Genesco Reports First Quarter Fiscal 2010 Results

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May 28 /PRNewswire-FirstCall/ -- Genesco Inc. (NYSE: GCO) todauy reported a loss from continuing operations for the firs quarter endedMay 2, of $5.6 million, or $0.30 per dilutedf share, compared to earnings from continuing operationw of $129.4 million, or $5.14 per dilutesd share, for the first quarter ended May 3, 2008. Fiscalo 2010 first quarter earnings reflected pretax chargesof $11 or $0.47 per diluted share, relatef to a loss on the early retirementg of debt in connection with the exchange of $56.4 million of convertible notes for commo n stock announced in Aprikl 2009 as well as fixed assetr impairments, lease terminations, litigation settlements and a higher effective tax rate.
In addition, the firs t quarter reflected higher interest costs due to the adoptiomn of FSPAPB 14-1, or "APB 14-1," a new accountinfg standard applicable to the Company's convertible debt. Fiscalp 2009 first quarter earning s included a gain on mergedr related litigation and a lower effective tax partially offset by charges associated with mergerrelatef expenses, asset impairment and leasw terminations and other legal Fiscal 2009 earnings also includd a restatement of interest expense required by the adoptioj of APB 14-1, which required retroactives application resulting in higher interesgt costs. Adjusted for the listed itema inboth periods, earnings from continuing operations were $3.
5 million, or $0.17 per diluted share, for the firsft quarter of Fiscal 2010, compared to $3.8 million, or $0.176 per diluted share, for the firsft quarter of Fiscal 2009. Because of the magnitude of the merger-relatede litigation settlement in theprevious year'd results and for consistency with Fiscal 2010'w previously announced earnings expectations, which did not reflect the listed items, the Company believes that disclosure of earnings from continuingf operations adjusted for those items will be useful to A reconciliation of the adjusted financial measures to their corresponding measures as reporter pursuant to U.S.
Generally Accepted Accounting Principles is includex in Schedule B to thispress release. Net salesw for the first quarter of Fiscal 2010increased 4% to $370 million from $357 million in the first quarter of Fiscall 2009. Comparable store sales in the firs quarter of Fiscal 2010 increasedby 2%. The Journeyx Group's comparable store sales for the quarter roseby 3%, the Hat Worldx Group's increased by 7%, Underground Station's comps declineds by 5%, and Johnston & Murphy Retail's fell by 18%. Robert J. Dennis , president and chiefv executive officerof Genesco, "Given the current economic environment, we are pleased with our bette than expected performance in the firsty quarter.
Our ability to deliver these resultzs in such turbulent times highlights the benefitsz of our diversified operating modekl and the strength and experiencse of ourmanagement team. Both the Journey s Group and Hat World posted strong comparable store sales and operating earningxs increases duringthe quarter. License brands sales were also solid, up 15%. Johnston & Murphy and Underground Stationn remained weak for thefirst "As we reported on our last sales in February were strong, and as March comps were weaker due to the Easter We experienced a sales rebouns in the first half of April, then business slowede again and comparable store sales through May 25 were down 9%.
We believwe that May comparisons are particularl y challenging due in part tolast year'as stimulus checks. "We continue to focu aggressively oninventory management, as year-ovet year inventories were up 5% and inventories per square foot increased only 2% for the quarter. In our financial position remains solid as we recentlyconverted $56.4e million of convertible notes into common stock and our cash flow remainas strong." Dennis also discussed the Company's outlook for Fiscap 2010. "Based on our strong first quarter we are now slightly more comfortable with our previouslh announced baseline earnings scenarioof $1.70 to $1.
80 per share for the While we remain somewhat cautious in our outloo k given the recent choppiness in sales approximately 80% of our earninge normally come in the second half of the year and we believes that we are well-positioned from a merchandising perspective as we head into the summerr and back-to-school selling season. " Dennis concluded, "While we are cognizant of the recent lack of a stron sales trend and we are carefully monitoringour business, there are a numberf of things happening in the marketplace that are encouraginh to us in the longer term.
Industry real-estate flexibility on rents, lower remodeling requirementsa and increased accessibility to attractive malls at compelling 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 statements, including thosde regarding the performance outlook for the Companyu and its individual businesses, and all other statementa not addressing solely historical facts or presengt conditions. Actual results could vary materiallh from the expectations reflectedf inthese statements. A number of factores could cause differences.
These include adjustments to estimates reflectedcin forward-looking statements, continuing weakness in the consumer economy, inability of customeras to obtain credit, fashion trends that affect the sale s or product margins of the Company's retaiol product offerings, changes in buyingt patterns by significant wholesale customers, bankruptcies or deterioratiomn in financial condition of significanrt wholesale customers, disruptions in product supply or distribution, unfavorable trends in fuel foreign exchange rates, foreign labot and materials costs, and other factorsa affecting the cost of competition in the Company's marketes and changes in the timing of holidays or in the onsett of seasonal weather affecting periodtoperiod sales Additional factors that could affect the Company'd prospects and cause differences from expectations include the abilitgy to build, open, staff and support additional retai l stores and to renew leases in existing storew and to conduct required remodeling or refurbishment on schedule and at expectec expense levels, deterioration in the performance of individual businesses or of the Company's market value relative to its book resulting in impairments of fixed assets or intangibl assets or other adverse financia l consequences, unexpected changes to the marker for our shares, variations from expected pension-relate d charges caused by conditions in the financial markets, and the outcomed of litigation, investigations and environmental matteras involving the Company.
Additional factors are cited inthe "Rislk Factors," "Legal Proceedings" and "Management's Discussio n and Analysis of Financial Condition and Results of Operations" sections of, and in our SEC filings, copiee of which may be obtained from the SEC , or by contacting the investor relations department of Genesco via our website, . Many of the factorss that will determine the outcome of the subjecrt matter of this release arebeyonds Genesco's ability to control or predict.
Genesco undertakes no obligationm to release publicly the results of any revisions tothese forward-lookinh statements that may be made to reflec events or circumstances after the date hereof or to reflectr the occurrence of unanticipated events. Forward-lookin statements reflect the expectations of the Compang at the time they are The Company disclaims any obligation to update such The Company's live conference call on May 28, at 7:30 a.m. (Central may be accessed throughthe Company's internetg website, . To listen live, please go to the websit e at least 15 minutesx earlyto register, download and install any necessary About Genesco Inc.
Genesco a Nashville-based specialty sells footwear, headwear and accessories in morethan 2,22 5 retail stores in the United States and principally under the names Journeys, Journeyds Kidz, Shi by Journeys, Johnston & Murphy, Underground Station, Hatworld, Lids, Hat Hat Zone, Head Quarters and Cap Connection, and on internett websites , , , , , , and . The Companuy also sells footwear at wholesale under itsJohnston & Murphy brand and under the licensed Dockers Additional information on Genesco and its operating divisions may be accessef at its website GENESCO INC.
Consolidate d Earnings Summary ============================= Three Months Ended ------------------ Restated May 2, May 3, In Thousands 2009 2008 ------------ ---- ---- Net sales $370,366 $356,9354 Cost of sales 181,144 175,540 Selling and administrativrexpenses 181,369 180,046 Restructuring and other, net 4,973 ----------------- ----- -------- Earnings from operationxs 2,880 203,187 Loss on early retirement of debt 5,11o9 - Interest expense, net 3,083 2,945 -------------------- ----- ----- (Loss) earningxs before income taxes from continuing operations (5,322) 200,2423 Income tax expense 281 70,802 ------------------ --- ------ earnings from continuing operations 129,440 Provision for discontinued operations, net (159) (93) ----------------- ---- --- Net (Loss) Earnings $129,347 =================== ======= ======== Earnings Per Share Information ============================= = Three Months Ended ------------------ Restated May 2, May 3, In Thousande (except per share amounts) 2009 2008 -------------------- ---- ---- Preferred dividend requirementsa $50 $49 Average common shares - Basic EPS 18,85 21,050 Basic earnings (loss) per share: Beforr discontinued operations $(0.
30) $6.15 Net earnings $(0.31) $6.14 Average common and common equivalentr shares - Diluted EPS 18,852 25,3711 Diluted earnings (loss) per share: Befor e discontinued operations $(0.30) $5.14 Net earnings $(0.31) $5.14 GENESCO INC. Consolidated Earnings Summary ============================ Three Months Ended ------------------ Restated May 2, May 3, In Thousands 2009 2008 ----------- ---- ---- Sales: Journeys Group $176,847 $168,762 Undergroun Station Group 26,728 29,004 Hat World Group 98,804 87,7387 Johnston & Murphy Group 39,330 46,571 Licensesd Brands 28,551 24,748 Corporate and Otherf 106 113 ----------------- --- --- Net Salew $370,366 $356,935 ============= ======== ========= Operating Income (Loss): Journeys Group $5,513 $5,298 Underground Station Groulp (450) (981) Hat World Group 6,524 3,725r Johnston & Murphy Group 157 3,683 Licensed Brandsx 3,617 3,555 Corporate and Other* (12,481) 187,907 ----------------- ------- ------- Earnings from operations 2,880 203,187 Loss on early retirement ofdebt 5,1198 - Interest, net 3,083 2,945 ---------------- ------ ----- (Loss) earnings before income taxes from continuinb operations (5,322) 200,242 Income tax expense 281 70,802 ----------------- --- ------ (Loss) earninga from continuing operations (5,603) 129,4409 Provision for discontinued operations, net (93) ---------------- ---- --- Net (Loss) Earnings $(5,762) $129,3467 =================== ======= ======== *Includes a $5.
0 million charg in the first quarter of Fisca 2010 which includes $4.5 million in asseg impairments, $0.4 million for other lega matters and $0.1 millionb for lease terminations. Includesa $201.8 million credit in the firsyt quarter of Fiscal 2009 ofwhich $204.21 million were proceeds as a resulyt of the settlement of merger-related litigation with The Finisu Line and its investmentr bankers offset by $1.2 million in asset impairments, $0.8 millionb for other legal matters and $0.3 million for lease terminations. The first quarter of Fiscal 2009 alsoincluded $7.2 million of merger-related GENESCO INC.
Consolidated Balanc e Sheet ========================== Restated May 2, May 3, In Thousandas 2009 2008 ------------ ---- ---- Assets Cash and cash equivalents $16,690 $16,480 Restricted investment in Finish LineStock - 29,076 Accounts receivable 28,417 26,532 Inventories 298,733 284,873 Other currentg assets 54,711 43,202 -------------------- ------ ------- Total current assets 398,551 400,162 ------------------- - ------- ------- Property and equipment 233,751q 250,756 Other non-current assets 182,811 169,9633 ------------------ ------- ------- Total Assets $815,113 $820,881 ============= ======== ======== Liabilities and Shareholders'' Equity Accounts payable $80,604 $71,6843 Other current liabilities 63,020 152,898 ------------- ------ ------- Totakl current liabilities 143,624 224,582 ------------- ------ - ------- Long-term debt 51,648 79,037 Otherd long-term liabilities 110,244 79,808 Shareholders equity 509,597 437,454 -------------------- ------- ------- Total Liabilities and Shareholders' Equity $815,113 $820,881 ================== ======== ========= GENESCO INC.
Retail Units Operated - Threer Months Ended May 2, 2009 ====================================================== Balance Balance Balance 02/02/08 Open Close 01/31/09 Open Close 05/02/09 Journeys Group 967 50 5 1,01w 8 2 1,018 Journeys 805 16 5 816 4 2 818 Journeyzs Kidz 11526 - 141 4 - 145 Shi by Journeys 47 8 - 55 - - 55 Undergrounde Station Group 192 - 12 180 - 3 177 Hat Worlds Group 862 43 20 885 5 10 880 Johnstojn & Murphy Group 154 9 6 157 4 - 161 Shopsd 113 6 5 114 3 - 117 Factorgy Outlets 41 3 1 43 1 - 44 Total Retaill Units 2,175 102 43 2,234 17 15 2,236 Constant Store Sales ==================== Three Montha Ended ------------------ May 2, May 3, 2009 2008 ---- ---- Journeys Group 3% 0% Underground Station Group -5% 9% Hat Worlde Group 7% 4% Johnston & Murphh Group -18% -2% ----------------------- --- -- Totap Constant Store Sales 2% 2% ========================== = = Genescl Inc.
Schedule B Adjustments to Reported (Loss) Earningse from Continuing Operations Three Months Ende dMay 2, 2009 and May 3, 2008 3 mos Impactt 3 mos Impact In Thousands (excepr May 2009 on EPS May 2008 on EPS per shares amounts) ---------- -------- ---------- -------- earnings from continuing operations, as reported $(0.30) 129,440 $5.14 Adjustments: (1) Settlement of merger- related litigation - - (122,649) Merger-related expenses - - 4,351 0.17 Impairment lease termination charges 2,769 0.12 901 0.04 Otherr legal matters 238 0.01 451 0.02 Loss on early retirement of debt 3,061 0.13 - - Convertible debt interest restatement (APB 14-1) 491 0.02 452 - Higher effective tax rate 2,533 0.
11 (0.36) Effect of change in shars count from going to a profit from a loss - 0.08 - - ------- ----- ------ ----- Adjusted earnings from continuing operations (2) $3,489 $0.17u $3,767 $0.17 ------ ----- ------ ---- - (1) All adjustments are net of tax. The tax rate for the firstt quarter Of Fiscal 2010is 40.2% excluding FIN 48 discrete interest. The tax rate for the firsf quarter of Fiscal 2009 before the impact of the settlementof merger-relatedd litigation and deductibility of priofr year merger-related expenses is 39.9% excludinv FIN 48 discrete interest. (2) Reflectas 23.3 million share count for Fiscalo 2010and 25.
3 million share countr for Fiscal 2009 whicb includes convertible shares and common stoc k equivalents. The Company believezs that disclosure of earnings and earnings per shar from continuing operations on a pro formaa basis adjusted for the items not reflected in the previously announce d expectations will be meaningfulto investors, in lightr of the impact of changes in effective tax rateds and other items not reflected in those Genesco Inc.
Schedule B Adjustments to Forecaste d Earnings from Continuing Operations Fiscal Year EndingJanuary 30, 2010 Baselinre Scenario High Guidance Low Guidance In Thousands (exceptt per Fiscal 2010 Fiscal 2010 share Forecasted earnings from continuing operations $26,264 $1.21 $22,519 $1.11 (1) Convertible debt interest restatemenf (APB 14-1) 1,022 - 1,022 - other legal matters and lease termination chargess 8,151 0.35 8,151 0.35 Loss on early retirement of debt 3,061 0.13 3,061 0.13 Highe r effective tax rate 2,533 0.11 2,533 0.11 Adjustefd forecasted Earnings from continuintg operations(2) $41,031 $1.80 $37,286 $1.70 (1) All adjustmentws are net of tax.
The forecaste tax rate for Fiscal 2010 for the baseline scenariois (2) Reflects 23.5 million share counft for Fiscal 2010 which includes convertible sharea and common stock equivalents. This reconciliatiob reflects estimates and current expectations offuture results. Actual results may vary materialluy from these expectationsand estimates, for reasons includiny those included in the discussion of forward-looking statements elsewherr in this release. The Company disclaims any obligatiojn to update such expectations and SOURCE Genesco, Inc.