Genesco Reports First Quarter Fiscal 2015 Results

May 30, 2014, 07:28 ET from Genesco Inc.

NASHVILLE, Tenn., May 30, 2014 /PRNewswire/ -- Genesco Inc. (NYSE: GCO) today reported earnings from continuing operations for the first quarter ended May 3, 2014, of $14.1 million, or $0.60 per diluted share, compared to earnings from continuing operations of $14.5 million, or $0.61 per diluted share, for the first quarter ended May 4, 2013.  Fiscal 2015 first quarter results reflect expenses of $7.7 million, or $0.21 per diluted share after tax, including $5.7 million related to a change in accounting for bonus awards; $3.1 million related to deferred purchase price payments in connection with the acquisition of Schuh Group Limited; and $2.0 million in network intrusion expenses, asset impairment charges and other legal matters, offset by a $3.1 million gain on a lease termination. Fiscal 2014 first quarter results reflected expenses of $10.7 million, or $0.33 per diluted share after tax, including $6.5 million associated with a change in accounting for bonus awards, $2.9 million related to deferred purchase price payments in connection with the acquisition of Schuh Group Limited, and $1.3 million for impairment charges and network intrusion expenses.

Adjusted for the items described above in both periods, earnings from continuing operations were $19.3 million, or $0.81 per diluted share, for the first quarter of Fiscal 2015, compared to earnings from continuing operations of $22.2 million, or $0.94 per diluted share, for the first quarter of Fiscal 2014.  For consistency with Fiscal 2015's previously announced earnings expectations and with previously reported adjusted results for the prior year period, the Company believes that the disclosure of the results from continuing operations adjusted for these items will be useful to investors. A reconciliation of earnings and earnings per share from continuing operations in accordance with U.S. Generally Accepted Accounting Principles with the adjusted earnings and earnings per share numbers presented in this paragraph is set forth on Schedule B to this press release.

Net sales for the first quarter of Fiscal 2015 increased 6.3% to $629 million from $591 million in the first quarter of Fiscal 2014. Consolidated first quarter 2015 comparable sales, including same store sales and comparable e-commerce and catalog sales, increased 1%, with a 1% increase in the Journeys Group, a 1% increase in the Lids Sports Group, a 1% decrease in the Schuh Group, and a 1% decrease in the Johnston & Murphy Group.

Robert J. Dennis, chairman, president and chief executive officer of Genesco, said, "We are pleased with our performance given the choppy retail environment, combined with the lack of a meaningful, new fashion driver in the teen footwear space early in the year. We continue to expect stronger comparable sales gains and improved profitability as we move into the back half of the year.

"The second quarter is off to a solid start with comparable sales up 3% through May 24.  We are encouraged by the recent pace of business and optimistic that we can build on our current momentum.

"Based on first quarter performance and current visibility, we remain comfortable with our previously announced guidance for adjusted Fiscal 2015 diluted earnings per share in the range of $5.40 to $5.55, a 6% to 9% increase over Fiscal 2014's adjusted earnings per share of $5.09. Consistent with our previous guidance, these expectations do not include non-cash asset impairments and other charges, partially offset by a gain on a lease termination in the first quarter this year, which we estimate will be in the range of $2.6 million to $3.1 million pretax, or $0.07 to $0.08 per share, after tax, in Fiscal 2015.

"They also do not reflect compensation expense associated with the Schuh deferred purchase price as described above, which is currently estimated at approximately $7.2 million, or $0.30 per diluted share, for the full year. This guidance assumes a comparable sales increase in the low single digit range for the full fiscal year."  A reconciliation of the adjusted financial measures cited in the guidance to their corresponding measures as reported pursuant to U.S. Generally Accepted Accounting Principles is included in Schedule B to this press release.

Conference Call and Management Commentary The Company has posted detailed financial commentary in writing on its website, www.genesco.com, in the investor relations section. The Company's live conference call on May 30, 2014 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.

Cautionary Note Concerning Forward-Looking Statements This release contains forward-looking statements, including those regarding the performance outlook for the Company and its individual businesses (including, without limitation, sales, margins and earnings) and all other statements not addressing solely historical facts or present conditions. Actual results could vary materially from the expectations reflected in these statements. A number of factors could cause differences.  These include adjustments to estimates reflected in forward-looking statements, including the amount of required accruals related to the earn-out bonus potentially payable to Schuh management based on the achievement of certain performance objectives; the timing and amount of non-cash asset impairments related to retail store fixed assets or to intangible assets of acquired businesses; weakness in the consumer economy; competition in the Company's markets; inability of customers to obtain credit; fashion trends that affect the sales or product margins of the Company's retail product offerings; changes in buying patterns by significant wholesale customers; bankruptcies or deterioration in financial condition of significant wholesale customers; disruptions in product supply or distribution; unfavorable trends in fuel costs, foreign exchange rates, foreign labor and material costs, and other factors affecting the cost of products; the Company's ability to continue to complete and integrate acquisitions, expand its business and diversify its product base; and changes in the timing of holidays or in the onset of seasonal weather affecting period-to-period sales comparisons. Additional factors that could affect the Company's prospects and cause differences from expectations include the ability to build, open, staff and support additional retail stores and to renew leases in existing stores and control occupancy costs, and to conduct required remodeling or refurbishment on schedule and at expected expense levels; deterioration in the performance of individual businesses or of the Company's market value relative to its book value, resulting in impairments of fixed assets or intangible assets or other adverse financial consequences; unexpected changes to the market for the Company's shares; variations from expected pension-related charges caused by conditions in the financial markets; and the cost and outcome of litigation, investigations and environmental matters involving the Company. Additional factors are cited in the "Risk Factors," "Legal Proceedings" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of, and elsewhere in, our SEC filings, copies of which may be obtained from the SEC website, www.sec.gov, or by contacting the investor relations department of Genesco via our website, www.genesco.com. Many of the factors that will determine the outcome of the subject matter of this release are beyond Genesco's ability to control or predict. Genesco undertakes no obligation to release publicly the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Forward-looking statements reflect the expectations of the Company at the time they are made. The Company disclaims any obligation to update such statements.

About Genesco Inc. Genesco Inc., a Nashville-based specialty retailer, sells footwear, headwear, sports apparel and accessories in more than 2,570 retail stores and leased departments throughout the U.S., Canada, the United Kingdom and the Republic of Ireland, principally under the names Journeys, Journeys Kidz, Shi by Journeys, Underground by Journeys, Schuh, Lids, Locker Room by Lids, Lids Clubhouse, Johnston & Murphy, and on internet websites www.journeys.com, www.journeyskidz.com, www.shibyjourneys.com, www.schuh.co.uk, www.johnstonmurphy.com, www.lids.com, www.lids.ca, www.lidslockerroom.com, www.lidsteamsports.com, www.lidsclubhouse.com, www.trask.com, www.suregripfootwear.com and www.dockersshoes.com.  The Company's Lids Sports Group division operates the Lids headwear stores and the lids.com website, the Locker Room by Lids and other team sports fan shops and single team clubhouse stores, and the Lids Team Sports team dealer business.   In addition, Genesco sells wholesale footwear under its Johnston & Murphy brand, the Trask brand, the licensed Dockers brand, SureGrip, and other brands. For more information on Genesco and its operating divisions, please visit www.genesco.com.

 

GENESCO INC.

Consolidated Earnings Summary

Three Months Ended

May 3, 

May 4,

In Thousands

2014

2013

Net sales

$    628,825

$   591,388

Cost of sales

312,881

292,951

Selling and administrative expenses*

293,337

271,384

Asset impairments and other, net

(1,111)

1,329

Earnings from operations 

23,718

25,724

Interest expense, net

701

1,039

Earnings from continuing operations before income taxes

23,017

24,685

Income tax expense

8,919

10,176

Earnings from continuing operations

14,098

14,509

Provision for discontinued operations, net

(125)

(99)

Net Earnings

$      13,973

$      14,410

* Includes $3.1 million and $2.9 million, respectively, in deferred payments related to the Schuh acquisition for

   the first quarter ended May 3, 2014 and May 4, 2013.

Earnings Per Share Information

Three Months Ended

May 3, 

May 4,

In Thousands (except per share amounts)

2014

2013

Preferred dividend requirements

$                 -

$             33

Average common shares - Basic EPS

23,369

23,295

Basic earnings per share:

    Before discontinued operations

$0.60

$0.62

    Net earnings

$0.60

$0.62

Average common and common

    equivalent shares - Diluted EPS

23,692

23,732

Diluted earnings per share:

    Before discontinued operations

$0.60

$0.61

    Net earnings

$0.59

$0.61

GENESCO INC.

Consolidated Earnings Summary

Three Months Ended

May 3,

May 4,

In Thousands

2014

2013

Sales:

    Journeys Group

$    262,123

$   257,143

    Schuh Group

81,276

68,323

    Lids Sports Group

189,266

177,905

    Johnston & Murphy Group

63,397

58,425

    Licensed Brands

32,462

29,355

    Corporate and Other

301

237

    Net Sales

$    628,825

$   591,388

Operating Income (Loss):

    Journeys Group

$      19,677

$      22,213

    Schuh Group(1)

(5,141)

(4,643)

    Lids Sports Group

8,137

10,796

    Johnston & Murphy Group

4,496

3,848

    Licensed Brands

3,521

2,921

    Corporate and Other(2)

(6,972)

(9,411)

   Earnings from operations

23,718

25,724

   Interest, net

701

1,039

Earnings from continuing operations before income taxes

23,017

24,685

Income tax expense

8,919

10,176

Earnings from continuing operations

14,098

14,509

Provision for discontinued operations, net

(125)

(99)

Net Earnings

$      13,973

$      14,410

(1)

Includes $3.1 million and $2.9 million, respectively, in deferred payments related to the Schuh acquisition for the first quarter ended May 3, 2014 and May 4, 2013.

(2)

Includes a $1.1 million gain in the first quarter of Fiscal 2015 which includes a $3.1 million gain for a lease termination, partially offset by $1.2 million for network intrusion expenses and $0.8 million in asset impairments.  Includes a $1.3 million charge in the first quarter of Fiscal 2014 which includes $1.2 million in asset impairments and $0.1 million for network intrusion expenses.

GENESCO INC.

Consolidated Balance Sheet

May 3, 

May 4,

In Thousands

2014

2013

Assets

Cash and cash equivalents

$      71,882

$      39,668

Accounts receivable

53,746

44,194

Inventories

587,245

509,100

Other current assets

82,912

64,464

Total current assets

795,785

657,426

Property and equipment

280,972

241,534

Other non-current assets

406,150

403,114

Total Assets

$ 1,482,907

$1,302,074

Liabilities and Equity

Accounts payable

$    171,026

$   117,923

Current portion long-term debt

7,489

5,576

Other current liabilities

142,470

121,614

Total current liabilities

320,985

245,113

Long-term debt

25,600

47,745

Other long-term liabilities

194,825

182,008

Equity

941,497

827,208

Total Liabilities and Equity

$ 1,482,907

$1,302,074

 

 

GENESCO INC.

Retail Units Operated - Three Months Ended May 3, 2014

Balance

Acquisi-

Balance

Balance

02/02/13

tions

Open

Close

02/01/14

Open

Close

05/03/14

Journeys Group

1,157

0

39

28

1,168

7

3

1,172

    Journeys

820

0

20

13

827

2

1

828

    Underground by Journeys

130

0

0

13

117

0

0

117

    Journeys Kidz

156

0

19

1

174

5

1

178

    Shi by Journeys

51

0

0

1

50

0

1

49

Schuh Group

92

0

29

22

99

2

1

100

     Schuh UK*

70

0

29

9

90

2

1

91

     Schuh ROI

9

0

0

0

9

0

0

9

     Schuh Concessions*

13

0

0

13

0

0

0

0

Lids Sports Group

1,053

15

102

37

1,133

19

18

1,134

Johnston & Murphy Group

157

0

13

2

168

1

2

167

    Shops

102

0

6

2

106

0

1

105

    Factory Outlets

55

0

7

0

62

1

1

62

Total Retail Units

2,459

15

183

89

2,568

29

24

2,573

Permanent Units*

2,446

15

173

69

2,565

29

23

2,571

*

Excludes Schuh Concessions and temporary "pop-up" locations.

Comparable Sales (including same store and comparable direct sales)

Three Months Ended

May 3,

May 4, 

2014

2013

Journeys Group

1%

-2%

Schuh Group

-1%

-11%

Lids Sports Group

1%

-6%

Johnston & Murphy Group

-1%

7%

Total Comparable Sales

1%

-4%

 

 

Genesco Inc.

Adjustments to Reported Earnings from Continuing Operations

Three Months Ended May 3, 2014 and May 4, 2013

 Impact on 

 Impact on 

 3 mos 

  Diluted 

 3 mos 

  Diluted 

In Thousands (except per share amounts)

 Apr 2014 

 EPS 

 Apr 2013 

 EPS 

Earnings from continuing operations, as reported

$     14,098

$        0.60

$      14,509

$   0.61

Adjustments:  (1)

Impairment charges

519

0.02

760

0.04

Deferred payment - Schuh acquisition

3,102

0.13

2,851

0.12

Gain on lease termination

(1,991)

(0.09)

-

-

Change in accounting for bonus awards

3,575

0.15

4,117

0.17

Other legal matters

13

-

(13)

-

Network intrusion expenses

761

0.03

89

-

Higher (lower) effective tax rate

(783)

(0.03)

(66)

-

Adjusted earnings from continuing operations (2)

$     19,294

$        0.81

$      22,247

$   0.94

(1) All adjustments are net of tax where applicable.  The tax rate for the first quarter of Fiscal 2015 is 37.0%

     excluding a FIN 48 discrete item of less than $0.1 million.  The tax rate for the first quarter of Fiscal 2014 is 37.1%

     excluding a FIN 48 discrete item of less than $0.1 million.  

(2) EPS reflects 23.7 million share count for both Fiscal 2015 and 2014, which includes common stock equivalents in

     both years.

The Company believes that disclosure of earnings and earnings per share from continuing operations adjusted

for the items not reflected in the previously announced expectations will be meaningful to investors, especially

in light of the impact of such items on the results.

Genesco Inc.

Adjustments to Reported Operating Income 

Three Months Ended May 3, 2014 and May 4, 2013

 Three Months Ended May 3, 2014 

 Operating 

 Bonus Adj 

Adj Operating

In Thousands 

 Income 

 and Other 

Income

Journeys Group

$     19,677

$      4,919

$      24,596

Schuh Group*

(5,141)

3,102

(2,039)

Lids Sports Group

8,137

-

8,137

Johnston & Murphy Group

4,496

25

4,521

Licensed Brands

3,521

-

3,521

Corporate and Other

(6,972)

(376)

(7,348)

Total Operating Income

$     23,718

$      7,670

$      31,388

*Schuh Group adjustments include $3.1 million in deferred purchase price payments.

 Three Months Ended May 4, 2013 

 Operating 

 Bonus Adj 

Adj Operating

In Thousands 

 Income 

 and Other 

Income

Journeys Group

$     22,213

$      1,418

$      23,631

Schuh Group*

(4,643)

4,468

(175)

Lids Sports Group

10,796

1,713

12,509

Johnston & Murphy Group

3,848

4

3,852

Licensed Brands

2,921

(6)

2,915

Corporate and Other

(9,411)

3,127

(6,284)

Total Operating Income

$     25,724

$    10,724

$      36,448

*Schuh Group adjustments include $2.9 million in deferred purchase price payments.

 

 

Genesco Inc.

Adjustments to Forecasted Earnings from Continuing Operations

Fiscal Year Ending January 31, 2015

In Thousands (except per share amounts)

High Guidance

Low Guidance

Fiscal 2015

Fiscal 2015

Forecasted earnings from continuing operations 

$    119,299

$       5.03

$ 115,421

$       4.87

Adjustments:  (1)

Asset impairment and other charges

1,632

0.07

1,947

0.08

Change in accounting for bonus awards

3,578

0.15

3,578

0.15

Deferred payment - Schuh acquisition

7,228

0.30

7,228

0.30

Adjusted forecasted earnings from continuing operations (2)

$    131,737

$       5.55

$ 128,174

$       5.40

(1) All adjustments are net of tax where applicable.  The forecasted tax rate for Fiscal 2015 is approximately

     37.0% excluding a FIN 48 discrete item of $0.1 million.

(2) EPS reflects 23.8 million share count for Fiscal 2015 which includes common stock equivalents.

This reconciliation reflects estimates and current expectations of future results. Actual results may vary materially from these expectations and estimates, for reasons including those included in the discussion of forward-looking statements elsewhere in this release. The Company disclaims any obligation to update such expectations and estimates.  

 

 

SOURCE Genesco Inc.



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