Genesco Inc. announced results of operations for the fourth quarter and fiscal year ended February 1, 2003. Earnings before discontinued operations, excluding certain previously announced items shown on the table following this announcement, were $15.8 million, or $0.62 per diluted share, for the quarter, compared to $15.4 million, or $0.60 per diluted share, for the previous year’s fourth quarter, also excluding certain items in that period shown on the table.
The items in the fourth quarter of fiscal 2003 include the cost of recognizing the asset impairment in 14 under-performing retail stores identified as suitable for closing if acceptable lease terminations can be negotiated, the payments related to the termination of one of those leases, and severance payments. The majority of these items relate to the Johnston & Murphy division.
Earnings before discontinued operations for the fourth quarter (reported pursuant to Generally Accepted Accounting Principles and including the listed items) were $14.2 million, or $0.56 per diluted share, this year, compared to $15.8 million, or $0.61 per diluted share, for the fourth quarter of fiscal 2002. Net sales for the fourth quarter were $250 million compared to $222 million in the earlier period.
For the year ended February 1, 2003, earnings before discontinued operations were $38.4 million, or $1.55 per diluted share, excluding the items shown on the table, compared with $38.0 million, or $1.52 per diluted share, excluding the items shown on the table for fiscal 2002. Earnings before discontinued operations (reported pursuant to Generally Accepted Accounting Principles and including the listed items) for fiscal 2003 were $36.4 million, or $1.47 per diluted share, compared with $38.3 million, or $1.54 per diluted share, for the previous year. Net sales for fiscal 2003 increased 11% to $828 million versus $746 million the previous year.
Genesco President and Chief Executive Officer Hal N. Pennington, said, “Fiscal 2003 represented another good year for Genesco, with double-digit sales growth and solid earnings. We also continued to strengthen our balance sheet and ended the year with $56 million in cash.”
“We saw particular strength in our retail operations during the year,” Pennington continued. “Total retail sales expanded 14% to $702 million and overall same store sales increased 3%. We also opened 97 stores to end the year with 991 stores in 46 states and Puerto Rico. Although we experienced a period of retail weakness in the month of December, we finished the year on a positive note, with January giving us some of our strongest same store sales increases of the year.
“Journeys net sales increased 13% during the quarter and same store sales rose 1%. Unit comps for the quarter were up 4%. Journeys net sales for the year increased 14% to $436 million and same store sales were flat, while unit comps for the full year increased 4% as well. We opened 12 Journeys stores during the quarter and 61 stores for the full year and ended fiscal 2003 with 579 stores in operation. In addition, we opened 21 Journeys Kidz stores for the full year and ended fiscal 2003 with 35 stores in operation. In a year of changing fashion, Journeys again benefited from its focus on understanding its customers and offering them the right product in the right shopping environment. Journeys remains the franchise footwear retailer for teenagers and we will continue to capitalize on our position in the market.”
Pennington continued, “The Underground Station/Jarman Group had another strong quarter, with sales increasing 13% to $48 million and overall same- store sales up 9%. For the year, total sales increased 23% to $148 million and same-store sales rose 14%. We opened 4 Underground Station stores during the quarter to end the year with a total of 229 stores – 114 Underground Station stores and 115 Jarman stores, in operation. Given our success with this concept, based on understanding and serving an underserved customer, we see the potential to grow Underground Station to a 400-store chain in the future.
“Johnston & Murphy’s net sales were $43 million for the fourth quarter compared with $42 million a year ago, and same-store sales declined 3%. For the full year, net sales were $165 million and same-store sales were flat. Johnston & Murphy continued to be negatively impacted by a very promotional retail environment. We believe that we have put a strategy in place that will further Johnston & Murphy’s strong brand equity and ultimately return the division to more acceptable levels of profitability.”
“Dockers sales were up 33% for the quarter to $19 million, and increased 11% for the year to $78 million. We continue to see positive results from new introductions such as Gortex and our Air Cushion System (ACS) product line. Dockers Footwear combines a strong brand and a superlative product offering for a price / value relationship that we believe is the best in its market today.”
Pennington concluded, “Genesco is a highly diversified footwear business, supported by powerful concepts and brands that occupy leadership positions within their respective markets. We are committed to executing a strategy that will result in long-term growth and increased shareholder value.”
GENESCO INC.
Consolidated Earnings Summary
Fourth Quarter Fiscal Year Ended
In Thousands 2003 2002* 2003 2002*
Net sales $249,715 $222,477 $828,307 $746,157
Cost of sales 133,477 119,014 438,231 396,891
Selling and administrative
expenses 88,744 76,318 320,833 280,712
Restructuring and other
charges(1) 2,549 5,395 2,549 5,126
Earnings from operations before
interest 24,945 21,750 66,694 63,428
Interest expense, net 2,114 1,982 7,870 7,564
Pretax earnings 22,831 19,768 58,824 55,864
Income tax expense 8,658 3,957 22,379 17,541
Earnings before discontinued
operations 14,173 15,811 36,445 38,323
Provision for discontinued
operations, net (165) (545) (165) (1,253)
Net Earnings $14,008 $15,266 $36,280 $37,070
GENESCO INC.
Consolidated Earnings Summary
Fourth Quarter Fiscal Year Ended
In Thousands 2003 2002 2003 2002
Sales:
Journeys $139,566 $123,198 $436,498 $381,736
Underground Station/Jarman
Group 48,129 42,623 147,926 120,242
Johnston & Murphy 43,000 42,376 165,269 167,488
Licensed Brands(1) 18,979 14,280 78,497 76,691
Corporate and Other 41 -- 117 --
Net Sales $249,715 $222,477 $828,307 $746,157
Pretax Earnings (Loss):
Journeys $22,050 $19,854 $53,214 $51,925
Underground Station/Jarman
Group 5,656 5,684 12,096 5,319
Johnston & Murphy 2,806 2,655 9,270 14,125
Licensed Brands(2) 1,089 1,005 8,506 8,001
Corporate and Other (4,100) (2,470) (13,205) (10,782)
Other charges(3) (2,556) (4,978) (3,187) (5,160)
Operating income 24,945 21,750 66,694 63,428
Interest, net 2,114 1,982 7,870 7,564
Total Pretax Earnings 22,831 19,768 58,824 55,864
Income tax expense 8,658 3,957 22,379 17,541
Earnings before discontinued
operations 14,173 15,811 36,445 38,323
Provision for discontinued
operations (165) (545) (165) (1,253)
Net Earnings $14,008 $15,266 $36,280 $37,070
(1) Includes Nautica sales of $6.1 million for Fiscal 2002.
(2) Includes Nautica operating losses of $0.1 million and $0.6 million for
the fourth quarter and year of Fiscal 2002.
(3) 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.
Included in the fourth quarter of Fiscal 2002 is a restructuring
charge of $5.4 million offset by unusual credits for litigation,
severance and insurance of $0.4 million. Included in Fiscal 2002 is a
restructuring charge of $5.1 million, litigation and severance
charges of $0.4 and an unusual credit of $0.3 million for life
insurance proceeds.
