e10vq

Large accelerated filer o

Accelerated Filer þ

Non-accelerated filer o

Smaller reporting company o

(Do not check if smaller reporting company)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended May 1, 2010


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

Commission File No. 1-3083

Genesco Inc.

(Exact name of registrant as specified in its charter)


Tennessee Corporation (State or other jurisdiction of incorporation or organization)		62-0211340 (I.R.S. Employer Identification No.)


Genesco Park, 1415 Murfreesboro Road Nashville, Tennessee (Address of principal executive offices)		37217-2895 (Zip Code)

Registrant’s telephone number, including area code: (615) 367-7000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232-405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer; an accelerated filer; a non-accelerated filer; or a smaller reporting company. See definitions of “large accelerated filer,” accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one:)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes o No þ

As of May 28, 2010, 24,050,377 shares of the registrant’s common stock were outstanding.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements
Genesco Inc.
and Subsidiaries

Condensed Consolidated Balance Sheets
(In Thousands, except share amounts)


	May 1,			January 30,			May 2,
Assets	2010			2010			2009

*Current Assets*
Cash and cash equivalents	$	105,399		$	82,148		$	16,690
Accounts receivable, net of allowances of $3,430 at May 1, 2010, $3,232 at January 30, 2010 and $3,168 at May 2, 2009		29,411			27,217			28,417
Inventories		295,514			290,974			298,733
Deferred income taxes		17,265			17,314			15,122
Prepaids and other current assets		33,752			32,419			39,589

Total current assets		481,341			450,072			398,551

Property and equipment:
Land		4,863			4,863			4,863
Buildings and building equipment		17,992			17,992			17,990
Computer hardware, software and equipment		87,194			86,239			80,602
Furniture and fixtures		102,086			101,923			99,475
Construction in progress		5,297			3,196			9,010
Improvements to leased property		275,610			277,624			272,736

Property and equipment, at cost		493,042			491,837			484,676
Accumulated depreciation		(284,310	)		(275,544	)		(250,925	)

Property and equipment, net		208,732			216,293			233,751

Deferred income taxes		14,246			13,545			10,360
Goodwill		118,979			118,995			111,666
Trademarks, net of accumulated amortization of $524 at May 1, 2010, $418 at January 30, 2010 and $319 at May 2, 2009		52,707			52,799			51,440
Other intangibles, net of accumulated amortization of $8,977 at May 1, 2010, $8,795 at January 30, 2010 and $8,172 at May 2, 2009		3,488			3,670			2,180
Other noncurrent assets		8,607			8,278			7,165

Total Assets	$	888,100		$	863,652		$	815,113

Genesco Inc.
and Subsidiaries

Condensed Consolidated Balance Sheets
(In Thousands, except share amounts)


	May 1,			January 30,			May 2,
Liabilities and Shareholders’ Equity	2010			2010			2009

*Current Liabilities*
Accounts payable	$	111,163		$	92,699		$	80,604
Accrued employee compensation		16,887			15,043			14,154
Accrued other taxes		12,111			11,570			10,428
Accrued income taxes		5,684			-0-			641
Other accrued liabilities		32,434			40,979			28,252
Provision for discontinued operations		9,480			9,366			9,545

Total current liabilities		187,759			169,657			143,624

Long-term debt		-0-			-0-			51,648
Pension liability		17,070			20,402			22,197
Deferred rent and other long-term liabilities		85,047			85,232			81,923
Provision for discontinued operations		6,048			6,048			6,124

Total liabilities		295,924			281,339			305,516

Commitments and contingent liabilities
*Shareholders’ Equity*
Non-redeemable preferred stock		5,195			5,220			5,254
Common shareholders’ equity:
Common stock, $1 par value:
Authorized: 80,000,000 shares
Issued/Outstanding:
May 1, 2010 – 24,538,841/24,050,377 January 30, 2010 – 24,562,693/24,074,229 May 2, 2009 – 22,761,309/22,272,845		24,539			24,563			22,761
Additional paid-in capital		147,869			146,981			112,061
Retained earnings		460,777			452,210			417,783
Accumulated other comprehensive loss		(28,347	)		(28,804	)		(30,405	)
Treasury shares, at cost		(17,857	)		(17,857	)		(17,857	)

Total shareholders’ equity		592,176			582,313			509,597

Total Liabilities and Shareholders’ Equity	$	888,100		$	863,652		$	815,113

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Genesco Inc.
and Subsidiaries

Condensed Consolidated Statements of Operations
(In Thousands, except per share amounts)


	Three Months Ended
	May 1,			May 2,
	2010			2009

Net sales	$	400,853		$	370,366
Cost of sales		192,782			181,144
Selling and administrative expenses		191,077			182,291
Restructuring and other, net		2,443			4,973

Earnings from operations		14,551			1,958

Loss on early retirement of debt		-0-			5,119
Interest expense, net:
Interest expense		236			2,169
Interest income		(1	)		(8	)

Total interest expense, net		235			2,161

Earnings (loss) from continuing operations before income taxes		14,316			(5,322	)
Income tax expense		5,753			281

Earnings (loss) from continuing operations		8,563			(5,603	)
Earnings from (provision for) discontinued operations, net		53			(159	)

Net Earnings (Loss)	$	8,616		$	(5,762	)


Basic earnings (loss) per common share:
Continuing operations	$	0.36		$	(0.30	)
Discontinued operations		0.01			(0.01	)

Net earnings (loss)	$	0.37		$	(0.31	)


Diluted earnings (loss) per common share:
Continuing operations	$	0.36		$	(0.30	)
Discontinued operations		0.00			(0.01	)

Net earnings (loss)	$	0.36		$	(0.31	)

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Genesco Inc.
and Subsidiaries

Condensed Consolidated Statements of Cash Flows
(In Thousands)


	Three Months Ended
	May 1,			May 2,
	2010			2009

CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)	$	8,616		$	(5,762	)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation		11,670			12,128
Amortization of deferred note expense and debt discount		104			1,018
Loss on early retirement of debt		-0-			5,119
Deferred income taxes		(710	)		1,675
Provision for losses on accounts receivable		298			100
Impairment of long-lived assets		2,356			4,467
Share-based compensation and restricted stock		1,711			1,599
Provision for discontinued operations		(88	)		262
Other		538			512
Effect on cash from changes in working capital and other assets and liabilities
Accounts receivable		(2,581	)		(4,773	)
Inventories		(4,541	)		7,345
Prepaids and other current assets		(1,333	)		(4,047	)
Accounts payable		19,320			11,117
Other accrued liabilities		4,297			(4,592	)
Other assets and liabilities		(3,755	)		(3,054	)

Net cash provided by operating activities		35,902			23,114

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(6,540	)		(11,008	)
Acquisitions, net of cash acquired		(3,445	)		(5	)
Proceeds from asset sales		2			2

Net cash used in investing activities		(9,983	)		(11,011	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of capital leases		(41	)		(45	)
Shares repurchased		(2,075	)		-0-
Change in overdraft balances		(856	)		(3,656	)
Borrowings under revolving credit facility		-0-			41,100
Payments on revolving credit facility		-0-			(50,200	)
Dividends paid on non-redeemable preferred stock		(49	)		(50	)
Exercise of stock options		353			55
Other		-0-			(289	)

Net cash used in financing activities		(2,668	)		(13,085	)

Net Increase (Decrease) in Cash and Cash Equivalents		23,251			(982	)
Cash and cash equivalents at beginning of period		82,148			17,672

Cash and cash equivalents at end of period	$	105,399		$	16,690

Supplemental Cash Flow Information:
Net cash paid for:
Interest	$	127		$	190
Income taxes		460			864

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Genesco Inc.
and Subsidiaries

Condensed Consolidated Statements of Shareholders’ Equity
In Thousands


	Total												Accumulated									Total
	Non-Redeemable						Additional						Other									Share-
	Preferred			Common			Paid-In			Retained			Comprehensive			Treasury			Comprehensive			holders’
	Stock			Stock			Capital			Earnings			Loss			Stock			Income			Equity

Balance January 31, 2009		$5,203		$	19,732		$	49,780		$	423,595			$(30,698	)	$	(17,857	)				$	449,755

Net earnings		-0-			-0-			-0-			28,813			-0-			-0-		$	28,813			28,813
Dividends paid on non-redeemable preferred stock		-0-			-0-			-0-			(198	)		-0-			-0-			-0-			(198	)
Exercise of stock options		-0-			28			372			-0-			-0-			-0-			-0-			400
Issue shares — Employee Stock Purchase Plan		-0-			4			95			-0-			-0-			-0-			-0-			99
Employee and non-employee restricted stock		-0-			-0-			6,528			-0-			-0-			-0-			-0-			6,528
Share-based compensation		-0-			-0-			441			-0-			-0-			-0-			-0-			441
Restricted stock issuance		-0-			405			(405	)		-0-			-0-			-0-			-0-			-0-
Restricted shares withheld for taxes		-0-			(65	)		(1,156	)		-0-			-0-			-0-			-0-			(1,221	)
Tax expense of stock options and restricted stock exercised		-0-			-0-			(658	)		-0-			-0-			-0-			-0-			(658	)
Shares repurchased		-0-			(85	)		(1,942	)		-0-			-0-			-0-			-0-			(2,027	)
Conversion of 4 1/8% debentures		-0-			4,553			93,933			-0-			-0-			-0-			-0-			98,486
Loss on foreign currency forward contracts (net of tax benefit of $0.1 million)		-0-			-0-			-0-			-0-			(157	)		-0-			(157	)		(157	)
Pension liability adjustment (net of tax of $0.6 million)		-0-			-0-			-0-			-0-			1,151			-0-			1,151			1,151
Postretirement liability adjustment (net of tax of $0.0 million)		-0-			-0-			-0-			-0-			14			-0-			14			14
Foreign currency translation adjustment		-0-			-0-			-0-			-0-			886			-0-			886			886
Other		17			(9	)		(7	)		-0-			-0-			-0-			-0-			1

Comprehensive income																			$	30,707

Balance January 30, 2010		5,220			24,563			146,981			452,210			(28,804	)		(17,857	)					582,313

Net earnings		-0-			-0-			-0-			8,616			-0-			-0-		$	8,616			8,616
Dividends paid on non-redeemable preferred stock		-0-			-0-			-0-			(49	)		-0-			-0-			-0-			(49	)
Exercise of stock options		-0-			18			335			-0-			-0-			-0-			-0-			353
Employee and non-employee restricted stock		-0-			-0-			1,640			-0-			-0-			-0-			-0-			1,640
Share-based compensation		-0-			-0-			71			-0-			-0-			-0-			-0-			71
Restricted shares withheld for taxes		-0-			(41	)		(1,135	)		-0-			-0-			-0-			-0-			(1,176	)
Shares repurchased		-0-			(2	)		(46	)		-0-			-0-			-0-			-0-			(48	)
Gain on foreign currency forward contracts (net of tax of $0.1 million)		-0-			-0-			-0-			-0-			91			-0-			91			91
Foreign currency translation adjustment		-0-			-0-			-0-			-0-			366			-0-			366			366
Other		(25	)		1			23			-0-			-0-			-0-			-0-			(1	)

Comprehensive income*																			$	9,073

Balance May 1, 2010		$5,195		$	24,539		$	147,869		$	460,777			$(28,347	)		$(17,857	)				$	592,176


*		Comprehensive income was a loss of $5.5 million for the first quarter ended May 2, 2009.

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Genesco Inc.
and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Note 1

Summary of Significant Accounting Policies

Interim Statements

The condensed consolidated financial statements contained in this report are unaudited but reflect all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the results for the interim periods of the fiscal year ending January 29, 2011 (“Fiscal 2011”) and of the fiscal year ended January 30, 2010 (“Fiscal 2010”). The results of operations for any interim period are not necessarily indicative of results for the full year. The interim financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K.

Nature of Operations

The Company’s businesses include the design or sourcing, marketing and distribution of footwear, principally under the Johnston & Murphy and Dockers brands and the operation at May 1, 2010 of 2,267 Journeys, Journeys Kidz, Shi by Journeys, Johnston & Murphy, Underground Station, Hat World, Lids, Hat Shack, Hat Zone, Head Quarters, Cap Connection, Lids Locker Room and Sports Fan-Attic retail footwear, headwear and licensed sports apparel and accessory stores. In September 2009, the Company acquired the assets of Great Plains Sports Inc., a dealer of branded athletic and team products for college and high school teams, as part of the Lids Sports Group. In November 2009, the Company acquired the assets of Sports Fan-Attic Inc., a retailer of licensed sports headwear, apparel, accessories and novelties, with 37 stores, as part of the Lids Sports Group.

Principles of Consolidation

All subsidiaries are consolidated in the condensed consolidated financial statements. All significant intercompany transactions and accounts have been eliminated.

Financial Statement Reclassifications

Certain reclassifications have been made to conform prior years’ data to the current year presentation. For the three months ended May 2, 2009, bank fees totaling approximately $0.9 million were reclassified from interest expense to selling and administrative expenses on the Condensed Consolidated Statements of Operations to conform to the current year presentation.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1

Summary of Significant Accounting Policies, Continued

Significant areas requiring management estimates or judgments include the following key financial areas:

Inventory Valuation

The Company values its inventories at the lower of cost or market.

In its wholesale operations, cost is determined using the first-in, first-out (“FIFO”) method. Market is determined using a system of analysis which evaluates inventory at the stock number level based on factors such as inventory turn, average selling price, inventory level, and selling prices reflected in future orders. The Company provides reserves when the inventory has not been marked down to market based on current selling prices or when the inventory is not turning and is not expected to turn at levels satisfactory to the Company.

In its retail operations, other than the Lids Sports segment, the Company employs the retail inventory method, applying average cost-to-retail ratios to the retail value of inventories. Under the retail inventory method, valuing inventory at the lower of cost or market is achieved as markdowns are taken or accrued as a reduction of the retail value of inventories.

Inherent in the retail inventory method are subjective judgments and estimates, including merchandise mark-on, markups, markdowns, and shrinkage. These judgments and estimates, coupled with the fact that the retail inventory method is an averaging process, could produce a range of cost figures. To reduce the risk of inaccuracy and to ensure consistent presentation, the Company employs the retail inventory method in multiple subclasses of inventory with similar gross margins, and analyzes markdown requirements at the stock number level based on factors such as inventory turn, average selling price, and inventory age. In addition, the Company accrues markdowns as necessary. These additional markdown accruals reflect all of the above factors as well as current agreements to return products to vendors and vendor agreements to provide markdown support. In addition to markdown provisions, the Company maintains provisions for shrinkage and damaged goods based on historical rates.

The Lids Sports segment employs the moving average cost method for valuing inventories and applies freight using an allocation method. The Company provides a valuation allowance for slow-moving inventory based on negative margins and estimated shrink based on historical experience and specific analysis, where appropriate.

Inherent in the analysis of both wholesale and retail inventory valuation are subjective judgments about current market conditions, fashion trends, and overall economic conditions. Failure to make appropriate conclusions regarding these factors may result in an overstatement or understatement of inventory value.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1

Summary of Significant Accounting Policies, Continued

Impairment of Long-Lived Assets

The Company periodically assesses the realizability of its long-lived assets and evaluates such assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Asset impairment is determined to exist if estimated future cash flows, undiscounted and without interest charges, are less than the carrying amount. Inherent in the analysis of impairment are subjective judgments about future cash flows. Failure to make appropriate conclusions regarding these judgments may result in an overstatement or understatement of the value of long-lived assets. See also Notes 3 and 5.

The goodwill impairment test involves a two-step process. The first step is a comparison of the fair value and carrying value of the reporting unit with which the goodwill is associated. The Company estimates fair value using the best information available, and computes the fair value by an equal weighting of the results arrived by a market approach and an income approach utilizing discounted cash flow projections. The income approach uses a projection of a business unit’s estimated operating results and cash flows that is discounted using a weighted-average cost of capital that reflects current market conditions. The projection uses management’s best estimates of economic and market conditions over the projected period including growth rates in sales, costs, estimates of future expected changes in operating margins and cash expenditures. Other significant estimates and assumptions include terminal value growth rates, future estimates of capital expenditures and changes in future working capital requirements.

If the carrying value of the reporting unit is higher than its fair value, there is an indication that impairment may exist and the second step must be performed to measure the amount of impairment loss. The amount of impairment is determined by comparing the implied fair value of reporting unit goodwill to the carrying value of the goodwill in the same manner as if the reporting unit was being acquired in a business combination. Specifically, the Company would allocate the fair value to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that would calculate the implied fair value of goodwill. If the implied fair value of goodwill is less than the recorded goodwill, the Company would record an impairment charge for the difference.

A key assumption in the Company’s fair value estimate is the weighted average cost of capital utilized for discounting its cash flow projections in its income approach. The Company believes the rate it used in its annual test was consistent with the risks inherent in its business and with industry discount rates.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1

Summary of Significant Accounting Policies, Continued

Environmental and Other Contingencies

The Company is subject to certain loss contingencies related to environmental proceedings and other legal matters, including those disclosed in Note 8. The Company has made pretax accruals for certain of these contingencies, including approximately $0.4 million in each of the first quarters of Fiscal 2011 and Fiscal 2010. These charges are included in provision for discontinued operations, net in the Condensed Consolidated Statements of Operations (see Note 3). The Company monitors these matters on an ongoing basis and, on a quarterly basis, management reviews the Company’s reserves and accruals in relation to each of them, adjusting provisions as management deems necessary in view of changes in available information. Changes in estimates of liability are reported in the periods when they occur. Consequently, management believes that its reserve in relation to each proceeding is a best estimate of probable loss connected to the proceeding, or in cases in which no best estimate is possible, the minimum amount in the range of estimated losses, based upon its analysis of the facts and circumstances as of the close of the most recent fiscal quarter. However, because of uncertainties and risks inherent in litigation generally and in environmental proceedings in particular, there can be no assurance that future developments will not require additional reserves to be set aside, that some or all reserves will be adequate or that the amounts of any such additional reserves or any such inadequacy will not have a material adverse effect upon the Company’s financial condition or results of operations.

Revenue Recognition

Retail sales are recorded at the point of sale and are net of estimated returns and exclude sales taxes. Catalog and internet sales are recorded at time of delivery to the customer and are net of estimated returns and exclude sales taxes. Wholesale revenue is recorded net of estimated returns and allowances for markdowns, damages and miscellaneous claims when the related goods have been shipped and legal title has passed to the customer. Shipping and handling costs charged to customers are included in net sales. Estimated returns are based on historical returns and claims. Actual amounts of markdowns have not differed materially from estimates. Actual returns and claims in any future period may differ from historical experience.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1

Summary of Significant Accounting Policies, Continued

Income Taxes

As part of the process of preparing Condensed Consolidated Financial Statements, the Company is required to estimate its income taxes in each of the tax jurisdictions in which it operates. This process involves estimating actual current tax obligations together with assessing temporary differences resulting from differing treatment of certain items for tax and accounting purposes, such as depreciation of property and equipment and valuation of inventories. These temporary differences result in deferred tax assets and liabilities, which are included within the Condensed Consolidated Balance Sheets. The Company then assesses the likelihood that its deferred tax assets will be recovered from future taxable income. Actual results could differ from this assessment if adequate taxable income is not generated in future periods. To the extent the Company believes that recovery of an asset is at risk, valuation allowances are established. To the extent valuation allowances are established or increased in a period, the Company includes an expense within the tax provision in the Condensed Consolidated Statements of Operations.

Income tax reserves are determined using the methodology required by the Income Tax Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“Codification”). This methodology was adopted by the Company as of February 4, 2007, and requires companies to assess each income tax position taken using a two step process. A determination is first made as to whether it is more likely than not that the position will be sustained, based upon the technical merits, upon examination by the taxing authorities. If the tax position is expected to meet the more likely than not criteria, the benefit recorded for the tax position equals the largest amount that is greater than 50% likely to be realized upon ultimate settlement of the respective tax position. Uncertain tax positions require determinations and estimated liabilities to be made based on provisions of the tax law which may be subject to change or varying interpretation. If the Company’s determinations and estimates prove to be inaccurate, the resulting adjustments could be material to its future financial results.

Postretirement Benefits Plan Accounting

Full-time employees who had 1,000 hours of service in calendar year 2004, except employees in the Lids Sports Segment, are covered by a defined benefit pension plan. The Company froze the defined benefit pension plan effective January 1, 2005. The Company also provides certain former employees with limited medical and life insurance benefits. The Company funds at least the minimum amount required by the Employee Retirement Income Security Act.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1

Summary of Significant Accounting Policies, Continued

As required by the Compensation — Retirement Benefits Topic of the Codification, the Company is required to recognize the overfunded or underfunded status of postretirement benefit plans as an asset or liability in their Condensed Consolidated Balance Sheets and to recognize changes in that funded status in accumulated other comprehensive loss, net of tax, in the year in which the changes occur. The Company is required to measure the funded status of a plan as of the date of its fiscal year end. The Company adopted the measurement date change as of January 31, 2009. The Company was required to change the measurement date for its defined benefit pension plan and postretirement benefit plan from December 31 to January 31 (end of fiscal year).

The Company accounts for the defined benefit pension plans using the Compensation-Retirement Benefits Topic of the Codification. As permitted under this topic, pension expense is recognized on an accrual basis over employees’ approximate service periods. The calculation of pension expense and the corresponding liability requires the use of a number of critical assumptions, including the expected long-term rate of return on plan assets and the assumed discount rate, as well as the recognition of actuarial gains and losses. Changes in these assumptions can result in different expense and liability amounts, and future actual experience can differ from these assumptions.

Share-Based Compensation

The Company has share-based compensation plans covering certain members of management and non-employee directors. The Company recognizes compensation expense for share-based payments based on the fair value of the awards as required by the Compensation — Stock Compensation Topic of the Codification. For each of the first quarters of Fiscal 2011 and 2010, share-based compensation expense was $0.1 million. For the first quarters of Fiscal 2011 and 2010, restricted stock expense was $1.6 million and $1.5 million, respectively. The benefits of tax deductions in excess of recognized compensation expense are reported as a financing cash flow.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1

Summary of Significant Accounting Policies, Continued

The Company estimates the fair value of each option award on the date of grant using a Black-Scholes option pricing model. The application of this valuation model involves assumptions that are judgmental and highly sensitive in the determination of compensation expense, including expected stock price volatility. The Company bases expected volatility on historical stock prices for a period that is commensurate with the expected term estimate. The Company bases the risk free rate on an interest rate for a bond with a maturity commensurate with the expected term estimate. The Company estimates the expected term of stock options using historical exercise and employee termination experience. The Company does not currently pay a dividend on common stock. The fair value of employee restricted stock is determined based on the closing price of the Company’s stock on the date of the grant.

In addition to the key assumptions used in the Black-Scholes model, the estimated forfeiture rate at the time of valuation (which is based on historical experience for similar options) is a critical assumption, as it reduces expense ratably over the vesting period. Share-based compensation expense is recorded based on a 2% expected forfeiture rate and is adjusted annually for actual forfeitures. The Company reviews the expected forfeiture rate annually to determine if that percent is still reasonable based on historical experience. The Company believes its estimates are reasonable in the context of actual (historical) experience.

The Company did not grant any stock options for the three months ended May 1, 2010 or May 2, 2009. During the three months ended May 1, 2010 and May 2, 2009, the Company did not issue any shares of employee restricted stock. There was no director retainer stock issued for the three months ended May 2, 2010 or May 2, 2009.

Cash and Cash Equivalents

Included in cash and cash equivalents at May 1, 2010, January 30, 2010 and May 2, 2009 are cash equivalents of $69.7 million, $62.7 million and $0.2 million, respectively. Cash equivalents are highly-liquid financial instruments having an original maturity of three months or less. The Company’s $69.7 million of cash equivalents was invested in a U.S. government money market fund which invests exclusively in high-quality, short-term securities that are issued or guaranteed by the U.S. government or by U.S. government agencies and instrumentalities. Uninsured cash balances were $23.4 million as of May 1, 2010. The majority of payments due from banks for customer credit card transactions process within 24 - 48 hours and are accordingly classified as cash and cash equivalents.

At May 1, 2010, January 30, 2010 and May 2, 2009 outstanding checks drawn on zero-balance accounts at certain domestic banks exceeded book cash balances at those banks by approximately $31.1 million, $31.9 million and $25.2 million, respectively. These amounts are included in accounts payable.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1

Summary of Significant Accounting Policies, Continued

Concentration of Credit Risk and Allowances on Accounts Receivable

The Company’s footwear wholesale businesses sell primarily to independent retailers and department stores across the United States. Receivables arising from these sales are not collateralized. Customer credit risk is affected by conditions or occurrences within the economy and the retail industry as well as by customer specific factors. One customer accounted for 15% of the Company’s trade receivables balance and no other customer accounted for more than 9% of the Company’s trade receivables balance as of May 1, 2010.

The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information, as well as customer specific factors. The Company also establishes allowances for sales returns, customer deductions and co-op advertising based on specific circumstances, historical trends and projected probable outcomes.

Property and Equipment

Property and equipment are recorded at cost and depreciated or amortized over the estimated useful life of related assets. Depreciation and amortization expense are computed principally by the straight-line method over the following estimated useful lives:


Buildings and building equipment		20-45 years
Computer hardware, software and equipment		3-10 years
Furniture and fixtures		10 years

Leases

Leasehold improvements and properties under capital leases are amortized on the straight-line method over the shorter of their useful lives or their related lease terms and the charge to earnings is included in selling and administrative expenses in the Condensed Consolidated Statements of Operations.

Certain leases include rent increases during the initial lease term. For these leases, the Company recognizes the related rental expense on a straight-line basis over the term of the lease (which includes any rent holidays and the pre-opening period of construction, renovation, fixturing and merchandise placement) and records the difference between the amounts charged to operations and amounts paid as deferred rent.

The Company occasionally receives reimbursements from landlords to be used towards construction of the store the Company intends to lease. Leasehold improvements are recorded at their gross costs including items reimbursed by landlords. The reimbursements are amortized as a reduction of rent expense over the initial lease term. Tenant allowances of $21.2 million, $22.1 million and $24.2 million at May 1, 2010, January 30, 2010 and May 2, 2009, respectively, and deferred rent of $31.6 million, $31.1 million and $29.7 million at May 1, 2010, January 30, 2010 and May 2, 2009, respectively, are included in deferred rent and other long-term liabilities on the Condensed Consolidated Balance Sheets.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1

Summary of Significant Accounting Policies, Continued

Goodwill and Other Intangibles

Under the provisions of the Intangibles — Goodwill and Other Topic of the Codification, goodwill and intangible assets with indefinite lives are not amortized, but are tested at least annually, during the fourth quarter, for impairment. The Company will update the tests between annual tests if events or circumstances occur that would more likely than not reduce the fair value of the business unit with which the goodwill is associated below its carrying amount. It is also required that intangible assets with finite lives be amortized over their respective lives to their estimated residual values, and reviewed for impairment in accordance with the Property, Plant and Equipment Topic of the Codification.

Intangible assets of the Company with indefinite lives are primarily goodwill and identifiable trademarks acquired in connection with the acquisition of Hat World Corporation in April 2004 and Hat Shack, Inc. in January 2007. The Condensed Consolidated Balance Sheets include goodwill for the Lids Sports Group of $119.0 million at May 1, 2010, $119.0 million at January 30, 2010 and $111.7 million at May 2, 2009, respectively. The Company tests for impairment of intangible assets with an indefinite life, at a minimum on an annual basis, relying on a number of factors including operating results, business plans, projected future cash flows and observable market data. The impairment test for identifiable assets not subject to amortization consists of a comparison of the fair value of the intangible asset with its carrying amount. The Company has not had an impairment charge for intangible assets.

Identifiable intangible assets of the Company with finite lives are primarily in-place leases, trademarks acquired in connection with the acquisition of Impact Sports in November 2008, Great Plains Sports in September 2009 and Sports Fan-Attic in November 2009, customer lists and non-compete agreements. They are subject to amortization based upon their estimated useful lives. Finite-lived intangible assets are evaluated for impairment using a process similar to that used to evaluate other definite-lived long-lived assets, a comparison of the fair value of the intangible asset with its carrying amount. An impairment loss is recognized for the amount by which the carrying value exceeds the fair value of the asset.

Fair Value of Financial Instruments

The Company does not have any long-term debt or revolver borrowings at May 1, 2010 or January 30, 2010.

Carrying amounts reported on the Condensed Consolidated Balance Sheets for cash, cash equivalents, receivables and accounts payable approximate fair value due to the short-term maturity of these instruments.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1

Summary of Significant Accounting Policies, Continued

Cost of Sales

For the Company’s retail operations, the cost of sales includes actual product cost, the cost of transportation to the Company’s warehouses from suppliers and the cost of transportation from the Company’s warehouses to the stores. Additionally, the cost of its distribution facilities allocated to its retail operations is included in cost of sales.

For the Company’s wholesale operations, the cost of sales includes the actual product cost and the cost of transportation to the Company’s warehouses from suppliers.

Selling and Administrative Expenses

Selling and administrative expenses include all operating costs of the Company excluding (i) those related to the transportation of products from the supplier to the warehouse, (ii) for its retail operations, those related to the transportation of products from the warehouse to the store and (iii) costs of its distribution facilities which are allocated to its retail operations. Wholesale and unallocated retail costs of distribution are included in selling and administrative expenses in the amounts of $1.2 million and $1.3 million for the first quarter Fiscal 2011 and 2010, respectively.

Gift Cards

The Company has a gift card program that began in calendar 1999 for its Lids Sports operations and calendar 2000 for its footwear operations. The gift cards issued to date do not expire. As such, the Company recognizes income when: (i) the gift card is redeemed by the customer; or (ii) the likelihood of the gift card being redeemed by the customer for the purchase of goods in the future is remote and there are no related escheat laws (referred to as “breakage”). The gift card breakage rate is based upon historical redemption patterns and income is recognized for unredeemed gift cards in proportion to those historical redemption patterns.

Gift card breakage is recognized in revenues each period. Gift card breakage recognized as revenue was less than $0.1 million for each of the first quarters of Fiscal 2011 and 2010. The Condensed Consolidated Balance Sheets include an accrued liability for gift cards of $7.0 million, $7.9 million and $6.5 million at May 1, 2010, January 30, 2010 and May 2, 2009, respectively.

Buying, Merchandising and Occupancy Costs

The Company records buying, merchandising and occupancy costs in selling and administrative expense. Because the Company does not include these costs in cost of sales, the Company’s gross margin may not be comparable to other retailers that include these costs in the calculation of gross margin.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1

Summary of Significant Accounting Policies, Continued

Shipping and Handling Costs

Shipping and handling costs related to inventory purchased from suppliers are included in the cost of inventory and are charged to cost of sales in the period that the inventory is sold. All other shipping and handling costs are charged to cost of sales in the period incurred except for wholesale and unallocated retail costs of distribution, which are included in selling and administrative expenses.

Preopening Costs

Costs associated with the opening of new stores are expensed as incurred, and are included in selling and administrative expenses on the accompanying Condensed Consolidated Statements of Operations.

Store Closings and Exit Costs

From time to time, the Company makes strategic decisions to close stores or exit locations or activities. If stores or operating activities to be closed or exited constitute components, as defined by the Property, Plant and Equipment Topic of the Codification, and will not result in a migration of customers and cash flows, these closures will be considered discontinued operations when the related assets meet the criteria to be classified as held for sale, or at the cease-use date, whichever occurs first. The results of operations of discontinued operations are presented retroactively, net of tax, as a separate component on the Condensed Consolidated Statements of Operations, if material individually or cumulatively. To date, no store closings meeting the discontinued operations criteria have been material individually or cumulatively.

Assets related to planned store closures or other exit activities are reflected as assets held for sale and recorded at the lower of carrying value or fair value less costs to sell when the required criteria, as defined by the Property, Plant and Equipment Topic of the Codification, are satisfied. Depreciation ceases on the date that the held for sale criteria are met.

Assets related to planned store closures or other exit activities that do not meet the criteria to be classified as held for sale are evaluated for impairment in accordance with the Company’s normal impairment policy, but with consideration given to revised estimates of future cash flows. In any event, the remaining depreciable useful lives are evaluated and adjusted as necessary.

Exit costs related to anticipated lease termination costs, severance benefits and other expected charges are accrued for and recognized in accordance with the Exit or Disposal Cost Obligations Topic of the Codification.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1

Summary of Significant Accounting Policies, Continued

Advertising Costs

Advertising costs are predominantly expensed as incurred. Advertising costs were $8.2 million and $8.9 million for the first quarter of Fiscal 2011 and 2010, respectively. Direct response advertising costs for catalogs are capitalized in accordance with the Other Assets and Deferred Costs Topic for Capitalized Advertising Costs of the Codification. Such costs are amortized over the estimated future revenues realized from such advertising, not to exceed six months. The Condensed Consolidated Balance Sheets include prepaid assets for direct response advertising costs of $1.2 million, $1.3 million and $1.7 million at May 1, 2010, January 30, 2010 and May 2, 2009, respectively.

Consideration to Resellers

The Company does not have any written buy-down programs with retailers, but the Company has provided certain retailers with markdown allowances for obsolete and slow moving products that are in the retailer’s inventory. The Company estimates these allowances and provides for them as reductions to revenues at the time revenues are recorded. Markdowns are negotiated with retailers and changes are made to the estimates as agreements are reached. Actual amounts for markdowns have not differed materially from estimates.

Cooperative Advertising

Cooperative advertising funds are made available to all of the Company’s wholesale footwear customers. In order for retailers to receive reimbursement under such programs, the retailer must meet specified advertising guidelines and provide appropriate documentation of expenses to be reimbursed. The Company’s cooperative advertising agreements require that wholesale customers present documentation or other evidence of specific advertisements or display materials used for the Company’s products by submitting the actual print advertisements presented in catalogs, newspaper inserts or other advertising circulars, or by permitting physical inspection of displays. Additionally, the Company’s cooperative advertising agreements require that the amount of reimbursement requested for such advertising or materials be supported by invoices or other evidence of the actual costs incurred by the retailer. The Company accounts for these cooperative advertising costs as selling and administrative expenses, in accordance with the Revenue Recognition Topic for Customer Payments and Incentives of the Codification.

Cooperative advertising costs recognized in selling and administrative expenses were $0.8 million and $1.0 million for the first quarter of Fiscal 2011 and 2010, respectively. During the first quarter of Fiscal 2011 and 2010, the Company’s cooperative advertising reimbursements paid did not exceed the fair value of the benefits received under those agreements.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1

Summary of Significant Accounting Policies, Continued

Vendor Allowances

From time to time, the Company negotiates allowances from its vendors for markdowns taken or expected to be taken. These markdowns are typically negotiated on specific merchandise and for specific amounts. These specific allowances are recognized as a reduction in cost of sales in the period in which the markdowns are taken. Markdown allowances not attached to specific inventory on hand or already sold are applied to concurrent or future purchases from each respective vendor.

The Company receives support from some of its vendors in the form of reimbursements for cooperative advertising and catalog costs for the launch and promotion of certain products. The reimbursements are agreed upon with vendors and represent specific, incremental, identifiable costs incurred by the Company in selling the vendor’s specific products. Such costs and the related reimbursements are accumulated and monitored on an individual vendor basis, pursuant to the respective cooperative advertising agreements with vendors. Such cooperative advertising reimbursements are recorded as a reduction of selling and administrative expenses in the same period in which the associated expense is incurred. If the amount of cash consideration received exceeds the costs being reimbursed, such excess amount would be recorded as a reduction of cost of sales.

Vendor reimbursements of cooperative advertising costs recognized as a reduction of selling and administrative expenses were $0.8 million for each of the first quarters of Fiscal 2011 and 2010. During the first quarter of Fiscal 2011 and 2010, the Company’s cooperative advertising reimbursements received were not in excess of the costs incurred.

Environmental Costs

Environmental expenditures relating to current operations are expensed or capitalized as appropriate. Expenditures relating to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable and the costs can be reasonably estimated and are evaluated independently of any future claims for recovery. Generally, the timing of these accruals coincides with completion of a feasibility study or the Company’s commitment to a formal plan of action. Costs of future expenditures for environmental remediation obligations are not discounted to their present value.

Earnings Per Common Share

Basic earnings per share excludes dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities to issue common stock were exercised or converted to common stock (see Note 7).

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1

Summary of Significant Accounting Policies, Continued

Other Comprehensive Income

The Comprehensive Income Topic of the Codification requires, among other things, the Company’s pension liability adjustment, postretirement liability adjustment, unrealized gains or losses on foreign currency forward contracts and foreign currency translation adjustments to be included in other comprehensive income net of tax. Accumulated other comprehensive loss at May 1, 2010 consisted of $28.9 million of cumulative pension liability adjustments, net of tax, a cumulative net loss of $0.1 million on foreign currency forward contracts, net of tax, offset by a foreign currency translation adjustment of $0.7 million.

Business Segments

The Segment Reporting Topic of the Codification requires that companies disclose “operating segments” based on the way management disaggregates the Company’s operations for making internal operating decisions (see Note 9).

Derivative Instruments and Hedging Activities

The Derivatives and Hedging Topic of the Codification requires an entity to recognize all derivatives as either assets or liabilities in the condensed consolidated balance sheet and to measure those instruments at fair value. Under certain conditions, a derivative may be specifically designated as a fair value hedge or a cash flow hedge. The accounting for changes in the fair value of a derivative are recorded each period in current earnings or in other comprehensive income depending on the intended use of the derivative and the resulting designation. The Company has entered into a small amount of foreign currency forward exchange contracts in order to reduce exposure to foreign currency exchange rate fluctuations in connection with inventory purchase commitments for its Johnston & Murphy Group. Derivative instruments used as hedges must be effective at reducing the risk associated with the exposure being hedged. The settlement terms of the forward contracts correspond with the expected payment terms for the merchandise inventories. As a result, there is no hedge ineffectiveness to be reflected in earnings.

The notional amount of such contracts outstanding at May 1, 2010 was $0.8 million. There were no contracts outstanding at May 2, 2009. Forward exchange contracts have an average remaining term of approximately three months. The loss based on spot rates under these contracts at May 1, 2010 was less than $0.1 million. For the three months ended May 1, 2010, the Company recorded an unrealized loss on foreign currency forward contracts of $0.1 million in accumulated other comprehensive loss, before taxes. The Company monitors the credit quality of the major national and regional financial institutions with which it enters into such contracts.

The Company estimates that the majority of net hedging losses related to forward exchange contracts will be reclassified from accumulated other comprehensive loss into earnings through higher cost of sales over the succeeding year.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1

Summary of Significant Accounting Policies, Continued

New Accounting Principles

In February 2010, the FASB issued Accounting Standards Update No. 2010-09 (ASU No. 2010-09), “Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements.” The amendments remove the requirements for an SEC filer to disclose a date, in both issued and revised financial statements, through which subsequent events have been reviewed. Revised financial statements include financial statements revised as a result of either correction of an error or retrospective application of U.S. GAAP. ASU No. 2010-09 was effective upon issuance. The adoption of this guidance did not have a significant impact on the Company’s results of operations or financial position.

Note 2

Acquisitions and Intangible Assets

Sports Fan-Attic Acquisition

In the fourth quarter of Fiscal 2010, the Company’s Hat World subsidiary acquired the assets of Sports Fan-Attic Inc., a retailer of licensed sports headwear, apparel, accessories and novelties, with 37 stores in seven states as of May 1, 2010, for a preliminary purchase price of $13.9 million plus assumed debt of $1.6 million with $4.5 million of that amount withheld until satisfaction of certain closing contingencies. Subsequently, in the first quarter of Fiscal 2011, $3.0 million of the $4.5 million was paid to the seller. The Company allocated $6.2 million of the purchase price to goodwill. Finite-lived intangibles include $1.4 million for trademarks, a $0.4 million asset and a $1.1 million liability to reflect the adjustment of acquired leases to market and $0.1 million for a non-compete agreement. The weighted average amortization period for the asset to adjust acquired leases to market is 4.7 years. The goodwill related to Sports Fan-Attic is deductible for tax purposes.

Other intangibles by major classes were as follows:


													Non-Compete
	Leases						Customer Lists						Agreements						Total
	May 1,			Jan. 30,			May 1,			Jan. 30,			May 1,			Jan. 30,			May 1,			Jan. 30,
(In Thousands)	2010			2010			2010			2010			2010			2010			2010			2010

Gross other intangibles	$	9,267		$	9,267		$	2,790		$	2,790		$	408		$	408		$	12,465		$	12,465
Accumulated amortization		(8,167	)		(8,074	)		(520	)		(461	)		(290	)		(260	)		(8,977	)		(8,795	)

Net Other Intangibles	$	1,100		$	1,193		$	2,270		$	2,329		$	118		$	148		$	3,488		$	3,670

The amortization of intangibles was $0.2 million for each of the first quarters of Fiscal 2011 and Fiscal 2010. The amortization of intangibles will be $1.1 million, $0.9 million, $0.8 million, $0.7 million and $0.6 million for Fiscal 2011, 2012, 2013, 2014 and 2015, respectively.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 3

Restructuring and Other Charges and Discontinued Operations

Restructuring and Other Charges

In accordance with Company policy, assets are determined to be impaired when the revised estimated future cash flows are insufficient to recover the carrying costs. Impairment charges represent the excess of the carrying value over the fair value of those assets.

Asset impairment charges are reflected as a reduction of the net carrying value of property and equipment, and in restructuring and other, net in the accompanying Condensed Consolidated Statements of Operations.

The Company recorded a pretax charge to earnings of $2.4 million in the first quarter of Fiscal 2011, primarily for asset impairments. The Company recorded a pretax charge to earnings of $5.0 million in the first quarter of Fiscal 2010, including $4.5 million in asset impairments, $0.4 million for other legal matters and $0.1 million for lease terminations.

Discontinued Operations

Accrued Provision for Discontinued Operations


	Facility
	Shutdown
In thousands	Costs

Balance January 31, 2009	$	15,568
Additional provision Fiscal 2010		452
Charges and adjustments, net		(606	)

Balance January 30, 2010		15,414
Additional provision (income) Fiscal 2011		(88	)
Charges and adjustments, net		202

Balance May 1, 2010*		15,528
Current provision for discontinued operations		9,480

Total Noncurrent Provision for Discontinued Operations	$	6,048


*		Includes a $16.0 million environmental provision, including $9.9 million in current provision for discontinued operations.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 4
Inventories


	May 1,		January 30,
In thousands	2010		2010

Raw materials	$	5,195	$	5,415
Wholesale finished goods		15,688		22,383
Retail merchandise		274,631		263,176

Total Inventories	$	295,514	$	290,974

Note 5
Fair Value

The Company adopted the Fair Value Measurements and Disclosures Topic of the Codification as of February 3, 2008, with the exception of the application of the topic to non-recurring, nonfinancial assets and liabilities. The adoption did not have a material impact on the Company’s results of operations or financial position. This Topic defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements. In February 2008, the FASB issued an amendment to the Fair Value Topic, to delay the effective date for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (that is, at least annually). The Company adopted the amendment as of February 1, 2009.

The Fair Value Measurements and Disclosures Topic defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. It also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 5
Fair Value, Continued

A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The following table presents the Company’s assets and liabilities measured at fair value on a nonrecurring basis as of May 1, 2010 aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):


	Long-Lived Assets								Total
	Held and Used		Level 1		Level 2		Level 3		Losses
Measured as of May 1, 2010	$	1,789	$	—	$	—	$	1,789	$	2,351

In accordance with the Property, Plant and Equipment Topic of the Codification, the Company recorded $2.4 million of impairment charges as a result of the fair value measurement of its long-lived assets held and used on a nonrecurring basis during the three months ended May 1, 2010. These charges are reflected in restructuring and other, net on the Condensed Consolidated Statements of Operations.

The Company used a discounted cash flow model to estimate the fair value of these long-lived assets at May 1, 2010. Discount rate and growth rate assumptions are derived from current economic conditions, expectations of management and projected trends of current operating results. As a result, the Company has determined that the majority of the inputs used to value its long-lived assets held and used are unobservable inputs that fall within Level 3 of the fair value hierarchy.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 6
Defined Benefit Pension Plans and Other Benefit Plans

Components of Net Periodic Benefit Cost


	Pension Benefits						Other Benefits
	Three Months Ended						Three Months Ended
	May 1,			May 2,			May 1,		May 2,
In thousands	2010			2009			2010		2009

Service cost	$	63		$	63		$	38	$	37
Interest cost		1,484			1,636			40		44
Expected return on plan assets		(2,025	)		(2,092	)		-0-		-0-
Amortization:
Prior service cost		1			1			-0-		-0-
Losses		1,130			598			14		17

Net amortization		1,131			599			14		17

Net Periodic Benefit Cost	$	653		$	206		$	92	$	98

While there was no cash requirement for the Plan in 2010, the Company made a $4.0 million contribution to the Plan in February 2010.

Genesco Inc.
and Consolidated Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 7
Earnings (Loss) Per Share from Continuing Operations


	For the Three Months Ended							For the Three Months Ended
	May 1, 2010							May 2, 2009
(In thousands, except	Income			Shares		Per-Share		Income			Shares		Per-Share
per share amounts)	(Numerator)			(Denominator)		Amount		(Numerator)			(Denominator)		Amount

Earnings (loss) from continuing operations	$	8,563						$	(5,603	)

Less: Preferred stock dividends		(49	)						(50	)


Basic EPS from continuing operations
Income (loss) available to common shareholders		8,514			23,462	$	.36		(5,653	)		18,852	$	(.30	)


Effect of Dilutive Securities from continuing operations
Options					386							-0-
Convertible preferred stock⁽¹⁾		-0-			-0-				-0-			-0-
4 1/8% Convertible Subordinated Debentures⁽²⁾		-0-			-0-				-0-			-0-
Employees’ preferred stock⁽³⁾					50							-0-


Diluted EPS from continuing operations
Income (loss) available to common shareholders plus assumed conversions	$	8,514			23,898	$	.36	$	(5,653	)		18,852	$	(.30	)


(1)		The amount of the dividend on the convertible preferred stock per common share obtainable on conversion of the convertible preferred stock was higher than basic earnings per share for all periods presented. Therefore, conversion of the convertible preferred stock was not reflected in diluted earnings per share, because it would have been antidilutive. The shares convertible to common stock for Series 1, 3 and 4 preferred stock would have been 27,913, 25,606 and 5,423, respectively, as of May 1, 2010.

(2)		There were no outstanding debentures for the three months ended May 1, 2010. The amount of the interest on the convertible subordinated debentures for the three months ended May 2, 2009 per common share obtainable on conversion is higher than basic earnings per share, therefore the convertible debentures are not reflected in diluted earnings per share for the three months ended May 2, 2009 because it would have been antidilutive.

(3)		The Company’s Employees’ Subordinated Convertible Preferred Stock is convertible one for one to the Company’s common stock. Because there are no dividends paid on this stock, these shares are assumed to be converted for the first quarter ended May 1, 2010, but not in the first quarter ended May 2, 2009 due to the loss from continuing operations.

During the first quarter this year, the board increased the total repurchase authorization under its common stock repurchase plan to $35.0 million. The Company repurchased 1,700 shares during the first quarter ended May 1, 2010. The Company did not repurchase any shares during the first quarter ended May 2, 2009. In total, the Company has repurchased 12.3 million shares at a cost of $196.4 million from all authorizations as of May 1, 2010.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 8
Legal Proceedings

Environmental Matters

New York State Environmental Matters

In August 1997, the New York State Department of Environmental Conservation (“NYSDEC”) and the Company entered into a consent order whereby the Company assumed responsibility for conducting a remedial investigation and feasibility study (“RIFS”) and implementing an interim remedial measure (“IRM”) with regard to the site of a knitting mill operated by a former subsidiary of the Company from 1965 to 1969. The Company undertook the IRM and RIFS voluntarily, without admitting liability or accepting responsibility for any future remediation of the site. The Company has completed the IRM and the RIFS. In the course of preparing the RIFS, the Company identified remedial alternatives with estimated undiscounted costs ranging from $-0- to $24.0 million, excluding amounts previously expended or provided for by the Company. The United States Environmental Protection Agency (“EPA”), which has assumed primary regulatory responsibility for the site from NYSDEC, issued a Record of Decision in September 2007. The Record of Decision requires a remedy of a combination of groundwater extraction and treatment and in-site chemical oxidation at an estimated present worth of approximately $10.7 million.

In July 2009, the Company agreed to a Consent Order with the EPA requiring the Company to perform certain remediation actions, operations, maintenance and monitoring at the site. In September 2009, a Consent Judgment embodying the Consent Order was filed in the U.S. District Court for the Eastern District of New York.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 8
Legal Proceedings, Continued

The Village of Garden City, New York, has asserted that the Company is liable for the costs associated with enhanced treatment required by the impact of the groundwater plume from the site on two public water supply wells, including historical costs ranging from approximately $1.8 million to in excess of $2.5 million, and future operation and maintenance costs which the Village estimates at $126,400 annually while the enhanced treatment continues. On December 14, 2007, the Village filed a complaint against the Company and the owner of the property under the Resource Conservation and Recovery Act (“RCRA”), the Safe Drinking Water Act, and the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) as well as a number of state law theories in the U.S. District Court for the Eastern District of New York, seeking an injunction requiring the defendants to remediate contamination from the site and to establish their liability for future costs that may be incurred in connection with it, which the complaint alleges could exceed $41 million over a 70-year period. The Company has not verified the estimates of either historic or future costs asserted by the Village, but believes that an estimate of future costs based on a 70-year remediation period is unreasonable given the expected remedial period reflected in the EPA’s Record of Decision. On May 23, 2008, the Company filed a motion to dismiss the Village’s complaint on grounds including applicable statutes of limitation and preemption of certain claims by the NYSDEC’s and the EPA’s diligent prosecution of remediation. On January 27, 2009, the Court granted the motion to dismiss all counts of the plaintiff’s complaint except for the CERCLA claim and a state law claim for indemnity for costs incurred after November 27, 2000. On September 23, 2009, on a motion for reconsideration by the Village, the Court reinstated the claims for injunctive relief under RCRA and for equitable relief under certain of the state law theories.

In December 2005, the EPA notified the Company that it considers the Company a potentially responsible party (“PRP”) with respect to contamination at two Superfund sites in upstate New York. The sites were used as landfills for process wastes generated by a glue manufacturer, which acquired tannery wastes from several tanners, allegedly including the Company’s Whitehall tannery, for use as raw materials in the gluemaking process. The Company has no records indicating that it ever provided raw materials to the gluemaking operation and has not been able to establish whether the EPA’s substantive allegations are accurate. The Company, together with other tannery PRPs, has entered into cost sharing agreements and Consent Decrees with the EPA with respect to both sites. Based upon the current estimates of the cost of remediation, the Company’s share is expected to be less than $250,000 in total for the two sites. While there is no assurance that the Company’s share of the actual cost of remediation will not exceed the estimate, the Company does not presently expect that its aggregate exposure with respect to these two landfill sites will have a material adverse effect on its financial condition or results of operations.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 8
Legal Proceedings, Continued

Whitehall Environmental Matters

The Company has performed sampling and analysis of soil, sediments, surface water, groundwater and waste management areas at the Company’s former Volunteer Leather Company facility in Whitehall, Michigan.

The Company has submitted to the Michigan Department of Environmental Quality (“MDEQ”) and provided for certain costs associated with a remedial action plan (the “Plan”) designed to bring the property into compliance with regulatory standards for non-industrial uses and has subsequently engaged in negotiations regarding the scope of the Plan. The Company estimates that the costs of resolving environmental contingencies related to the Whitehall property range from $3.9 million to $4.4 million, and considers the cost of implementing the Plan, as it is modified in the course of negotiations with the MDEQ, to be the most likely cost within that range. Until the Plan is finally approved by the MDEQ, management cannot provide assurances that no further remediation will be required or that its estimate of the range of possible costs or of the most likely cost of remediation will prove accurate.

Accrual for Environmental Contingencies

Related to all outstanding environmental contingencies, the Company had accrued $16.0 million as of May 1, 2010, $15.9 million as of January 30, 2010 and $16.1 million as of May 2, 2009. All such provisions reflect the Company’s estimates of the most likely cost (undiscounted, including both current and noncurrent portions) of resolving the contingencies, based on facts and circumstances as of the time they were made. There is no assurance that relevant facts and circumstances will not change, necessitating future changes to the provisions. Such contingent liabilities are included in the liability arising from provision for discontinued operations on the accompanying Condensed Consolidated Balance Sheets. The Company has made pretax accruals for certain of these contingencies, including approximately $0.4 million reflected in each of the first quarters of Fiscal 2011 and Fiscal 2010. These charges are included in provision for discontinued operations, net in the Condensed Consolidated Statements of Operations.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 8
Legal Proceedings, Continued

California Matters

On June 16, 2008, there was filed in the Superior Court of the State of California, County of Shasta, a putative class action styled Jacobs v. Genesco Inc. et al., alleging violations of the California Labor Code involving payment of wages, failure to provide mandatory meal and rest breaks, and unfair competition, and seeking back pay, penalties and declaratory and injunctive relief. The Company removed the case to the Federal District Court for the Eastern District of California. On September 3, 2008, the court dismissed certain of the plaintiff’s claims, including claims for conversion and punitive damages. On May 5, 2009, the Company and the plaintiff’s counsel reached an agreement to settle the lawsuit on a claims made basis. On May 21, 2010, the court granted final approval of the settlement. The minimum payment by the Company pursuant to the agreement, is $398,000; the maximum is $703,000.

Patent Action

The Company is named as a defendant in Paul Ware and Financial Systems Innovation, L.L.C. v. Abercrombie & Fitch Stores, Inc., et al., filed on June 19, 2007, in the United States District Court for the Northern District of Georgia, against more than 100 retailers. The suit alleges that the defendants have infringed U.S. Patent No. 4,707,592 by using a feature of their retail point of sale registers to generate transaction numbers for credit card purchases. The complaint seeks treble damages in an unspecified amount and attorneys’ fees. The Company has filed an answer denying the substantive allegations in the complaint and asserting certain affirmative defenses. On December 14, 2007, the Company filed a third-party complaint against Datavantage Corporation and MICROS Systems, Inc., its vendor for the technology at issue in the case, seeking indemnification and defense against the infringement allegations in the complaint. On December 27, 2007, the court stayed proceedings in the litigation pending the outcome of a reexamination of the patent by the U. S. Patent and Trademark Office. On September 15, 2008, the patent examiner issued a first Office Action rejecting all of the claims in the patent as being unpatentable over the prior art. On January 21, 2009, the examiner issued a final office action again rejecting all of the claims in the patent. In April 2009, the examiner issued a Notice of Intent to Issue an Ex Parte Reexamination Certificate for the patent. The litigation is in discovery.

Other Matters

In addition to the matters specifically described in this footnote, the Company is a party to other legal and regulatory proceedings and claims arising in the ordinary course of its business. While management does not believe that the Company’s liability with respect to any of these other matters is likely to have a material effect on its financial position or results of operations, legal proceedings are subject to inherent uncertainties and unfavorable rulings could have a material adverse impact on our business and results of operations.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 9

Business Segment Information

The Company operates five reportable business segments (not including corporate): Journeys Group, comprised of the Journeys, Journeys Kidz and Shi by Journeys retail footwear chains, catalog and e-commerce operations; Underground Station Group, comprised of the Underground Station retail footwear chain and e-commerce operations and the remaining Jarman retail footwear stores; Lids Sports Group, comprised of the Hat World, Lids, Hat Shack, Hat Zone, Head Quarters and Cap Connection retail headwear stores, the Sports Fan-Attic retail licensed sports headwear, apparel and accessory stores, now referred to as Lids Locker Room, acquired in November 2009, the Lids Team Sports business, and certain e-commerce operations; Johnston & Murphy Group, comprised of Johnston & Murphy retail operations, catalog and e-commerce operations and wholesale distribution; and Licensed Brands, comprised primarily of Dockers^® Footwear sourced and marketed under a license from Levi Strauss & Company.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies.

The Company’s reportable segments are based on the way management organizes the segments in order to make operating decisions and assess performance along types of products sold. Journeys Group, Underground Station Group and Lids Sports Group sell primarily branded products from other companies while Johnston & Murphy Group and Licensed Brands sell primarily the Company’s owned and licensed brands.

Corporate assets include cash, deferred income taxes, deferred note expense and corporate fixed assets. The Company charges allocated retail costs of distribution to each segment and unallocated retail costs of distribution to the corporate segment. The Company does not allocate certain costs to each segment in order to make decisions and assess performance. These costs include corporate overhead, stock compensation, interest expense, interest income, restructuring charges and other, including litigation and the loss on early retirement of debt.

Three Months Ended

Underground

Johnston

May 1, 2010

Journeys

Station

Lids Sports

& Murphy

Licensed

Corporate

In thousands

Group

Brands

& Other

Consolidated

Sales

181,891

26,073

119,988

44,537

28,190

222

400,901

Intercompany sales

-0-

(48

)

-0-

(48

)

Net sales to external customers

181,891

26,073

119,988

44,537

28,142

222

400,853

Segment operating income (loss)

9,082

765

9,792

2,273

4,632

(9,550

)

16,994

Restructuring and other*

-0-

(2,443

)

(2,443

)

Earnings (loss) from operations

9,082

765

9,792

2,273

4,632

(11,993

)

14,551

Interest expense

-0-

(236

)

(236

)

Interest income

-0-

Earnings (loss) from continuing operations before income taxes

$9,082

765

9,792

2,273

4,632

(12,228

)

14,316

Total assets**

244,978

25,423

342,497

62,439

26,872

185,891

888,100

Depreciation

5,496

589

4,008

957

578

11,670

Capital expenditures

1,674

4,341

375

134

6,540


*		Restructuring and other includes a $2.4 million charge for asset impairments, of which $1.5 million is in the Journeys Group, $0.3 million in the Underground Station Group, $0.3 million in the Johnston & Murphy Group and $0.3 million in the Lids Sports Group.

**		Total assets for the Lids Sports Group include $119.0 million of goodwill.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 9

Business Segment Information, Continued


Three Months Ended			Underground					Johnston
May 2, 2009	Journeys		Station			Lids Sports		& Murphy		Licensed			Corporate
In thousands	Group		Group			Group		Group		Brands			& Other			Consolidated

Sales	$	176,847	$	26,728		$	98,804	$	39,330	$	28,559		$	106		$	370,374
Intercompany sales		-0-		-0-			-0-		-0-		(8	)		-0-			(8	)

Net sales to external customers	$	176,847	$	26,728		$	98,804	$	39,330	$	28,551		$	106		$	370,366


Segment operating income (loss)	$	5,513	$	(450	)	$	6,524	$	157	$	3,617		$	(8,430	)	$	6,931
Restructuring and other*		-0-		-0-			-0-		-0-		-0-			(4,973	)		(4,973	)

Earnings (loss) from operations		5,513		(450	)		6,524		157		3,617			(13,403	)		1,958
Loss on early retirement of debt		-0-		-0-			-0-		-0-		-0-			(5,119	)		(5,119	)
Interest expense		-0-		-0-			-0-		-0-		-0-			(2,169	)		(2,169	)
Interest income		-0-		-0-			-0-		-0-		-0-			8			8

Earnings (loss) from continuing operations before income taxes	$	5,513	$	(450	)	$	6,524	$	157	$	3,617		$	(20,683	)	$	(5,322	)


Total assets**	$	259,512	$	34,274		$	315,097	$	80,765	$	27,883		$	97,582		$	815,113
Depreciation		6,480		728			3,337		993		47			543			12,128
Capital expenditures		5,769		24			3,240		1,874		10			91			11,008


*		Restructuring and other includes a $4.5 million charge for asset impairments, of which $3.6 million is in the Journeys Group, $0.6 million in the Underground Station Group, $0.2 million in the Johnston & Murphy Group and $0.1 million in the Lids Sports Group.

**		Total assets for the Lids Sports Group include $111.7 million of goodwill.

Note 10

Subsequent Events

In May 2010, after the close of the first fiscal quarter, the Company completed a small acquisition of the assets of Brand Innovators Inc., a West Coast team dealer business, as part of the Lids Sports Group.

As a result of flood damage to four Nashville-based stores in May 2010, the Company estimates a charge for asset write-offs of $0.9 million to be reflected in the Company’s second quarter results for Fiscal 2011.


Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

This discussion and the notes to the Condensed Consolidated Financial Statements include certain 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 differ materially from those reflected by the forward-looking statements in this discussion, in the notes to the Condensed Consolidated Financial Statements, and in other disclosures, including those regarding the Company’s performance outlook for Fiscal 2011.

A number of factors may adversely affect the outlook reflected in forward looking statements and the Company’s future results, liquidity, capital resources or prospects. These factors (some of which are beyond the Company’s control) include:

	•		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 the financial condition of significant wholesale customers, limiting their ability to buy or pay for merchandise offered by the Company.

	•		Disruptions in product supply or distribution.

	•		Unfavorable trends in fuel costs, foreign exchange rates, foreign labor and material 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 period-to-period sales comparisons.

	•		Risks associated with acquisitions, including inaccurate valuation of the acquired businesses, the failure of the acquired businesses to perform as expected, the assumption of undisclosed liabilities, the failure to integrate the acquired businesses appropriately, and distraction of management from existing businesses.

	•		The Company’s 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 acceptable 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 the Company’s shares.

	•		Variations from expected pension-related charges caused by conditions in the financial markets.

	•		The outcome of litigation, investigations and environmental matters involving the Company, including but not limited to the matters discussed in Note 8 to the Condensed Consolidated Financial Statements.

In addition to the risks referenced above, additional risks are highlighted in the Company’s Annual Report on Form 10-K for the year ended January 30, 2010. Forward-looking statements reflect the expectations of the Company at the time they are made, and investors should rely on them only as

expressions of opinion about what may happen in the future and only at the time they are made. The Company undertakes no obligation to update any forward-looking statement. Although the Company believes it has an appropriate business strategy and the resources necessary for its operations, predictions about future revenue and margin trends are inherently uncertain and the Company may alter its business strategies to address changing conditions.

Overview

Description of Business

The Company is a leading retailer of branded footwear, of licensed and branded headwear and of licensed sports apparel and accessories, operating 2,267 retail footwear, headwear and sports apparel and accessory stores throughout the United States and, in Puerto Rico and Canada as of May 1, 2010. The Company also designs, sources, markets and distributes footwear under its own Johnston & Murphy brand, under the licensed Dockers^® brand, and under two other licensed brands to more than 1,000 retail accounts in the United States, including a number of leading department, discount, and specialty stores.

The Company operates five reportable business segments (not including corporate): Journeys Group, comprised of the Journeys, Journeys Kidz and Shi by Journeys retail footwear chains, catalog and e-commerce operations; Underground Station Group, comprised of the Underground Station retail footwear chain and e-commerce operations and the Company’s remaining Jarman retail footwear stores; Lids Sports Group, comprised of the Hat World, Lids, Hat Shack, Hat Zone, Head Quarters and Cap Connection retail headwear stores, the Sports Fan-Attic retail licensed sports headwear, apparel and accessory stores, now referred to as Lids Locker Room, acquired in November 2009, the Lids Team Sports business, and certain e-commerce operations; Johnston & Murphy Group, comprised of Johnston & Murphy retail operations, catalog and e-commerce operations and wholesale distribution; and Licensed Brands, comprised primarily of Dockers^® Footwear, sourced and marketed under a license from Levi Strauss & Company.

The Journeys retail footwear stores sell footwear and accessories primarily for 13 to 22 year old men and women. The stores average approximately 1,950 square feet. The Journeys Kidz retail footwear stores sell footwear primarily for younger children, ages five to 12. These stores average approximately 1,425 square feet. Shi by Journeys retail footwear stores sell footwear and accessories to fashion-conscious women in their early 20’s to mid 30’s. These stores average approximately 2,150 square feet. The Journeys Group stores are primarily in malls and factory outlet centers throughout the United States, and in Puerto Rico and Canada. Journeys also sells footwear and accessories through a direct-to-consumer catalog and e-commerce operations.

The Underground Station retail footwear stores sell footwear and accessories primarily for men and women in the 20 to 35 age group and in the urban market. The Underground Station Group stores average approximately 1,800 square feet. Underground Station also sells footwear and accessories through an e-commerce operation. The Company plans to shorten the average lease life of the Underground Station stores, close certain underperforming stores as the opportunity presents itself, and attempt to secure rent relief on other locations while it assesses the future prospects for the chain.

The Lids Sports Group includes stores and kiosks that sell licensed and branded headwear to men and women primarily in the early-teens to mid-20’s age group and Sports Fan-Attic stores, now referred to as Lids Locker Room, that sell licensed sports headwear, apparel and accessories to sports fans of all ages. The Lids store locations average approximately 800 square feet and are

primarily in malls, airports, street level stores and factory outlet centers throughout the United States, and in Puerto Rico and Canada. Sports Fan-Attic, or Lids Locker Room, locations average approximately 3,075 square feet and are in malls primarily in the southeastern United States. In November 2009, the Company acquired Sports Fan-Attic, as part of the Lids Sports Group. Lids Sports also sells headwear and accessories through e-commerce operations. In November 2008, the Company acquired Impact Sports, a team dealer business, as part of the Lids Sports Group. In September 2009, the Company acquired Great Plains Sports, also a team dealer business, as part of the Lids Sports Group. Together, these team dealer businesses make up Lids Team Sports.

Johnston & Murphy retail shops sell a broad range of men’s footwear, luggage and accessories. Johnston & Murphy introduced a line of women’s footwear and accessories in select Johnston & Murphy retail shops in the fall of 2008. Johnston & Murphy shops average approximately 1,475 square feet and are located primarily in better malls nationwide and in airports. Johnston & Murphy shoes are also distributed through the Company’s wholesale operations to better department and independent specialty stores. In addition, the Company sells Johnston & Murphy footwear, luggage and accessories in factory stores, averaging approximately 2,350 square feet, located in factory outlet malls, and through a direct-to-consumer catalog and e-commerce operation.

The Company entered into an exclusive license with Levi Strauss & Co. to market men’s footwear in the United States under the Dockers^® brand name in 1991. Levi Strauss & Co. and the Company have subsequently added additional territories, including Canada and Mexico and in certain other Latin American countries. The Dockers license agreement was renewed May 15, 2009. The Dockers license agreement, as amended, expires on December 31, 2012. The Company uses the Dockers name to market casual and dress casual footwear to men aged 30 to 55 through many of the same national retail chains that carry Dockers slacks and sportswear and in department and specialty stores across the country.

Strategy

The Company’s long-term strategy for many years has been to seek organic growth by: 1) increasing the Company’s store base, 2) increasing retail square footage, 3) improving comparable store sales, 4) increasing operating margin and 5) enhancing the value of its brands. Our future results are subject to various risks, uncertainties and other challenges, including those discussed under the caption “Forward Looking Statements,” above and those discussed in Item 1A, Risk Factors in the Company’s Annual Report on Form 10-K for the year ended January 30, 2010. The pace of the Company’s organic growth may be limited by saturation of its markets and by economic conditions. In Fiscal 2010, the Company slowed the pace of new store openings and focused on inventory management and cash flow in response to the recent economic downturn. The Company has also focused on opportunities provided by the economic climate to negotiate occupancy cost reductions, especially where lease provisions triggered by sales shortfalls or declining occupancy of malls would permit the Company to terminate leases.

To supplement its organic growth potential, the Company has made acquisitions and expects to consider acquisition opportunities, either to augment its existing businesses or to enter new businesses that it considers compatible with its existing businesses, core expertise and strategic profile. Acquisitions involve a number of risks, including inaccurate valuation of the acquired business, the assumption of undisclosed liabilities, the failure to integrate the acquired business appropriately, and distraction of management from existing businesses. The Company seeks to mitigate these risks by applying appropriate financial metrics in its valuation analysis and

developing and executing plans for due diligence and integration that are appropriate to each acquisition.

More generally, the Company attempts to develop strategies to mitigate the risks it views as material, including those discussed under the caption “Forward Looking Statements,” above and those discussed in Item 1A, Risk Factors. Among the most important of these factors are those related to consumer demand. Conditions in the external economy can affect demand, resulting in changes in sales and, as prices are adjusted to drive sales and manage inventories, in gross margins. Because fashion trends influencing many of the Company’s target customers (particularly customers of Journeys Group, Underground Station Group and Lids Sports Group) can change rapidly, the Company believes that its ability to react quickly to those changes has been important to its success. Even when the Company succeeds in aligning its merchandise offerings with consumer preferences, those preferences may affect results by, for example, driving sales of products with lower average selling prices. Moreover, economic factors, such as the recession and the current high level of unemployment, may reduce the consumer’s disposable income or his or her willingness to purchase discretionary items, and thus may reduce demand for the Company’s merchandise, regardless of the Company’s skill in detecting and responding to fashion trends. The Company believes its experience and discipline in merchandising and the buying power associated with its relative size in the industry are important to its ability to mitigate risks associated with changing customer preferences and other reductions in consumer demand.

Summary of Results of Operations

The Company’s net sales increased 8.2% during the first quarter of Fiscal 2011 compared to Fiscal 2010. The increase was driven primarily by a 21% increase in Lids Sports Group sales, a 3% increase in Journeys Group sales and a 13% increase in Johnston & Murphy Group sales, offset by a 2% decrease in Underground Station Group sales and a 1% decrease in Licensed Brands sales. Gross margin increased as a percentage of net sales during the first quarter of Fiscal 2011, primarily due to margin increases in the Journeys Group, Underground Station Group, Johnston & Murphy Group and Licensed Brands offset by a margin decrease in Lids Sports Group. Selling and administrative expenses decreased as a percentage of net sales during the first quarter of Fiscal 2011, due to decreases in selling and administrative expenses as a percentage of net sales in all of the Company’s business units. Earnings from operations increased as a percentage of net sales during the first quarter of Fiscal 2011, due to increased earnings from operations in all of the Company’s business units.

Significant Developments

Subsequent Events

Sports Fan-Attic Acquisition

37 stores in seven states as of May 1, 2010, for a preliminary purchase price of $13.9 million plus assumed debt of $1.6 million with $4.5 million of that amount withheld until satisfaction of certain closing contingencies. Subsequently, in the first quarter of Fiscal 2011, $3.0 million of the $4.5 million was paid to the seller.

Conversion of 4 1/8% Debentures

On April 29, 2009, the Company entered into separate exchange agreements whereby it acquired and retired $56.4 million in aggregate principal amount ($51.3 million fair value) of its Debentures due June 15, 2023 in exchange for the issuance of 3,066,713 shares of its common stock, which included 2,811,575 shares that were reserved for conversion of the Debentures and 255,138 additional inducement shares, and a cash payment of approximately $0.9 million. The inducement was not deductible for tax purposes. As a result of the exchange agreements, the Company recognized a loss on the early retirement of debt of $5.1 million in the first quarter of Fiscal 2010, reflected on the Condensed Consolidated Statements of Operations.

Restructuring and Other Charges

Comparable Store Sales

Comparable store sales begin in the fifty-third week of a store’s operation. Temporarily closed stores are excluded from the comparable store sales calculation for every full week of the store closing. Expanded stores are excluded from the comparable store sales calculation until the fifty-third week of operation in the expanded format. E-commerce and catalog sales are excluded from comparable store sales calculations.

Results of Operations — First Quarter Fiscal 2011 Compared to Fiscal 2010

The Company’s net sales in the first quarter ended May 1, 2010 increased 8.2% to $400.9 million from $370.4 million in the first quarter ended May 2, 2009. Gross margin increased 10.0% to $208.1 million in the first quarter this year from $189.2 million in the same period last year and increased as a percentage of net sales from 51.1% to 51.9%. Selling and administrative expenses in the first quarter this year increased 4.8% from the first quarter last year but decreased as a percentage of net sales from 49.2% to 47.7%. The Company records buying and merchandising and occupancy costs in selling and administrative expense. Because the Company does not include these costs in cost of sales, the Company’s gross margin may not be comparable to other retailers that include these costs in the calculation of gross margin. Explanations of the changes in results of operations are provided by business segment in discussions following these introductory paragraphs.

Earnings from continuing operations before income taxes (“pretax earnings (loss)”) for the first quarter ended May 1, 2010 were $14.3 million compared to a pretax loss of $(5.3) million for the first quarter ended May 2, 2009. Pretax earnings for the first quarter ended May 1, 2010 included restructuring and other charges of $2.4 million, primarily for retail store asset impairments. The pretax loss for the first quarter ended May 2, 2009 included a loss on the early retirement of debt of $5.1 million and restructuring and other charges of $5.0 million, primarily for retail store asset impairments, other legal matters and lease terminations.

Net earnings for the first quarter ended May 1, 2010 were $8.6 million ($0.36 diluted earnings per share) compared to a net loss of $(5.8) million ($0.31 diluted loss per share) for the first quarter ended May 2, 2009. The Company recorded an effective income tax rate of 40.2% in the first quarter this year compared to (5.3)% in the same period last year. The variance in the effective tax rate for the first quarter this year compared to the first quarter last year is primarily attributable to the non-deductibility of certain items incurred in connection with the inducement of the conversion of the 4 1/8% Debentures for common stock in the first quarter last year.

Journeys Group


	Three Months Ended
	May 1,			May 2,			%
	2010			2009			Change
	(dollars in thousands)
Net sales	$	181,891		$	176,847			2.9	%
Earnings from operations	$	9,082		$	5,513			64.7	%
Operating margin		5.0	%		3.1	%

Net sales from Journeys Group increased 2.9% to $181.9 million for the first quarter ended May 1, 2010 compared to $176.8 million for the same period last year. The increase reflects primarily a 2% increase in comparable store sales and a 1% increase in average Journeys stores operated (i.e., the sum of the number of stores open on the first day of the fiscal quarter and the last day of each fiscal month during the quarter divided by four). The comparable store sales increase reflected a 3% increase in footwear unit comparable sales offset by a 1% decrease in average price per pair of shoes, reflecting changes in product mix. Unit sales increased 4% during the same period. Journeys Group operated 1,023 stores at the end of the first quarter of Fiscal 2011, including 150 Journeys Kidz stores, 56 Shi by Journeys stores and the first Journeys store in Canada, compared to 1,018 stores at the end of the first quarter last year, including 145 Journeys Kidz stores and 55 Shi by Journeys stores.

Journeys Group earnings from operations for the first quarter ended May 1, 2010 increased 64.7% to $9.1 million compared to $5.5 million for the first quarter ended May 2, 2009. The increase was due to increased net sales, to increased gross margin as a percentage of net sales, reflecting decreased markdowns, and to decreased expenses as a percentage of net sales, reflecting store-related expense leverage from positive comparable store sales.

Underground Station Group


	Three Months Ended
	May 1,			May 2,			%
	2010			2009			Change
	(dollars in thousands)
Net sales	$	26,073		$	26,728			(2.5	)%
Earnings (loss) from operations	$	765		$	(450	)	NM
Operating margin		2.9	%		(1.7	)%

Net sales from the Underground Station Group decreased 2.5% to $26.1 million for the first quarter ended May 1, 2010 from $26.7 million for the same period last year. The decrease reflects a 7% decrease in average Underground Station stores operated and flat comparable store sales.

Comparable footwear unit sales increased 8% while the average price per pair of shoes decreased 3%, reflecting changes in product mix. Unit sales increased 4% during the same period. Underground Station Group operated 163 stores at the end of the first quarter of Fiscal 2011, including 155 Underground Station stores, compared to 177 stores at the end of the first quarter last year, including 167 Underground Station stores.

Underground Station Group earnings from operations for the first quarter ended May 1, 2010 improved to $0.8 million from a loss of $(0.5) million in the first quarter ended May 2, 2009. The improvement was primarily due to increased gross margin as a percentage of net sales, reflecting decreased markdowns and increased initial mark-on from changes in product mix, and to decreased expenses as a percentage of net sales due to decreased occupancy costs and depreciation.

Lids Sports Group


	Three Months Ended
	May 1,			May 2,			%
	2010			2009			Change
	(dollars in thousands)
Net sales	$	119,988		$	98,804			21.4	%
Earnings from operations	$	9,792		$	6,524			50.1	%
Operating margin		8.2	%		6.6	%

Net sales from Lids Sports Group increased 21.4% to $120.0 million for the first quarter ended May 1, 2010 compared to $98.8 million for the same period last year, reflecting primarily a 10% increase in comparable store sales, a 4% increase in average stores operated, $5.3 million in sales from the Sports Fan-Attic business acquired in the fourth quarter of Fiscal 2010, and a $3.0 million increase in sales related to the Lids Team Sports business. The comparable store sales increase reflected a 9% increase in comparable store units sold, primarily from strength in fashion-oriented Major League Baseball products, NCAA products and NHL products, and a 2% increase in average price per hat. Lids Sports Group operated 922 stores at the end of the first quarter of Fiscal 2011, including 62 stores in Canada and 37 Sports Fan-Attic stores, compared to 880 stores at the end of the first quarter last year, including 50 stores in Canada.

Lids Sports Group earnings from operations for the first quarter ended May 1, 2010 increased 50.1% to $9.8 million compared to $6.5 million for the first quarter ended May 2, 2009. The increase was due to increased headwear sales and decreased expenses as a percentage of net sales, primarily reflecting leverage from positive comparable store sales.

Johnston & Murphy Group


	Three Months Ended
	May 1,			May 2,			%
	2010			2009			Change
	(dollars in thousands)
Net sales	$	44,537		$	39,330			13.2	%
Earnings from operations	$	2,273		$	157		NM
Operating margin		5.1	%		0.4	%

Johnston & Murphy Group net sales increased 13.2% to $44.5 million for the first quarter ended May 1, 2010 from $39.3 million for the first quarter ended May 2, 2009, reflecting primarily a 10%

increase in comparable store sales, a 16% increase in Johnston & Murphy wholesale sales and a 1% increase in average stores operated for Johnston & Murphy retail operations. Unit sales for the Johnston & Murphy wholesale business increased 15% in the first quarter of Fiscal 2011 and the average price per pair of shoes increased 1% for the same period. Retail operations accounted for 71.6% of Johnston & Murphy Group segment sales in the first quarter this year, down from 72.1% in the first quarter last year. The comparable store sales increase in the first quarter ended May 1, 2010 reflects a 12% increase in footwear unit comparable sales offset by a 4% decrease in average price per pair of shoes for Johnston & Murphy retail operations, primarily due to changes in product mix. The store count for Johnston & Murphy retail operations at the end of the first quarter of Fiscal 2011 included 159 Johnston & Murphy shops and factory stores compared to 161 Johnston & Murphy shops and factory stores at the end of the first quarter of Fiscal 2010.

Johnston & Murphy Group earnings from operations for the first quarter ended May 1, 2010 increased to $2.3 million compared to $0.2 million for the same period last year, primarily due to increased net sales, increased gross margin as a percentage of net sales, and decreased expenses as a percentage of net sales. Gross margin reflected decreased markdowns and changes in product mix. Expenses reflected positive leverage from the increase in comparable store sales and increased wholesale sales.

Licensed Brands


	Three Months Ended
	May 1,			May 2,			%
	2010			2009			Change
	(dollars in thousands)
Net sales	$	28,142		$	28,551			(1.4	)%
Earnings from operations	$	4,632		$	3,617			28.1	%
Operating margin		16.5	%		12.7	%

Licensed Brands’ net sales decreased 1.4% to $28.1 million for the first quarter ended May 1, 2010, from $28.6 million for the first quarter ended May 2, 2009. The sales decrease reflects a 6% decrease in sales of Dockers Footwear offset by increased sales from a line of footwear that the Company is sourcing under a different brand with limited distribution. Dockers’ sales decrease reflected fewer closeout sales and depleted inventory levels associated with reduced manufacturing and shipping capacity from China. Unit sales for Dockers Footwear decreased 5% for the first quarter this year and the average price per pair of Dockers shoes decreased 1% compared to the same period last year.

Licensed Brands’ earnings from operations for the first quarter ended May 1, 2010 increased 28.1% to $4.6 million compared to $3.6 million for the same period last year. The decrease in net sales was offset by increased gross margin as a percentage of net sales, reflecting fewer sales of closeouts at lower margins, and by decreased expenses, both in dollars and as a percentage of net sales.

Corporate, Interest Expenses and Other Charges

Corporate and other expense for the first quarter ended May 1, 2010 was $12.0 million compared to $18.5 million for the first quarter ended May 2, 2009. Corporate expense in the first quarter this year included $2.4 million in restructuring and other charges, primarily for retail store asset impairments. Last year’s expense in the first quarter included a $5.1 million loss on the early retirement of debt and $5.0 million in restructuring and other charges, primarily for retail store asset

impairments, other legal matters and lease terminations. Excluding the charges listed above, corporate and other expense increased primarily due to increased bonus accruals as a result of increased earnings in the first quarter this year compared to a loss in the first quarter last year.

Interest expense decreased 89.1% from $2.2 million in the first quarter ended May 2, 2009 to $0.2 million for the first quarter ended May 1, 2010, due to the conversion of all the Company’s 4 1/8% Debentures during Fiscal 2010 and no revolver borrowings during the first quarter this year. Last year had an average of $25.7 million in revolver borrowings outstanding during the first quarter ended May 2, 2009. Interest income decreased $7,000 from the first quarter ended May 2, 2009.

Liquidity and Capital Resources

The following table sets forth certain financial data at the dates indicated.


	May 1,		January 30,		May 2,
	2010		2010		2009
	(dollars in millions)
Cash and cash equivalents	$	105.4	$	82.1	$	16.7
Working capital	$	293.6	$	280.4	$	254.9
Long-term debt	$	-0-	$	-0-	$	51.6

Working Capital

The Company’s business is somewhat seasonal, with the Company’s investment in inventory and accounts receivable normally reaching peaks in the spring and fall of each year. Historically, cash flows from operations have been generated principally in the fourth quarter of each fiscal year.

Cash provided by operating activities was $35.9 million in the first three months of Fiscal 2011 compared to $23.1 million in the first three months of Fiscal 2010. The $12.8 million increase in cash flow from operating activities from last year reflects increases in cash flow from improved earnings and changes in other accrued liabilities and accounts payable of $8.9 million and $8.2 million, respectively, offset by a decrease in cash flow from changes in inventory of $11.9 million. The $8.9 million increase in cash flow from other accrued liabilities was due to increased accrued income taxes in the first quarter this year compared to the first quarter last year and increased bonus accruals. The $8.2 million increase in cash flow from accounts payable reflected changes in buying patterns and payment terms negotiated with individual vendors. The $11.9 million decrease in cash flow from inventory reflected last year’s efforts to reduce wholesale and Journeys Group inventories and this year’s increased purchases in the Journeys Group and Lids Sports Group to support sales offset by decreased inventory in the wholesale businesses.

The $4.5 million increase in inventories at May 1, 2010 from January 30, 2010 levels reflected increased purchases in the Journeys Group and Lids Sports Group, offset by decreased inventory in the wholesale businesses.

Accounts receivable at May 1, 2010 increased $2.6 million compared to January 30, 2010, due primarily to increased wholesale sales, due to seasonally stronger footwear wholesale sales in the first quarter.

Cash provided (or used) due to changes in accounts payable and accrued liabilities are as follows:


	Three Months Ended
	May 1,		May 2,
	2010		2009
	(in thousands)
Accounts payable	$	19,320	$	11,117
Accrued liabilities		4,297		(4,592	)

	$	23,617	$	6,525

The difference in cash provided due to changes in accounts payable for the first quarter this year compared to the first quarter last year reflects changes in buying patterns and payment terms negotiated with individual vendors. The change in cash provided due to changes in accrued liabilities for the first quarter this year from the first quarter last year was due primarily to increased accrued income taxes and increased bonus accruals resulting from increased earnings in the first quarter this year compared to a loss in the first quarter last year.

There were no revolving credit borrowings during the three months ended May 1, 2010. Revolving credit borrowings averaged $25.7 million during the three months ended May 2, 2009. The Company funded its seasonal working capital requirements and its capital expenditures in the first quarter through cash flow generated by operating activities.

The Company’s contractual obligations increased from January 30, 2010. Purchase obligations increased $76.5 million due to seasonal increases in purchases of retail inventory offset by a $35.3 million reduction in operating leases.

Capital Expenditures

Total capital expenditures in Fiscal 2011 are expected to be approximately $44.9 million. These include retail capital expenditures of approximately $33.1 million to open approximately 12 Journeys stores, three Journeys Kidz stores, nine Johnston & Murphy shops and factory stores and 45 Lid Sports Group stores including 15 stores in Canada and five Lids Locker Room stores and to complete approximately 83 major store renovations. Due to continuing economic uncertainty, the Company intends to continue to be selective with respect to new store locations and to open stores at a slower pace in 2011 than before the recession. The planned amount of capital expenditures in Fiscal 2011 for wholesale operations and other purposes is approximately $11.8 million, including approximately $6.2 million for new systems to improve customer service and support the Company’s growth.

Future Capital Needs

The Company expects that cash on hand and cash provided by operations will be sufficient to support seasonal working capital requirements and capital expenditures, although the Company may borrow under its Credit Facility from time to time to support seasonal working capital requirements during Fiscal 2011. The approximately $9.5 million of costs associated with discontinued operations that are expected to be paid during the next twelve months are expected to be funded from cash on hand and borrowings under the Credit Facility during Fiscal 2011.

There were $13.3 million of letters of credit outstanding and no revolver borrowings outstanding under the Credit Facility at May 1, 2010. Net availability under the facility was $181.1 million.

The Company is not required to comply with any financial covenants under the facility unless Adjusted Excess Availability (as defined in the Amended and Restated Credit Agreement) is less than 10% of the total commitments under the credit facility (currently $20.0 million). If and during such time as Adjusted Excess Availability is less than such amount, the credit facility requires the Company to meet a minimum fixed charge coverage ratio (EBITDA less capital expenditures less cash taxes divided by cash interest expense and scheduled payments of principal indebtedness) of 1.0 to 1.0. Adjusted Excess Availability was $181.1 million at May 1, 2010. Because Adjusted Excess Availability exceeded $20.0 million, the Company was not required to comply with this financial covenant at May 1, 2010.

The Credit Facility prohibits the payment of dividends and other restricted payments (including stock repurchases) unless after such dividend or restricted payment (i) availability is between $30.0 million and $50.0 million, the fixed charge coverage is greater than 1.0 to 1.0 or (ii) availability under the credit facility exceeds $50.0 million. The Company’s management does not expect availability under the Credit Facility to fall below $50.0 million during Fiscal 2011.

The aggregate of annual dividend requirements on the Company’s Subordinated Serial Preferred Stock, $2.30 Series 1, $4.75 Series 3 and $4.75 Series 4, and on its $1.50 Subordinated Cumulative Preferred Stock is $197,000.

Common Stock Repurchases

In February 2010, the board increased the total repurchase authorization under its common stock repurchase plan to $35.0 million. The Company repurchased 1,700 shares at a cost of $48,000 during the three months ended May 1, 2010. The Company did not repurchase any shares during the three months ended May 2, 2009.

Environmental and Other Contingencies

The Company is subject to certain loss contingencies related to environmental proceedings and other legal matters, including those disclosed in Note 8 to the Company’s Condensed Consolidated Financial Statements. The Company has made pretax accruals for certain of these contingencies, including approximately $0.4 million in each of the first quarters of Fiscal 2011 and Fiscal 2010. These charges are included in the provision for discontinued operations, net in the Condensed Consolidated Statements of Operations. The Company monitors these matters on an ongoing basis and, on a quarterly basis, management reviews the Company’s reserves and accruals in relation to each of them, adjusting provisions as management deems necessary in view of changes in available information. Changes in estimates of liability are reported in the periods when they occur. Consequently, management believes that its reserve in relation to each proceeding is a reasonable estimate of the probable loss connected to the proceeding, or in cases in which no reasonable estimate is possible, the minimum amount in the range of estimated losses, based upon its analysis of the facts and circumstances as of the close of the most recent fiscal quarter. However, because of uncertainties and risks inherent in litigation generally and in environmental proceedings in particular, there can be no assurance that future developments will not require additional reserves to be set aside, that some or all reserves may not be adequate or that the amounts of any such additional reserves or any such inadequacy will not have a material adverse effect upon the Company’s financial condition or results of operations.

Financial Market Risk

The following discusses the Company’s exposure to financial market risk related to changes in interest rates.

Outstanding Debt of the Company — The Company does not have any outstanding debt as of May 1, 2010.

Cash and Cash Equivalents — The Company’s cash and cash equivalent balances are invested in financial instruments with original maturities of three months or less. The Company does not have significant exposure to changing interest rates on invested cash at May 1, 2010. As a result, the Company considers the interest rate market risk implicit in these investments at May 1, 2010 to be low.

Foreign Currency Exchange Rate Risk — Most purchases by the Company from foreign sources are denominated in U.S. dollars. To the extent that import transactions are denominated in other currencies, it is the Company’s practice to hedge its risks through the purchase of forward foreign exchange contracts when the purchases are material. At May 1, 2010, the Company had $0.8 million of forward foreign exchange contracts for Euro. The Company’s policy is not to speculate in derivative instruments for profit on the exchange rate price fluctuation and it does not hold any derivative instruments for trading purposes. Derivative instruments used as hedges must be effective at reducing the risk associated with the exposure being hedged and must be designated as a hedge at the inception of the contract. The unrealized loss on contracts outstanding at May 1, 2010 was less than $0.1 million based on current spot rates. As of May 1, 2010, a 10% adverse change in foreign currency exchange rates from market rates would decrease the fair value of the contracts by approximately $0.1 million.

Accounts Receivable — The Company’s accounts receivable balance at May 1, 2010 is primarily concentrated in two of its wholesale businesses, which sell primarily to department stores and independent retailers across the United States. One customer accounted for 15% of the Company’s trade accounts receivable balance and no other customer accounted for more than 9% of the Company’s trade receivables balance as of May 1, 2010. The Company monitors the credit quality of its customers and establishes an allowance for doubtful accounts based upon factors surrounding credit risk of specific customers, historical trends and other information, as well as customer specific factors; however, credit risk is affected by conditions or occurrences within the economy and the retail industry, as well as company-specific information.

Summary — Based on the Company’s overall market interest rate exposure at May 1, 2010, the Company believes that the effect, if any, of reasonably possible near-term changes in interest rates on the Company’s consolidated financial position, results of operations or cash flows for Fiscal 2011 would not be material.

New Accounting Principles

Descriptions of the recently issued accounting principles and the accounting principles adopted by the Company during the three months ended May 1, 2010 are included in Note 1 to the Condensed Consolidated Financial statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company incorporates by reference the information regarding market risk appearing under the heading “Financial Market Risk” in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures.

We have established disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to the officers who certify the Company’s financial reports and to other members of senior management and the Board of Directors.

Based on their evaluation as of May 1, 2010, the principal executive officer and principal financial officer of the Company have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within time periods specified in SEC rules and forms and (ii) accumulated and communicated to the Company’s management, including the Company’s principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting.

There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s first fiscal quarter that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION


Item 1.		Legal Proceedings

The Company incorporates by reference the information regarding legal proceedings in Note 8 of the Company’s Condensed Consolidated Financial Statements.


Item 1A.		Risk Factors

There have been no material changes to the risk factors previously disclosed in Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended January 30, 2010.


Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds

ISSUER PURCHASES OF EQUITY SECURITIES


							(d) Maximum
							Number (or
					(c) Total		Approximate
					Number of		Dollar Value) of
					Shares		shares that
					Purchased as		May Yet Be
	(a) Total of				Part of Publicly		Purchased
	Number of		(b) Average		Announced		Under the Plans
	Shares		Price Paid		Plans or		or Programs
Period	Purchased		per Share		Programs		(in thousands)
February 2010
1-31-10 to 2-27-10⁽¹⁾		340	$	23.27		-0-	$	-0-

March 2010
2-28-10 to 3-27-10⁽¹⁾		40,308	$	29.07		-0-	$	-0-
2-28-10 to 3-27-10⁽²⁾		1,700	$	28.49		1,700	$	34,952

April 2010
3-28-10 to 5-1-10		-0-	$	-0-		-0-	$	-0-


(1)		These shares represent shares withheld from vested restricted stock to satisfy the minimum withholding requirement for federal and state taxes.

(2)		During the first quarter of Fiscal 2011, the board increased the total repurchase authorization under its common stock repurchase plan to $35.0 million. As of May 1, 2010, the Company had repurchased 1,700 shares at a cost of $48,000.


	Page
Part I. Financial Information
Item 1. Financial Statements (unaudited):
Condensed Consolidated Balance Sheets – May 1, 2010, January 30, 2010 and May 2, 2009		3
Condensed Consolidated Statements of Operations — Three Months Ended May 1, 2010 and May 2, 2009		5
Condensed Consolidated Statements of Cash Flows — Three Months Ended May 1, 2010 and May 2, 2009		6
Condensed Consolidated Statements of Shareholders’ Equity — Year Ended January 30, 2010 and Three Months Ended May 1, 2010		7
Notes to Condensed Consolidated Financial Statements		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		34
Item 3. Quantitative and Qualitative Disclosures About Market Risk		46
Item 4. Controls and Procedures		46
Part II. Other Information
Item 1. Legal Proceedings		47
Item 1A. Risk Factors		47
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		47
Item 6. Exhibits		48
Signature		49
EX-31.1
EX-31.2
EX-32.1
EX-32.2

(31.1)		Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

(31.2)		Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

(32.1)		Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(32.2)		Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


	Genesco Inc.
	By:	/s/ James S. Gulmi
		James S. Gulmi
Date: June 9, 2010		Senior Vice President – Finance, Chief Financial Officer and Treasurer


Item 6.		Exhibits