Genesco Inc. reported earnings from continuing operations slid 6.7 percent in the fourth quarter, to $38.7 million, or $1.63 per diluted share, compared to earnings from continuing operations of $41.5 million, or $1.72, in the year-ago quarter. Fiscal 2013 fourth quarter results reflect expenses of $19.3 million, or 53 cents per share after tax, including $15.4 million of expenses related to the 2010 network intrusion.
Charges in the latest period also inlcluded $3.2 million of expenses related to deferred purchase price payments in connection with the acquisition of Schuh Group Limited, which are required to be expensed as compensation because the payment is contingent upon the payees continued employment; and $0.7 million in asset impairment charges; and a higher effective tax rate related to the nondeductibility of the Schuh deferred purchase price expenses.
Fiscal 2012 fourth quarter results reflect expenses of $3.7 million, or $0.25 per share after tax, primarily including deferred purchase price expenses and asset impairments, other legal matters and acquisition expenses.
Adjusted for the items described above in both periods, earnings from continuing operations were $51.4 million, or $2.16 per diluted share, for the fourth quarter of Fiscal 2013, compared to earnings from continuing operations of $47.5 million, or $1.97 per diluted share, for the fourth quarter of Fiscal 2012.
Net sales for the 14-week fourth quarter of Fiscal 2013 increased 10 percent to $797 million from $723 million in the 13-week fourth quarter of Fiscal 2012, with the extra week accounting for approximately half the increase. Consolidated fourth quarter 2013 comparable sales, including same store sales and comparable e-commerce and catalog sales, decreased 2 percent on a 14-week basis, with a 1 percent decrease in the Journeys Group, a 10 percent decrease in the Lids Sports Group, a 7 percent increase in the Schuh Group, and a 2 percent increase in the Johnston & Murphy Group.
The Company also reported earnings from continuing operations for the 53-week period ended February 2, 2013, of $111.0 million, or $4.62 per diluted share, compared to earnings from continuing operations of $83.0 million, or $3.48 per diluted share, for the 52-week period ended January 28, 2012. Fiscal 2013 earnings reflect after-tax charges of $0.44 per diluted share, including network intrusion-related expenses, compensation expense associated with the Schuh deferred purchase price, asset impairments, and other legal matters, and a higher effective tax rate. Fiscal 2012 earnings reflected after-tax charges of $0.61 per diluted share, including compensation expense associated with the Schuh deferred purchase price, acquisition expenses, asset impairments, other legal matters, and network intrusion-related expenses.
Adjusted for the listed items in both years, earnings from continuing operations were $121.8 million, or $5.06 per diluted share, for Fiscal 2013, compared to earnings from continuing operations of $97.5 million, or $4.09 per diluted share, for Fiscal 2012. 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 2013 increased 14 percent to $2.60 billion from $2.29 billion in Fiscal 2012.
Robert J. Dennis, chairman, president and chief executive officer of Genesco, said, “Fiscal 2013 was another solid year for Genesco, highlighted by annual sales and adjusted earnings per share increases of 14 percent and 24 percent, respectively. We believe that the strong earnings performance in a year characterized by challenges in our markets and in the broader economy demonstrates the resiliency of our business model.”
“Fiscal 2014 has started off somewhat slowly, with February consolidated comparable sales down 9 percent. We believe that most of the negative factors we have identified in our recent performance, including a delay in initial federal tax refunds and the timing of new product deliveries versus a year ago, are temporary. Comparable sales improved in the course of February, but we remain cautious in our near-term outlook given continuing uncertainty in the economy and in some of our markets and the relatively strong prior year comparisons we face in the first half of this year.
“Based on current visibility, we expect adjusted Fiscal 2014 diluted earnings per share to be in the range of $5.57 to $5.67, which represents a 10 percent to 12 percent increase over fiscal 2013’s adjusted earnings per share of $5.06. Consistent with previous guidance, these expectations do not include expected non-cash asset impairments and other charges, which are estimated in the range of $3.0 million to $4.0 million pretax, or $0.08 to $0.11 per share, after tax, in Fiscal 2014. They also do not reflect compensation expense associated with the Schuh deferred purchase price as described above, which are currently estimated at approximately $11.6 million, or $0.49 per diluted share, for the full year. This guidance assumes comparable sales increases in the low single digit range for the full fiscal year.”
Dennis concluded, “We enter the new year focused on continuing to navigate successfully through the short-term headwinds while executing our long-term growth strategies.”
