 912 | 970 | |||||||||||
Net Sales | $ | 932,214 | $ | 892,630 | $ | 3,022,234 | $ | 2,859,844 | |||||||
Operating Income (Loss): | |||||||||||||||
Journeys Group | $ | 53,654 | $ | 53,240 | $ | 126,248 | $ | 114,784 | |||||||
Schuh Group (1) | 8,244 | 11,499 | 19,124 | 10,110 | |||||||||||
Lids Sports Group | 10,140 | 23,753 | 17,040 | 48,970 | |||||||||||
Johnston & Murphy Group | 8,301 | 6,279 | 17,761 | 14,856 | |||||||||||
Licensed Brands | 1,710 | 1,983 | 9,236 | 10,459 | |||||||||||
Corporate and Other (2) | (11,598 | ) | (9,850 | ) | (38,158 | ) | (31,913 | ) | |||||||
Earnings from operations | 70,451 | 86,904 | 151,251 | 167,266 | |||||||||||
Indemnification asset write-off | — | — | — | 7,050 | |||||||||||
Gain on sale of Lids Team Sports | (7,331 | ) | — | (7,331 | ) | — | |||||||||
Interest, net | 1,500 | 853 | 4,403 | 3,227 | |||||||||||
Earnings from continuing operations | |||||||||||||||
before income taxes | 76,282 | 86,051 | 154,179 | 156,989 | |||||||||||
Income tax expense | 29,538 | 34,294 | 57,042 | 57,616 | |||||||||||
Earnings from continuing operations | 46,744 | 51,757 | 97,137 | 99,373 | |||||||||||
Provision for discontinued operations (3) | (324 | ) | (1,361 | ) | (812 | ) | (1,648 | ) | |||||||
Net Earnings | $ | 46,420 | $ | 50,396 | $ | 96,325 | $ | 97,725 | |||||||
(1)Includes $0.0 million and $1.5 million in deferred payments related to the Schuh acquisition in the fourth quarter and fiscal year ended January 30, 2016, respectively, and $1.0 million and $7.3 million for the fourth quarter and fiscal year ended January 31, 2015, respectively.
(2)Includes a $3.9 million charge in the fourth quarter of Fiscal 2016 which includes $2.5 million for asset write-downs, $1.3 million for asset impairments and $0.1 million for network intrusion expenses. Includes a $7.9 million charge for Fiscal 2016 which includes $3.1 million for asset impairments, $2.5 million for asset write-downs, $2.2 million for network intrusion expenses and $0.1 million for other legal matters. Includes a $1.0 million charge in the fourth quarter of Fiscal 2015 which includes $0.7 million for network intrusion expenses and $0.3 million for asset impairments. Includes a $2.3 million charge for Fiscal 2015 which includes $3.1 million for network intrusion expenses, $1.9 million for asset impairments and $0.6 million for other legal matters, partially offset by a $3.3 million gain on a lease termination.
(3)Lids Team Sports does not qualify as a discontinued operation.
Exhibit 99.1
GENESCO INC. | |||||||
Consolidated Balance Sheet | |||||||
Jan. 30, | Jan. 31, | ||||||
In Thousands | 2016 | 2015 | |||||
Assets | |||||||
Cash and cash equivalents | $ | 133,288 | $ | 112,867 | |||
Accounts receivable | 47,820 | 55,263 | |||||
Inventories | 530,565 | 598,145 | |||||
Other current assets | 89,033 | 81,383 | |||||
Total current assets | 800,706 | 847,658 | |||||
Property and equipment | 323,328 | 305,752 | |||||
Goodwill and other intangibles | 371,694 | 390,713 | |||||
Other non-current assets | 46,374 | 38,964 | |||||
Total Assets | $ | 1,542,102 | $ | 1,583,087 | |||
Liabilities and Equity | |||||||
Accounts payable | $ | 155,049 | $ | 176,307 | |||
Current portion long-term debt | 14,182 | 13,152 | |||||
Other current liabilities | 153,249 | 216,457 | |||||
Total current liabilities | 322,480 | 405,916 | |||||
Long-term debt | 97,876 | 16,003 | |||||
Pension liability | 9,957 | 22,184 | |||||
Deferred rent and other long-term liabilities | 153,250 | 140,207 | |||||
Equity | 958,539 | 998,777 | |||||
Total Liabilities and Equity | $ | 1,542,102 | $ | 1,583,087 | |||
Exhibit 99.1
GENESCO INC. | ||||||||||||||||||||||||||
Retail Units Operated - Twelve Months Ended January 30, 2016 | ||||||||||||||||||||||||||
Balance | Acquisi- | Balance | Acquisi- | Balance | ||||||||||||||||||||||
2/1/2014 | tions | Open | Close | 1/31/2015 | tions | Open | Close | 1/30/2016 | ||||||||||||||||||
Journeys Group | 1,168 | — | 34 | 20 | 1,182 | 37 | 29 | 26 | 1,222 | |||||||||||||||||
Journeys | 827 | — | 16 | 9 | 834 | — | 13 | 5 | 842 | |||||||||||||||||
Underground by Journeys | 117 | — | — | 7 | 110 | — | — | 12 | 98 | |||||||||||||||||
Journeys Kidz | 174 | — | 18 | 3 | 189 | — | 16 | 5 | 200 | |||||||||||||||||
Shi by Journeys | 50 | — | — | 1 | 49 | — | — | 3 | 46 | |||||||||||||||||
Little Burgundy | — | — | — | — | — | 37 | — | 1 | 36 | |||||||||||||||||
Schuh Group | 99 | — | 13 | 4 | 108 | — | 17 | — | 125 | |||||||||||||||||
Schuh UK | 90 | — | 12 | 4 | 98 | — | 15 | — | 113 | |||||||||||||||||
Schuh Germany | — | — | — | — | — | 2 | — | 2 | ||||||||||||||||||
Schuh ROI | 9 | — | 1 | — | 10 | — | — | — | 10 | |||||||||||||||||
Lids Sports Group* | 1,133 | 56 | 218 | 43 | 1,364 | — | 27 | 59 | 1,332 | |||||||||||||||||
Johnston & Murphy Group | 168 | — | 8 | 6 | 170 | — | 8 | 5 | 173 | |||||||||||||||||
Shops | 106 | — | 3 | 4 | 105 | — | 3 | 5 | 103 | |||||||||||||||||
Factory Outlets | 62 | — | 5 | 2 | 65 | — | 5 | — | 70 | |||||||||||||||||
Total Retail Units | 2,568 | 56 | 273 | 73 | 2,824 | 37 | 81 | 90 | 2,852 | |||||||||||||||||
Retail Units Operated - Three Months Ended January 30, 2016 | ||||||||||||||
Balance | Acquisi- | Balance | ||||||||||||
10/31/2015 | tions | Open | Close | 1/30/2016 | ||||||||||
Journeys Group | 1,179 | 37 | 9 | 3 | 1,222 | |||||||||
Journeys | 838 | — | 4 | — | 842 | |||||||||
Underground by Journeys | 100 | — | — | 2 | 98 | |||||||||
Journeys Kidz | 195 | — | 5 | — | 200 | |||||||||
Shi by Journeys | 46 | — | — | — | 46 | |||||||||
Little Burgundy | — | 37 | — | 1 | 36 | |||||||||
Schuh Group | 117 | — | 8 | — | 125 | |||||||||
Schuh UK | 106 | — | 7 | — | 113 | |||||||||
Schuh Germany | 1 | 1 | — | 2 | ||||||||||
Schuh ROI | 10 | — | — | — | 10 | |||||||||
Lids Sports Group* | 1,347 | — | 3 | 18 | 1,332 | |||||||||
Johnston & Murphy Group | 174 | — | 1 | 2 | 173 | |||||||||
Shops | 105 | — | — | 2 | 103 | |||||||||
Factory Outlets | 69 | — | 1 | — | 70 | |||||||||
Total Retail Units | 2,817 | 37 | 21 | 23 | 2,852 | |||||||||
*Includes 185, 190 and 26 Locker Room by Lids in Macy's stores as of January 30, 2016, January 31, 2015 and February 1, 2014, respectively.
Exhibit 99.1
Genesco Inc. | |||||||||||
Comparable Sales (including same store and comparable direct sales) | |||||||||||
Fourth Quarter Ended | Fiscal Year Ended | ||||||||||
Jan. 30, | Jan. 31, | Jan. 30, | Jan. 31, | ||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Journeys Group | 5 | % | 16 | % | 5 | % | 8 | % | |||
Schuh Group | (2 | )% | 3 | % | 3 | % | 1 | % | |||
Lids Sports Group | 3 | % | 7 | % | 6 | % | 2 | % | |||
Johnston & Murphy Group | 6 | % | 2 | % | 6 | % | 1 | % | |||
Total Comparable Sales | 4 | % | 10 | % | 5 | % | 4 | % | |||
Exhibit 99.1
Schedule B
Genesco Inc. | ||||||||||||
Adjustments to Reported Earnings from Continuing Operations | ||||||||||||
Three Months Ended January 30, 2016 and January 31, 2015 | ||||||||||||
Fourth | Impact on | Fourth | Impact on | |||||||||
Quarter | Diluted | Quarter | Diluted | |||||||||
In Thousands (except per share amounts) | Jan 2016 | EPS | Jan 2015 | EPS | ||||||||
Earnings from continuing operations, as reported | $ | 46,744 | $ | 2.15 | $ | 51,757 | $ | 2.18 | ||||
Adjustments: (1) | ||||||||||||
Impairment charges | 846 | 0.04 | 162 | — | ||||||||
Deferred payment - Schuh acquisition | — | — | 965 | 0.04 | ||||||||
Gain on lease termination | — | — | (14 | ) | — | |||||||
Asset write-down | 1,564 | 0.07 | — | — | ||||||||
Gain on sale of Lids Team Sports | (4,633 | ) | (0.21 | ) | — | — | ||||||
Network intrusion expenses | 59 | — | 420 | 0.02 | ||||||||
Higher (lower) effective tax rate | 1,206 | 0.06 | 1,434 | 0.06 | ||||||||
Adjusted earnings from continuing operations (2) | $ | 45,786 | $ | 2.11 | $ | 54,724 | $ | 2.30 | ||||
(1) All adjustments are net of tax where applicable. The tax rate for the fourth quarter of Fiscal 2016 is 37.1% excluding a FIN 48 discrete item of less than $0.1 million. The tax rate for the fourth quarter of Fiscal 2015 is 37.7% excluding a FIN 48 discrete item of less than $0.1 million.
(2) EPS reflects 21.7 million and 23.8 million share counts for Fiscal 2016 and 2015, 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 | |||||||||
Three Months Ended January 30, 2016 | |||||||||
Three Months ended January 30, 2016 | |||||||||
Operating | Adj Operating | ||||||||
In Thousands | Income | Other Adj | Income | ||||||
Journeys Group | $ | 53,654 | $ | — | $ | 53,654 | |||
Schuh Group | 8,244 | — | 8,244 | ||||||
Lids Sports Group | 10,140 | — | 10,140 | ||||||
Johnston & Murphy Group | 8,301 | — | 8,301 | ||||||
Licensed Brands | 1,710 | — | 1,710 | ||||||
Corporate and Other | (11,598 | ) | 3,923 | (7,675 | ) | ||||
Total Operating Income | $ | 70,451 | $ | 3,923 | $ | 74,374 | |||
Exhibit 99.1
Schedule B
Genesco Inc. | |||||||||
Adjustments to Reported Operating Income | |||||||||
Three Months Ended January 31, 2015 | |||||||||
Three Months ended January 31, 2015 | |||||||||
Operating | Adj Operating | ||||||||
In Thousands | Income | Other Adj | Income | ||||||
Journeys Group | $ | 53,240 | $ | — | $ | 53,240 | |||
Schuh Group* | 11,499 | 965 | 12,464 | ||||||
Lids Sports Group | 23,753 | — | 23,753 | ||||||
Johnston & Murphy Group | 6,279 | — | 6,279 | ||||||
Licensed Brands | 1,983 | — | 1,983 | ||||||
Corporate and Other | (9,850 | ) | 934 | (8,916 | ) | ||||
Total Operating Income | $ | 86,904 | $ | 1,899 | $ | 88,803 | |||
*Schuh Group adjustments include $1.0 million in deferred purchase price payments.
Genesco Inc. | ||||||||||||
Adjustments to Reported Earnings from Continuing Operations | ||||||||||||
Twelve Months Ended January 30, 2016 and January 31, 2015 | ||||||||||||
Impact on | Impact on | |||||||||||
12 mos | Diluted | 12 mos | Diluted | |||||||||
In Thousands (except per share amounts) | Jan 2016 | EPS | Jan 2015 | EPS | ||||||||
Earnings from continuing operations, as reported | $ | 97,137 | $ | 4.22 | $ | 99,373 | $ | 4.19 | ||||
Adjustments: (1) | ||||||||||||
Impairment charges | 1,975 | 0.09 | 1,185 | 0.05 | ||||||||
Deferred payment - Schuh acquisition | 1,490 | 0.07 | 7,311 | 0.31 | ||||||||
Gain on lease termination | — | — | (2,118 | ) | (0.09 | ) | ||||||
Indemnification asset write-off | — | — | 7,050 | 0.3 | ||||||||
Change in accounting for bonus awards | — | — | 3,575 | 0.15 | ||||||||
Other legal matters | 75 | — | 437 | 0.02 | ||||||||
Network intrusion expenses | 1,375 | 0.06 | 1,929 | 0.08 | ||||||||
Asset write-down | 1,564 | 0.07 | — | — | ||||||||
Gain on sale of Lids Team Sports | (4,633 | ) | (0.20 | ) | — | — | ||||||
Higher (lower) effective tax rate | (355 | ) | (0.02 | ) | (6,404 | ) | (0.27 | ) | ||||
Adjusted earnings from continuing operations (2) | $ | 98,628 | $ | 4.29 | $ | 112,338 | $ | 4.74 | ||||
(1) All adjustments are net of tax where applicable. The tax rate for Fiscal 2016 is 36.8% excluding a FIN 48 discrete item of $0.1 million. The tax rate for Fiscal 2015 is 37.3% excluding a FIN 48 discrete item of $0.1 million.
(2) EPS reflects 23.0 million and 23.7 million share counts for Fiscal 2016 and 2015, 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 January 30, 2016 | |||||||||
Twelve Months ended January 30, 2016 | |||||||||
Operating | Adj Operating | ||||||||
In Thousands | Income | Other Adj | Income | ||||||
Journeys Group | $ | 126,248 | $ | — | $ | 126,248 | |||
Schuh Group* | 19,124 | 1,490 | 20,614 | ||||||
Lids Sports Group | 17,040 | — | 17,040 | ||||||
Johnston & Murphy Group | 17,761 | — | 17,761 | ||||||
Licensed Brands | 9,236 | — | 9,236 | ||||||
Corporate and Other | (38,158 | ) | 7,893 | (30,265 | ) | ||||
Total Operating Income | $ | 151,251 | $ | 9,383 | $ | 160,634 | |||
*Schuh Group adjustments include $1.5 million in deferred purchase price payments.
Genesco Inc. | |||||||||
Adjustments to Reported Operating Income | |||||||||
Twelve Months Ended January 31, 2015 | |||||||||
Twelve Months ended January 31, 2015 | |||||||||
Operating | Bonus Adj | Adj Operating | |||||||
In Thousands | Income | and Other | Income | ||||||
Journeys Group | $ | 114,784 | $ | 4,919 | $ | 119,703 | |||
Schuh Group* | 10,110 | 7,311 | 17,421 | ||||||
Lids Sports Group | 48,970 | — | 48,970 | ||||||
Johnston & Murphy Group | 14,856 | 25 | 14,881 | ||||||
Licensed Brands | 10,459 | — | 10,459 | ||||||
Corporate and Other | (31,913 | ) | 3,016 | (28,897 | ) | ||||
Total Operating Income | $ | 167,266 | $ | 15,271 | $ | 182,537 | |||
*Schuh Group adjustments include $7.3 million in deferred purchase price payments.
Exhibit 99.1
Schedule B
Genesco Inc. | ||||||||||||
Adjustments to Forecasted Earnings from Continuing Operations | ||||||||||||
Fiscal Year Ending January 28, 2017 | ||||||||||||
In Thousands (except per share amounts) | High Guidance | Low Guidance | ||||||||||
Fiscal 2017 | Fiscal 2017 | |||||||||||
Forecasted earnings from continuing operations | $ | 98,841 | $ | 4.71 | $ | 96,492 | $ | 4.60 | ||||
Adjustments: (1) | ||||||||||||
Asset impairment and other charges | 3,957 | 0.19 | 4,273 | 0.2 | ||||||||
Adjusted forecasted earnings from continuing operations (2) | $ | 102,798 | $ | 4.90 | $ | 100,765 | $ | 4.80 | ||||
(1) All adjustments are net of tax where applicable. The forecasted tax rate for Fiscal 2017 is approximately 36.9% excluding a FIN 48 discrete item of $0.3 million.
(2) EPS reflects 21.0 million share count for Fiscal 2017 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 2016
FOURTH QUARTER ENDED JANUARY 30, 2016
Consolidated Results
Fourth Quarter
Sales
Fourth quarter net sales increased 4.4% to $932 million in Fiscal 2016 from $893 million in Fiscal 2015. 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 | ||||
4th Qtr | 4th Qtr | 12 mos | 12 mos | |
Same Store Sales: | FY16 | FY15 | FY16 | FY15 |
Journeys Group | 4% | 14% | 5% | 7% |
Schuh Group | (4)% | (1)% | 1% | (1)% |
Lids Sports Group | (1)% | 5% | 3% | 1% |
Johnston & Murphy Group | 6% | 2% | 5% | 1% |
Total Genesco | 2% | 9% | 4% | 4% |
4th Qtr | 4th Qtr | 12 mos | 12 mos | |
Comparable Direct Sales: | FY16 | FY15 | FY16 | FY15 |
Journeys Group | 20% | 40% | 18% | 30% |
Schuh Group | 10% | 25% | 13% | 12% |
Lids Sports Group | 39% | 27% | 46% | 14% |
Johnston & Murphy Group | 7% | 3% | 11% | (1)% |
Total Genesco | 21% | 25% | 24% | 14% |
4th Qtr | 4th Qtr | 12 mos | 12 mos | |
Same Store and Comparable Direct Sales: | FY16 | FY15 | FY16 | FY15 |
Journeys Group | 5% | 16% | 5% | 8% |
Schuh Group | (2)% | 3% | 3% | 1% |
Lids Sports Group | 3% | 7% | 6% | 2% |
Johnston & Murphy Group | 6% | 2% | 6% | 1% |
Total Genesco | 4% | 10% | 5% | 4% |
Through March 5, 2015, first quarter same store sales increased 4% and direct sales decreased 5% on a comparable basis; and combined comparable sales increased 3%.
Exhibit 99.2
Gross Margin
Fourth quarter gross margin was 45.4% for Fiscal 2016 compared with 47.5% the previous year, primarily reflecting lower gross margins in Lids Sports Group and Schuh Group and to a lesser extent in Journeys Group.
SG&A
Selling and administrative expense for the fourth quarter decreased to 37.4% of sales from 37.7% for the same period the previous year. In Fiscal 2015, expenses in the quarter included $1.0 million, or $0.04 per diluted share, of deferred purchase price expense associated with the acquisition of the Schuh business. There was no deferred purchase price expense in the third or fourth quarters of Fiscal 2016. Excluding the deferred purchase price expense from the previous year, SG&A as a percent of Fiscal 2016 sales decreased to 37.4% from 37.6% the previous year. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is posted on the Company’s website in conjunction with this document.
Also included in Fiscal 2015’s fourth quarter SG&A expense, but not eliminated from the adjusted expense, is $3.0 million, or $0.10 per diluted share, related to a contingent bonus payment provided for in the Schuh acquisition. The purchase agreement called for a total payment of up to £28 million including payroll taxes to Schuh employees payable in Fiscal 2016 if they achieved certain earnings targets above the planned earnings on which we based our acquisition valuation. The final contingent bonus accrual was made in the fourth quarter of Fiscal 2015, and there was no expense related to the bonus in Fiscal 2016.
Asset Impairment and Other Items
The asset impairment and other charge of $3.9 million for the fourth quarter of Fiscal 2016 included an asset write-off of $2.5 million, asset impairments of $1.3 million and network intrusion expenses of $0.1 million. The previous year’s fourth quarter asset impairment and other charge of $1.0 million included a $0.7 million charge for network intrusion expenses and a $0.3 million charge for asset impairments. The asset impairment and other charge and the deferred purchase price expense are collectively referred to as “Excluded Items” in the discussion below.
Operating Income
Genesco’s operating income for the fourth quarter was $70.5 million in Fiscal 2016 compared with $86.9 million the previous year. Adjusted for the Excluded Items in both periods, operating income for the fourth quarter was $74.4 million in Fiscal 2016 compared with $88.8 million the previous year. Adjusted operating margin was 8.0% of sales in the fourth quarter of Fiscal 2016 and 9.9% the previous year. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is posted on the Company’s website in conjunction with this document.
Interest Expense
Net interest expense for the quarter was $1.5 million, compared with $0.9 million for the same period the previous year. Net interest expense increased 75.8% in the fourth quarter of Fiscal 2016 because of increased revolver borrowings compared to the previous year as a result of the share repurchase program and Little Burgundy acquisition and increased borrowings to fund the Schuh contingent bonus and deferred purchase price payments.
Exhibit 99.2
Pretax Earnings
Pretax earnings for the quarter were $76.3 million in Fiscal 2016 and $86.1 million the previous year. Included in Fiscal 2016’s pretax earnings is a gain on the sale of the Lids Team Sports business of $7.3 million. Adjusted for the Excluded Items in both years and for the gain on the sale of Lids Team Sports this year, pretax earnings for the quarter were $72.9 million in Fiscal 2016 compared to $88.0 million the previous year. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is posted on the Company’s website in conjunction with this document.
Taxes
The effective tax rate for the quarter was 38.7% in Fiscal 2016 compared to 39.9% the previous year. The adjusted tax rate, reflecting the exclusion of the Excluded Items and the gain on the sale of Lids Team Sports, was 37.1% in Fiscal 2016 and 37.7% the previous year. The year-over-year decrease in tax rates was primarily due to lower tax rates in the UK.
Earnings From Continuing Operations After Taxes
Earnings from continuing operations were $46.7 million, or $2.15 per diluted share, in the fourth quarter of Fiscal 2016, compared to earnings of $51.8 million, or $2.18 per diluted share, in the fourth quarter of the previous year. Adjusted for the Excluded Items in both periods and the gain on the sale of Lids Team Sports in Fiscal 2016, fourth quarter earnings from continuing operations were $45.8 million, or $2.11 per diluted share in Fiscal 2016, compared with $54.7 million, or $2.30 per diluted share, the previous year. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is posted on the Company’s website in conjunction with this document.
Fiscal Year 2016
Consolidated net sales increased 5.7% for Fiscal 2016.
Same store sales for the year increased 4% and comparable direct sales increased 24%. Comparable sales, including both same store sales and comparable direct sales, increased 5%.
For the full year, operating income was $151.3 million compared to $167.3 million the previous year. Excluding the items discussed above, adjusted operating income was $160.6 million, compared to $182.5 million the previous year. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is posted on the Company’s website in conjunction with this document.
Diluted earnings per share from continuing operations for Fiscal 2016 increased to $4.22 from $4.19 for Fiscal 2015. Excluding the items discussed above and a $7.1 million indemnification asset write-off in Fiscal 2015 related to formerly uncertain tax positions taken by Schuh at the time of the purchase by Genesco, adjusted earnings per share were $4.29 in Fiscal 2016 compared with $4.74 the previous year. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is posted on the Company’s website in conjunction with this document.
Exhibit 99.2
Segment Results
Lids Sports Group
Lids Sports Group’s sales for the fourth quarter of Fiscal 2016 increased 2.0% to $300 million from $294 million the previous year.
Same store sales for the quarter decreased 1% in Fiscal 2016 compared to a 5% increase in the previous year. Comparable direct sales increased 39% compared to 27% the previous year. Comparable sales, including both same store and comparable direct sales, increased 3% in Fiscal 2016 compared to 7% the previous year. Through March 5, 2016, same store sales for the first quarter of Fiscal 2017 increased 3%; e-commerce sales decreased 19%; and combined comparable sales increased 1%.
The Group’s gross margin as a percent of sales decreased 570 basis points due primarily to increased promotional activity, and to a lesser extent increased shipping and warehouse expense. SG&A expense as a percent of sales decreased 100 basis points, due primarily to a decrease in occupancy expense and selling salaries and other compensation as a percentage of net sales.
The Group’s fourth quarter operating income was $10.1 million, or 3.4% of sales, down from $23.8 million, or 8.1% of sales, in Fiscal 2015.
For Fiscal 2016, the Group’s sales increased 8% to $976 million from $903 million the previous year. Operating income was $17.0 million, or 1.7% of sales, down from $49.0 million, or 5.4% of sales, the previous year.
Journeys Group
Journeys Group’s sales for the quarter increased 7.2% to $404 million from $377 million the previous year.
Same store sales for the Group were up 4%, compared to 14% the previous year; comparable direct sales increased 20% compared to 40% the previous year. Combined comparable sales increased 5% compared to 16% the previous year. Through March 5, 2016, same store sales for the first quarter increased 4%; comparable direct sales increased 10%; and combined comparable sales increased 4%.
Gross margin for the Journeys Group decreased 20 basis points in the quarter due primarily to higher markdowns due to increased promotional activity, which more than offset improvements in initial margin due primarily to changes in product mix.
The Journeys Group’s SG&A expense increased 60 basis points as a percent of sales for the fourth quarter, reflecting increased store related expenses, primarily increases in selling salaries and advertising.
The Journeys Group’s operating income for the quarter was $53.7 million, or 13.3% of sales, compared to $53.2 million, or 14.1% of sales, the previous year.
For Fiscal 2016, the Group’s sales increased 6% to $1.3 billion compared to $1.2 billion for Fiscal 2015. Operating income was $126.2 million, or 10.1% sales, compared to $119.7 million, or 10.1% of sales, the previous year.
Exhibit 99.2
Schuh Group
Schuh Group’s sales in the fourth quarter were $122 million, compared to $124 million the previous year, a decrease of 1.4%. Same store sales decreased 4% in the quarter compared to a 1% decrease the previous year; direct sales increased 10% compared to 25% the previous year; and total comparable sales decreased 2% compared to a 3% increase the previous year. Schuh Group sales were impacted by declines in exchange rates which decreased sales $6.2 million in the fourth quarter of Fiscal 2016 compared to the same period the previous year. Through March 5, 2016, same store sales for the first quarter were flat; comparable direct sales decreased 6%; and total comparable sales decreased 1%.
Schuh Group’s gross margin was down 220 basis points in the quarter due primarily to increased promotional activity and increased shipping and warehouse expenses. Schuh Group’s adjusted SG&A expense increased 110 basis points due to increased store related expenses, primarily increases in occupancy expense and selling salaries, partially offset by not having a contingent bonus accrual in the fourth quarter of Fiscal 2016 compared to a $3.0 million expense for the same period of Fiscal 2015.
Schuh Group’s adjusted operating income for the quarter was $8.2 million, or 6.7% of sales compared with $12.5 million, or 10.1% of sales the previous year.
For Fiscal 2016, the Group’s sales decreased slightly to $406 million compared to $407 million for Fiscal 2015. Despite a 3% increase in comparable sales for the year, Schuh Group’s sales were negatively impacted by $33.0 million for the year from declines in exchange rates. Adjusted operating income was $20.6 million, or 5.1% of sales, compared to $17.4 million, or 4.3% of sales, in Fiscal 2015. Adjusting for the contingent bonus accrual in Fiscal 2015, the operating margin would have been 7.2% of sales. 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 7.7%, to $81 million, compared to $75 million in the fourth quarter of the previous year.
Same store sales increased 6% compared to 2% the previous year; direct sales increased 7% compared to 3% the previous year; and combined comparable sales increased 6% compared to 2% the previous year. Direct sales represented about 15% of Johnston & Murphy Group’s sales this quarter. Through March 5, 2016, same store sales for the first quarter of Fiscal 2017 increased 12%; e-commerce and catalog sales increased 18%; and combined comparable sales increased 13%.
Johnston & Murphy’s gross margin for the Group increased 30 basis points in the quarter primarily due to decreased markdowns. SG&A expense as a percent of sales decreased 160 basis points, due primarily to decreased advertising expenses, occupancy costs and selling salaries. The Group’s operating income was $8.3 million or 10.2% of sales, compared to operating income of $6.3 million, or 8.3% of sales in the fourth quarter of the previous year.
For Fiscal 2016, the Group’s sales increased 7% to $279 million compared to $260 million for Fiscal 2015. Operating income was $17.8 million, or 6.4% of sales, compared to $14.9 million, or 5.7% of sales, in the previous year.
Exhibit 99.2
Licensed Brands
Licensed Brands’ sales increased 10.4% to $25 million in the fourth quarter of Fiscal 2016, compared to $22 million in the fourth quarter of Fiscal 2015. Gross margin was up 20 basis points due to lower markdowns.
SG&A expense as a percent of sales was up 210 basis points primarily due to increased advertising and compensation expenses and start-up costs related to the launch of the Bass Footwear License.
Operating income for the quarter was $1.7 million or 6.9% of sales, compared with $2.0 million, or 8.9% of sales, for the same quarter of the previous year.
For Fiscal 2016, Licensed Brands’ sales were flat at $110 million. Operating income was $9.2 million, or 8.4% of sales, compared to $10.5 million, or 9.5% of sales, for Fiscal 2015.
Corporate
Corporate expenses were $11.6 million or 1.2% of sales in the fourth quarter of Fiscal 2016, compared with $9.9 million or 1.1% of sales in the same quarter of the previous year. Adjusted for the applicable Excluded Items, corporate expenses were $7.7 million for the quarter compared to $8.9 million the previous year, primarily due to lower exchange losses on intercompany transactions. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is posted on the Company’s website in conjunction with this document.
Balance Sheet
Cash
Cash at the end of the fourth quarter was $133 million compared with $113 million at the end of the previous year. We ended the quarter with $54 million in U.K. debt, compared with $29 million in U.K. debt the previous year. Domestic revolver borrowings were $58 million at the end of Fiscal 2016 compared to zero at the end of the previous year. The domestic revolver borrowings included $22 million related to Genesco (UK) Limited and $36 million related to GCO Canada.
We repurchased 251,000 shares in the fourth quarter of Fiscal 2016 for a cost of $15.9 million at an average price of $63.24. During Fiscal 2016, we repurchased 2.4 million shares at a cost of about $145 million, or $60.79 per share. During the first quarter of Fiscal 2017, through March 4, 2016, we have repurchased 480,500 shares at a cost of $30.9 million, or $64.40 per share. As of March 4, 2016, we have about $53 million remaining in the most recent $100 million buyback authorization.
Inventory
Inventories decreased 11% on a year-over-year basis. Retail inventory per square foot decreased 9%.
Equity
Equity was $959 million at quarter-end, compared with $999 million at the end of Fiscal 2015.
Capital Expenditures and Store Count
For the fourth quarter, capital expenditures were $23 million and depreciation and amortization was $21 million. During the quarter, we acquired 37 Little Burgundy stores, opened 21 new stores and closed 23 stores. Excluding Locker Room by Lids in Macy’s stores, we ended the quarter with 2,667 stores compared
Exhibit 99.2
with 2,634 stores at the end of the fourth quarter of the previous year, or an increase of 1%. Square footage increased 4% on a year-over-year basis, including the Macy’s locations and 4% excluding them. The store count as of January 30, 2016 included:
Lids stores (including 113 stores in Canada) | 919 |
Lids Locker Room Stores (including 38 stores in Canada) | 199 |
Lids Clubhouse stores | 29 |
Journeys stores (including 39 stores in Canada) | 842 |
Little Burgundy stores | 36 |
Journeys Kidz stores | 200 |
Shï by Journeys stores | 46 |
Underground by Journeys stores | 98 |
Schuh Stores (including 10 Kids stores) | 125 |
Johnston & Murphy Stores and Factory stores (including 7 stores in Canada) | 173 |
Total Stores | 2,667 |
Locker Room by Lids in Macy’s stores | 185 |
Total Stores and Macy’s Locations | 2,852 |
Exhibit 99.2
For Fiscal 2017, we are forecasting capital expenditures of approximately $125 to $135 million and depreciation and amortization of about $80 million. Projected square footage growth is expected to be approximately 3% for fiscal 2017. Our current store openings and closing plans by chain are as follows:
Actual | Projected | Projected | Projected | Projected | |||
Jan 2016 | New | Conversions | Closings | Jan 2017 | |||
Journeys Group | 1,222 | 87 | (24) | 1,285 | |||
Journeys stores (U.S.) | 803 | 30 | (10) | 823 | |||
Journeys stores (Canada) | 39 | 10 | 0 | 49 | |||
Little Burgundy stores | 36 | 2 | 0 | 38 | |||
Journeys Kidz stores | 200 | 45 | (5) | 240 | |||
Shï by Journeys | 46 | 0 | (5) | 41 | |||
Underground by Journeys | 98 | 0 | (4) | 94 | |||
Johnston & Murphy Group | 173 | 9 | (6) | 176 | |||
Schuh Group | 125 | 9 | (2) | 132 | |||
Schuh Stores | 115 | 6 | (2) | 119 | |||
Schuh Kids | 10 | 3 | 0 | 13 | |||
Lids Sports Group | 1,332 | 25 | 0 | (24) | 1,333 | ||
Lids hat stores (U.S.) | 806 | 15 | (6) | 815 | |||
Lids hat stores (Canada) | 113 | 5 | (1) | 117 | |||
Locker Room stores (U.S) | 161 | 1 | (4) | 158 | |||
Locker Room stores (Canada) | 38 | 3 | (1) | 40 | |||
Clubhouse stores | 29 | 1 | (3) | 27 | |||
Locker Room by Lids (Macy’s) | 185 | 0 | (9) | 176 | |||
Total Stores | 2,852 | 130 | 0 | (56) | 2,926 | ||
Comparable Sales Assumptions in Fiscal 2017 Guidance
Our guidance for Fiscal 2017 assumes comparable sales (including both same store sales and comparable direct sales) for each retail segment by quarter as follows:
Guidance | Guidance | Guidance | Guidance | ||
Q1 | Q2 | Q3 | Q4 | FY17 | |
Journeys Group | 2 - 3% | 2 - 3% | 2 - 3% | 2 - 3% | 2 - 3% |
Lids Sports Group | (1) - 0% | (1) - 0% | (1) - 0% | (1) - 0% | (1) - 0% |
Schuh Group | (2) - (1%) | 1 - 2% | 2 - 3% | 1 - 2% | 1 - 2% |
Johnston & Murphy Group | 3 - 4% | 2 - 3% | 2 - 3% | 1 - 2% | 2 - 3% |
Total Genesco | 1 - 2% | 1 - 2% | 1 - 2% | 1 - 2% | 1 - 2% |
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 level and timing of promotional activity necessary to maintain inventories at appropriate levels; the timing and amount of non-cash asset impairments related to retail store fixed assets and intangible assets of acquired businesses; the effectiveness of the Company’s omnichannel initiatives; weakness in the consumer economy and retail industry; competition in the Company's markets; fashion trends that affect the sales or product margins of the Company's retail product offerings; changes in buying patterns by significant wholesale customers; bankruptcies or deterioration in financial condition of significant wholesale customers or the inability of wholesale customers or consumers to obtain credit; disruptions in product supply or distribution; unfavorable trends in fuel costs, foreign exchange rates, foreign labor and material costs, and other factors affecting the cost of products; the 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.