Genesco Inc. reported earnings before discontinued operations of $17.8 million, or $0.81 per diluted share, for the fourth quarter ended January 31, 2004. Items including retail store asset impairments and recognition of excess restructuring provisions and a tax benefit added a net $0.05 per diluted share to earnings before discontinued operations in the fourth quarter of fiscal 2004.
Earnings before discontinued operations for the fourth quarter of fiscal 2003 were $14.2 million, or $0.56 per diluted share, including a charge of $0.06 per share primarily related to retail store asset impairments.
Net earnings for the fourth quarter of fiscal 2004 were $16.9 million, or $0.77 per diluted share, compared with $14.0 million, or $0.55 per diluted share, for the previous fourth quarter. Net sales for the fourth quarter of fiscal 2004 were $253 million compared to $250 million for the fourth quarter of fiscal 2003.
For the fiscal year ended January 31, 2004, earnings before discontinued operations were $29.7 million, or $1.33 per diluted share, compared to $36.4 million, or $1.47 per diluted share, for fiscal 2003. Earnings before discontinued operations for fiscal 2004 included net charges of $0.03 per share, primarily related to the items discussed above and expenses related to the refinancing of the Company's long-term debt in the second quarter.
Earnings before discontinued operations for fiscal 2003 were reduced by $0.08 per share because of charges primarily related to retail store asset impairments. Net earnings for fiscal 2004 were $28.8 million, or $1.29 per diluted share, compared to $36.3 million, or $1.47 per diluted share, for fiscal 2003. Net sales for fiscal 2004 were $837 million versus $828 million the previous year.
Genesco President and Chief Executive Officer Hal N. Pennington, said, “We were very pleased to end the year on such a positive note. Throughout fiscal 2004 we worked hard to respond to challenges in the marketplace and we believe that our strong fourth quarter performance is an early indication that our strategies are working and our outlook is improving. As we head into fiscal 2005, our momentum is good, our inventories are fresh and we are excited about the opportunities that lie ahead.
“During the quarter Journeys same store sales were flat, footwear unit comparable sales rose 6% and margins came in above our expectations, due primarily to lower than expected markdowns. So far in the new fiscal year, Journeys' comparable sales trends have improved, the decline in average selling price appears to be moderating, the retail environment seems to be improving and Journeys merchants are enthusiastic about fresh, new products in the marketplace. We believe that all of this bodes well for us in the new year.
“Comparable store sales in the fourth quarter in the Underground Station/Jarman Group fell about 8%, compared to an increase of 9% last year, with Underground Station stores again performing better than the Jarman stores. As expected, the business was affected by a decline in demand for Euro-casual and utility-inspired products. Underground Station has implemented a number of initiatives to take advantage of the opportunities we see in its women's and fashion athletic businesses and to improve its overall position in the marketplace. Underground Station's comparable sales for the quarter to date have improved from fourth quarter levels. We have made the strategic decision to close 34 Jarman stores over the next 12 months and convert the remaining 62 stores to Underground Station stores as quickly as it is financially feasible to do so, subject to obtaining necessary approvals under the store leases.
“Johnston & Murphy saw more benefits of its strategic repositioning in the fourth quarter, as changes in product mix and a less promotional stance improved average selling price in the Johnston & Murphy shops by 6% compared to the fourth quarter last year. Johnston & Murphy also did a good job managing expenses during the quarter and its inventories are well positioned as it begins the new year. The positive feedback from retailers that we received at the recent World Shoe Association (WSA) tradeshow gives us confidence that Johnston & Murphy is successfully executing its plan.
“Dockers Footwear sales were $12 million in the fourth quarter compared to $19 million for the same period last year. Despite the top line pressure, Dockers' operating margin increased by 2 percentage points. We continue to expect a rebound in Dockers' sales in the second half of this year.”
Genesco also stated that it is revising upward its fiscal 2005 guidance. The Company now expects sales between $901 million and $920 million and earnings per share from $1.37 to $1.44, including charges of approximately $0.09 per share associated with the planned closing of Jarman and other underperforming stores in fiscal 2005. The Company's guidance does not reflect the closing of its previously announced agreement to acquire Hat World Corporation, which the Company expects to consummate during the first quarter.
Pennington concluded, “We remain committed to taking the necessary steps to help improve our operating platform and better position Genesco for long- term growth. We move forward focused on execution and excited about the future.”
GENESCO INC.
Consolidated Earnings Summary
Fourth Quarter Fiscal Year Ended
In Thousands 2004 2003 2004 2003
Net sales $252,672 $249,715 $837,379 $828,307
Cost of sales 134,603 133,477 448,601 438,231
Selling and administrative
expenses 89,209 88,744 332,559 320,833
Restructuring and other charges 1,040 2,549 901 2,549
Earnings from operations before
interest and other 27,820 24,945 55,318 66,694
Loss on early retirement of debt - - 2,581 -
Interest expense, net 1,598 2,114 7,289 7,870
Earnings before income taxes from
continuing operations 26,222 22,831 45,448 58,824
Income tax expense 8,392 8,658 15,760 22,379
Earnings from continuing
operations 17,830 14,173 29,688 36,445
Provision for discontinued
operations, net (888) (165) (888) (165)
Net Earnings $16,942 $14,008 $28,800 $36,280
Earnings Per Share Information
Fourth Quarter Fiscal Year Ended
In Thousands (except per share amounts) 2004 2003 2004 2003
Preferred dividend requirements $73 $73 $294 $294
Average common shares - Basic EPS 21,721 21,710 21,742 21,821
Basic earnings per share:
Before discontinued operations $0.82 $0.65 $1.35 $1.66
Net earnings $0.78 $0.64 $1.31 $1.65
Average common and common equivalent
shares - Diluted EPS 22,098 26,988 22,042 27,152
Diluted earnings per share:
Before discontinued operations $0.81 $0.56 $1.33 $1.47
Net earnings $0.77 $0.55 $1.29 $1.47
GENESCO INC.
Consolidated Earnings Summary
Fourth Quarter Fiscal Year Ended
In Thousands 2004 2003 2004 2003
Sales:
Journeys $151,128 $139,566 $468,919 $436,498
Underground Station/Jarman
Group 47,521 48,129 147,812 147,926
Johnston & Murphy 41,727 43,000 160,095 165,269
Dockers 12,241 18,979 60,274 78,497
Corporate and Other 55 41 279 117
Net Sales $252,672 $249,715 $837,379 $828,307
Pretax Earnings (Loss):
Journeys $26,065 $22,050 $54,823 $53,214
Underground Station/Jarman Group 4,975 5,656 8,156 12,096
Johnston & Murphy 1,589 2,806 4,018 9,270
Dockers 943 1,089 4,548 8,506
Corporate and Other* (5,752) (6,656) (16,227) (16,392)
Operating income 27,820 24,945 55,318 66,694
Loss on early retirement of debt - - 2,581 -
Interest, net 1,598 2,114 7,289 7,870
Total Pretax Earnings 26,222 22,831 45,448 58,824
Income tax expense 8,392 8,658 15,760 22,379
Earnings from continuing
operations 17,830 14,173 29,688 36,445
Provision for discontinued
operations (888) (165) (888) (165)
Net Earnings $16,942 $14,008 $28,800 $36,280
* Includes impairment charge of $2.8 million offset by $1.8 million
excess restructuring provisions in the fourth quarter and year of
Fiscal 2004 and includes impairment and other charges of $2.6 million
in the fourth quarter and year of Fiscal 2003 and $0.6 million of
professional fees, severance and litigation in Fiscal 2003.
Constant Store Sales
Three Months Ended Twelve Months Ended
January 31, February 1, January 31, February 1,
2004 2003 2004 2003
Journeys 0% 1% -1% 0%
Underground Station/Jarman Group -8% 9% -6% 14%
Underground Station -7% 17% -1% 18%
Jarman Retail -9% 3% -11% 12%
Johnston & Murphy -1% -3% -1% 0%
Shops -3% -2% -3% 0%
Factory Outlets 9% -7% 4% -1%
Total Constant Store Sales -2% 2% -2% 3%
