Genesco Inc. reported net earnings of $9.4 million, or $0.42 per diluted share, for the third quarter ended November 1, 2003, compared with net earnings of $10.1 million, or $0.41 per diluted share, for the third quarter
last year. Net sales for the quarter were $212.5 million compared to $213.2 million for the third quarter of fiscal 2003.
Genesco President and Chief Executive Officer Hal N. Pennington, said,
“Better than expected gross margin and lower expenses enabled us to meet our
earnings per share expectations for the quarter, even though sales were lower
than we expected. Sales were affected by a combination of unseasonably warm
weather throughout much of the country and a merchandise trend that extended
the demand for athletic footwear later into the season, slowing the transition
into seasonal casual shoes.
“Journeys' same store sales declined approximately 1% for the quarter,
versus a 1% gain for the same period a year ago, and comps at Underground
Station fell about 7%, compared to an increase of more than 21% last year.
Both businesses were affected by the late onset of fall weather and by the
athletic fashion trend. In response, we have taken a number of steps to
improve our position for the holiday and spring selling seasons. On the
product front, we have increased our commitment in fashion athletic footwear
and reduced our exposure in the more fashion-oriented casual shoe categories.
We believe that colder weather will improve sales in our traditional casual
shoe business and we are well positioned in those brands. In addition, we plan
to be more aggressive with promotions to drive traffic and generate sales.
The Jarman stores' comparable sales declined 11% in the quarter.
“Dockers Footwear's sales declined 24% during the quarter; however, we
believe this business is stabilizing and we look forward to a rebound in sales
late in the first half of next year.
“Johnston & Murphy continues to make progress in its strategy of focusing
on profitable sales and premium positioning. Accordingly, sales declined
slightly, while both gross margin and operating income exceeded our
expectations. In our Johnston & Murphy retail stores, same store sales rose 1%
for the quarter. Average prices in the Johnston & Murphy shops increased 6%,
again reflecting our focus on premium positioning and on dress casual styles.”
Due to current market conditions the Company is taking a more conservative
outlook for the fourth quarter of fiscal 2004. The Company now expects fourth
quarter sales to range between $251 million and $254 million and earnings per
share to range from $0.63 to $0.67. The Company also expects fiscal 2004 sales
to range between $836 million and $839 million and earnings per share to range
from $1.16 to $1.20, including the loss of $0.08 per diluted share on the
early retirement of convertible debt refinanced in the second quarter. For
fiscal 2005, the Company expects sales to range between $911 million and $916
million and earnings per share to range from $1.36 to $1.41.
Pennington concluded, “In this dynamic environment we believe our
commitment to understanding our customer is more important than ever.
Fortunately, we have the flexibility to move quickly in response to market
changes. We remain confident that our brands continue to resonate with
consumers and our concepts continue to occupy a compelling position in the
marketplace.”
GENESCO INC.
Consolidated Earnings Summary
Three Months Ended Nine Months Ended
November November November November
1, 2, 1, 2,
In Thousands 2003 2002 2003 2002
Net sales $212,483 $213,157 $584,707 $578,592
Cost of sales 113,355 112,318 313,998 304,754
Selling and administrative
expenses 82,426 82,197 243,350 232,089
Restructuring adjustment
(gain) -- -- (139) --
Earnings from operations
before interest and other 16,702 18,642 27,498 41,749
Loss on early retirement of
debt -- -- 2,581 --
Interest expense, net* 1,510 2,162 5,691 5,756
Pretax earnings 15,192 16,480 19,226 35,993
Income tax expense 5,780 6,373 7,368 13,721
Net Earnings $9,412 $10,107 $11,858 $22,272
Basic net earnings per share $0.43 $0.46 $0.54 $1.01
Diluted net earnings
per share $0.42 $0.41 $0.53 $0.92
* Includes $0.2 million additional net interest expense due to early
retirement of debt for the nine months of Fiscal 2004.
Consolidated Earnings Summary
Three Months Ended Nine Months Ended
November November November November
1, 2, 1, 2,
In Thousands 2003 2002 2003 2002
Sales:
Journeys $121,602 $113,777 $317,791 $296,932
Underground Station/Jarman
Group 34,996 36,415 100,291 99,797
Johnston & Murphy 38,760 40,363 118,368 122,269
Dockers 17,023 22,526 48,033 59,518
Corporate and Other 102 76 224 76
Net Sales $212,483 $213,157 $584,707 $578,592
Pretax Earnings (Loss):
Journeys $16,484 $15,464 $28,758 $31,164
Underground Station/Jarman
Group 1,390 2,637 3,181 6,440
Johnston & Murphy 455 992 2,429 6,464
Dockers 1,315 3,305 3,605 7,417
Corporate and Other* (2,942) (3,756) (10,475) (9,736)
Operating income 16,702 18,642 27,498 41,749
Loss on early retirement of
debt -- -- 2,581 --
Interest, net 1,510 2,162 5,691 5,756
Total Pretax Earnings 15,192 16,480 19,226 35,993
Income tax expense 5,780 6,373 7,368 13,721
Net Earnings $9,412 $10,107 $11,858 $22,272
* Includes $0.2 million of severance charges in the third quarter of
Fiscal 2003 and a $0.1 million restructuring adjustment and
$0.6 million of professional fees and severance charges in the
nine months of Fiscal 2004 and 2003, respectively.
