Genesco Inc. reported fourth-quarter earnings dropped 9.3 percent on an adjusted basis but Wall Street was expecting a significantly greater decline. Journeys achieved record operating income on a 2 percent comp gain. Companywide e-commerce sales jumped 53 percent.

Mimi E. Vaughn, Genesco board chair, president and chief executive officer, said, “We concluded an incredibly challenging year with a fourth-quarter that exceeded our expectations across the board highlighted by strength at Journeys. Our improving performance throughout Fiscal 2021 under difficult circumstances reflects the strength of our retail concepts prior to COVID-19 and our success capitalizing on the opportunities that emerged during the pandemic to fortify the leadership positions of our teen and young adult footwear businesses. The numerous digital investments we’ve made over the past several years allowed us to take advantage of the accelerated shift to online spending to achieve record digital revenue of nearly $450 million, an increase of almost 75 percent year-over-year, while also fueling record profitability for this channel.
“While we expect the environment to remain fluid in the near-term, we are optimistic about our ability to solidify our recent digital gains and further expand our market share. The events of the past year have provided us the opportunity to transform our business at a faster pace. We believe this, along with a solid balance sheet, has put us in a strong position to emerge from the pandemic, invest for growth, and build great value for our shareholders.”

Thomas A. George, Genesco interim chief financial officer, commented, “We were pleased with our fourth-quarter performance, as all facets of operating results exceeded our internal expectations. Building upon our strong return to profitability in the third quarter, sequential improvements compared to the prior quarters in revenue, gross margin, and operating expenses, inclusive of rent abatements, drove operating income above last year’s level. In terms of earnings, we far exceeded our initial expectations; however, a higher tax rate offset the higher operating income, resulting in adjusted EPS of $2.76 compared to $3.09 last year.”

Store Re-Opening Update

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As of March 11, 2021, the company is operating in 90 percent of its locations, including approximately 1,145 Journeys, 160 Johnston & Murphy and 2 Schuh locations.

Fourth Quarter Review


  • Net sales for the fourth quarter of Fiscal 2021 decreased 6 percent to $637 million from $678 million in the fourth quarter of Fiscal 2020. Results topped Wall Street’s consensus estimate of $617.5 million. This sales decrease was driven by continued pressure at Johnston & Murphy and the impact from store closures during the quarter, partially offset by digital comp growth of 55 percent. Stores were open about 90 percent of possible days. Although the company has disclosed comparable sales for the fourth quarter of Fiscal 2021, it is providing both overall and comp sales by business to give better insight into performance.
  • By concept, same-store sales grew 2 percent at Journeys and 35 percent at Schuh while sliding 35 percent at Johnston & Murphy. Overall same-store sales were up 1 percent. Store same-store sales were down 10 percent while comparable direct sales grew 55 percent.
  • Overall sales were flat at Journeys, down 13 percent at Schuh, and down 42 percent at Johnston & Murphy while sales were up 84 percent at Licensed Brands due to the Togast acquisition in the fourth quarter last year.
  • Fourth-quarter gross margin this year was 45.8 percent, down 110 basis points, compared with 46.9 percent last year. The decrease as a percentage of sales is due primarily to higher shipping and warehouse expense in all of our retail divisions driven by the increase in penetration of e-commerce, increased closeouts at Johnston & Murphy wholesale and higher markdowns at Johnston & Murphy retail and to the mix of our businesses, partially offset by decreased markdowns at Journeys.
  • Adjusted selling and administrative expense for the fourth quarter this year decreased 240 basis points as a percentage of sales. On a dollar basis, expenses decreased 12 percent compared to the same period last year due primarily to reduced occupancy expense, driven by rent abatement agreements with landlords and government relief programs, as well as reduced selling salaries, partially offset by increased marketing expenses.
    Genesco’s GAAP operating income for the fourth quarter was $62.6 million, or 9.8 percent of sales this year, compared with $45.3 million, or 6.7 percent of sales last year. Adjusted for the Excluded Items in both periods, operating income for the fourth quarter was $64.7 million this year compared to $59.3 million last year. Adjusted operating margin was 10.2 percent of sales in the fourth quarter of Fiscal 2021 and 8.8 percent last year.
  • The effective tax rate for the quarter was -45.6 percent in Fiscal 2021 compared to 21.0 percent last year. The adjusted tax rate, reflecting Excluded Items, was 37.5 percent in Fiscal 2021 compared to 25.3 percent last year. The higher adjusted tax rate for this year reflects the reversal of previously accrued tax benefits under the CARES Act due to positive earnings in the fourth quarter this year. The divergence between the effective tax rate and the adjusted tax rate is due to income tax initiatives under the CARES Act and other provisions that are excluded from the adjusted tax rate.
  • GAAP earnings from continuing operations were $90.0 million in the fourth quarter of Fiscal 2021, compared to $35.5 million in the fourth quarter last year. Adjusted for the Excluded Items in both periods, fourth-quarter earnings from continuing operations were $40.0 million, or $2.76 per share, in Fiscal 2021, compared to $44.1 million, or $3.09 per share, last year. Wall Street’s consensus estimate on an adjusted basis had been $1.96.

Full Year Review


  • Net sales for Fiscal 2021 decreased 19 percent to $1.8 billion from $2.2 billion in Fiscal 2020. This sales decrease was driven by the impact from store closures during the year, lower store comps and sales pressure at Johnston & Murphy, partially offset by digital comp growth of 74 percent. Stores were open about 76 percent of possible days. The company has not disclosed comparable sales for Fiscal 2021 as it believes that overall sales is a more meaningful metric during this period due to the impact of COVID-19.
  • Overall sales were down 16 percent at Journeys, 18 percent at Schuh, and 49 percent at Johnston & Murphy while sales were up 61 percent at Licensed Brands due to the Togast acquisition in the fourth quarter last year.
  • Fiscal 2021 gross margin was 45.0 percent, down 340 basis points, compared with 48.4 percent last year. The decrease as a percentage of sales is due primarily to higher shipping and warehouse expense in all of our retail divisions driven by the increase in penetration of e-commerce, reduced margins at Johnston & Murphy as a result of increased inventory reserves, increased markdowns at Johnston & Murphy retail and closeouts at Johnston & Murphy wholesale, the mix of our businesses and increased promotional activity at Schuh, partially offset by decreased markdowns at Journeys.
  • Adjusted selling and administrative expense as a percentage of sales for the year was 45.7 percent, up 180 basis points, compared to 43.9 percent last year. On a dollar basis, expenses decreased 15 percent compared to the same period last year due primarily to reduced occupancy expense, driven by rent abatement agreements with landlords and government relief programs, as well as reduced selling salaries and bonus and travel expenses, partially offset by increased marketing expenses.
  • Genesco’s GAAP operating loss for Fiscal 2021 was $(107.2) million, or (6.0) percent of sales, compared with operating income of $83.3 million, or 3.8 percent of sales last year. Adjusted for the Excluded Items in both periods, the operating loss was $(11.8) million this year compared to operating income of $99.2 million last year. Adjusted operating margin was (0.7) percent of sales in Fiscal 2021 and 4.5 percent of sales last year.
  • The effective tax rate was 49.8 percent in Fiscal 2021 compared to 25.1 percent last year. The adjusted tax rate, reflecting Excluded Items, was -3.3 percent in Fiscal 2021 compared to 26.9 percent last year. The lower adjusted tax rate for this year reflects the impact of the company’s performance in foreign jurisdictions for which no income tax benefit or expense is recorded in Fiscal 2021, partially offset by taxes accrued for the U.S. jurisdiction. The divergence between the effective tax rate and the adjusted tax rate is due to income tax initiatives under the CARES Act and other provisions that are excluded from the adjusted tax rate.
  • GAAP loss from continuing operations was $(56.0) million in Fiscal 2021, compared to earnings from continuing operations of $61.8 million in Fiscal 2020. Adjusted for the Excluded Items in both periods, the loss from continuing operations was $(16.7) million, or $(1.18) per share, in Fiscal 2021, compared to earnings from continuing operations of $71.8 million, or $4.58 per share, last year.

Cash, Borrowings and Inventory

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Cash and cash equivalents at January 30, 2021, were $215.1 million, compared with $81.4 million at February 1, 2020. Total debt at the end of the fourth quarter of Fiscal 2021 was $33.0 million compared with $14.4 million at the end of last year’s fourth quarter. Inventories decreased 20 percent in the fourth quarter of Fiscal 2021 on a year-over-year basis.
  • Capital Expenditures and Store Activity
For the fourth quarter, capital expenditures were $6 million, related primarily to digital and omnichannel initiatives. Depreciation and amortization were $11 million. During the quarter, the company closed 16 stores. The company ended the quarter with 1,460 stores compared with 1,480 stores at the end of the fourth quarter last year, or a decrease of 1 percent. Square footage was down 2 percent on a year-over-year basis.

Share Repurchases

The company did not repurchase any shares during the fourth quarter of Fiscal 2021. The company currently has $90 million remaining on the $100 million board authorization from September 2019.

Fiscal 2022 Outlook
Due to the continued uncertainty in the overall economy driven by COVID-19, the company is not providing guidance at this time.

Photo courtesy Genesco/Journey’s