Genesco Inc. said that excluding nonrecurring items in both periods, it showed a loss from continuing operations of $500,000, or 2 cents per diluted share, for the second quarter compared to a loss of $400,000, or 2 cents, a year ago.
The net loss from continuing operations slightly narrowed to $2.4 million, or 10 cents a share, from $2.7 million, or 12 cents, a year ago.
Fiscal 2011 second-quarter earnings reflected pretax charges of $3.2 million, or 8 cents per diluted share, primarily related to fixed asset impairments, purchase price accounting adjustments, a loss related to the Nashville flood and acquisition expenses. Fiscal 2010 second quarter earnings reflected pretax charges of $3.3 million, or $0.10 per diluted share, primarily related to fixed asset impairments.
Net sales increased 9% to $364 million from $335 million a year ago. Comparable store sales increased by 3%. The Lids Sports Group's comparable store sales increased by 7% and the Journeys Group by 2%, while Johnston & Murphy Retail's comparable store sales were flat and the Underground Station Group declined 4%.
Robert J. Dennis, chairman, president and chief executive officer of Genesco, said, “Our second quarter results were in line with our expectations, with a same store sales increase for the Company, thanks to increases in the Lids Sports Group and Journeys Group. Increases in incentive compensation accruals related to improved performance masked declines in store occupancy cost and other key expense items as a percent of sales.
“The Back-to-School season has been strong for us so far, with comparable store sales up 8% for August. While we expect this trend to moderate as we proceed through the third quarter, this is an encouraging start to the second half of the year.”
Dennis also reaffirmed the company's outlook for Fiscal 2011. “We are reiterating our Fiscal 2011 outlook for full year earnings between $2.10 and $2.20. Consistent with previous years, this guidance does not include expected non-cash asset impairments and other charges, which are projected to be approximately $10 million to $12 million, or $0.26 to $0.31 per share, in Fiscal 2011. This guidance assumes comparable sales in the low single digits for the second half.”
Dennis concluded, “We are pleased with the overall pace of our business as we pass the halfway mark of Fiscal 2011. Our Lids Sports segment continues to expand and diversify, creating new market opportunities and greater economies of scale. Meanwhile, we believe we have some distinct product advantages in Journeys that should drive comparable store sales gains and improved profitability over the next few quarters.”
Consolidated Earnings Summary | ||||||||||
Three Months Ended | Six Months Ended | |||||||||
July 31, | August 1, | July 31, | August 1, | |||||||
In Thousands | 2010 | 2009 | 2010 | 2009 | ||||||
Net sales | $ 363,654 | $ 334,658 | $ 764,507 | $ 705,024 | ||||||
Cost of sales | 179,610 | 164,713 | 372,392 | 345,857 | ||||||
Selling and administrative expenses* | 185,465 | 169,509 | 376,542 | 351,800 | ||||||
Restructuring and other, net | 2,001 | 3,320 | 4,444 | 8,293 | ||||||
(Loss) earnings from operations | (3,422) | (2,884) | 11,129 | (926) | ||||||
Loss on early retirement of debt | – | – | – | 5,119 | ||||||
Interest expense, net | 227 | 951 | 462 | 3,112 | ||||||
(Loss) earnings from continuing operations | ||||||||||
before income taxes | (3,649) | (3,835) | 10,667 | (9,157) | ||||||
Income tax (benefit) expense | (1,253) | (1,172) | 4,500 | (891) | ||||||
(Loss) earnings from continuing operations | (2,396) | (2,663) | 6,167 | (8,266) | ||||||
Provision for discontinued operations | (787) | (59) | (734) | (218) | ||||||
Net (Loss) Earnings | $ (3,183) | $ (2,722) | $ 5,433 | $ (8,484) | ||||||
*For the three months and six months ended August 1, 2009, bank fees of $0.9 million and $1.8 million, respectively, were reclassified from interest expense to selling and administrative expenses to conform to the current year presentation. | ||||||||||
