Genesco earnings before discontinued operations were $8.2 million, or 32 cents per diluted share, for the first quarter compared to $5.8 million, or 24 cents per diluted share, for the first quarter last year. These results include previously announced charges of $1.6 million, or $0.06 per diluted share after taxes, associated with the anticipated settlement of a previously disclosed class action suit. Net sales for the first quarter of fiscal 2006 increased 27% to $286 million compared to $226 million for the first quarter of fiscal 2005.
Genesco Chairman, President and Chief Executive Officer Hal N. Pennington, said, “Our results for the quarter, which significantly exceeded plan, were fueled by better than expected performances at Journeys, Hat World, Underground Station and Johnston & Murphy. Sales, margins, and cash flow were strong, and we ended the quarter with a good inventory position. We look forward to building on our momentum in the marketplace.
“Journeys' same store sales increased 7%, footwear unit comparable sales rose 11%, and gross margins came in above plan. Journeys generated meaningful leverage on the strong sales as operating margin improved 270 basis points to 10.7%. Our stores are focused and our merchandise selection is reflective of what is currently happening in the marketplace, helping us sustain the favorable same store sales trend.
“Once again, Hat World performed well during the quarter. Total sales increased to $62 million and same store sales increased 7%, against a 23% comp gain for the same period last year. These strong results and our continued success with multiple stores within malls, street locations and tourist destinations increase our confidence in Hat World's expansion potential. Hat World's operating margins and aggressive growth plans give it the potential to make a significant contribution to our long-term sales and earnings growth objectives.
“Total sales for the Underground Station Group were up 13% to approximately $40 million during the quarter, comparable store sales rose 9% and operating margin increased 120 basis points to 5.8% due to improved gross margin and increased expense leverage. Same store sales for the Underground Station stores increased 11%, driven by continued increases in average selling prices and a 6% gain in footwear unit comps. We believe the early success of our new Underground Station store in Brooklyn, New York, which shares a location with a Lids store, demonstrates the potential for dual concept stores to contribute to Genesco's retail growth. Our momentum remains positive and we are committed to fully capitalizing on Underground Station's unique position in the marketplace.
“Johnston & Murphy registered another strong quarter as total sales grew to roughly $42 million, same store sales rose 3% and wholesale sales increased 9%. We believe that Johnston & Murphy's updated image, reflected in its new logo, packaging, website, catalog and print ads will help to attract new customers and drive incremental sales. We remain encouraged about Johnston & Murphy's prospects as it moves forward with great product, innovative marketing and clean inventories.
“Dockers Footwear sales were impacted by internal and external issues during the quarter. We are working hard to improve our market position and we remain confident that Dockers' brand value-equation continues to occupy an important space in the mind of our consumer.”
Genesco also stated that it is revising upward its fiscal 2006 guidance. The Company now expects sales for the year to range between $1.27 billion and $1.28 billion and earnings per share to range from $2.21 to $2.24, including the previously announced charges of approximately $0.06 per share associated with the anticipated class action settlement.
Pennington concluded, “These excellent results, which come on the heels of a strong fourth quarter, are a great way to start the new fiscal year. We continue to see the positive results of all of our hard work and we remain committed to effectively executing our strategic plan, aimed at driving long- term growth and increasing shareholder value.”
GENESCO INC.
Consolidated Earnings Summary
Three Months Ended
April 30, May 1,
In Thousands 2005 2004
Net sales $286,085 $225,526
Cost of sales 139,532 114,848
Selling and administrative expenses 127,697 99,338
Restructuring and other, net 2,867 68
Earnings from operations before interest 15,989 11,272
Interest expense, net 2,704 1,882
Earnings before income taxes from
continuing operations 13,285 9,390
Income tax expense 5,131 3,584
Earnings from continuing operations 8,154 5,806
Excess provision for discontinued
operations, net 65 -
Net Earnings $8,219 $5,806
Earnings Per Share Information
Three Months Ended
April 30, May 1,
In Thousands (except per share amounts) 2005 2004
Preferred dividend requirements $73 $73
Average common shares - Basic EPS 22,525 21,763
Basic earnings per share:
Before discontinued operations $0.36 $0.26
Net earnings $0.36 $0.26
Average common and common
equivalent shares - Diluted EPS 26,898 26,126
Diluted earnings per share:
Before discontinued operations $0.32 $0.24
Net earnings $0.33 $0.24
