Genesco Reports Third Quarter Results; Reports 3Q03 EPS of $0.41; Exceeds First Call Consensus Estimate of $0.33
NASHVILLE, Tenn., Nov. 20 /PRNewswire-FirstCall/ -- Genesco Inc. (NYSE: GCO) today reported net earnings of $10.1 million, or $0.41 per diluted share, for the third quarter ended November 2, 2002, compared with $8.0 million, or $0.33 per diluted share before discontinued operations, for the third quarter last year. Net sales for the quarter increased 15% to $213 million from $186 million in the third quarter a year ago.
Genesco President and Chief Executive Officer Hal N. Pennington said, "Our ability to exceed internal and external expectations in a challenging retail environment is a testament to the strength of our retail and wholesale brands and to the talent and commitment of our people. Solid sales gains at Journeys and Dockers, coupled with another strong performance by Jarman and Underground Station, more than offset weakness in our Johnston & Murphy wholesale business during the quarter. We believe we are well positioned for the remainder of the year and we remain enthusiastic about our opportunities for the future."
"Journeys' net sales during the quarter increased by 17% to $114 million compared to $97 million for the same period last year. Same store sales increased 1%. As expected, a decline in average selling price that affected Journeys throughout the spring and summer moderated during the quarter, as sandals became a smaller percentage of the overall product mix. This helped to drive our better than expected same store sales. At the same time, our gross margins were above last year and we benefited from favorable expense leverage during the quarter. We believe we have the right merchandise in place for the key Holiday season and we remain excited about Journeys' prospects."
Pennington continued, "Once again, we were very pleased with the performance of the Jarman Group, as net sales increased 23% to $36 million, same store sales rose 15% and operating margin expanded from a small loss to a positive 7.2%. Jarman retail comps were up 10% and Underground Station posted a 21% same store sales gain. These results represent the Jarman Group's third consecutive quarter of double digit comp increases and its fourth quarter- over-quarter improvement in operating margin.
"Total sales at Johnston & Murphy declined 1% for the quarter to $40 million compared to $41 million last year. Retail same store sales for the division increased 4% during the quarter, while wholesale sales declined. The solid performance of our stores gives us confidence that the Johnston & Murphy brand is strong. While the department store environment remains extremely promotional, we are pleased with the sharper focus and improved teamwork we are seeing in that division and although much remains to be done, we believe that Johnston & Murphy is on the right track to improve results.
"Finally, Dockers Footwear's sales increased 26% to $23 million compared to $18 million in the same quarter last year. Dockers experienced strong gains in all of its distribution channels from department stores to specialty chains to volume moderates. While it is still early, the response to our new Gore-Tex product has been very positive and we are excited about the potential of this new line. We continue to believe that Dockers offers one of the best price-value relationships in the industry and we remain positive about the opportunities for this brand."
The forward-looking statements in this release involve a number of risks and uncertainties. Actual results could be materially different. The factors that could cause materially different results include, among other factors: lower than expected consumer demand for the Company's products in the Holiday selling season and beyond, whether caused by weakness in the overall economy, consumer reactions to unexpected events or changes in fashions or tastes that the Company fails to anticipate or respond to appropriately; greater than anticipated pricing pressure from product mix changes or competition; changes in buying patterns by significant wholesale customers; disruptions in product supply or distribution, including the impact of a continuing transition to a new distribution center; the inability to adjust inventory levels to sales changes in business strategies by the Company's competitors; the inability to open, staff and support additional retail stores on schedule and at acceptable expense levels; and the outcome of litigation and environmental matters involving the Company. Forward-looking statements reflect the expectations of the Company at the time they are made. The Company disclaims any obligation to update such statements.
The Company's live conference call on November 20, 2002, at 8:30 a.m. (Central time), may be accessed through the Company's Internet website, www.genesco.com. The Company expects to discuss results from the third quarter and its current expectations for the fourth quarter and fiscal year ending February 1, 2003, during the call. To listen live, please go to the website at least 15 minutes early to register, download and install any necessary software. A replay will be available shortly after the call for 14 days.
Genesco, based in Nashville, sells footwear and accessories in more than 975 retail stores in the U.S., principally under the names Journeys, Journeys Kidz, Johnston & Murphy, Jarman and Underground Station, and on internet websites www.journeys.com and www.johnstonmurphy.com The Company also sells footwear at wholesale under its Johnston & Murphy brand and under the licensed Dockers brand. Additional information on Genesco and its operating divisions may be accessed at its website www.genesco.com .
GENESCO INC.
Consolidated Earnings Summary
Three Months Ended Nine Months Ended
November 2, November 3, November 2, November 3,
In Thousands 2002 2001* 2002 2001*
Net sales $ 213,157 $ 185,535 $ 578,592 $ 523,680
Cost of sales 112,318 99,814 304,754 277,877
Selling and administrative
expenses 82,197 70,694 232,089 204,394
Restructuring credit(1) -- -- -- (269)
Earnings from operations before
interest 18,642 15,027 41,749 41,678
Interest expense, net 2,162 2,159 5,756 5,582
Pretax earnings 16,480 12,868 35,993 36,096
Income tax expense 6,373 4,877 13,721 13,584
Earnings before discontinued
operations 10,107 7,991 22,272 22,512
Provision for discontinued
operations -- (708) -- (708)
Net Earnings $ 10,107 $ 7,283 $ 22,272 $ 21,804
Earnings Per Share Information
In Thousands (except per share amounts)
Three Months Ended Nine Months Ended
November 2, November 3, November 2, November 3,
2002 2001 2002 2001
Preferred dividend
requirements $ 73 $ 73 $ 221 $ 220
Average common shares -
Basic EPS 21,785 21,907 21,858 21,905
Basic earnings per share:
Before discontinued
operations $ 0.46 $ 0.36 $ 1.01 $ 1.02
Net earnings $ 0.46 $ 0.33 $ 1.01 $ 0.99
Average common and common
equivalent shares - Diluted
EPS 26,985 27,234 27,207 27,334
Diluted earnings per share:
Before discontinued
operations $ 0.41 $ 0.33 $ 0.92 $ 0.92
Net earnings $ 0.41 $ 0.30 $ 0.92 $ 0.90
(1) Adjustment to Nautica closedown provision including a $0.1 million
reversal of inventory write-down.
* Certain amounts have been reclassified to conform to current
presentation.
GENESCO INC.
Consolidated Earnings Summary
Three Months Ended Nine Months Ended
November 2, November 3, November 2, November 3,
In Thousands 2002 2001 2002 2001
Sales:
Journeys $ 113,777 $ 97,143 $ 296,932 $ 258,538
Jarman 36,415 29,592 99,797 77,619
Johnston & Murphy 40,363 40,812 122,269 125,112
Licensed Brands(1) 22,526 17,988 59,518 62,411
Corporate and Other 76 -- 76 --
Net Sales $ 213,157 $ 185,535 $ 578,592 $ 523,680
Pretax Earnings (Loss):
Journeys $ 15,464 $ 12,666 $ 31,164 $ 32,071
Jarman 2,637 (264) 6,440 (365)
Johnston & Murphy 992 2,812 6,464 11,470
Licensed Brands(2) 3,305 2,006 7,417 6,996
Corporate and Other (3,578) (2,193) (9,105) (8,313)
Nonrecurring charges(3) (178) -- (631) (181)
Operating income 18,642 15,027 41,749 41,678
Interest, net 2,162 2,159 5,756 5,582
Total Pretax Earnings 16,480 12,868 35,993 36,096
Income tax expense 6,373 4,877 13,721 13,584
Earnings before discontinued
operations 10,107 7,991 22,272 22,512
Provision for discontinued
operations -- (708) -- (708)
Net Earnings $ 10,107 $ 7,283 $ 22,272 $ 21,804
(1) Includes Nautica sales of $0.1 million and $6.1 million for the third
quarter and nine months of Fiscal 2002.
(2) Includes Nautica operating gain of $0.1 million for the third quarter
of Fiscal 2002 and an operating loss of $0.5 million for the nine
months of Fiscal 2002.
(3) Includes professional fees and severance charges in the third quarter
and nine months of Fiscal 2003 and litigation and severance charges in
the nine months of Fiscal 2002 offset by an adjustment to the Nautica
closedown provision of $0.3 million.
GENESCO INC.
Consolidated Balance Sheet
November 2, November 3,
In Thousands 2002 2001
Assets
Cash and short-term investments $ 10,260 $ 9,926
Accounts receivable 24,597 26,334
Inventories 199,773 183,676
Other current assets 22,021 28,553
Total current assets 256,651 248,489
Plant, equipment and capital leases 129,271 104,336
Other non-current assets 20,884 19,639
Non-current assets of discontinued
operations* 499 535
Total Assets $ 407,305 $ 372,999
Liabilities and Shareholders' Equity
Total current liabilities 96,220 95,478
Long-term debt 103,271 103,272
Other long-term liabilities 25,578 11,132
Shareholders' equity 182,236 163,117
Total Liabilities and Shareholders'
Equity $ 407,305 $ 372,999
*Non-current assets of discontinued operations include Volunteer Leather.
Retail Units Operated - Nine Months Ended November 2, 2002
Balance Balance
02/02/02 Open Conversions Close 11/02/02
Journeys Group 533 69 0 1 601
Journeys 519 49 0 1 567
Journeys Kidz 14 20 0 0 34
Jarman Group 227 7 0 6 228
Jarman Retail 130 0 (5) 5 120
Underground Station 97 7 5 1 108
Johnston & Murphy 148 4 0 1 151
Shops 116 2 0 1 117
Factory Outlets 32 2 0 0 34
Total Retail Units 908 80 0 8 980
Retail Units Operated - Three Months Ended November 2, 2002
Balance Balance
08/03/02 Open Conversions Close 11/02/02
Journeys Group 586 15 0 0 601
Journeys 558 9 0 0 567
Journeys Kidz 28 6 0 0 34
Jarman Group 229 1 0 2 228
Jarman Retail 126 0 (4) 2 120
Underground Station 103 1 4 0 108
Johnston & Murphy 149 3 0 1 151
Shops 117 1 0 1 117
Factory Outlets 32 2 0 0 34
Total Retail Units 964 19 0 3 980
Constant Store Sales
Three Months Ended Nine Months Ended
November 2, November 3, November 2, November 3,
2002 2001 2002 2001
Journeys 1% 8% -1% 7%
Jarman Group 15% -3% 17% -5%
Jarman Retail 10% -4% 16% -7%
Underground Station 21% -2% 19% -1%
Johnston & Murphy 4% -16% 1% -11%
Shops 6% -18% 1% -12%
Factory Outlets -2% -8% 1% -9%
Total Constant Store Sales 4% 1% 3% 1%
SOURCE Genesco Inc.
-0- 11/20/2002
/CONTACT: financial, James S. Gulmi, +1-615-367-8325, or media, Claire S. McCall, +1-615-367-8283, both of Genesco Inc./
/Company News On-Call: http://www.prnewswire.com/gh/cnoc/comp/352750.html/
/Web site: http://www.journeys.com /
/Web site: http://www.johnstonmurphy.com /