Genesco Inc. reported fourth-quarter sales increased 6% to $479
million from $452 million a year ago. Comparable store sales were flat. Comp’s at Hat World Group
increased by 6%, the Journeys Group decreased by 3%, Underground
Station decreased by 2%, and Johnston & Murphy Retail increased by
2%. Earnings from continuing operations rose 11.2% to $25.8 million, or $1.08 per share, from $23.2 million, or $1.05, a year earlier.
Fiscal 2010 fourth quarter earnings reflected charges of 8 cents 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. Fiscal 2009 fourth quarter earnings reflected charges of 1 cent per diluted share, including asset impairments, store closing costs and final expenses related to a terminated merger agreement, offset by a gain on a lease termination transaction and tax rate adjustments. In addition, Fiscal 2009 earnings also included a restatement of interest expense required by the adoption of APB 14-1, which required retroactive application resulting in additional interest costs.
Adjusted for the listed items in both periods, earnings from continuing operations were $27.7 million, or $1.16 per diluted share, for the fourth quarter of Fiscal 2010, compared to earnings from continuing operations of $23.9 million, or $1.06 per diluted share, for the fourth quarter of Fiscal 2009.
Robert J. Dennis, president and chief executive officer of Genesco, said, “Our fourth quarter earnings exceeded expectations, driven by strong sales at Hat World and our direct-to-consumer catalog and e-commerce businesses combined with higher gross margins for the Company and well managed expenses across all our divisions. This performance caps a year in which, despite a challenging retail environment, we generated almost $100 million in cash flow from operations and paid down all $32 million of our outstanding bank debt, to end with $82 million in cash and no debt.
“As we begin the new fiscal year, all of our businesses are performing above their fourth quarter comparable sales, with positive comparable store sales across the board. For February, comparable sales increased 10% for the Hat World Group, 4% for the Journeys Group, 13% for Underground Station, 4% for Johnston & Murphy Retail and 6% for the total Company. Including the 17% comparable sales increase for the direct businesses, the Company’s comparable sales for February increased 7%.
“Especially given the strong start to the first quarter, we remain comfortable with our previously announced expectations for fiscal 2011 of earnings per share between $2.00 and $2.10. Consistent with previous years, this guidance does not include expected non-cash asset impairments which are projected to be approximately $9 million to $11 million, or $0.23 to $0.28 per share, in fiscal 2011. This guidance assumes full year comparable sales in the positive 2% to 3% range.
“We move forward confident that we have the right strategies in place at each of our operating segments. With a much stronger balance sheet than a year ago, we are better positioned to pursue multiple near-term growth opportunities that we have identified.”
Fiscal Year 2010
The Company also reported earnings from continuing operations for the fiscal year ended January 30, 2010, of $29.1 million, or $1.31 per diluted share, compared to earnings from continuing operations of $156.2 million, or $6.72 per diluted share, for the fiscal year ended January 31, 2009. Fiscal 2010 earnings reflected 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 applicable to the Company’s convertible debt. Fiscal 2009 earnings reflected a gain of $4.91 per diluted share from the settlement of merger-related litigation with The Finish Line offset by merger-related expenses, asset impairments, store closing costs and other items listed on Schedule B to this press release. Fiscal 2009 earnings also included a restatement of interest expense required by the adoption of APB 14-1, which required retroactive application resulting in additional interest costs.
Adjusted for the listed items in both years, earnings from continuing operations were $43.1 million, or $1.87 per diluted share, for Fiscal 2010, compared to earnings from continuing operations of $40.8 million, or $1.81 per diluted share, for Fiscal 2009.
Consolidated Earnings Summary
Fourth Quarter Fiscal Year Ended
---------------------- ------------------------
Restated * Restated *
January 30, January 31, January 30, January 31,
In Thousands 2010 2009 2010 2009
---- ---- ---- ----
Net sales $479,026 $451,722 $1,574,352 $1,551,562
Cost of sales 242,489 232,373 778,482 771,580
Selling and
administrative
expenses 189,960 180,534 718,269 713,365
Restructuring
and other, net 2,497 (282) 13,361 (196,575)
----- ---- ------ --------
Earnings from
operations 44,080 39,097 64,240 263,192
Loss on early
retirement of debt 399 - 5,518 -
Interest expense, net 1,439 3,405 8,234 12,478
----- ----- ----- ------
Earnings before
income taxes
from continuing
operations 42,242 35,692 50,488 250,714
Income tax expense 16,413 12,513 21,402 94,495
------ ------ ------ ------
Earnings from
continuing operations 25,829 23,179 29,086 156,219
Earnings from (provision
for) discontinued
operations, net 25 16 (273) (5,463)
--- --- ---- ------
Net Earnings $25,854 $23,195 $28,813 $150,756
======= ======= ======= ========
GENESCO INC.
Consolidated Earnings Summary
Fourth Quarter Fiscal Year Ended
---------------------- -------------------------
Restated Restated
January 30, January 31, January 30, January 31,
In Thousands 2010 2009 2010 2009
---- ---- ---- ----
Sales:
Journeys Group $225,356 $229,541 $749,202 $760,008
Underground
Station Group 32,223 34,035 99,458 110,902
Hat World Group 152,403 122,409 465,776 405,446
Johnston & Murphy
Group 47,334 45,593 166,079 177,963
Licensed Brands 21,540 20,019 93,194 96,561
Corporate and Other 170 125 643 682
--- --- --- ---
Net Sales $479,026 $451,722 $1,574,352 $1,551,562
======== ======== ========== ==========
Operating Income (Loss):
Journeys Group $24,029 $24,463 $44,285 $49,050
Underground Station
Group 1,517 593 (4,584) (5,660)
Hat World Group 19,979 14,770 44,039 36,670
Johnston & Murphy
Group 4,126 1,867 5,484 10,069
Licensed Brands 2,847 2,387 12,372 11,925
Corporate and Other* (8,418) (4,983) (37,356) 161,138
------ ------ ------- -------
Earnings from
operations 44,080 39,097 64,240 263,192
Loss on early
retirement of debt 399 - 5,518 -
Interest, net 1,439 3,405 8,234 12,478
----- ----- ----- ------
Earnings Before income
taxes from continuing
operations 42,242 35,692 50,488 250,714
Income tax expense 16,413 12,513 21,402 94,495
------ ------ ------ ------
Earnings from
continuing operations 25,829 23,179 29,086 156,219
Earnings from (provision
for) discontinued
operations 25 16 (273) (5,463)
--- --- ---- ------
Net Earnings $25,854 $23,195 $28,813 $150,756
======= ======= ======= ========
*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.
Includes a $0.3 million credit in the fourth quarter of Fiscal 2009
which includes a $3.8 million gain on a lease termination offset by $3.1
million in asset impairments and $0.4 million for lease terminations.
Includes a $196.6 million credit in Fiscal 2009 of which $204.1 million
were proceeds as a result of the settlement of merger-related litigation
with The Finish Line and its investment bankers and a $3.8 million gain
from a lease termination offset by $8.6 million in asset impairments,
$1.6 million in lease terminations and $1.1 million for other legal
matters. In the fourth quarter and year of Fiscal 2009, there is also an
additional $0.1 million and $0.2 million, respectively, of charges
related to lease terminations that are included in cost of sales on the
consolidated earnings summary. The fourth quarter and Fiscal 2009 also
included $0.2 million and $8.0 million, respectively, of merger-related
expenses.
