EX-99.1 2 g04457exv99w1.htm EX-99.1 PRESS RELEASE Ex-99.1
 

Exhibit 99.1
Financial Contact: James S. Gulmi (615) 367-8325
Media Contact: Claire S. McCall (615) 367-8283
GENESCO REPORTS THIRD QUARTER FISCAL 2007 RESULTS
—Company Reports Third Quarter Diluted EPS of $0.62 Before Discontinued Operations—
—Increases Earnings Per Share Guidance for Fiscal 2007—
NASHVILLE, Tenn., Nov. 21, 2006 — Genesco Inc. (NYSE: GCO) today reported earnings before discontinued operations of $16.0 million, or $0.62 per diluted share, for the third quarter ended October 28, 2006. Earnings before discontinued operations were $16.2 million, or $0.62 per diluted share, for the third quarter ended October 29, 2005. Earnings before discontinued operations for the third quarter of this year reflected SFAS 123(R) share-based compensation and restricted stock expense of $1.7 million before taxes, or $0.04 per diluted share. Earnings from the third quarter last year reflected income of $0.8 million, or $0.02 per diluted share, primarily from an excess litigation provision. Net sales for the third quarter of fiscal 2007 increased 15% to $364 million compared to $316 million for the third quarter of fiscal 2006.
     Genesco Chairman and Chief Executive Officer Hal N. Pennington, said, “Our better than expected third quarter results were driven by excellent performances at Journeys and Journeys Kidz, Johnston & Murphy and Dockers. While we expect the Underground Station business to remain challenging in the fourth quarter, our confidence that the strength we have seen in these other businesses will continue in the Holiday selling season is reflected in our increased earnings guidance for the full fiscal year.
     “Net sales at Journeys Group increased 20% to approximately $184 million, same store sales rose 9% and footwear unit comps increased 18% in the third quarter. As expected, many of the same

 

 

trends that produced success in the second quarter continued through Back-to-School. Journeys Kidz again reported strong growth, with sales up 55% and comparable store sales up 9%. Additionally, we remain pleased with the performance of Shi by Journeys. We feel very good about our merchandise assortment and the continuing momentum of the entire Journeys’ group as we look forward to the Holiday selling season.
     “Net sales at Hat World Group increased 13% to approximately $78 million and same store sales declined 1%, primarily reflecting weakness in Hat World stores serving the urban markets. We are forecasting a modest comparable sales improvement in the fourth quarter and we remain on track to open 101 new stores, representing a 14% increase in the store base, in the fiscal year. Hat World remains a high margin, highly profitable business with significant expansion opportunities and we remain very excited about its potential.
     “Net sales for the Underground Station Group, which includes the Jarman stores, were $35 million and same store sales declined 11% in the third quarter. Same store sales at Underground Station fell 11% primarily due to continued weakness in men’s athletic and urban markets in general. Our fourth quarter expectations do not reflect an improvement in the Underground Station business. Longer term, Underground Station is working to improve its women’s product offering and non-footwear assortment.
     “Johnston & Murphy Group’s net sales increased 14% to approximately $44 million. Wholesale sales increased 25% and same store sales rose 6%. Johnston & Murphy’s expanded dress and dress casual collection continues to gain retail shelf space and both footwear and non-footwear products are performing extremely well in the Johnston & Murphy stores. Sales growth and gross margin improvement combined to double operating margin compared to last year.
     “Third quarter sales of licensed brands increased 31% to approximately $23 million. The entire Dockers’ Footwear product line is retailing well and backlog is strong.”
     Genesco said that it is raising its earnings per share guidance for the year ending February 3, 2007. The Company now expects sales of approximately $1.45 billion and diluted earnings per share of $2.55 to $2.57 for the year. For the fourth quarter, the Company expects sales of approximately $467 million to $470 million. It reiterated its previously announced expectation for fourth quarter earnings in the range of $1.29 to $1.31 per diluted share. The earnings per share

 

 

estimates include expected SFAS 123(R) share-based compensation and restricted stock expense totaling approximately $0.17 per share for the year and $0.05 per share for the fourth quarter.
     This release contains forward-looking statements, including those regarding the Company’s sales and earnings outlook and all other statements not addressing solely historical facts or present conditions. Actual results could vary materially from the expectations reflected in these statements. A number of factors could cause differences. These include weakness in consumer demand for products sold by the Company, fashion trends that affect the sales or product margins of the Company’s retail product offerings, changes in the timing of holidays or in the onset of seasonal weather affecting period to period sales comparisons, changes in buying patterns by significant wholesale customers, disruptions in product supply or distribution, further unfavorable trends in foreign exchange rates and other factors affecting the cost of products, and competition in the Company’s markets. The effects of any demand-related factors in the Holiday selling season could be particularly significant to the Company’s business. Additional factors that could affect the Company’s prospects and cause differences from expectations include the ability to open, staff and support additional retail stores on schedule and at acceptable expense levels and to renew leases in existing stores on schedule and at acceptable expense levels, variations from expected pension-related charges caused by conditions in the financial markets, and the outcome of litigation and environmental matters involving the Company. Forward-looking statements reflect the expectations of the Company at the time they are made. The Company disclaims any obligation to update such statements.
     The Company’s live conference call on November 21, 2006, at 7:30 a.m. (Central time) may be accessed through the Company’s internet website, www.genesco.com. To listen live, please go to the website at least 15 minutes early to register, download and install any necessary software.
     Genesco Inc., a Nashville-based specialty retailer, sells footwear, headwear and accessories in more than 1,900 retail stores in the United States and Canada, principally under the names Journeys, Journeys Kidz, Shi by Journeys, Johnston & Murphy, Underground Station, Hatworld, Lids, Hat Zone, Cap Factory, Head Quarters and Cap Connection, and on internet websites www.journeys.com, www.journeyskidz.com, www.undergroundstation.com, www.johnstonmurphy.com, www.lids.com, www.hatworld.com, and www.lidscyo.com. The

 

 

     Company also sells footwear at wholesale under its Johnston & Murphy brand and under the licensed Dockers brand. Additional information on Genesco and its operating divisions may be accessed at its website www.genesco.com.

 

 

GENESCO INC.
Consolidated Earnings Summary
                                 
    Three Months Ended     Nine Months Ended  
    October 28,     October 29,     October 28,     October 29,  
In Thousands   2006     2005     2006     2005  
Net sales
   $ 364,298     $ 316,336     $ 983,617     $ 877,589  
Cost of sales
     182,844       154,825       487,404       430,567  
Selling and administrative expenses
     150,992       133,225       433,477       385,429  
Restructuring and other, net
     1,083       (789 )     1,672       2,255  
 
                        
Earnings from operations
     29,379       29,075       61,064       59,338  
Interest expense, net
     2,948       2,669       7,022       7,941  
 
                        
Earnings before income taxes from continuing operations
     26,431       26,406       54,042       51,397  
Income tax expense
     10,456       10,168       21,457       19,967  
 
                        
Earnings from continuing operations
     15,975       16,238       32,585       31,430  
Provision for discontinued operations
     (98 )     (95 )     (287 )     (30 )
Net Earnings
   $ 15,877     $ 16,143     $ 32,298     $ 31,400  
 
                        
Earnings Per Share Information
                                 
    Three Months Ended     Nine Months Ended  
    October 28,     October 29,     October 28,     October 29,  
In Thousands (except per share amounts)   2006     2005     2006     2005  
Preferred dividend requirements
   $ 64     $ 67     $ 192     $ 209  
Average common shares — Basic EPS
     22,284       22,797       22,771       22,675  
Basic earnings per share:
                                
Before discontinued operations
   $ 0.71     $ 0.71     $ 1.42     $ 1.38  
Net earnings
   $ 0.71     $ 0.71     $ 1.41     $ 1.38  
Average common and common equivalent shares — Diluted EPS
     26,624       27,346       27,111       27,106  
Diluted earnings per share:
                                
Before discontinued operations
   $ 0.62     $ 0.62     $ 1.26     $ 1.22  
Net earnings
   $ 0.62     $ 0.61     $ 1.25     $ 1.22  

 

GENESCO INC.
Consolidated Earnings Summary
                                         
    Three Months Ended     Nine Months Ended          
    October 28,     October 29,     October 28,     October 29,          
In Thousands   2006     2005     2006     2005          
Sales:
                                        
Journeys Group
   $ 184,391     $ 153,109     $ 462,560     $ 400,881          
Underground Station Group
     34,981       38,395       105,854       110,417          
Hat World Group
     77,503       68,330       226,697       199,532          
Johnston & Murphy Group
     44,467       38,981       130,414       121,497          
Licensed Brands
     22,844       17,457       57,759       45,065          
Corporate and Other
     112       64       333       197          
 
                                
Net Sales
   $ 364,298     $ 316,336     $ 983,617     $ 877,589          
 
                                
Operating Income (Loss):
                                        
Journeys Group
   $ 25,260     $ 21,551     $ 46,346     $ 42,270          
Underground Station Group
     (631 )     1,965       27       3,900          
Hat World Group
     7,710       7,615       22,334       22,355          
Johnston & Murphy Group
     3,193       1,404       8,500       6,352          
Licensed Brands
     2,326       1,781       5,390       3,545          
Corporate and Other*
     (8,479 )     (5,241 )     (21,533 )     (19,084 )        
 
                                
Earnings from operations
     29,379       29,075       61,064       59,338          
Interest, net
     2,948       2,669       7,022       7,941          
 
                                
Earnings before income taxes from continuing operations
     26,431       26,406       54,042       51,397          
Income tax expense
     10,456       10,168       21,457       19,967          
 
                                
Earnings from continuing operations
     15,975       16,238       32,585       31,430          
Provision for discontinued operations
     (98 )     (95 )     (287 )     (30 )        
 
                                
Net Earnings
   $ 15,877     $ 16,143     $ 32,298     $ 31,400          
 
                                
*   Includes $1.1 million and $1.7 million of other charges in the third quarter and nine months of Fiscal 2007, respectively, for asset impairment and lease terminations. Includes $0.1 million and $0.6 million of other charges for asset impairment and lease terminations in the third quarter and nine months of Fiscal 2006, respectively, and a $0.9 million credit due to a favorable adjustment to a litigation settlement in the third quarter of Fiscal 2006 and a $1.7 million charge for a litigation settlement for the nine months of Fiscal 2006.

 

GENESCO INC.
Consolidated Balance Sheet
                         
    October 28,     October 29,          
In Thousands   2006     2005          
Assets
                        
Cash and cash equivalents
   $ 18,638     $ 33,398          
Accounts receivable
     24,401       22,738          
Inventories
     344,309       292,798          
Other current assets
     33,122       26,011          
 
                    
Total current assets
     420,470       374,945          
 
                    
Property and equipment
     213,974       181,630          
Other non-current assets
     158,111       159,130          
 
                    
Total Assets
   $ 792,555     $ 715,705          
 
                    
Liabilities and Shareholders’ Equity
                        
Accounts payable
   $ 135,614     $ 115,993          
Current portion — long-term debt
     —       —          
Other current liabilities
     62,862       62,671          
 
                    
Total current liabilities
     198,476       178,664          
 
                    
Long-term debt
     158,250       151,250          
Other long-term liabilities
     78,722       74,076          
Shareholders’ equity
     357,107       311,715          
 
                    
Total Liabilities and Shareholders’ Equity
   $ 792,555     $ 715,705          
 
                    

 

GENESCO INC.
Retail Units Operated — Nine Months Ended October 28, 2006
                                                                         
    Balance                             Balance                             Balance  
    01/29/05     Open     Conv     Close     01/28/06     Open     Conv     Close     10/28/06  
Journeys Group
     695       71       0       5       761       71       0       3       829  
Journeys
     654       60       0       4       710       44       0       3       751  
Journeys Kidz
     41       10       0       1       50       18       0       0       68  
Shi by Journeys
     0       1       0       0       1       9       0       0       10  
Underground Station Group
     229       21       0       21       229       10       0       10       229  
Underground Station
     165       21       2       8       180       10       3       0       193  
Jarman Retail
     64       0       (2 )     13       49       0       (3 )     10       36  
Hat World Group
     552       96       0       7       641       83       0       6       718  
Johnston & Murphy Group
     142       5       0       5       142       11       0       4       149  
Shops
     107       4       0       4       107       6       0       3       110  
Factory Outlets
     35       1       0       1       35       5       0       1       39  
 
                                                      
Total Retail Units
     1,618       193       0       38       1,773       175       0       23       1,925  
 
                                                      
Retail Units Operated — Three Months Ended October 28, 2006
                                         
    Balance                             Balance  
    07/29/06     Open     Conv     Close     10/28/06  
Journeys Group
     806       25       0       2       829  
Journeys
     736       17       0       2       751  
Journeys Kidz
     64       4       0       0       68  
Shi by Journeys
     6       4       0       0       10  
Underground Station Group
     231       3       0       5       229  
Underground Station
     189       3       1       0       193  
Jarman Retail
     42       0       (1 )     5       36  
Hat World Group
     685       34       0       1       718  
Johnston & Murphy Group
     148       4       0       3       149  
Shops
     109       3       0       2       110  
Factory Outlets
     39       1       0       1       39  
 
                              
Total Retail Units
     1,870       66       0       11       1,925  
 
                              
Constant Store Sales
                                 
    Three Months Ended     Nine Months Ended  
    October 28,     October 29,     October 28,     October 29,  
    2006     2005     2006     2005  
Journeys Group
     9 %     5 %     5 %     6 %
Underground Station Group
     -11 %     9 %     -7 %     9 %
Underground Station
     -11 %     13 %     -6 %     12 %
Jarman Retail
     -10 %     -5 %     -10 %     0 %
Hat World Group
     -1 %     1 %     0 %     4 %
Johnston & Murphy Group
     6 %     5 %     2 %     6 %
Shops
     7 %     6 %     2 %     6 %
Factory Outlets
     3 %     5 %     -1 %     5 %
 
                        
Total Constant Store Sales
     4 %     6 %     2 %     7 %