Genesco Inc. first quarter earnings before discontinued operations were $2.2 million, or 10 cents per diluted share including primarily non-cash, pretax fixed asset impairment charges of $6.6 million, or 15 cents per diluted share, primarily related to the Company's previously announced plan to close up to 57 under performing stores in urban markets.
For the quarter ended April 29, 2006, earnings before discontinued operations were $10.7 million, or $0.41 per diluted share. Net sales for the first quarter of fiscal 2008 increased 6% to $335 million, compared to $315 million for the first quarter of fiscal 2007.
Genesco Chairman and Chief Executive Officer Hal N. Pennington said, “During the first quarter the Journeys Group posted solid sales growth and the positive momentum in the Johnston & Murphy and Dockers Footwear businesses continued. Hat World's business improved consistently throughout the quarter, with the successful transition to the new Major League Baseball on-field hat. However, the challenges in the urban market were once again a negative factor in our overall results for the quarter.
“As we previously announced, we plan to close or convert up to 57 underperforming urban stores, primarily in the Underground Station Group, that have been most negatively impacted by the downturn in that market. We remain confident that Underground Station is a viable concept and believe that closing these stores will provide us with a stronger platform on which to rebuild and improve that business.
“Net sales in the Journeys Group increased 10% to approximately $156 million and same store sales rose 3% in the first quarter, with a 7% increase in comparable footwear unit sales, which strengthens our confidence in our merchandising position for the summer and back to school season. Journeys' store growth plans remain on track, as we continue to target 50 to 60 new stores for fiscal 2008.
“Net sales at Journeys Kidz increased 35% to $11 million, same store sales rose 6% and comparable footwear unit sales were up 11% during the quarter. We continue to work toward a target of 40 new Kidz stores this fiscal year. We opened 11 new Shi by Journeys stores during the first quarter and ended the period with 23 Shi by Journeys stores in operation. Our target is to have 50 Shi stores open by the end of the fiscal year.
“Net sales in the Hat World Group increased 12% to approximately $79 million and same store sales declined 4%, compared to a decline of less than 1% in the first quarter last year. As expected, Hat World continued to be affected by the difficult urban market. Additionally, the quarter saw the planned transition to the new Major League Baseball on-field hat. This transition hurt sales early in the quarter, but the introduction of the new hat at the beginning of April sparked a positive sales trend that has continued into the second quarter. Based on both our positioning in the market and moderating comparisons, we expect an improving sales trend at Hat World through the balance of the year. We expect to open 100 to 105 new stores in the Hat World Group in Fiscal 2008.
“Net sales for the Underground Station Group, which includes the remaining Jarman stores, were $30 million and same store sales declined 22%. The weak urban market, ongoing softness in the athletic category and a tough Nike comparison negatively affected sales comparisons during the quarter. We expect improvements at Underground Station in the latter part of the year, as we continue to re-merchandise the stores towards more women's and casual products, as the absence of Nike products becomes a less significant factor in the year-over-year comparisons, and as overall comparisons moderate as we mark the anniversary of the onset of the urban market downturn.
“Johnston & Murphy Group's net sales increased 5% to approximately $46 million in the first quarter. Wholesale sales rose 3%, same store sales for the shops were up 3% and operating margin increased 330 basis points to 9.7%. Johnston & Murphy's footwear line continues to gain customer acceptance. At the same time, we continue to see strength in all our non-footwear categories. Johnston & Murphy's momentum remains strong.
“First quarter sales of Licensed Brands increased 25% to approximately $24 million, after a 37% gain for the same period last year. According to The NPD Group's Retail Tracking Service, Dockers Footwear was the #1 ranked brand for men's dress casual footwear in national chains and shoe chains for the 12 months ended March 2007.”
The Company also updated its guidance for the fiscal year ending February 2, 2008. It now expects to report net sales of $1.59 billion and earnings per diluted share of $2.37 to $2.40 for fiscal 2008, including charges of $0.35 related to the store closing program. The Company's fiscal 2008 guidance does not include the impact of any costs associated with the Company's review of strategic alternatives, which the Company announced today.
GENESCO INC.
Consolidated Earnings Summary
Three Months Ended
May 5, April 29,
In Thousands 2007 2006
Net sales $334,651 $315,018
Cost of sales 162,807 153,649
Selling and administrative expenses 159,073 141,866
Restructuring and other, net 6,595 109
Earnings from operations 6,176 19,394
Interest expense, net 2,402 1,914
Earnings before income taxes from
continuing operations 3,774 17,480
Income tax expense 1,571 6,814
Earnings from continuing operations 2,203 10,666
Provision for discontinued operations, net - (189)
Net Earnings $2,203 $10,477
Earnings Per Share Information
Three Months Ended
May 5, April 29,
In Thousands (except per share amounts) 2007 2006
Preferred dividend requirements $ 64 $ 64
Average common shares - Basic EPS 22,391 23,042
Basic earnings per share:
Before discontinued operations $0.10 $0.46
Net earnings $0.10 $0.45
Average common and common equivalent
shares - Diluted EPS 26,804 27,436
Diluted earnings per share:
Before discontinued operations $0.10 $0.41
Net earnings $0.10 $0.40
