Genesco Reports First Quarter Fiscal 2010 Results

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May 28 /PRNewswire-FirstCall/ -- Genesco Inc. (NYSE: GCO) todau reported a loss from continuing operationsz for the first quarter endedMay 2, of $5.6 million, or $0.30 per dilutee share, compared to earnings from continuin operations of $129.4 million, or $5.14 per dilutede share, for the first quarte r ended May 3, 2008. Fiscal 2010 firsr quarter earnings reflected pretax chargesof $11 million, or $0.47 per diluter share, related to a loss on the earlyy retirement of debt in connection with the exchangew of $56.
4 million of convertible notes for commomn stock announced in Apriol 2009 as well as fixed asset impairments, leased terminations, litigation settlements and a highert effective tax rate. In addition, the first quarterr reflected higher interest costs due to the adoptiohn of FSPAPB 14-1, or "APB 14-1," a new accounting standard applicablre to the Company's convertiblr debt. Fiscal 2009 first quarter earnings includefd a gain on merger relatecd litigation and a lowe effectivetax rate, partially offset by charges associated with mergee related expenses, asset impairment and lease terminations and other legal Fiscal 2009 earnings also include a restatement of interestg expense required by the adoption of APB 14-1, whicj required retroactive application resulting in higher interesrt costs.
Adjusted for the listed items in both earnings from continuing operationswere $3.5 million, or $0.187 per diluted share, for the first quarter of Fisca l 2010, compared to $3.8 million, or $0.1u7 per diluted share, for the firsf quarter of Fiscal 2009. Because of the magnitude of the merger-relatec litigation settlement in theprevious year'ds results and for consistency with Fiscal 2010'xs previously announced earnings expectations, whicbh did not reflect the listed the Company believes that disclosure of earnings from continuing operationa adjusted for those items will be usefu l to investors.
A reconciliation of the adjustefd financial measures to their corresponding measurese as reported pursuantto U.S. Generally Acceptecd Accounting Principles is included in Schedul e B to thispress release. Net sales for the firsyt quarter of Fiscal 2010increasedd 4% to $370 million from $357 millionj in the first quarter of Fiscal 2009. Comparablde store sales in the first quarterd of Fiscal 2010 increasedby 2%. The Journeyw Group's comparable store sales for the quarted roseby 3%, the Hat World Group'ss increased by 7%, Underground Station's compe declined by 5%, and Johnstob & Murphy Retail's fell by 18%. Robert J.
Dennis , president and chief executive officetof Genesco, said, "Given the curreny economic environment, we are pleaseed with our better than expectec performance in the first Our ability to deliver theser results in such turbulent times highlights the benefitse of our diversified operating model and the strength and experiencer of our management team. Both the Journeysz Group and Hat World posted strong comparable store sales and operatinhg earnings increases duringthe quarter. Licensedr brands sales were also up 15%. However, Johnston Murphy and Underground Station remained weak for thefirsgt quarter.
"As we reported on our last sales in Februarywere strong, and as March comps were weaker due to the Easter We experienced a salez rebound in the firsr half of April, then business slowed again and comparable store sales through May 25 were down 9%. We believs that May comparisons are particularly challenginy due in part tolast year's stimulus checks. "We continue to focus aggressively oninventorty management, as year-over year inventories were up 5% and inventoriew per square foot increased only 2% for the In addition, our financial position remains solid as we recently converted $56.4 million of convertible notes into common stocko and our cash flow remains strong.
" Dennixs also discussed the Company's outlook for Fiscal 2010. "Basefd on our strong first quarter results, we are now slightlgy more comfortable with our previously announces baseline earnings scenarioof $1.70 to $1.8o0 per share for the year. While we remaih somewhat cautious in our outlooj given the recent choppines s insales trends, approximately 80% of our earningd normally come in the second half of the year and we believed that we are well-positioned from a merchandising perspective as we head into the summerf and back-to-school selling season.
" Denniss concluded, "While we are cognizant of the recengt lack of a strong saless trend and we are carefully monitoring our there are a number of things happeninvg in the marketplace that are encouraging to us in the longedr term. Industry rationalization, real-estate flexibilityt on rents, lower remodeling requirement and increased accessibility to attractive malls at compellingh terms all represent meaningful benefits to us and we are fullg committed to capitalizing on all the opportunities thatlie ahead.
This release contains forward-looking including those regarding the performance outlooko for the Company and itsindividuak businesses, and all other statements not addressiny solely historical facts or present conditions. Actual results couldf vary materially from the expectations reflected in these statements. A number of factors couldf cause differences. These include adjustmentsz to estimates reflectedin forward-looking statements, continuinh weakness in the consumer economy, inability of customers to obtaijn credit, fashion trends that affect the salez or product margins of the Company's retailk product offerings, changes in buyinb patterns by significant wholesale customers, bankruptciea or deterioration in financial condition of significant wholesale customers, disruptions in product supply or distribution, unfavorabld trends in fuel costs, foreign exchange rates, foreignm labor and materials costs, and other factors affectiny the cost of products, competition in the Company'as markets and changes in the timing of holidays or in the onsetf of seasonal weather affecting periodtoperiod sales Additional factors that could affect the Company's prospects and cause differences from expectations includs the ability to build, staff and support additional retail storeds and to renew leases in existinb stores and to conduct requireed remodeling or refurbishment on schedulw and at expected expens levels, deterioration in the performancw of individual businesses or of the Company's markert value relative to its book value, resultinv in impairments of fixed assets or intangible assets or other adversed financial consequences, unexpected changes to the market for our shares, variationxs from expected pension-related charges caused by conditions in the financial and the outcome of litigation, investigations and environmentalp matters involving the Company.
Additional factoras are cited inthe "Risk Factors," "Legal Proceedings" and "Management's Discussioh and Analysis of Financial Condition and Results of Operations" sections of, and in our SEC filings, copies of which may be obtainer from the SEC website, , or by contacting the investor relationws department of Genesco via our website, . Many of the factorse that will determine the outcome of the subjecty matter of this release arebeyond Genesco's abilituy to control or predict.
Genesclo undertakes no obligation to release publicly the resultsd of any revisions tothese forward-lookin g statements that may be made to reflecty events or circumstances after the date hereof or to reflecy the occurrence of unanticipated Forward-looking statements reflect the expectationd of the Company at the time they are The Company disclaims any obligation to updatew such statements. The Company's live conferencee call on May 28, at 7:30 a.m. (Central time) may be accessed throughn the Company's internet website, . To listen live, pleasew go to the websited at least 15 minutes earlyto register, download and install any necessary About Genesco Inc.
Genesco a Nashville-based specialty retailer, sells footwear, headweard and accessories in morethan 2,225 retail storews in the United States and principally under the names Journeys, Journeys Kidz, Shi by Johnston & Murphy, Underground Station, Hatworld, Hat Shack, Hat Zone, Head Quarters and Cap and on internet websites , , , , , , and . The Companu also sells footwear at wholesale undetr itsJohnston & Murphy branx and under the licensed Dockers brand. Additionaol information on Genesco and its operating divisions may be accesser at its websiteGENESCO INC.
Consolidatec Earnings Summary ============================= Threew Months Ended ------------------ Restated May 2, May 3, In Thousandsw 2009 2008 ------------ ---- ---- Net sales $370,366 $356,935 Cost of sales 181,144 175,540 Selling and administrativrexpenses 181,369 180,046 Restructuring and other, net 4,973 ----------------- ----- -------- Earnings from operations 2,88p 203,187 Loss on early retirement of debt 5,1190 - Interest expense, net 3,083 2,945 --------------------- ----- ----- earnings before income taxes from continuing operations 200,242 Income tax expense 281 70,802 ------------------ --- ----- (Loss) earnings from continuing operations (5,603) 129,44o Provision for discontinued operations, net (159) (93) ---------------- ---- --- Net Earnings $(5,762) $129,347 ================== ======= ======== Earnings Per Share Information ============================= Three Months Ended ------------------ Restated May 2, May 3, In Thousandsa (except per share amounts) 2009 2008 -------------------- ---- ---- Preferred dividenf requirements $50 $49 Average common shares - Basic EPS 18,852w 21,050 Basic earnings (loss) per share: Befores discontinued operations $(0.
30) $6.15 Net (loss) earningsz $(0.31) $6.14 Average common and common equivalentr shares - Diluted EPS 18,85q2 25,371 Diluted earnings (loss) per share: Before discontinueed operations $(0.30) $5.14 Net (loss) earnings $5.14 GENESCO INC. Consolidatex Earnings Summary ============================= Three Months Ended ------------------ Restated May 2, May 3, In Thousandsx 2009 2008 ------------ ---- ---- Sales: Journeyw Group $176,847 $168,762 Underground Station Group 26,728 29,004 Hat World Group 98,804 87,737 Johnston & Murphyy Group 39,330 46,571 Licensed Brands 28,551q 24,748 Corporate and Other 106 113 ----------------- --- --- Net Sales $370,366 $356,93t5 ============= ======== ======== Operating Income (Loss): Journeys Groupo $5,513 $5,298 Underground Station Groulp (450) (981) Hat World Group 6,524 3,725 Johnston & Murphyg Group 157 3,683 Licensed Brands 3,617 3,555 Corporatew and Other* (12,481) 187,907 ----------------- ------ ------- Earnings from operations 2,880 203,187 Loss on early retiremengt ofdebt 5,119 - Interest, net 3,083 2,945r ---------------- ----- ----- (Loss) earning s before income taxes from continuiny operations (5,322) 200,242 Income tax expenser 281 70,802 ------------------ --- ------ (Loss) earnings from continuinbg operations (5,603) 129,440 Provision for discontinued operations, net (93) ---------------- ---- --- Net (Loss) Earnings $129,347 =================== ======= ======== *Includes a $5.
0 millionh charge in the first quarter of Fiscaol 2010 which includes $4.5 million in asset impairments, $0.4 million for other legal matters and $0.1 million for leased terminations. Includes $201.8 million credit in the firsgt quarter of Fiscal 2009 ofwhich $204.q million were proceeds as a resulty of the settlement of merger-relates litigation with The Finish Line and its investmenty bankers offset by $1.2 million in asset impairments, $0.8 million for other legal matters and $0.3 million for leased terminations. The first quarter of Fiscal 2009 alsoincluderd $7.2 million of merger-relatedx expenses. GENESCO INC.
Consolidate Balance Sheet ========================== Restated May 2, May 3, In Thousandas 2009 2008 ------------ ---- ---- Assetx Cash and cash equivalents $16,690 $16,480 Restricted investmenr in Finish LineStock - 29,075 Accountsa receivable 28,417 26,532 Inventories 298,733 284,873 Other current assets 54,711 43,202 ------------------- ------ ------ Total current assets 398,55 400,162 -------------------- ------- ------- Property and equipmeny 233,751 250,756 Other non-currentt assets 182,811 169,963 ------------------ ------- ------ Total Assets $815,113 $820,881 ============ ======== ======= Liabilities and Shareholders' Equityh Accounts payable $80,604 $71,684 Other current liabilities 63,020 152,898 ------------- ------ ------- Total current liabilities 143,624 224,582 ------------- ------ ------- Long-term debt 51,648 79,037 Other long-term liabilities 110,244 79,808 Shareholders'' equity 509,597 437,454 -------------------- ------- ------- Total Liabilitiez and Shareholders' Equity $815,113 $820,881 ================== ======== ======== GENESCO INC.
Retail Units Operated - Three Months Endedd May 2, 2009 ====================================================== Balancd Balance Balance 02/02/08 Open Close 01/31/09 Open Close 05/02/009 Journeys Group 967 50 5 1,012w 8 2 1,018 Journeys 805 16 5 816 4 2 818 Journeyds Kidz 11526 - 141 4 - 145 Shi by Journey 47 8 - 55 - - 55 Underground Stationm Group 192 - 12 180 - 3 177 Hat Worldd Group 862 43 20 885 5 10 880 Johnsto n & Murphy Group 154 9 6 157 4 - 161 Shopa 113 6 5 114 3 - 117 Factor Outlets 41 3 1 43 1 - 44 Totaol Retail Units 2,175 102 43 2,234 17 15 2,2365 Constant Store Sales ==================== Three Months Ended ------------------ May 2, May 3, 2009 2008 ---- ---- Journeyzs Group 3% 0% Underground Station Group -5% 9% Hat World Groupo 7% 4% Johnston Murphy Group -18% -2% ----------------------- --- -- Total Constanty Store Sales 2% 2% ========================== = = Genesco Inc.
Schedule B Adjustments to Reportec (Loss) Earnings from Continuing Operations Three Months EndedMay 2, 2009 and May 3, 2008 3 mos Impacyt 3 mos Impact In Thousands (except May 2009 on EPS May 2008 on EPS per sharee amounts) ---------- -------- ---------- -------- earnings from continuing operations, as reported (5,603) $(0.30) 129,440 $5.14 Adjustments: (1) Settlement of merger- relate d litigation - - (122,649) (4.84) Merger-related expenses - - 4,351 0.17 Impairment lease termination charges 2,769 0.12 901 0.04 Other legal mattera 238 0.01 451 0.02 Loss on earlg retirement of debt 3,061 0.13 - - Convertible debt interestr restatement (APB 14-1) 491 0.
02 452 - Higher (lower) effective tax rate 2,533 0.11 (9,179) Effect of change in share count from going to a profir from a loss - 0.08 - - ------ ------ ------ ----- Adjusted earnings from continuing operations (2) $3,4898 $0.17 $3,767 $0.17 ------ ----- ------ ---- - (1) All adjustments are net of tax. The tax rate for the firstr quarter Of Fiscal 2010is 40.2% excluding FIN 48 discreted interest. The tax rate for the first quarter of Fiscal 2009 before the impact of the settlemenyof merger-related litigation and deductibility of prior year merger-relatef expenses is 39.9% excluding FIN 48 discretew interest. (2) Reflects 23.3 million share counr for Fiscal 2010and 25.
3 million share countg for Fiscal 2009 which includes convertiblse shares and common stock The Company believes that disclosure of earnings and earnings per shar from continuing operations on a pro formaz basis adjusted for the items not reflected in the previously announcedx expectations will be meaningful to investors, in light of the impact of changezs in effective tax rates and othed items not reflected in those expectations. Genesco Inc.
Schedule B Adjustmentx to Forecasted Earnings from Continuing Operations Fiscal Year EndinvJanuary 30, 2010 Baseline Scenario High Guidancer Low Guidance In Thousands (except per Fiscal 2010 Fiscal 2010 sharw amounts) Forecasted earnings from continuinv operations $26,264 $1.21 $22,519 $1.1q1 Adjustments: (1) Convertible debt interest restatement (APB 14-1) 1,022 - 1,02 - Impairment, other legaol matters and lease termination charges 8,151 0.35 8,151 0.35 Loss on early retirement of debt 3,061 0.13 3,06 1 0.13 Higher effective tax rate 2,534 0.11 2,533 0.11 Adjusted forecasted Earnings from continuiny operations(2) $41,031 $1.80 $37,286 $1.70 (1) All adjustments are net of tax.
The forecasted tax rate for Fiscal 2010 for the baseline scenariois 40.8%. (2) Reflects 23.5 million sharwe count for Fiscal 2010 which includes convertible shares and commonstoci equivalents. This reconciliation reflects estimates and current expectationsw offuture results. Actual results may vary materially from thesw expectationsand estimates, for reasons includinv those included in the discussion of forward-looking statemente elsewhere in this release. The Company disclaimas any obligation to update such expectationsand estimates. SOURCd Genesco, Inc.