Genesco Inc. reported reported earnings from continuing operations for the third quarter ended Oct. 31, 2009, of $11.5 million, or 50 cents per diluted share, compared $9.0 million, or 43 cents, a year ago, a 27.8% gain.
The latest period reflected pretax charges of $2.6 million, or 7 cents per diluted share, primarily related to fixed asset impairments. In addition, the third quarter of Fiscal 2010 reflected additional interest expense due to the adoption in the first quarter of Fiscal 2010 of FSP APB 14-1, a new accounting standard applicable to the company's convertible debt. Fiscal 2009 third quarter earnings included charges associated with merger related expenses, asset impairment and lease terminations, and other legal matters, and a higher effective tax rate. Fiscal 2009 earnings also included a restatement of interest expense required by the adoption of APB 14-1, which required retroactive application resulting in additional interest costs.
Adjusted for the listed items in both periods, earnings from continuing operations were $12.3 million, or 53 cents per diluted share, for the third quarter of Fiscal 2010, compared to earnings from continuing operations of $9.5 million, or 43 cents per diluted share, for the third quarter of Fiscal 2009.
Net sales for the third quarter of Fiscal 2010 were $390 million, essentially even with the third quarter of Fiscal 2009. Comparable store sales in the third quarter of Fiscal 2010 decreased by 2%. Comparable store sales in the Journeys Group decreased by 2%, the Hat World Group increased by 1%, Underground Station decreased by 6%, and Johnston & Murphy Retail decreased by 2%.
Robert J. Dennis, president and chief executive officer of Genesco, said, “We are pleased with our third quarter earnings, which exceeded expectations thanks to improved gross margin and solid expense leverage, despite the lack of a sustained sales trend in the quarter. Comparable store sales for the first three weeks of November are down 3% from the same period last year. Nevertheless, given the consumer's continued willingness to shop during the peak sales periods throughout the current economic downturn, the relatively easier comparisons later in the quarter, and our strong merchandise position, we remain optimistic about the Holiday selling season.
“We are raising our fiscal 2010 guidance to reflect our strong third quarter results, and now expect earnings per share of $1.78 to $1.84 for the year. This guidance assumes fourth quarter earnings per share of $1.07 to $1.13, based on flat to slightly positive fourth quarter comparable store sales compared with -5% last year and subject to the same adjustments as our previous guidance.
“As we look ahead, we are confident about both our near and long-term opportunities. We continue to build on our leadership status in our niche markets and remain confident in our ability to execute a strategy that will result in long-term growth and increased shareholder value.”
Consolidated Earnings Summary
Three Months Ended
October 31, November 1,
In Thousands 2009 2008
———— —- —-
Net sales $390,302 $389,767
Cost of sales 190,136 191,853
Selling and administrative expenses 178,342 179,365
Restructuring and other, net 2,571 2,284
—————————- —– —–
Earnings from operations 19,253 16,265
Loss on early retirement of debt – –
Interest expense, net 1,850 3,255
——————— —– —–
Earnings before income taxes from
continuing operations 17,403 13,010
Income tax expense 5,880 4,019
—————— —– —–
Earnings from continuing operations 11,523 8,991
Provision for discontinued operations (80) (25)
————————————- — —
Net earnings $11,443 $8,966
* Fiscal 2009 results restated as a result of retroactive application
of FSP APB 14-1.