Genesco Inc. reported earnings from continuing operations for the 14-week period ended February 3, 2018, of $56.3 million, or $2.91 per diluted share, compared to earnings from continuing operations of $46.8 million, or $2.40 per diluted share, for the 13-week period ended January 28, 2017.

Fiscal 2018 fourth quarter results reflect a benefit of $19.8 million, or $1.02 per diluted share from lower tax expense, partially offset by pre-tax charges of $7.5 million, or $0.26 per diluted share including $5.4 million, or $0.19 per diluted share in licensing termination expenses and $2.1 million, or $0.07 per diluted share of store impairment charges, among other items. Fiscal 2017 fourth quarter results reflect a pretax gain of $9.2 million, or $0.25 per diluted share after tax, including a gain on the sale of SureGrip Footwear of $12.3 million and a gain of $0.8 million on other legal matters, partially offset by $3.9 million of asset impairment charges, pension settlement expenses and other items.

Adjusted for the items described above in both periods, earnings from continuing operations were $41.5 million, or $2.15 per diluted share, for the fourth quarter of Fiscal 2018, compared to earnings from continuing operations of $41.8 million, or $2.15 per diluted share, for the fourth quarter of Fiscal 2017. For consistency with Fiscal 2018’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.

Net sales for the fourth quarter of Fiscal 2018 increased 5 percent, including the results of a 53rd week, to $930 million from $883 million in the fourth quarter of Fiscal 2017. Consolidated fourth quarter 2018 comparable sales, including same store sales and comparable e-commerce and catalog sales increased 1 percent with an 11 percent increase in the Journeys Group, a 1 percent increase in the Schuh Group, a 14 percent decrease in the Lids Sports Group, and a 4 percent increase in the Johnston & Murphy Group. Comparable sales for the company included a 1 percent decrease in same store sales and a 15 percent increase in e-commerce sales.

The company also reported net sales for the 53-week year ended February 3, 2018, of $2.91 billion, an increase of 1 percent from net sales of approximately $2.87 billion for the 52-week year ended January 28, 2017. The loss from continuing operations for Fiscal 2018 was $111.4 million, or $5.80 per diluted share, compared to earnings from continuing operations of $97.9 million, or $4.85 per diluted share, for Fiscal 2017. Fiscal 2018 earnings reflect charges of $191.6 million, or $8.52 per diluted share after tax including a goodwill impairment charge of $182.2 million, or $8.18 per diluted share after tax, related primarily to the sustained decline in the company’s market value to a level below book value, among other items, plus a tax expense of $7.7 million, or $0.41 per diluted share related to the impact of share-based awards and goodwill impairment. Fiscal 2017 earnings reflect an after-tax gain of $0.52 per diluted share, including a $14.7 million gain on the sale of SureGrip Footwear and Lids Team Sports, an $8.9 million gain on network intrusion expenses as a result of a litigation settlement, and a $0.8 million gain on other legal matters, partially offset by $8.9 million in asset impairments and pension settlement expenses.

Adjusted for the listed items in both years, earnings from continuing operations were $60.3 million, or $3.13 per diluted share, for Fiscal 2018, compared to earnings from continuing operations of $87.2 million, or $4.33 per diluted share, for Fiscal 2017. 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.

Robert J. Dennis, chairman, president and chief executive officer of Genesco, said, “Our fourth quarter earnings per share were in-line with our most recent outlook and flat with last year’s level, as strong performance by our U.S. retail footwear businesses was offset by specific challenges in our other operating divisions. Overall Fiscal 2018 was a difficult year as Journeys managed through a fashion rotation up until the start of back to school, Lids faced a number of specific marketplace headwinds, and consumers shifted their shopping from brick & mortar to online at an accelerated pace. While comparable sales were flat, our profitability suffered due primarily to deleverage from negative store results coupled with higher expenses from our omnichannel initiatives. On a positive note, the EPS gap to last year improved sequentially each quarter and ultimately closed in the fourth quarter.

“Looking ahead, we believe our near-term performance will continue to be shaped by the divergence in our two biggest businesses although not to the degree we experienced in the fourth quarter. Like our other businesses, Lids is subject to fashion cycles, and headwear is currently between trends, which we believe positions the business for the type of recovery that Journeys is now enjoying once a new fashion driver emerges. Though we don’t know the timing of when this will occur, history points to an eventual rebound. While we believe that Journeys’ current product assortment is well positioned in terms of brands and styles to drive continued growth, this timing uncertainty combined with generally weak store traffic across retail causes us to be cautious about the current year. We expect adjusted diluted earnings per share for Fiscal 2019 in the range of $3.05 to $3.45, inclusive of the benefit from lower tax expense following the passage of the Tax Cuts and Jobs Act in December 2017.”

These expectations do not include expected non-cash asset impairments and other charges, estimated in the range of $3.9 million to $4.9 million pretax, or $0.15 to $0.18 per share after tax, for the full fiscal year. It also does not include certain tax effects related to equity grants pursuant to ASU 2016-09, estimated at $0.03 per share after tax or any possible SAB 118 adjustments related to our estimates arising from the 2017 Tax Act. This guidance assumes comparable sales in the flat to positive 2 percent range for the full year.

Dennis concluded, “We continue to be confident that the work we are doing to strengthen the strategic positioning of our businesses will drive long-term growth. At the same time, we are undertaking a multi-year reshaping of our cost structure in order to improve profitability and deliver greater value to our shareholders and have already identified potential annualized cost savings in the range of $35 million to $40 million.”