Genesco Reports Fourth Quarter Fiscal 2011 Results

--Fourth Quarter Comparable Store Sales Increase 9%--

Mar 04, 2011, 07:35 ET from Genesco Inc.

NASHVILLE, Tenn., March 4, 2011 /PRNewswire/ -- Genesco Inc. (NYSE: GCO) today reported earnings from continuing operations of $31.4 million, or $1.34 per diluted share for the fourth quarter ended January 29, 2011, compared to earnings from continuing operations of $25.8  million, or $1.08 per diluted share, for the fourth quarter ended January 30, 2010.  Fiscal 2011 fourth quarter earnings were favorably impacted by $0.08 per share due to a lower effective tax rate offset by pretax items totaling $2.8 million, or $0.07 per diluted share, after tax, primarily related to network intrusion expenses, fixed asset impairments and purchase price accounting adjustments.  Fiscal 2010 fourth quarter earnings reflected pretax charges of $2.9 million, or $0.08 per diluted share, after tax, primarily related to asset impairments, loss on early retirement of debt and tax rate adjustments, partially offset by a gain related to other legal matters.  

Adjusted for the listed items in both periods, earnings from continuing operations were $31.3 million, or $1.33 per diluted share, for the fourth quarter of Fiscal 2011, compared to earnings from continuing operations of $27.7 million, or $1.16 per diluted share, for the fourth quarter of Fiscal 2010.  For consistency with Fiscal 2011's previously announced earnings expectations and the adjusted results for the prior period announced last year, neither of which reflected the listed items, the Company believes that disclosure of earnings from continuing operations adjusted for those items will be useful to investors. A reconciliation of the adjusted financial measures to their corresponding measures as reported pursuant to U.S. Generally Accepted Accounting Principles is included in Schedule B to this press release.   

Net sales for the fourth quarter of Fiscal 2011 increased 17% to $560.5 million from $479.0 million in the fourth quarter of Fiscal 2010.  Comparable store sales in the fourth quarter of Fiscal 2011 increased by 9%.  The Lids Sports Group's comparable store sales increased by 6%, the Journeys Group increased by 12%, Johnston & Murphy Retail increased by 12%, and Underground Station decreased by 4%.

Robert J. Dennis, chairman, president and chief executive officer of Genesco, said, "We are very pleased with our fourth quarter results. Solid organic growth combined with contributions from our recent acquisitions drove quarterly sales above $500 million.  Our top-line performance also helped us achieve our highest level of fourth quarter profitability in four years, representing a great way to close out a successful Fiscal 2011.

"Fiscal 2012 is off to a good start with February comparable store sales across all the Company's retail businesses up 10%.  While we expect these trends will moderate, we feel good about our prospects for spring based on our merchandising strategies and solid inventory position.

"Based on current visibility we expect Fiscal 2012 diluted earnings per share to be in the range of $2.78 to $2.85, which represents a 12% to 15% increase over last year's earnings. Consistent with previous guidance, these expectations do not include expected non-cash asset impairments and other charges, which are projected to total approximately $4 million to $5 million pretax, or $0.10 to $0.13 per share, after tax, in Fiscal 2012. This guidance assumes comparable sales of 3% 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.

Dennis concluded, "Our Fiscal 2011 performance underscores our key competitive advantages, especially in our two largest businesses, the Journeys Group and the Lids Sports Group and, with regard to Lids Sports, is an early validation of our strategy to create a leading destination for licensed sports merchandise and team apparel.  We now have two very strong and differentiated growth vehicles, supported by strong performances from Johnston & Murphy and Licensed Brands, and a solid balance sheet to support our expansion plans.  Looking ahead, we believe that our business model will generate solid cash flow and put us in a position to pursue further growth opportunities."  

Fiscal Year 2011

The Company also reported earnings from continuing operations for the fiscal year ended January 29, 2011, of $54.5 million, or $2.29 per diluted share, compared to earnings from continuing operations of $29.1 million, or $1.31 per diluted share, for the fiscal year ended January 30, 2010. Fiscal 2011 earnings reflected after-tax charges of $0.19 per diluted share, including asset impairments, purchase price accounting adjustments, network intrusion-related expenses, flood loss and other legal matters, partially offset by a lower effective tax rate. Fiscal 2010 earnings reflected after-tax charges of $0.56 per diluted share, including asset impairments, loss on early retirement of debt and tax rate adjustments, partially offset by a gain related to other legal matters. In addition, Fiscal 2010 reflected additional interest expense due to the adoption in the first quarter of Fiscal 2010 of FSP APB 14-1, a new accounting standard that applied to the Company's convertible debt.

Adjusted for the listed items in both years, earnings from continuing operations were $59.0 million, or $2.48 per diluted share, for Fiscal 2011, compared to earnings from continuing operations of $43.1 million, or $1.87 per diluted share, for Fiscal 2010. For consistency with previously announced earnings expectations, which did not reflect the listed items, the Company believes that disclosure of earnings from continuing operations adjusted for those items will be useful to investors. A reconciliation of the adjusted financial measures to their corresponding measures as reported pursuant to U.S. Generally Accepted Accounting Principles is included in Schedule B to this press release. Net sales for Fiscal 2011 increased 13.7% to $1.79 billion from $1.57 billion in Fiscal 2010.

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 March 4, 2011 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 commentary contains 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 vary materially from the expectations reflected in these statements.  A number of factors could cause differences.  These include the costs of responding to and liability in connection with the network intrusion announced in December 2010, adjustments to estimates reflected in forward-looking statements, including the timing and amount of non-cash asset impairments; 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 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 maintain reductions in occupancy costs achieved in recent lease negotiations, 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 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 2,300 retail stores throughout the U.S. and Canada, principally under the names Journeys, Journeys Kidz, Shi by Journeys, Lids and Lids Locker Room, Johnston & Murphy, and Underground Station,  and on internet websites www.journeys.com, www.journeyskidz.com, www.shibyjourneys.com, www.undergroundstation.com, www.johnstonmurphy.com, www.dockersshoes.com,  and www.lids.com.  The Company's Lids Sports division operates the Lids headwear stores and the lids.com website, the Lids Locker Room 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 licensed Dockers brand and other brands. For more information on Genesco and its operating divisions, please visit www.genesco.com.

GENESCO INC.

Consolidated Earnings Summary

Fourth Quarter

Fiscal Year Ended

January 29,

January 30,

January 29,

January 30,

In Thousands

2011

2010

2011

2010

Net sales

$           560,494

$           479,026

$            1,789,839

$            1,574,352

Cost of sales

287,503

242,489

887,992

778,482

Selling and administrative expenses

222,713

191,016

807,197

722,087

Restructuring and other, net

2,003

2,497

8,567

13,361

Earnings from operations

48,275

43,024

86,083

60,422

Loss on early retirement of debt

-

399

-

5,518

Interest expense, net

354

383

1,122

4,416

Earnings from continuing operations

   before income taxes

47,921

42,242

84,961

50,488

Income tax expense

16,508

16,413

30,414

21,402

Earnings from continuing operations

31,413

25,829

54,547

29,086

Provision for discontinued operations

(552)

25

(1,336)

(273)

Net  Earnings

$             30,861

$             25,854

$                 53,211

$                 28,813

Earnings Per Share Information

Fourth Quarter

Fiscal Year Ended

January 29,

January 30,

January 29,

January 30,

In Thousands (except per share amounts)

2011

2010

2011

2010

Preferred dividend requirements

$49

$50

$197

$198

Average common shares - Basic EPS

22,825

23,279

23,209

21,471

Basic earnings per share:

   Before discontinued operations

$1.37

$1.11

$2.34

$1.35

   Net earnings

$1.35

$1.11

$2.28

$1.33

Average common and common

   equivalent shares - Diluted EPS

23,500

23,981

23,716

23,500

Diluted earnings per share:

   Before discontinued operations

$1.34

$1.08

$2.29

$1.31

   Net earnings

$1.31

$1.08

$2.24

$1.30

GENESCO INC.

Consolidated Earnings Summary

Fourth Quarter

Fiscal Year Ended

January 29,

January 30,

January 29,

January 30,

In Thousands

2011

2010

2011

2010

Sales:

   Journeys Group

$           253,315

$           225,356

$               804,149

$               749,202

   Underground Station Group

29,405

32,223

94,351

99,458

   Lids Sports Group

198,072

152,403

603,345

465,776

   Johnston & Murphy Group

56,010

47,334

185,011

166,079

   Licensed Brands

23,325

21,540

101,644

93,194

   Corporate and Other

367

170

1,339

643

   Net Sales

$           560,494

$           479,026

$            1,789,839

$            1,574,352

Operating Income (Loss):

   Journeys Group

$             28,756

$             24,029

$                 55,628

$                 44,285

   Underground Station Group

1,497

1,517

(2,476)

(4,584)

   Lids Sports Group

23,326

19,979

57,778

44,039

   Johnston & Murphy Group

4,423

4,126

8,617

5,484

   Licensed Brands

2,397

2,847

12,861

12,372

   Corporate and Other*

(12,124)

(9,474)

(46,325)

(41,174)

  Earnings from operations

48,275

43,024

86,083

60,422

  Loss on early retirement of debt

-

399

-

5,518

  Interest, net

354

383

1,122

4,416

Earnings from continuing operations

    before income taxes

47,921

42,242

84,961

50,488

Income tax expense

16,508

16,413

30,414

21,402

Earnings from continuing operations

31,413

25,829

54,547

29,086

Provision for discontinued operations

(552)

25

(1,336)

(273)

Net Earnings

$             30,861

$             25,854

$                 53,211

$                 28,813

*Includes $2.0 million of other charges in the fourth quarter of Fiscal 2011, which includes $1.3 million for intrusion expenses,

 and $0.8 million in asset impairments offset by $0.1 million in other legal matters.  Includes $8.6 million of other charges in  

 Fiscal 2011 which includes $7.2 million in asset impairments, $1.3 million for intrusion expenses and $0.1 million in other  

 legal matters.    

 Includes $2.5 million of other charges in the fourth quarter of Fiscal 2010, which includes $2.9 million in asset impairments and

 $0.2 million in lease terminations offset by $0.6 million in other legal matters.  Includes $13.4 million of other charges in

 Fiscal 2010 which includes $13.3 million in asset impairments and $0.4 million for lease terminations offset by $0.3 million  

 in other legal matters.  For Fiscal 2010, there is also an additional $0.1 million of charges related to lease terminations that  

 are included in cost of sales in the consolidated earnings summary.  

GENESCO INC.

Consolidated Balance Sheet 

January 29,

January 30,

In Thousands 

2011

2010

Assets

Cash and cash equivalents

$                 55,934

$                 82,148

Accounts receivable

44,512

27,217

Inventories

359,736

290,974

Other current assets 

52,873

49,733

Total current assets 

513,055

450,072

Property and equipment

198,691

216,293

Other non-current assets 

248,677

197,287

Total Assets 

$               960,423

$               863,652

Liabilities and Shareholders' Equity

Accounts payable

$               117,001

$                 92,699

Other current liabilities 

116,703

76,958

Total current liabilities 

233,704

169,657

Long-term debt

-

-

Other long-term liabilities

99,898

111,682

Shareholders' equity 

626,821

582,313

Total Liabilities and Shareholders' Equity 

$               960,423

$               863,652

GENESCO INC.

Retail Units Operated - Twelve Months Ended January 29, 2011 

Balance

Acquisi-

Balance

Acquisi-

Balance

01/31/09

Open

tions

Close

01/30/10

Open

tions

Close

01/29/11

Journeys Group

1,012

19

0

6

1,025

9

0

17

1,017

   Journeys

816

9

0

6

819

6

0

12

813

   Journeys Kidz

141

9

0

0

150

3

0

4

149

   Shi by Journeys

55

1

0

0

56

0

0

1

55

Underground Station Group

180

0

0

10

170

0

0

19

151

Lids Sports Group

885

35

38

37

921

41

58

35

985

Johnston & Murphy Group

157

7

0

4

160

3

0

7

156

   Shops

114

5

0

3

116

2

0

7

111

   Factory Outlets

43

2

0

1

44

1

0

0

45

Total Retail Units

2,234

61

38

57

2,276

53

58

78

2,309

Retail Units Operated - Three Months Ended January 29, 2011

Balance

Acquisi-

Balance

10/30/10

Open

tions

Close

01/29/11

Journeys Group

1,021

2

0

6

1,017

   Journeys

815

1

0

3

813

   Journeys Kidz

150

1

0

2

149

   Shi by Journeys

56

0

0

1

55

Underground Station Group

157

0

0

6

151

Lids Sports Group

974

18

8

15

985

Johnston & Murphy Group

159

0

0

3

156

   Shops

114

0

0

3

111

   Factory Outlets

45

0

0

0

45

Total Retail Units

2,311

20

8

30

2,309

Comparable Store Sales

 Three Months Ended

 Twelve Months Ended

January 29,

January 30,

January 29,

January 30,

2011

2010

2011

2010

Journeys Group

12%

-3%

7%

-3%

Underground Station Group

-4%

-2%

-1%

-7%

Lids Sports Group

6%

6%

9%

3%

Johnston & Murphy Group

12%

2%

8%

-8%

Total Comparable Store Sales

9%

0%

7%

-2%

Genesco Inc.

Adjustments to Reported Earnings from Continuing Operations

Three Months Ended January 29, 2011 and January 30, 2010

3 mos

Impact

3 mos

Impact

In Thousands (except per share amounts)

Jan 2011

on EPS

Jan 2010

on EPS

Earnings from continuing operations, as reported

$   31,413

$   1.34

$   25,829

$   1.08

Adjustments:  (1)

Impairment & lease termination charges

487

0.02

1,927

0.08

Other legal matters

(39)

-

(382)

(0.01)

Intrusion expenses

816

0.03

-

-

Purchase price accounting adjustment - margin

476

0.02

-

-

Loss on early retirement of debt

-

-

247

0.01

Convertible debt interest restatement (APB 14-1)

-

-

23

-

Higher (lower) effective tax rate

(1,863)

(0.08)

74

-

Adjusted earnings from continuing operations (2)

$   31,290

$   1.33

$   27,718

$   1.16

(1) All adjustments are net of tax.  The tax rate for the fourth quarter of Fiscal 2011 is 38.0% excluding a FIN 48

   discrete item of $0.1 million.  The tax rate for the fourth quarter of Fiscal 2010 is 38.2% excluding a FIN 48

   discrete item of $0.2 million.

(2) Reflects 23.5 million share count for Fiscal 2011 and 24.0 million share count for Fiscal 2010 which does

    include common stock equivalents in both years.

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

pro forma basis 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 Earnings from Continuing Operations

Twelve Months Ended January 29, 2011 and January 30, 2010

12 mos

Impact

12 mos

Impact

In Thousands (except per share amounts)

Jan 2011

on EPS

Jan 2010

on EPS

Earnings from continuing operations, as reported

$   54,547

$   2.29

$   29,086

$   1.31

Adjustments:  (1)

Impairment & lease termination charges

4,410

0.19

8,447

0.36

Other legal matters

56

-

(167)

(0.01)

Loss on early retirement of debt

-

-

3,396

0.14

Flood loss

215

0.01

-

-

Intrusion expenses

816

0.03

-

-

Purchase price accounting adjustment - margin

1,242

0.05

-

-

Purchase price accounting adjustment - expense

266

0.01

-

-

Expenses related to aborted acquisition

127

0.01

-

-

Convertible debt interest restatement (APB 14-1)

-

-

871

-

Higher (lower) effective tax rate

(2,639)

(0.11)

1,508

0.07

Adjusted earnings from continuing operations (2)

$   59,040

$   2.48

$   43,141

$   1.87

(1) All adjustments are net of tax.  The tax rate for Fiscal 2011 is 38.4% excluding a FIN 48 discrete item of

   $0.5 million.  The tax rate for Fiscal 2010 before a positive adjustment of $1.2 million for FIN 48 and other

   adjustments is 38.45% excluding a FIN 48 discrete item of $0.5 million.  The tax rate for Fiscal 2010

   excludes the non-deductibility of certain items incurred in connection with the inducement of the conversion

   of the 4 1/8% Debentures for common stock.

(2) Reflects 23.7 million share count for Fiscal 2011 and 23.5 million share count for Fiscal 2010 which

    includes common stock equivalents in both years.

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

pro forma basis 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 Forecasted Earnings from Continuing Operations

Fiscal Year Ending January 28, 2012

High Guidance

Low Guidance

In Thousands (except per share amounts)

Fiscal 2012

Fiscal 2012

Forecasted earnings from continuing operations

$ 64,808

$ 2.74

$ 63,004

$ 2.67

Adjustments:  (1)

Impairment and intrusion expenses

2,698

0.11

2,698

0.11

Adjusted forecasted earnings from continuing operations (2)

$ 67,506

$ 2.85

$ 65,702

$ 2.78

(1) All adjustments are net of tax.  The forecasted tax rate for Fiscal 2012 is 39.5% excluding a FIN 48 discrete

   item of $0.6 million.

(2) Reflects 23.6 million share count for Fiscal 2012 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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