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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended November 2, 2019



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from to

Commission File No. 1-3083

Genesco Inc.

(Exact name of registrant as specified in its charter)



Tennessee		62-0211340
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Genesco Park,	1415 Murfreesboro Pike	37217-2895
Nashville,	Tennessee	(Zip Code)
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (615) 367-7000

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



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 par value	GCO	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer; an accelerated filer; a non-accelerated filer; a smaller reporting company; or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:



Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

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

Table of Contents

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

As of November 29, 2019, 14,700,187 shares of the registrant's common stock were outstanding.

Table of Contents



INDEX

Part I. Financial Information
Item 1. Financial Statements (unaudited):
Condensed Consolidated Balance Sheets - November 2, 2019, February 2, 2019 and November 3, 2018	4
Condensed Consolidated Statements of Operations - Three and Nine Months ended November 2, 2019 and November 3, 2018	6
Condensed Consolidated Statements of Comprehensive Income - Three and Nine Months ended November 2, 2019 and November 3, 2018	7
Condensed Consolidated Statements of Cash Flows - Three and Nine Months ended November 2, 2019 and November 3, 2018	8
Condensed Consolidated Statements of Equity - Three and Nine Months ended November 2, 2019 and November 3, 2018	9
Notes to Condensed Consolidated Financial Statements (unaudited)	11
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3. Quantitative and Qualitative Disclosures about Market Risk	57
Item 4. Controls and Procedures	57
Part II. Other Information	58
Item 1. Legal Proceedings	58
Item 1A. Risk Factors	58
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	58
Item 6. Exhibits	59
Signature	60

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

Genesco Inc.

and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share amounts)



Assets	November 2, 2019			February 2, 2019			November 3, 2018
Current Assets:
Cash and cash equivalents	$	55,826		$	167,355		$	53,423
Accounts receivable, net of allowances of $2,457 at Nov. 2, 2019,
$2,894 at Feb. 2, 2019 and $3,217 at Nov. 3, 2018	34,849			132,390			39,158
Inventories	473,940			366,667			454,673
Prepaids and other current assets	36,179			64,634			60,159
Current assets - discontinued operations	—			—			235,689
Total current assets	600,794			731,046			843,102

Property and equipment:
Land	7,943			7,953			7,934
Buildings and building equipment	82,467			82,621			82,317
Computer hardware, software and equipment	139,814			138,147			135,297
Furniture and fixtures	130,013			129,625			128,919
Construction in progress	12,911			5,920			13,230
Improvements to leased property	339,721			341,134			339,995
Property and equipment, at cost	712,869			705,400			707,692
Accumulated depreciation	(451,588		)	(428,025		)	(421,839		)
Property and equipment, net	261,281			277,375			285,853
Operating lease right of use asset	750,855			—			—
Goodwill	92,166			93,081			92,396
Trademarks, net of accumulated amortization of zero at Nov. 2, 2019,
Feb. 2, 2019 and Nov. 3, 2018	30,637			30,904			30,714
Other intangibles, net of accumulated amortization of $1,794 at
Nov. 2, 2019, $4,680 at Feb. 2, 2019 and $4,574 at Nov. 3, 2018	—			943			1,014
Deferred income taxes	25,188			21,335			25,015
Other noncurrent assets	24,571			26,397			27,697
Non-current assets - discontinued operations	—			—			124,922
Total Assets	$	1,785,492		$	1,181,081		$	1,430,713

Genesco Inc.

and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share amounts)



Liabilities and Equity	November 2, 2019			February 2, 2019			November 3, 2018
Current Liabilities:
Accounts payable	$	195,906		$	158,603		$	176,451
Accrued employee compensation	31,531			43,246			28,716
Accrued other taxes	12,978			17,389			16,459
Accrued income taxes	73			2,133			69
Current portion – long-term debt	17,146			8,992			9,325
Current portion - operating lease liability	145,788			—			—
Other accrued liabilities	44,614			45,313			40,204
Provision for discontinued operations	488			553			470
Current liabilities - discontinued operations	—			—			100,598
Total current liabilities	448,524			276,229			372,292
Long-term debt	62,368			56,751			72,455
Long-term operating lease liability	663,168			—			—
Other long-term liabilities	36,138			108,704			117,782
Provision for discontinued operations	1,846			1,846			1,743
Non-current liabilities - discontinued operations	—			—			24,680
Total liabilities	1,212,044			443,530			588,952
Commitments and contingent liabilities
Equity:
Non-redeemable preferred stock	1,011			1,060			1,061
Common equity:
Common stock, $1 par value:
Authorized: 80,000,000 shares
Issued/Outstanding:
Nov. 2, 2019 – 15,188,651/14,700,187
February 2, 2019 – 19,591,048/19,102,584
Nov. 3, 2018 – 20,681,008/20,192,544	15,189			19,591			20,681
Additional paid-in capital	271,505			264,138			260,709
Retained earnings	343,156			508,555			617,923
Accumulated other comprehensive loss	(39,556		)	(37,936		)	(43,054		)
Treasury shares, at cost (488,464 shares)	(17,857		)	(17,857		)	(17,857		)
Total Genesco equity	573,448			737,551			839,463
Noncontrolling interest – non-redeemable	—			—			2,298
Total equity	573,448			737,551			841,761
Total Liabilities and Equity	$	1,785,492		$	1,181,081		$	1,430,713

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Genesco Inc.

and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)



	Three Months Ended						Nine Months Ended
	November 2, 2019			November 3, 2018			November 2, 2019			November 3, 2018
Net sales	$	537,263		$	539,828		$	1,519,487		$	1,513,062
Cost of sales	273,061			277,910			773,844			781,669
Selling and administrative expenses	237,460			235,601			705,811			699,200
Asset impairments and other, net	799			(70		)	1,843			1,019
Operating income	25,943			26,387			37,989			31,174
Other components net periodic benefit cost	(92		)	(30		)	(271		)	(67		)
Interest expense, net:
Interest expense	808			984			2,491			3,144
Interest income	(206		)	(147		)	(1,708		)	(176		)
Total interest expense, net	602			837			783			2,968
Earnings from continuing operations before
income taxes	25,433			25,580			37,477			28,273
Income tax expense	6,454			5,886			11,235			6,748
Earnings from continuing operations	18,979			19,694			26,242			21,525
Loss from discontinued operations, net of tax	(80		)	(5,307		)	(420		)	(9,484		)
Net Earnings	$	18,899		$	14,387		$	25,822		$	12,041

Basic earnings per common share:
Continuing operations	$	1.31		$	1.01		$	1.64		$	1.11
Discontinued operations	0.00			(0.27		)	(0.03		)	(0.49		)
Net earnings	$	1.31		$	0.74		$	1.61		$	0.62
Diluted earnings per common share:
Continuing operations	$	1.31		$	1.00		$	1.63		$	1.10
Discontinued operations	(0.01		)	(0.27		)	(0.03		)	(0.48		)
Net earnings	$	1.30		$	0.73		$	1.60		$	0.62

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Genesco Inc.

and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(In thousands)



	Three Months Ended						Nine Months Ended
	November 2, 2019			November 3, 2018			November 2, 2019			November 3, 2018
Net earnings	$	18,899		$	14,387		$	25,822		$	12,041
Other comprehensive income (loss):
Pension liability adjustments, net of tax	51			145			157			430
Postretirement liability adjustments, net of tax	(167		)	11			(500		)	48
Foreign currency translation adjustments	8,715			(466		)	(1,277		)	(14,340		)
Total other comprehensive income (loss)	8,599			(310		)	(1,620		)	(13,862		)
Comprehensive income (loss)	$	27,498		$	14,077		$	24,202		$	(1,821	)

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Genesco Inc.

and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)



	Three Months Ended						Nine Months Ended
	November 2, 2019			November 3, 2018			November 2, 2019			November 3, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	18,899		$	14,387		$	25,822		$	12,041
Adjustments to reconcile net earnings to net cash provided by
(used in) operating activities:
Depreciation and amortization	12,180			19,151			37,298			58,069
Amortization of deferred note expense and debt discount	98			146			315			447
Deferred income taxes	(1,842		)	(1,976		)	(3,127		)	(1,926		)
Provision (recoveries) on accounts receivable	(167		)	50			(76		)	(53		)
Gain on sale of business	—			—			86			—
Impairment of intangible assets	268			5,736			268			5,736
Impairment of long-lived assets	531			1,522			1,569			3,724
Restricted stock expense	2,617			3,408			7,485			10,130
Provision for discontinued operations	107			178			487			455
Other	28			(566		)	803			1,005
Effect on cash from changes in working capital and other
assets and liabilities, net of acquisitions:
Accounts receivable	(7,752		)	(10,315		)	(5,158		)	(8,219		)
Inventories	(25,566		)	(59,680		)	(107,657		)	(130,537		)
Prepaids and other current assets	9,343			3,897			11,001			(6,949		)
Accounts payable	30,892			37,599			51,756			110,587
Other accrued liabilities	2,436			3,949			(17,225		)	3,961
Other assets and liabilities	(1,158		)	(2,231		)	(841		)	(174		)
Net cash provided by operating activities	40,914			15,255			2,806			58,297
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(8,137		)	(16,082		)	(21,388		)	(47,208		)
Other investing activities	—			872			23			1,505
Proceeds from sale of business and asset sales	—			23			98,707			297
Net cash provided by (used in) investing activities	(8,137		)	(15,187		)	77,342			(45,406		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt	—			(400		)	(789		)	(1,240		)
Borrowings under revolving credit facility	24,291			33,946			74,123			239,942
Payments on revolving credit facility	(21,839		)	(34,535		)	(59,042		)	(239,554		)
Share repurchases related to share repurchase program	(43,849		)	—			(189,210		)	—
Restricted shares withheld for taxes	—			—			(2,209		)	(2,433		)
Change in overdraft balances	6,027			4,643			(14,191		)	8,316
Additions to deferred note cost	—			—			—			(359		)
Other	—			(73		)	—			(3,282		)
Net cash provided by (used in) financing activities	(35,370		)	3,581			(191,318		)	1,390
Effect of foreign exchange rate fluctuations on cash	454			(12		)	(359		)	(795		)
Net Increase (Decrease) in Cash and Cash Equivalents	(2,139		)	3,637			(111,529		)	13,486
Cash and cash equivalents at beginning of period⁽¹⁾	57,965			49,786			167,355			39,937
Cash and cash equivalents at end of period⁽¹⁾	$	55,826		$	53,423		$	55,826		$	53,423
Supplemental Cash Flow Information:
Net cash paid for:
Interest	$	639		$	628		$	2,146		$	2,352
Income taxes	(253		)	2,080			3,542			12,041

⁽¹⁾ The cash flows related to discontinued operations have not been segregated and are included in the Condensed Consolidated Cash Flows for the three and nine months ended November 3, 2018.

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Genesco Inc.

and Subsidiaries

Condensed Consolidated Statements of Equity

(In thousands)



	Non-Redeemable Preferred Stock			Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Shares			Non Controlling Interest Non-Redeemable		Total Equity
Balance February 3, 2018	$	1,052		$	20,392		$	250,877		$	603,902		$	(29,192	)	$	(17,857	)	$	1,530	$	830,704
Cumulative adjustment from ASC 606, net of tax	—			—			—			4,413			—			—			—		4,413
Net loss	—			—			—			(2,331		)	—			—			—		(2,331		)
Other comprehensive loss	—			—			—			—			(7,698		)	—			—		(7,698		)
Employee and non-employee restricted stock	—			—			3,354			—			—			—			—		3,354
Restricted stock issuance	—			14			(14		)	—			—			—			—		—
Other	(12		)	(2		)	13			—			—			—			—		(1		)
Noncontrolling interest – earnings	—			—			—			—			—			—			398		398
Balance May 5, 2018	1,040			20,404			254,230			605,984			(36,890		)	(17,857		)	1,928		828,839
Net loss	—			—			—			(15		)	—			—			—		(15		)
Other comprehensive loss	—			—			—			—			(5,854		)	—			—		(5,854		)
Employee and non-employee restricted stock	—			—			3,368			—			—			—			—		3,368
Restricted stock issuance	—			375			(375		)	—			—			—			—		—
Restricted shares withheld for taxes	—			(61		)	61			(2,433		)	—			—			—		(2,433		)
Other	24			(34		)	11			—			—			—			—		1
Noncontrolling interest – earnings	—			—			—			—			—			—			252		252
Balance August 4, 2018	1,064			20,684			257,295			603,536			(42,744		)	(17,857		)	2,180		824,158
Net earnings	—			—			—			14,387			—			—			—		14,387
Other comprehensive loss	—			—			—			—			(310		)	—			—		(310		)
Employee and non-employee restricted stock	—			—			3,408			—			—			—			—		3,408
Other	(3		)	(3		)	6			—			—			—			—		—
Noncontrolling interest – earnings	—			—			—			—			—			—			118		118
Balance November 3, 2018	$	1,061		$	20,681		$	260,709		$	617,923		$	(43,054	)	$	(17,857	)	$	2,298	$	841,761

Genesco Inc.

and Subsidiaries

Condensed Consolidated Statements of Equity

(In thousands)



	Non-Redeemable Preferred Stock			Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Shares			Non Controlling Interest Non-Redeemable		Total Equity
Balance February 2, 2019	$	1,060		$	19,591		$	264,138		$	508,555		$	(37,936	)	$	(17,857	)	$	—	$	737,551
Cumulative adjustment from ASC 842, net of tax	—			—			—			(4,208		)	—			—			—		(4,208		)
Net earnings				—			—			6,346			—			—			—		6,346
Other comprehensive earnings	—			—			—			—			968			—			—		968
Employee and non-employee restricted stock	—			—			2,239			—			—			—			—		2,239
Shares repurchased	—			(1,809		)	—			(78,162		)	—			—			—		(79,971		)
Other	(48		)	(29		)	78			—			—			—			—		1
Balance May 4, 2019	1,012			17,753			266,455			432,531			(36,968		)	(17,857		)	—		662,926
Net earnings	—			—			—			577			—			—			—		577
Other comprehensive loss	—			—			—			—			(11,187		)	—			—		(11,187		)
Employee and non-employee restricted stock	—			—			2,629			—			—			—			—		2,629
Shares repurchased	—			(1,611		)	—			(66,503		)	—			—			—		(68,114		)
Restricted stock issuance	—			285			(285		)	—			—			—			—		—
Restricted shares withheld for taxes	—			(56		)	56			(2,209		)	—			—			—		(2,209		)
Other	(2		)	(26		)	27			—			—			—			—		(1		)
Balance August 3, 2019	1,010			16,345			268,882			364,396			(48,155		)	(17,857		)	—		584,621
Net earnings	—			—			—			18,899			—			—			—		18,899
Employee and non-employee restricted stock	—			—			2,617			—			—			—			—		2,617
Shares repurchased	—			(1,150		)	—			(40,139		)	—			—			—		(41,289		)
Other comprehensive income	—			—			—			—			8,599			—			—		8,599
Other	1			(6		)	6			—			—			—			—		1
Balance November 2, 2019	$	1,011		$	15,189		$	271,505		$	343,156		$	(39,556	)	$	(17,857	)	$	—	$	573,448

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Genesco Inc.

and Consolidated Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

Note 1

Summary of Significant Accounting Policies

Basis of Presentation

The Condensed Consolidated Financial Statements and Notes contained in this report are unaudited but reflect all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the results for the interim periods of the fiscal year ending February 1, 2020 ("Fiscal 2020") and of the fiscal year ended February 2, 2019 ("Fiscal 2019"). The results of operations for any interim period are not necessarily indicative of results for the full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") have been condensed or omitted. The Condensed Consolidated Balance Sheet as of February 2, 2019 has been derived from the audited financial statements at that date. These Condensed Consolidated Financial Statements should be read in conjunction with the Company's Consolidated Financial Statements and notes thereto for Fiscal 2019, which are contained in the Company's Annual Report on Form 10-K as filed with the Securities and Exchange Commission ("SEC") on April 3, 2019.

Nature of Operations

Genesco Inc. and its subsidiaries (collectively, the "Company") business includes the sourcing and design, marketing and distribution of footwear and accessories through retail stores in the U.S., Puerto Rico and Canada primarily under the Journeys, Journeys Kidz, Little Burgundy and Johnston & Murphy banners and under the Schuh banner in the United Kingdom and the Republic of Ireland; through catalogs and e-commerce websites including the following: journeys.com, journeyskidz.com, journeys.ca, schuh.co.uk, littleburgundyshoes.com, johnstonmurphy.com, johnstonmurphy.ca and trask.com, and at wholesale, primarily under the Company's Johnston & Murphy brand, the Trask brand, the licensed Dockers brand and other brands that the Company licenses for footwear. At November 2, 2019, the Company operated 1,492 retail stores in the U.S., Puerto Rico, Canada, the United Kingdom and the Republic of Ireland.

On February 2, 2019, the Company completed the sale of its Lids Sports Group business. As a result, the Company reported the operating results of this business in loss from discontinued operations, net of tax in the Condensed Consolidated Statements of Operations for the three and nine months ended November 3, 2018. In addition, the related assets and liabilities as of November 3, 2018 have been reported as assets and liabilities of discontinued operations in the Condensed Consolidated Balance Sheets. The cash flows related to discontinued operations have not been segregated, and are included in the Condensed Consolidated Statements of Cash Flows for the three and nine months ended November 3, 2018. Unless otherwise noted, discussion within these notes to the condensed consolidated financial statements relates to continuing operations. See Note 3 for additional information related to discontinued operations.

During the three and nine months ended November 2, 2019 and November 3, 2018, the Company operated four reportable business segments (not including corporate): (i) Journeys Group, comprised of the Journeys, Journeys Kidz and Little Burgundy retail footwear chains, e-commerce and catalog operations; (ii) Schuh Group, comprised of the Schuh retail footwear chain and e-commerce operations; (iii) Johnston & Murphy Group, comprised of Johnston & Murphy retail operations, e-commerce operations, catalog, Trask e-commerce operations and wholesale distribution of products under the Johnston & Murphy^®and H.S. Trask^® brands; and (iv) Licensed

Genesco Inc.

and Consolidated Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

Note 1

Summary of Significant Accounting Policies, Continued

Brands, comprised of Dockers^® Footwear, sourced and marketed under a license from Levi Strauss & Company; and other brands.

Principles of Consolidation

All subsidiaries are consolidated in the Condensed Consolidated Financial Statements. All significant intercompany transactions and accounts have been eliminated.

Revenue Recognition

In accordance with ASC 606, revenue shall be recognized upon satisfaction of all contractual performance obligations and transfer of control to the customer. Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for corresponding goods. The majority of the Company's sales are single performance obligation arrangements for retail sale transactions for which the transaction price is equivalent to the stated price of the product, net of any stated discounts applicable at a point in time. Each sales transaction results in an implicit contract with the customer to deliver a product at the point of sale. Revenue from retail sales is recognized at the point of sale, is net of estimated returns, and excludes sales and value added taxes. Revenue from catalog and internet sales is recognized at estimated time of delivery to the customer, is net of estimated returns, and excludes sales and value added taxes. Wholesale revenue is recorded net of estimated returns and allowances for markdowns, damages and miscellaneous claims when the related goods have been shipped and legal title has passed to the customer. Actual amounts of markdowns have not differed materially from estimates. Shipping and handling costs charged to customers are included in net sales. The Company elected the practical expedient within ASC 606 related to taxes that are assessed by a governmental authority, which allows for the exclusion of sales and value added tax from transaction price.

A provision for estimated returns is provided through a reduction of sales and cost of goods sold in the period that the related sales are recorded. Estimated returns are based on historical returns and claims. Actual returns and claims in any future period may differ from historical experience. Revenue from gift cards is deferred and recognized upon the redemption of the cards. These cards have no expiration date. Income from unredeemed cards is recognized on the Condensed Consolidated Statements of Operations within net sales in proportion to the pattern of rights exercised by the customer in future periods. The Company performs an evaluation of historical redemption patterns from the date of original issuance to estimate future period redemption activity.

The Condensed Consolidated Balance Sheets include an accrued liability for gift cards of $3.7 million, $5.1 million and $3.6 million at November 2, 2019, February 2, 2019 and November 3, 2018, respectively. Gift card breakage recognized as revenue was $0.1 million for each of the third quarters of Fiscal 2020 and Fiscal 2019, and $0.4 million for each of the first nine months of Fiscal 2020 and Fiscal 2019. During the nine months ended November 2, 2019, the Company recognized $2.9 million of gift card redemptions and gift card breakage revenue that were included in the gift card liability as of February 2, 2019.

Genesco Inc.

and Consolidated Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

Note 1

Summary of Significant Accounting Policies, Continued

Cash and Cash Equivalents

The Company's foreign subsidiaries held cash of approximately $6.1 million, $20.8 million and $11.3 million as of November 2, 2019, February 2, 2019 and November 3, 2018, respectively, which is included in cash and cash equivalents on the Condensed Consolidated Balance Sheets. The Company's strategic plan does not require the repatriation of foreign cash in order to fund its operations in the U.S., and it is the Company's current intention to indefinitely reinvest its foreign cash and cash equivalents outside of the U.S. If the Company were to repatriate foreign cash to the U.S., it would be required to accrue and pay U.S. taxes in accordance with applicable U.S. tax rules and regulations as a result of the repatriation.

There were $32.8 million, $127.2 million and $17.0 million in cash equivalents at November 2, 2019, February 2, 2019 and November 3, 2018, respectively. The Company's cash equivalents at November 2, 2019, February 2, 2019 and November 3, 2018 were invested in institutional money market funds which invest exclusively in highly rated, short-term securities that are issued, guaranteed or collateralized by the U.S. government or by U.S. government agencies and instrumentalities.

At November 2, 2019, substantially all of the Company’s domestic cash was invested in institutional money market funds. The majority of payments due from banks for domestic customer credit card transactions process within 24 - 48 hours and are accordingly classified as cash and cash equivalents in the Condensed Consolidated Balance Sheets.

At November 2, 2019, February 2, 2019 and November 3, 2018, outstanding checks drawn on zero-balance accounts at certain domestic banks exceeded book cash balances at those banks by approximately $15.4 million, $29.6 million and $22.5 million, respectively. These amounts are included in accounts payable in the Condensed Consolidated Balance Sheets.

Concentration of Credit Risk and Allowances on Accounts Receivable

The Company’s footwear wholesale businesses sell primarily to department stores and independent retailers across the United States. Receivables arising from these sales are not collateralized. Customer credit risk is affected by conditions or occurrences within the economy and the retail industry as well as by customer-specific factors. In the footwear wholesale businesses, one customer accounted for 21%, two customers each accounted for 9% and no other customer accounted for more than 6% of the Company’s total trade receivables balance as of November 2, 2019.

Asset Retirement Obligations

The Condensed Consolidated Balance Sheets include asset retirement obligations related to leases of $10.7 million, $10.9 million and $10.7 million as of November 2, 2019, February 2, 2019 and November 3, 2018, respectively.

Genesco Inc.

and Consolidated Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

Note 1

Summary of Significant Accounting Policies, Continued

Fair Value of Financial Instruments

The carrying amounts and fair values of the Company’s financial instruments at November 2, 2019 and February 2, 2019 are as follows:



Fair Values
In Thousands	November 2, 2019				February 2, 2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
U.S. Credit Facility Borrowings	$	62,368	$	63,199	$	56,773	$	56,861
UK Term Loans	8,088		8,098		8,970		9,063
UK Revolver Borrowings	9,058		9,085		—		—

Debt fair values were estimated using a discounted cash flow analysis based on current market interest rates for similar types of financial instruments and would be classified in Level 2 as defined in Note 5.

Carrying amounts reported on the Condensed Consolidated Balance Sheets for cash, cash equivalents, receivables and accounts payable approximate fair value due to the short-term maturity of these instruments.

Selling and Administrative Expenses

Selling and administrative expenses include all operating costs of the Company excluding (i) those related to the transportation of products from the supplier to the warehouse, (ii) for its retail operations, those related to the transportation of products from the warehouse to the store and from the warehouse to the customer and (iii) costs of its distribution facilities which are a