Genesco Reports Second Quarter Fiscal 2010 Results
Adjusted for the listed items in both periods, the loss from continuing operations was
Net sales for the second quarter of Fiscal 2010 were
"Looking ahead, while visibility with regard to the economic climate is still quite limited, we remain cautiously optimistic about the second half of Fiscal 2010. Sales comparisons continue to moderate throughout the period, and we expect positive comps in the fourth quarter. We are buying accordingly.
"Based on our sales expectations, we believe that we should be able to achieve our previously announced baseline scenario of earnings per share in the
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, 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, continuing weakness in the consumer economy, inability of customers to obtain credit, fashion trends that affect the sales or product margins of the Company's retail product offerings, changes in buying patterns by significant wholesale customers, bankruptcies or deterioration in financial condition of significant wholesale customers, disruptions in product supply or distribution, unfavorable trends in fuel costs, foreign exchange rates, foreign labor and materials costs, and other factors affecting the cost of products, competition in the Company's markets and changes in the timing of holidays or in the onset of seasonal weather affecting periodtoperiod sales comparisons. 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 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 our shares, variations from expected pension-related charges caused by conditions in the financial markets, and the 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
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GENESCO INC.
Consolidated Earnings Summary
Three Months Ended Six Months Ended
Restated * Restated *
In Thousands August 1, August 2, August 1, August 2,
2009 2008 2009 2008
Net sales $334,658 $353,138 $705,024 $710,073
Cost of sales 164,713 171,814 345,857 347,354
Selling and
administrative
expenses 168,598 173,420 349,967 353,466
Restructuring and
other, net 3,320 3,261 8,293 (198,577)
(Loss) earnings
from operations (1,973) 4,643 907 207,830
Loss on early
retirement of debt - - 5,119 -
Interest expense,
net 1,862 2,873 4,945 5,818
(Loss) earnings
before income taxes
from continuing
operations (3,835) 1,770 (9,157) 202,012
Income tax (benefit)
expense (1,172) 7,161 (891) 77,963
(Loss) earnings from
Continuing
operations (2,663) (5,391) (8,266) 124,049
Provision for
discontinued
operations (59) (5,361) (218) (5,454)
Net (Loss)
Earnings $(2,722) $(10,752) $(8,484) $118,595
* Fiscal 2009 results restated as a result of retroactive application of
FSP APB 14-1.
Earnings Per Share Information
Three Months Ended Six Months Ended
In Thousands Restated Restated
(except per August 1, August 2, August 1, August 2,
share amounts) 2009 2008 2009 2008
Preferred dividend
requirements $49 $50 $99 $99
Average common
shares - Basic
EPS 21,798 18,513 20,326 19,782
Basic earnings
(loss) per share:
Before discontinued
operations ($0.12) ($0.29) ($0.41) $6.27
Net (loss)
earnings ($0.13) ($0.58) ($0.42) $5.99
Average common and
common equivalent
shares - Diluted EPS 21,798 18,513 20,326 24,508
Diluted earnings
(loss) per share:
Before discontinued
operations ($0.12) ($0.29) ($0.41) $5.15
Net (loss)
earnings ($0.13) ($0.58) ($0.42) $4.93
GENESCO INC.
Consolidated Earnings Summary
Three Months Ended Six Months Ended
Restated Restated
August 1, August 2, August 1, August 2,
In Thousands 2009 2008 2009 2008
Sales:
Journeys Group $148,592 $160,960 $325,439 $329,722
Underground
Station Group 18,561 23,597 45,289 52,601
Hat World Group 108,830 102,169 207,634 189,906
Johnston & Murphy
Group 39,054 44,014 78,384 90,585
Licensed Brands 19,402 22,145 47,953 46,893
Corporate and
Other 219 253 325 366
Net Sales $334,658 $353,138 $705,024 $710,073
Operating Income
(Loss):
Journeys Group $(3,159) $2,388 $2,354 $7,686
Underground Station
Group (3,789) (3,038) (4,239) (4,019)
Hat World Group 10,526 11,454 17,050 15,179
Johnston & Murphy
Group (459) 2,994 (302) 6,677
Licensed Brands 1,987 2,091 5,604 5,646
Corporate and
Other* (7,079) (11,246) (19,560) 176,661
(Loss) earnings
from operations (1,973) 4,643 907 207,830
Loss on early
retirement of
debt - - 5,119 -
Interest, net 1,862 2,873 4,945 5,818
(Loss) earnings before
income taxes from
continuing
operations (3,835) 1,770 (9,157) 202,012
Income tax (benefit)
expense (1,172) 7,161 (891) 77,963
(Loss) earnings from
continuing operations (2,663) (5,391) (8,266) 124,049
Provision for
discontinued
operations (59) (5,361) (218) (5,454)
Net (Loss) Earnings $(2,722) $(10,752) $(8,484) $118,595
*Includes $3.3 million of other charges in the second quarter of Fiscal
2010 which includes $3.4 million in asset impairments offset by a $0.1
million gain from other legal matters and includes $8.3 million of other
charges in the first six months of Fiscal 2010 which includes $7.9
million in asset impairments, $0.3 million in other legal matters and
$0.1 million for lease terminations.
Includes $3.3 million of other charges in the second quarter of Fiscal
2009 which includes $2.4 million in asset impairments, $0.6 million for
lease terminations and $0.3 million for other legal matters and includes
$198.6 million credit in the first six months of Fiscal 2009 of which
$204.1 million were proceeds as a result of the settlement of
merger-related litigation with The Finish Line and its investment bankers
offset by $3.6 million in asset impairments, $1.1 million for other legal
matters and $0.8 million for lease terminations. The second quarter and
six months of Fiscal 2009 also included $0.3 million and $7.6 million ,
respectively, of merger-related expenses.
GENESCO INC.
Consolidated Balance Sheet
Restated
August 1, August 2,
In Thousands 2009 2008
Assets
Cash and cash equivalents $21,457 $24,283
Accounts receivable 28,251 23,015
Inventories 332,917 327,986
Other current assets 59,986 41,199
Total current assets 442,611 416,483
Property and equipment 228,712 249,067
Other non-current assets 182,678 170,056
Total Assets $854,001 $835,606
Liabilities and Shareholders' Equity
Accounts payable $119,891 $133,806
Other current liabilities 60,156 85,995
Total current liabilities 180,047 219,801
Long-term debt 53,042 99,820
Other long-term liabilities 111,981 86,977
Shareholders' equity 508,931 429,008
Total Liabilities and Shareholders' Equity $854,001 $835,606
GENESCO INC.
Retail Units Operated - Six Months Ended August 1, 2009
Balance Balance Balance
02/02/08 Open Close 01/31/09 Open Close 08/01/09
Journeys Group 967 50 5 1,012 14 5 1,021
Journeys 805 16 5 816 7 5 818
Journeys Kidz 115 26 0 141 7 0 148
Shi by Journeys 47 8 0 55 0 0 55
Underground
Station Group 192 0 12 180 0 4 176
Hat World Group 862 43 20 885 13 15 883
Johnston & Murphy
Group 154 9 6 157 4 0 161
Shops 113 6 5 114 3 0 117
Factory Outlets 41 3 1 43 1 0 44
Total Retail
Units 2,175 102 43 2,234 31 24 2,241
Retail Units Operated - Three Months Ended August 1, 2009
Balance Balance
05/02/09 Open Close 08/01/09
Journeys Group 1,018 6 3 1,021
Journeys 818 3 3 818
Journeys Kidz 145 3 0 148
Shi by Journeys 55 0 0 55
Underground Station
Group 177 0 1 176
Hat World Group 880 8 5 883
Johnston & Murphy Group 161 0 0 161
Shops 117 0 0 117
Factory Outlets 44 0 0 44
Total Retail Units 2,236 14 9 2,241
Constant Store Sales
Three Months Ended Six Months Ended
August 1, August 2, August 1, August 2,
2009 2008 2009 2008
Journeys Group -9% 2% -3% 1%
Underground Station Group -19% 9% -11% 9%
Hat World Group -2% 7% 3% 5%
Johnston & Murphy Group -16% -4% -17% -3%
Total Constant Store Sales -8% 4% -3% 3%
Schedule B
Genesco Inc.
Adjustments to Reported (Loss) Earnings from Continuing Operations
Three Months Ended August 1, 2009 and August 2, 2008
In Thousands 3 mos Impact 3 mos Impact
(except per share amounts) Aug 2009 on EPS Aug 2008 on EPS
(Loss) earnings from continuing
operations, as reported (2,663) $(0.12) (5,391) $(0.29)
Adjustments: (1)
Merger-related expenses - - 202 0.01
Impairment & lease
termination charges 2,114 0.09 1,780 0.07
Other legal matters (32) - 190 0.01
Convertible debt interest
restatement (APB 14-1) 172 0.01 462 0.02
Higher effective tax rate (2) 7 - 6,366 0.27
Effect of change in share count
from going to a profit from a loss - - - 0.09
Adjusted (loss) earnings from
continuing operations (3) $(402) $(0.02) $3,609 $0.18
(1) All adjustments are net of tax. The tax rate for the second quarter
of Fiscal 2010 is 37.29% excluding FIN 48 discrete items of $258,000 .
The tax rate for the second quarter of Fiscal 2009 before the impact of
the settlement of merger-related litigation and deductibility of prior
year merger-related expenses is 40.2% excluding a FIN 48 discrete item of
$74,000 .
(2) Includes added tax on Finish Line share appreciation and impact on
EPS calculation from additional tax in Fiscal 2009.
(3) Reflects 21.8 million share count for Fiscal 2010 and 23.3 million
share count for Fiscal 2009 which includes convertible shares and common
stock equivalents in Fiscal 2009.
The Company believes that disclosure of earnings and earnings per share
from continuing operations on a pro forma basis adjusted for the items
not reflected in the previously announced expectations will be meaningful
to investors, in light of the impact of changes in effective tax rates
and other items not reflected in those expectations.
Schedule B
Genesco Inc.
Adjustments to Forecasted Earnings from Continuing Operations
Fiscal Year Ending January 30, 2010
Baseline Scenario High Guidance Low Guidance
In Thousands Fiscal 2010 Fiscal 2010
(except per share amounts)
Forecasted earnings from continuing
operations $25,426 $1.17 $23,067 $1.07
Adjustments: (1)
Convertible debt interest
restatement (APB 14-1) 1,014 - 1,014 -
Impairment, other legal matters and
lease termination charges 9,063 0.39 9,063 0.39
Loss on early retirement of debt 3,117 0.13 3,117 0.13
Higher effective tax rate 2,540 0.11 2,540 0.11
Adjusted forecasted earnings from
continuing operations (2) $41,160 $1.80 $38,801 $1.70
(1) All adjustments are net of tax. The forecasted tax rate for Fiscal
2010 for the baseline scenario is 39.1%.
(2) Reflects 23.6 million share count for Fiscal 2010 which includes
convertible shares and 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.
SOURCE
Financial, James S. Gulmi, +1-615-367-8325, or Media, Claire S. McCall, +1-615-367-8283, both of Genesco Inc.