gco-8k_20210902.htm
false GENESCO INC 0000018498 0000018498 2021-09-02 2021-09-02

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (date of earliest event reported): September 2, 2021  (September 2, 2021)

 

GENESCO INC.

(Exact name of registrant as specified in its charter)

 

Tennessee

1-3083

62-0211340

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

 

 

1415 Murfreesboro Pike

Nashville

Tennessee

37217-2895

(Address of Principal Executive Offices)

(Zip Code)

 

(615) 367-7000

Registrant's telephone number, including area code

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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

 

Title of each class

Trading Symbol(s)

Name of exchange on which registered

Common Stock, $1.00 par value

GCO

New York Stock Exchange

 

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

Emerging growth company

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

 

 


 

 

ITEM 2.02.  RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On September 2, 2021, Genesco Inc. issued a press release announcing results of operations for the fiscal second quarter ended July 31, 2021. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

On September 2, 2021, the Company also posted on its website, www.genesco.com, a slide presentation with summary results.  A copy of the slide presentation is furnished as Exhibit 99.2 to this Current Report on Form 8-K.

In addition to disclosing financial results calculated in accordance with United States generally accepted accounting principles (GAAP), the press release furnished herewith contains non-GAAP financial measures, including adjusted selling and administrative expense, operating income, pretax earnings, earnings from continuing operations and earnings per share from continuing operations, as discussed in the text of the release and as detailed on the reconciliation schedule attached to the press release. For consistency and ease of comparison with the adjusted results for the prior period announced last year, the Company believes that disclosure of the non-GAAP measures will be useful to investors.

ITEM 9.01.  FINANCIAL STATEMENTS AND EXHIBITS.

(d)       Exhibits

The following exhibits are furnished herewith:

 

Exhibit Number

 

Description

 

 

 

99.1

 

Press Release Issued by Genesco Inc. on September 2, 2021

 

 

 

99.2

 

Genesco Inc. Second Quarter Ended July 31, 2021 Summary Results

 

 

 

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 


 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

GENESCO INC.

 

 

 

Date: September 2, 2021

 

By:

 

/s/ Thomas A. George

 

 

Name:

 

Thomas A. George

 

 

Title:

 

Senior Vice President and

Interim Chief Financial Officer

 

 

gco-ex991_7.htm

 

Exhibit 99.1

 

 

 

 

GENESCO INC. REPORTS FISCAL 2022 SECOND QUARTER RESULTS

--Results Meaningfully Exceed Expectations—

--Record Second Quarter EPS--

--Revenue and Earnings Accelerate and Continue to Exceed Pre-Pandemic Levels--

 

 

 

Second Quarter Fiscal 2022 Financial Summary

Net sales increased 42% from last year to $555 million

Net sales increased 14% over the second quarter two years ago with stores open about 97% of days

GAAP operating income increased 336% over second quarter two years ago

Non-GAAP operating income increased 346% over second quarter two years ago

E-commerce sales increased 97% from second quarter two years ago

GAAP EPS from continuing operations increased to $0.74 vs. ($1.33) last year and $0.05 two years ago

Non-GAAP EPS from continuing operations increased to $1.051 vs. ($1.23) last year and $0.15 two years ago

 

NASHVILLE, Tenn., Sept. 2, 2021 --- Genesco Inc. (NYSE: GCO) today reported GAAP earnings from continuing operations per diluted share of $0.74 for the three months ended July 31, 2021, compared to a loss from continuing operations per diluted share of ($1.33) in the second quarter last year and earnings from continuing operations of $0.05 per diluted share two years ago.  Adjusted for the Excluded Items in all periods, the Company reported second quarter earnings from continuing operations per diluted share of $1.05, compared to a loss from continuing operations per diluted share of ($1.23) last year and earnings from continuing operations of $0.15 per diluted share two years ago.

 

Mimi E. Vaughn, Genesco board chair, president and chief executive officer, said, “We delivered outstanding second quarter results highlighted by record second quarter profitability for our footwear businesses that far exceeded our expectations. Following a very strong start to Fiscal 2022, our top-line accelerated even further ahead of pre-pandemic levels fueled by robust full-priced selling, as our merchandise offerings, exceptional service and differentiated shopping experiences continue to resonate strongly with consumers. Our outperformance was driven by better than anticipated results across the board with all businesses exceeding pre-pandemic profits. The levels at which the Company performed during the first half of the year following a challenging Fiscal 2021 reflect the strong competitive positions of our retail and branded concepts and the positive transformation we are driving through our footwear focused strategy. Turning to the current quarter, we have been pleased with our results to date as sales tracked ahead of pre-pandemic levels in August, and we are several weeks into the all-important back-to-school selling season.

 

 

 

 

_____________________

1Excludes professional fees related to the actions of a shareholder activist, retail store asset impairments and expenses related to the Company’s new headquarters building, partially offset by an insurance gain, net of tax effect in the second quarter of Fiscal 2022 (“Excluded Items”).  A reconciliation of earnings/loss and earnings/loss per share from continuing operations in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) with the adjusted earnings/loss and earnings/loss per share numbers is set forth on Schedule B to this press release. The Company believes that disclosure of earnings/loss and earnings/loss 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.


 


 

 

 

 

“Our exceptional year-to-date performance reinforces our confidence in the strategic course we have set for the Company.  Our footwear focused strategy is working and is delivering results. Our opportunity to unlock value in Genesco is to further accelerate the digital and omnichannel potential in our retail business and to meaningfully grow our branded side.  In addition, the pandemic has provided us the real opportunity to transform our business at a faster pace, as we deliver improved growth and operating margins. With a strong balance sheet, we believe we are well positioned to further invest in this growth while also returning capital to our shareholders going forward.”

 

Thomas A. George, Genesco interim chief financial officer, commented, “We were very pleased that the second quarter marked an acceleration in the sequential improvement of our operating results since the onset of the pandemic. With much stronger revenue, higher gross margins, and well managed expenses, operating income far surpassed last year’s levels and the second quarter Fiscal 2020 two years ago, delivering record second quarter adjusted EPS of $1.05 compared to $0.15 in Fiscal 2020.”

 

Store Re-Opening Update

As of August 31, 2021, the Company is operating substantially all locations.  

 

Second Quarter Review

Net sales for the second quarter of Fiscal 2022 increased 42% to $555 million from $391 million in the second quarter of Fiscal 2021 and increased 14% from $487 million in the second quarter of Fiscal 2020. The sales increase from Fiscal 2020 was driven by a 97% increase in e-commerce sales and increased wholesale sales, with store sales just under Fiscal 2020 levels. As a result of store closures in response to the COVID-19 pandemic and the Company’s policy of removing any store closed for seven consecutive days from comparable sales, the Company has not included second quarter comparable sales for this year or last year, except for comparable direct sales, as it feels that overall sales is a more meaningful metric for these periods. Comparable direct sales for the second quarter of Fiscal 2022 were down 23% compared to up 144% for the second quarter of Fiscal 2021, and up 20% compared to the second quarter of Fiscal 2020.

 

Overall sales for the second quarter this year compared to the second quarter of Fiscal 2021 were up 25% at Journeys, up 48% at Schuh, up 154% at Johnston & Murphy and up 122% at Licensed Brands. Overall sales compared to the second quarter of Fiscal 2020 were up 10% at Journeys, up 15% at Schuh and up 260% at Licensed Brands, partially offset by a 9% decrease in Johnston & Murphy sales.

 

            Second quarter gross margin this year was 49.1%, up 640 basis points, compared with 42.7% last year and up 50 basis points compared with 48.6% in the second quarter of Fiscal 2020. The increase as a percentage of sales as compared to Fiscal 2020 is due primarily to higher full price selling at Journeys, partially offset by a mix shift towards Licensed Brands and higher shipping and warehouse expense in our retail businesses driven by the increase in penetration of e-commerce as compared to Fiscal 2020.

 

Adjusted selling and administrative expense for the second quarter this year decreased 270 basis points as a percentage of sales compared with last year and decreased 230 basis points compared with the second quarter of Fiscal 2020.  The decrease from Fiscal 2020 is due primarily to reduced occupancy expense as well as reduced selling salaries, partially offset by increased performance-based compensation expense driven by improved profitability and increased marketing expenses. The reduction in occupancy expense is driven by the U.K. government property tax relief program and benefits from our ongoing lease cost initiative.

 

Genesco’s GAAP operating income for the second quarter was $12.9 million, or 2.3% of sales this year, compared with an operating loss of $(22.0) million, or (5.6)% of sales last year, and an operating income of $3.0 million, or 0.6% of sales in the second quarter of Fiscal 2020.  Adjusted for the Excluded

 


 

Items in all periods, operating income for the second quarter was $21.1 million this year compared to an operating loss of $(20.9) million last year and an operating income of $4.7 million in the second quarter of Fiscal 2020. Adjusted operating margin was 3.8% of sales in the second quarter of Fiscal 2022, (5.3)% last year and 1.0% in the second quarter of Fiscal 2020.    

 

The effective tax rate for the quarter was 11.1% in Fiscal 2022 compared to 20.3% last year and 70.7% in the second quarter of Fiscal 2020.  The adjusted effective tax rate, reflecting Excluded Items, was 25.1% in the second quarter of Fiscal 2022 compared to 23.0% last year and 45.2% in the second quarter of Fiscal 2020.  The higher adjusted effective tax rate for this year as compared to last year reflects the inability to recognize a tax benefit for certain foreign losses and a higher mix of earnings in jurisdictions where the Company generates taxable income.

 

GAAP earnings from continuing operations were $10.9 million in the second quarter of Fiscal 2022, compared to a loss from continuing operations of $(18.9) million in the second quarter last year and earnings from continuing operations of $0.8 million in the second quarter of Fiscal 2020.  Adjusted for the Excluded Items in all periods, second quarter earnings from continuing operations were $15.3 million, or $1.05 per share, in Fiscal 2022, compared to a loss from continuing operations of $(17.4) million, or ($1.23) loss per share, last year and earnings from continuing operations of $2.5 million, or $0.15 per share, in the second quarter of Fiscal 2020.

 

Cash, Borrowings and Inventory

Cash and cash equivalents at July 31, 2021, were $304.0 million, compared with $299.1 million at August 1, 2020.  Total debt at the end of the second quarter of Fiscal 2022 was $20.0 million compared with $210.9 million at the end of last year’s second quarter reflecting increased borrowings in the second quarter last year as a result of the COVID-19 pandemic.  Inventories decreased 11% in the second quarter of Fiscal 2022 on a year-over-year basis and decreased 27% versus the second quarter of Fiscal 2020.  

 

Capital Expenditures and Store Activity

For the second quarter, capital expenditures were $8 million, related primarily to digital and omnichannel initiatives.  Depreciation and amortization was $11 million.  During the quarter, the Company opened three stores and closed eight stores.  The Company ended the quarter with 1,439 stores compared with 1,476 stores at the end of the second quarter last year, or a decrease of 3%.  Square footage was down 2% on a year-over-year basis.

 

Share Repurchases

The Company did not repurchase any shares during the second quarter of Fiscal 2022.  The Company currently has $90 million remaining on the $100 million board authorization from September 2019.

 

Fiscal 2022 Outlook

Due to the continued uncertainty in the overall economy driven by the COVID-19 pandemic, specifically the spread of the Delta variant, the Company is not providing guidance at this time, but will provide commentary on its outlook for the coming quarter in its prepared remarks on today’s earnings call.

 

Conference Call, Management Commentary and Investor Presentation

The Company has posted detailed financial commentary and a supplemental financial presentation of second quarter results on its website, www.genesco.com, in the investor relations section.  The Company's live conference call on September 2, 2021, at 7:30 a.m. (Central time), may be accessed through the Company's website, www.genesco.com. To listen live, please go to the website at least 15 minutes early to register, download and install any necessary software.

 


 


 

Safe Harbor Statement

This release contains forward-looking statements, including those regarding the performance outlook for the Company, expectations with respect to returning capital to shareholders and all other statements not addressing solely historical facts or present conditions.  Forward-looking statements are usually identified by or are associated with such words as “intend,” “expect,” “believe,” “anticipate,” “should,” “optimistic” and similar terminology.  Actual results could vary materially from the expectations reflected in these statements.  A number of factors could cause differences.  These include adjustments to projections reflected in forward-looking statements, including those resulting from the effects of COVID-19 on the Company’s business, including COVID-19 case spikes in locations in which the Company operates, additional store closures due to COVID-19 and expected timing for store reopenings, weakness in store and shopping mall traffic, timing of in person back-to-work and back-to-school and sales with respect thereto, expectations regarding the COVID-19 vaccine rollout and acceptance, restrictions on operations imposed by government entities and/or landlords, changes in public safety and health requirements, and limitations on the Company’s ability to adequately staff and operate stores.  Differences from expectations could also result from store closures and effects on the business as a result of civil disturbances; the level and timing of promotional activity necessary to maintain inventories at appropriate levels; the imposition of tariffs on product imported by the Company or its vendors as well as the ability and costs to move production of products in response to tariffs; the Company’s ability to obtain from suppliers products that are in-demand on a timely basis and effectively manage disruptions in product supply or distribution, including disruptions as a result of COVID-19; unfavorable trends in fuel costs, foreign exchange rates, foreign labor and material costs, and other factors affecting the cost of products; the effects of the British decision to exit the European Union and other sources of market weakness in the U.K. and Republic of Ireland; the effectiveness of the Company's omnichannel initiatives; costs associated with changes in minimum wage and overtime requirements; wage pressure in the U.S. and the U.K.; weakness in the consumer economy and retail industry; competition and fashion trends in the Company's markets; risks related to the potential for terrorist events; risks related to public health and safety events; changes in buying patterns by significant wholesale customers; retained liabilities associated with divestitures of businesses including potential liabilities under leases as the prior tenant or as a guarantor; and changes in the timing of holidays or in the onset of seasonal weather affecting period-to-period sales comparisons.  Additional factors that could cause differences from expectations include the ability to renew leases in existing stores and control or lower occupancy costs, and to conduct required remodeling or refurbishment on schedule and at expected expense levels; the Company’s ability to realize anticipated cost savings, including rent savings; the Company’s ability to achieve expected digital gains and gain market share; deterioration in the performance of individual businesses or of the Company's market value relative to its book value, resulting in impairments of fixed assets, operating lease right of use assets or intangible assets or other adverse financial consequences and the timing and amount of such impairments or other consequences; unexpected changes to the market for the Company's shares or for the retail sector in general; costs and reputational harm as a result of disruptions in the Company’s business or information technology systems either by security breaches and incidents or by potential problems associated with the implementation of new or upgraded systems; the Company’s ability to realize any anticipated tax benefits; and the cost and outcome of litigation, investigations and environmental matters involving the Company.  Additional factors are cited in the "Risk Factors," "Legal Proceedings" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of, and elsewhere in, the Company’s SEC filings, copies of which may be obtained from the SEC website, www.sec.gov, or by contacting the investor relations department of Genesco via the Company’s website, www.genesco.com.  Many of the factors that will determine the outcome of the subject matter of this release are beyond Genesco's ability to control or predict.  Genesco undertakes no obligation to release publicly the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.  Forward-looking statements reflect the expectations of the Company at the time they are made.  The Company disclaims any obligation to update such statements.


 


 

About Genesco Inc.

Genesco Inc., a Nashville-based specialty retail and branded company, sells footwear and accessories in more than 1,435 retail stores throughout the U.S., Canada, the United Kingdom and the Republic of Ireland, principally under the names Journeys, Journeys Kidz, Little Burgundy, Schuh, Schuh Kids, Johnston & Murphy, and on internet websites www.journeys.com, www.journeyskidz.com, www.journeys.ca, www.littleburgundyshoes.com, www.schuh.co.uk, www.johnstonmurphy.com, www.johnstonmurphy.ca, www.nashvilleshoewarehouse.com, and www.dockersshoes.com. In addition, Genesco sells footwear at wholesale under its Johnston & Murphy brand, the licensed Levi’s brand, the licensed Dockers brand, the licensed Bass brand, and other brands. Genesco is committed to progress in its diversity, equity and inclusion efforts, and the Company’s environmental, social and governance stewardship. For more information on Genesco and its operating divisions, please visit www.genesco.com.

 

 

Genesco Inc. Financial ContactsGenesco Inc. Media Contact

Thomas A. GeorgeClaire S. McCall

(615) 367-7465/tgeorge@genesco.com(615) 367-8283/cmccall@genesco.com

 

Dave Slater

(615) 367-7604/dslater@genesco.com  

 

 

 


 

 

GENESCO INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)

 

 

 

Quarter 2

 

 

Quarter 2

 

 

 

July 31,

2021

 

 

% of

Net Sales

 

 

August 1,

2020

 

 

% of

Net Sales

 

Net sales

 

$

555,183

 

 

 

100.0

%

 

$

391,217

 

 

 

100.0

%

Cost of sales

 

 

282,661

 

 

 

50.9

%

 

 

224,217

 

 

 

57.3

%

Gross margin

 

 

272,522

 

 

 

49.1

%

 

 

167,000

 

 

 

42.7

%

Selling and administrative expenses

 

 

252,551

 

 

 

45.5

%

 

 

187,261

 

 

 

47.9

%

Asset impairments and other, net

 

 

7,070

 

 

 

1.3

%

 

 

1,733

 

 

 

0.4

%

Operating income (loss)

 

 

12,901

 

 

 

2.3

%

 

 

(21,994

)

 

 

-5.6

%

Other components of net periodic benefit cost (income)

 

 

56

 

 

 

0.0

%

 

 

(182

)

 

 

0.0

%

Interest expense, net

 

 

617

 

 

 

0.1

%

 

 

1,918

 

 

 

0.5

%

Earnings (loss) from continuing operations before income taxes

 

 

12,228

 

 

 

2.2

%

 

 

(23,730

)

 

 

-6.1

%

Income tax expense (benefit)

 

 

1,354

 

 

 

0.2

%

 

 

(4,806

)

 

 

-1.2

%

Earnings (loss) from continuing operations

 

 

10,874

 

 

 

2.0

%

 

 

(18,924

)

 

 

-4.8

%

Gain (loss) from discontinued operations, net of tax

 

 

63

 

 

 

0.0

%

 

 

(112

)

 

 

0.0

%

Net Earnings (Loss)

 

$

10,937

 

 

 

2.0

%

 

$

(19,036

)

 

 

-4.9

%

Basic earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Before discontinued operations

 

$

0.76

 

 

 

 

 

 

$

(1.33

)

 

 

 

 

Net earnings (loss)

 

$

0.76

 

 

 

 

 

 

$

(1.34

)

 

 

 

 

Diluted earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Before discontinued operations

 

$

0.74

 

 

 

 

 

 

$

(1.33

)

 

 

 

 

Net earnings (loss)

 

$

0.75

 

 

 

 

 

 

$

(1.34

)

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

14,339

 

 

 

 

 

 

 

14,179

 

 

 

 

 

Diluted

 

 

14,611

 

 

 

 

 

 

 

14,179

 

 

 

 

 

 


 

 

GENESCO INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)

 

 

 

Six Months Ended

 

 

Six Months Ended

 

 

 

July 31,

2021

 

 

% of

Net Sales

 

 

August 1,

2020

 

 

% of

Net Sales

 

Net sales

 

$

1,093,878

 

 

 

100.0

%

 

$

670,449

 

 

 

100.0

%

Cost of sales

 

 

563,694

 

 

 

51.5

%

 

 

383,305

 

 

 

57.2

%

Gross margin

 

 

530,184

 

 

 

48.5

%

 

 

287,144

 

 

 

42.8

%

Selling and administrative expenses

 

 

492,016

 

 

 

45.0

%

 

 

376,303

 

 

 

56.1

%

Goodwill impairment

 

 

 

 

 

0.0

%

 

 

79,259

 

 

 

11.8

%

Asset impairments and other, net

 

 

9,740

 

 

 

0.9

%

 

 

9,594

 

 

 

1.4

%

Operating income (loss)

 

 

28,428

 

 

 

2.6

%

 

 

(178,012

)

 

 

-26.6

%

Other components of net periodic benefit cost (income)

 

 

17

 

 

 

0.0

%

 

 

(306

)

 

 

0.0

%

Interest expense, net

 

 

1,346

 

 

 

0.1

%

 

 

2,774

 

 

 

0.4

%

Earnings (loss) from continuing operations before income taxes

 

 

27,065

 

 

 

2.5

%

 

 

(180,480

)

 

 

-26.9

%

Income tax expense (benefit)

 

 

7,297

 

 

 

0.7

%

 

 

(26,932

)

 

 

-4.0

%

Earnings (loss) from continuing operations

 

 

19,768

 

 

 

1.8

%

 

 

(153,548

)

 

 

-22.9

%

Gain (loss) from discontinued operations, net of tax

 

 

47

 

 

 

0.0

%

 

 

(265

)

 

 

0.0

%

Net Earnings (Loss)

 

$

19,815

 

 

 

1.8

%

 

$

(153,813

)

 

 

-22.9

%

Basic earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Before discontinued operations

 

$

1.38

 

 

 

 

 

 

$

(10.86

)

 

 

 

 

Net earnings (loss)

 

$

1.38

 

 

 

 

 

 

$

(10.87

)

 

 

 

 

Diluted earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Before discontinued operations

 

$

1.35

 

 

 

 

 

 

$

(10.86

)

 

 

 

 

Net earnings (loss)

 

$

1.35

 

 

 

 

 

 

$

(10.87

)

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

14,313

 

 

 

 

 

 

 

14,145

 

 

 

 

 

Diluted

 

 

14,657

 

 

 

 

 

 

 

14,145

 

 

 

 

 

 


 

 

GENESCO INC.

Sales/Earnings Summary by Segment

(in thousands)

(Unaudited)

 

 

 

Quarter 2

 

 

Quarter 2

 

 

 

July 31,

2021

 

 

% of

Net Sales

 

 

August 1,

2020

 

 

% of

Net Sales

 

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Journeys Group

 

$

346,275

 

 

 

62.4

%

 

$

276,631

 

 

 

70.7

%

Schuh Group

 

 

106,079

 

 

 

19.1

%

 

 

71,732

 

 

 

18.3

%

Johnston & Murphy Group

 

 

61,159

 

 

 

11.0

%

 

 

24,097

 

 

 

6.2

%

Licensed Brands

 

 

41,670

 

 

 

7.5

%

 

 

18,757

 

 

 

4.8

%

Net Sales

 

$

555,183

 

 

 

100.0

%

 

$

391,217

 

 

 

100.0

%

Operating Income (Loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Journeys Group

 

$

30,368

 

 

 

8.8

%

 

$

10,160

 

 

 

3.7

%

Schuh Group

 

 

3,623

 

 

 

3.4

%

 

 

(6,838

)

 

 

-9.5

%

Johnston & Murphy Group

 

 

3,951

 

 

 

6.5

%

 

 

(18,243

)

 

 

-75.7

%

Licensed Brands

 

 

991

 

 

 

2.4

%

 

 

(1,222

)

 

 

-6.5

%

Corporate and Other(1)

 

 

(26,032

)

 

 

-4.7

%

 

 

(5,851

)

 

 

-1.5

%

Operating income (loss)

 

 

12,901

 

 

 

2.3

%

 

 

(21,994

)

 

 

-5.6

%

Other components of net periodic benefit cost (income)

 

 

56

 

 

 

0.0

%

 

 

(182

)

 

 

0.0

%

Interest, net

 

 

617

 

 

 

0.1

%

 

 

1,918

 

 

 

0.5

%

Earnings (loss) from continuing operations before income taxes

 

 

12,228

 

 

 

2.2

%

 

 

(23,730

)

 

 

-6.1

%

Income tax expense (benefit)

 

 

1,354

 

 

 

0.2

%

 

 

(4,806

)

 

 

-1.2

%

Earnings (loss) from continuing operations

 

 

10,874

 

 

 

2.0

%

 

 

(18,924

)

 

 

-4.8

%

Gain (loss) from discontinued operations, net of tax

 

 

63

 

 

 

0.0

%

 

 

(112

)

 

 

0.0

%

Net Earnings (Loss)

 

$

10,937

 

 

 

2.0

%

 

$

(19,036

)

 

 

-4.9

%

 

 

(1)

Includes a $7.0 million charge in the second quarter of Fiscal 2022 which includes $6.2 million for professional fees related to the actions of a shareholder activist and $1.4 million for retail store asset impairments, partially offset by a $0.6 million insurance gain.   Includes a $1.7 million charge in the second quarter of Fiscal 2021 for retail store asset impairments.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

GENESCO INC.

Sales/Earnings Summary by Segment

(in thousands)

(Unaudited)

 

 

 

 

Six Months Ended

 

 

Six Months Ended

 

 

 

July 31,

2021

 

 

% of

Net Sales

 

 

August 1,

2020

 

 

% of

Net Sales

 

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Journeys Group

 

$

722,823

 

 

 

66.1

%

 

$

445,556

 

 

 

66.5

%

Schuh Group

 

 

174,790

 

 

 

16.0

%

 

 

118,897

 

 

 

17.7

%

Johnston & Murphy Group

 

 

109,921

 

 

 

10.0

%

 

 

62,946

 

 

 

9.4

%

Licensed Brands

 

 

86,344

 

 

 

7.9

%

 

 

43,050

 

 

 

6.4

%

Net Sales

 

$

1,093,878

 

 

 

100.0

%

 

$

670,449

 

 

 

100.0

%

Operating Income (Loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Journeys Group

 

$

63,492

 

 

 

8.8

%

 

$

(26,923

)

 

 

-6.0

%

Schuh Group

 

 

(224

)

 

 

-0.1

%

 

 

(21,924

)

 

 

-18.4

%

Johnston & Murphy Group

 

 

771

 

 

 

0.7

%

 

 

(27,827

)

 

 

-44.2

%

Licensed Brands

 

 

3,552

 

 

 

4.1

%

 

 

(3,723

)

 

 

-8.6

%

Corporate and Other(1)

 

 

(39,163

)

 

 

-3.6

%

 

 

(18,356

)

 

 

-2.7

%

Goodwill Impairment

 

 

 

 

 

0.0

%

 

 

(79,259

)

 

 

-11.8

%

Operating income (loss)

 

 

28,428

 

 

 

2.6

%

 

 

(178,012

)

 

 

-26.6

%

Other components of net periodic benefit cost (income)

 

 

17

 

 

 

0.0

%

 

 

(306

)

 

 

0.0

%

Interest, net

 

 

1,346

 

 

 

0.1

%

 

 

2,774

 

 

 

0.4

%

Earnings (loss) from continuing operations before income taxes

 

 

27,065

 

 

 

2.5

%

 

 

(180,480

)

 

 

-26.9

%

Income tax expense (benefit)

 

 

7,297

 

 

 

0.7

%

 

 

(26,932

)

 

 

-4.0

%

Earnings (loss) from continuing operations

 

 

19,768

 

 

 

1.8

%

 

 

(153,548

)

 

 

-22.9

%

Gain (loss) from discontinued operations, net of tax

 

 

47

 

 

 

0.0

%

 

 

(265

)

 

 

0.0

%

Net Earnings (Loss)

 

$

19,815

 

 

 

1.8

%

 

$

(153,813

)

 

 

-22.9

%

 

 

(1)

Includes a $9.7 million charge in the first six months of Fiscal 2022 which includes $8.5 million for professional fees related to the actions of a shareholder activist and $1.8 million for retail store asset impairments, partially offset by a $0.6 million insurance gain.   Includes a $9.6 million charge in the first six months of Fiscal 2021 which includes a $5.3 million charge for trademark impairment and a $4.7 million charge for retail store asset impairments, partially offset by a $0.4 million gain for the release of an earnout related to the Togast acquisition.

 


 

GENESCO INC.

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)

 

 

 

July 31, 2021

 

 

August 1, 2020

 

Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

304,039

 

 

$

299,144

 

Accounts receivable

 

 

31,872

 

 

 

54,793

 

Inventories

 

 

326,477

 

 

 

365,267

 

Other current assets (1)

 

 

91,554

 

 

 

58,454

 

Total current assets

 

 

753,942

 

 

 

777,658

 

Property and equipment

 

 

202,711

 

 

 

220,458

 

Operating lease right of use assets

 

 

610,188

 

 

 

670,323

 

Goodwill and other intangibles

 

 

69,850

 

 

 

67,939

 

Other non-current assets

 

 

21,929

 

 

 

33,650

 

Total Assets

 

$

1,658,620

 

 

$

1,770,028

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

 

Accounts payable

 

$

186,593

 

 

$

178,541

 

Current portion long-term debt

 

 

 

 

 

24,860

 

Current portion operating lease liabilities

 

 

156,562

 

 

 

199,392

 

Other current liabilities

 

 

134,407

 

 

 

88,047

 

Total current liabilities

 

 

477,562

 

 

 

490,840

 

Long-term debt

 

 

20,022

 

 

 

186,049

 

Long-term operating lease liabilities

 

 

524,857

 

 

 

593,723

 

Other long-term liabilities

 

 

48,082

 

 

 

38,552

 

Equity

 

 

588,097

 

 

 

460,864

 

Total Liabilities and Equity

 

$

1,658,620

 

 

$

1,770,028

 

 

 

(1)

Includes prepaid income taxes of $60.8 million at July 31, 2021.

 


 

GENESCO INC.

Store Count Activity

 

 

 

Balance

02/01/20

 

 

Open

 

 

Close

 

 

Balance

01/30/21

 

 

Open

 

 

Close

 

 

Balance

07/31/21

 

Journeys Group

 

 

1,171

 

 

 

8

 

 

 

20

 

 

 

1,159

 

 

 

3

 

 

 

20

 

 

 

1,142

 

Schuh Group

 

 

129

 

 

 

1

 

 

 

7

 

 

 

123

 

 

0

 

 

0

 

 

 

123

 

Johnston & Murphy Group

 

 

180

 

 

 

4

 

 

 

6

 

 

 

178

 

 

 

1

 

 

 

5

 

 

 

174

 

Total Retail Units

 

 

1,480

 

 

 

13

 

 

 

33

 

 

 

1,460

 

 

 

4

 

 

 

25

 

 

 

1,439

 

 

 

 

 

 

 

GENESCO INC.

Store Count Activity

 

 

 

 

Balance

05/01/21

 

 

Open

 

 

Close

 

 

Balance

07/31/21

 

Journeys Group

 

 

1,143

 

 

 

3

 

 

 

4

 

 

 

1,142

 

Schuh Group

 

 

123

 

 

0

 

 

0

 

 

 

123

 

Johnston & Murphy Group

 

 

178

 

 

0

 

 

 

4

 

 

 

174

 

Total Retail Units

 

 

1,444

 

 

 

3

 

 

 

8

 

 

 

1,439

 

 

 

 

 

 

 

GENESCO INC.

Comparable Sales (1)

 

 

 

Quarter 2

 

 

Six Months

 

 

 

July 31,

2021

 

 

August 1,

2020

 

 

July 31,

2021

 

 

August 1,

2020

 

Comparable Direct Sales

 

 

-23

%

 

 

144

%

 

 

3

%

 

 

105

%

 

 

 

(1)

As a result of store closures in response to the COVID-19 pandemic and the Company's policy of removing any store closed for seven consecutive days from comparable sales, the Company has not included comparable sales for the second quarter and six months this year and last year, except for comparable direct sales, as it felt that overall sales was a more meaningful metric during these periods.

 

 

 

 

 

 

 

 

 

 

 

 


 

 

GENESCO INC.

COVID-19 Related Items

Decrease (Increase) to Pretax Earnings

(in thousands)

(Unaudited)

 

 

 

Quarter 2

 

 

Six Months

 

 

 

July 31, 2021

 

August 1, 2020

 

 

July 31, 2021

 

August 1, 2020

 

Goodwill impairment

 

$

 

$

 

 

$

 

$

79,259

 

Incremental retail store asset impairment (1)

 

 

 

 

1,002

 

 

 

 

 

3,736

 

Trademark impairment (1)

 

 

 

 

 

 

 

 

 

5,260

 

Release of Togast earnout (1)

 

 

 

 

 

 

 

 

 

(441

)

Excess inventory (2)

 

 

(1,826

)

 

2,469

 

 

 

(1,826

)

 

4,277

 

Non-productive compensation (3) and (4)

 

 

(917

)

 

1,443

 

 

 

(200

)

 

4,688

 

UK property tax relief (3)

 

 

(3,126

)

 

(3,934

)

 

 

(7,801

)

 

(5,489

)

Other governmental relief (3) and (5)

 

 

(1,163

)

 

 

 

 

(4,387

)

 

 

Rent abatements and temporary rent concessions (3) and (6)

 

 

(2,426

)

 

 

 

 

(8,574

)

 

 

Incremental bad debt reserve (3)

 

 

 

 

643

 

 

 

 

 

3,065

 

Other (3)

 

 

 

 

1,092

 

 

 

 

 

894

 

Total COVID-19 Related Items

 

$

(9,458

)

$

2,715

 

 

$

(22,788

)

$

95,249

 

 

(1)

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

(2)

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

(3)

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

(4)

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

(5)

Includes UK and ROI Relief Grants and Canadian rent subsidy.

(6)

Estimated impact of abatements and temporary rent savings agreements that are being recognized when executed if they pertain to a prior period.

 

 

 

 


Schedule B

 

Genesco Inc.

Adjustments to Reported Earnings (Loss) from Continuing Operations

Three Months Ended July 31, 2021, August 1, 2020 and August 3, 2019

The Company believes that disclosure of earnings (loss) and earnings (loss) per share from continuing operations and operating income (loss) adjusted for the items not reflected in the previously announced expectations will be meaningful to investors, especially in light of the impact of such items on the results.

 

 

 

Quarter 2

 

 

 

July 31, 2021

 

 

August 1, 2020

 

 

August 3, 2019

 

In Thousands (except per share amounts)

 

Pretax

 

 

Net of

Tax

 

 

Per Share

Amounts

 

 

Pretax

 

 

Net of

Tax

 

 

Per Share

Amounts

 

 

Pretax