Genesco’s Q3 Earnings Jump on 12 Percent Comp Growth

Fiscal 2012 third quarter results reflect pretax items of $3.4 million, or 12 cents per diluted share after tax, including compensation expense related to deferred purchase price payments in connection with the acquisition of Schuh Group Limited in June 2011, acquisition expenses and other legal matters. As previously announced, because the obligation to pay the deferred purchase price for Schuh is contingent upon the continued employment of the payees, U.S. Generally Accepted Accounting Principles require that it be treated as compensation expense.

Fiscal 2011 third quarter results were reduced by pretax items totaling $3.1 million, or 5 cents per diluted share, after tax, primarily related to fixed asset impairments and purchase price accounting adjustments. Adjusted for the items described above in both periods, earnings from continuing operations were $29.1 million, or $1.21 per diluted share, for the third quarter of Fiscal 2012, compared to earnings from continuing operations of $18.1 million, or $0.77 per diluted share, for the third quarter of Fiscal 2011.

Net sales for the third quarter of Fiscal 2012 increased 33 percent to $616.5 million from $464.8 million in the third quarter of Fiscal 2011. Comparable store sales in the third quarter of Fiscal 2012 increased by 12 percent. The Lids Sports Group's comparable store sales increased by 8 percent, the Journeys Group increased by 15 percent, Johnston & Murphy Retail increased by 7 percent, and Underground Station increased by 14 percent.

Robert J. Dennis, chairman, president and chief executive officer of Genesco, said, “Our third quarter operating performance was exceptionally strong, highlighted by significant gains in sales and profitability. We were particularly encouraged by our 12 percent comparable store sales gain, which contributed to strong expense leverage for the quarter. The strength of our product assortments combined with the current fashion trends have us well positioned as we get set for our busiest selling period of the year. “The fourth quarter has gotten off to a good start with comparable store sales up 11 percent through the first three weeks of November. While we do not expect to maintain comparable sales at this level for the balance of the quarter, we are optimistic about our ability to meaningfully expand our top and bottom line over the same period a year ago.”

Dennis also discussed the company's updated outlook.

“Based on our third quarter performance, we are raising our Fiscal 2012 guidance. We now expect full year diluted earnings per share to be in the range of $3.64 to $3.69, which represents a 47 percent to 49 percent increase over last year's earnings, up from our previous guidance range of $3.35 to $3.42. Consistent with previous guidance, these expectations do not include expected non-cash asset impairments and other charges, which are projected to total approximately $2.5 million to $3.5 million pretax, or 6 to 9 cents per share, after tax, in Fiscal 2012. They also do not reflect Schuh acquisition expenses and compensation expense associated with the Schuh deferred purchase price as described above, totaling approximately $13.8 million, or 54 cents per diluted share, for the full year. This guidance assumes comparable store sales of 10 percent to 11 percent for the full fiscal year.”

A reconciliation of the adjusted financial measures cited in the guidance to their corresponding measures as reported pursuant to U.S. Generally Accepted Accounting Principles is included in Schedule B to this press release.

Dennis concluded, “Our results through the first three quarters of Fiscal 2012 are well ahead of our initial expectations and have us set up to deliver a very strong year. They also represent a great start to our 5-year plan. I believe that we have the right people and strategies in place to drive our portfolio of businesses forward to achieve $3.1 billion in sales and operating margins of at least 9 percent by Fiscal 2016.”