Genesco Inc. reported net earnings of $5.8 million, or 26 cents per diluted share, for the first quarter ended May 1, 2004, compared with net earnings of $3.3 million, or 15 cents per diluted share, for the first quarter last year. Net sales for the first quarter of fiscal 2004 were $226 million compared to $193 million for the first quarter of fiscal 2004.
Genesco President and Chief Executive Officer Hal N. Pennington, said, “These strong results represent a great start for the new fiscal year and underscore the improvements we have made across our businesses. Our positive momentum has given us a heightened degree of confidence about our prospects, enabling us to increase guidance for the year.
“Journeys' same store sales increased 9%, footwear unit comparable sales rose 9% and margins came in above plan, due primarily to lower than anticipated markdowns. Our better than expected sales were driven by solid gains in footwear units, growth in accessories, and moderation in the decline in average selling price. We are very excited about these developments and we remain committed to further capitalizing on Journeys' leadership position in the market.
“Comparable store sales for the Underground Station Group declined 3% for the quarter, but operating margin increased due to improved gross margin. Comparable store sales in the Underground Station stores declined 2%, compared to an increase of more than 7% last year. Much like what happened at Journeys last year, we believe Underground Station is being impacted by a lack of any distinctive fashion trends and a decline in average selling prices. On the positive side, footwear unit comps for the Underground Station stores were up 2.7%. While we do not expect to see much sales improvement in the second quarter in the Underground Station stores, we are optimistic about the second half of the year as comparisons improve from both a same store sales and a merchandising perspective.
“Total sales at Johnston & Murphy were $41 million and same store sales increased 8%, driven by increases in average price per pair in the Johnston & Murphy shops. We were also pleased to achieve some significant operating margin expansion at Johnston & Murphy during the quarter, despite the ongoing effects of a stronger euro. The strategic plan to reposition the Johnston & Murphy brand that we implemented over a year ago appears to be working well.
“Dockers Footwear registered operating income as a percent of sales of 10% on sales of $17.5 million in the first quarter. Based on current trends, we believe that we will see top line improvement in the Dockers business during our second fiscal quarter, which is earlier than we previously expected.
“Hat World, which we acquired on April 1, 2004, outperformed plan in both sales and operating margin. Hat World reported a same store sales gain of 23% for the first quarter and 20% for the month of April. These excellent results, which came against difficult comparisons to a strong quarter last year, were driven by a number of favorable trends in the merchandise mix. The integration process since the acquisition has been very smooth; the Hat World business continues to be strong and we are excited about the growth opportunities this business represents.”
Genesco also stated that it is revising upward its fiscal 2005 guidance. The Company now expects sales for the year of approximately $1.1 billion and earnings per share to range from $1.74 to $1.80, including previously announced charges of approximately $0.09 per share associated with the planned closing of Jarman and other underperforming stores in fiscal 2005.
Pennington concluded, “It is gratifying to see the positive results of all of our hard work over the past several quarters. We believe that our in-depth knowledge of our customers, our branded lifestyle focus and our ability to react quickly and execute our strategy set us apart from our peers. We will continue to draw on these strengths as we seek long-term growth and profitability.”
