Genesco Inc. reported net earnings of $4.8 million, or 21 cents per diluted share, for the second quarter ended July 31, 2004.
Items including the recognition of a gain on the curtailment of the Company's defined benefit plan and a tax benefit partially offset by retail store asset impairments and retail store closings, added $0.02 per diluted share in the second quarter of fiscal 2005. This compares with a net loss of $891,000, or $0.04 per diluted share, for the second quarter last year, which included a net loss of $0.07 per diluted share primarily related to the Company's refinancing of its convertible subordinated notes in the second quarter of fiscal 2004.
Net sales for the second quarter of fiscal 2005 increased 37% to $246 million compared to $179 million for the second quarter of fiscal 2004.
Genesco President and Chief Executive Officer Hal N. Pennington said, “We are very pleased to be able to once again exceed expectations for the second quarter. Our results were primarily driven by continued strength at Hat World, a solid performance at Journeys and ongoing improvements at Johnston & Murphy and Dockers. As we head into the second half of the fiscal year, we are encouraged by our momentum and believe we are well positioned to take advantage of the current trends in the marketplace.
“Total sales at Journeys increased 8.5% to approximately $106 million and both same store sales and footwear unit comps rose 2%. We continued to benefit from the strong trend in athletic and solid gains in women's fashion footwear, offset in part by the impact of the shift in the tax-free timing in some states. We think our merchandise selection looks great for back-to- school and we are excited about our prospects.
“Underground Station reported a same store sales decline of 11% compared to a 9% increase last year. As expected, Underground Station's business remained challenging during the quarter due to difficult same store sales and product comparisons. Looking ahead, comparisons begin to moderate and we remain focused on improving this business.
“Hat World registered another strong quarter, with total sales up 30% and same store sales up 16% reflecting robust demand for our core sports product and ongoing strength in our fashion and branded businesses. We remain excited about this acquisition and the short and long-term opportunities of this business.
“Johnston & Murphy posted its second consecutive quarter of increased profitability. Operating margin improved significantly as we continued to benefit from enhanced sourcing efficiencies, less promotional selling and a higher mix of premium product. We believe the strong positive feedback that we recently received at WSA is further evidence that our initiatives are working and we remain committed to executing our strategic plan for this business.
“Finally, Dockers generated meaningful gains in terms of sales and operating income during the second quarter. Revenues grew 20.3% to $14.2 million and operating margin increased to 9.2% compared to a negative operating margin of 2.2% last year. Over the past six months we have made significant progress at Dockers and we are optimistic that this positive momentum will continue into the back half of the fiscal year.”
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 $1.89 to $1.92, including previously announced charges of approximately $0.08 to $0.09 per share associated with the planned closing of Jarman and other underperforming stores in fiscal 2005.
GENESCO INC. Consolidated Earnings Summary Three Months Ended Six Months Ended July 31, August 2, July 31, August 2, In Thousands 2004 2003 2004 2003 Net sales $245,939 $179,478 $471,465 $372,224 Cost of sales 124,050 95,989 238,898 200,643 Selling and administrative expenses 112,085 80,271 211,315 160,924 Restructuring and other, net 186 139 40 139 Earnings from operations before interest and other 9,990 3,357 21,292 10,796 Loss on early retirement of debt - 2,581 - 2,581 Interest expense, net 2,896 2,149 4,778 4,181 Earnings (loss) before income taxes from continuing operations 7,094 (1,373) 16,514 4,034 Income tax expense (benefit)* 2,301 (482) 5,897 1,588 Earnings (loss) from continuing operations 4,793 (891) 10,617 2,446 Provision for discontinued operations, net (21) - (21) - Net Earnings (Loss) $4,772 $(891) $10,596 $2,446 *Includes favorable tax settlements of $0.4 million and $0.5 million in the second quarter and six months of Fiscal 2005, respectively. Basic earnings (loss) per share: Before discontinued operations $0.22 ($0.04) $0.48 $0.11 Net earnings (loss) $0.21 ($0.04) $0.48 $0.11