Strong Third Quarter Comps Boost Genesco’s Bottom Line

Genesco Inc. reported earnings before discontinued operations of $16.2 million, or 62 cents per diluted share, for the third quarter ended October 29, 2005. This compares with earnings before discontinued operations of $12.4 million, or 49 cents per diluted share, for the third quarter last year. Net sales for the third quarter of fiscal 2006 increased 10% to $316 million compared to $288 million for the third quarter of fiscal 2005.

Genesco's third quarter earnings reflect a pre-tax gain of $0.9 million, or approximately 2 cents per diluted share, associated with the conclusion of the settlement of a California employment class action more favorably than originally anticipated offset by a pre-tax expense of $0.6 million, or approximately $0.01 per diluted share, related to uninsured property damage from the hurricanes during the quarter.

Genesco Chairman, President and Chief Executive Officer Hal N. Pennington, said, “Our third quarter performance, which once again exceeded expectations, was driven primarily by same store sales gains and gross margin expansion. These results were particularly gratifying given the external challenges we faced during the quarter — including hurricanes and rising gasoline prices — and some difficult internal comparisons against the previous year.

“Net sales at Journeys rose 11% to approximately $153 million, and both same store sales and footwear unit comps increased 5% for the quarter. The Journeys business was strong across the board. In December, Journeys will open its 700th store, an important milestone that reflects the vibrancy and national appeal of the brand. In addition to seeking further growth in its mall-based store count, Journeys' growth plans include opening additional stores in major city street locations following a successful opening on 34th Street in Manhattan, as well as testing other non-mall venues. Additionally, the continuing strength of the Journeys Kidz business has led us to accelerate our store opening plans for that concept for next year to more than double this year's level.

“Net sales at Hat World increased 15% to $68 million and same store sales were up 1%, which was in line with expectations, and on top of a 12% comp increase a year ago. Despite the tough comparisons to the robust demand generated by last year's World Series, the Major League Baseball business was on plan, and the NFL, NBA and NHL products all performed well. Hat World remains on track to open about 96 new stores this year, up from 55 last year, and we expect it will have approximately 642 stores in operation at the end of fiscal 2006.

“Net sales for the Underground Station Group, which includes Jarman, increased 12% to $38 million and comparable store sales rose 9%. Comparable store sales at Jarman declined 5%. Underground Station registered another strong same store sales result, accelerating to a 13% comp increase, following a 12% gain in the second quarter and an 11% increase in the first quarter. Underground Station again expanded its operating margin in the quarter by 300 basis points to 5.1%, driven by better gross margins and improved expense leverage.

“Johnston & Murphy's net sales were up 2% for the quarter to $39 million, same store sales for Johnston & Murphy shops increased 6%, and footwear unit comps rose 7%. As anticipated, Johnston & Murphy's earnings declined modestly, primarily due to increased investment in brand advertising. Johnston & Murphy continued to experience growth in casual and dress casual footwear and registered solid gains in its accessory business as well.

“Sales of Dockers Footwear were $17 million compared to $18 million for the same period a year ago. The Stain Defender and Pro Style product has continued to perform strongly and the early response to its Spring 2006 offering is good.”

Genesco also stated that it is revising its fiscal 2006 guidance upward. The Company now expects sales for the year to be approximately $1.28 billion and earnings per share to range from $2.34 to $2.35, including the previously announced charge of approximately $0.04 per share associated with the settlement of a class action lawsuit (adjusted for its more favorable than expected conclusion, as discussed above.)

Pennington concluded, “As we look toward the holiday selling season, we feel good about our product assortment, brand positioning and forward momentum. We remain focused on improving our platform for growth and driving increased shareholder value into the future.”

                                 GENESCO INC.

      Consolidated Earnings Summary
                                     Three Months Ended   Nine Months Ended
                                      October   October   October   October
      In Thousands                    29, 2005  30, 2004  29, 2005  30, 2004

      Net sales                        $316,336  $288,398  $877,589  $759,863
      Cost of sales                     154,825   145,030   430,567   383,928
      Selling and administrative
       expenses                         133,225   119,492   385,429   330,841
      Restructuring and other, net         (789)      664     2,255       572

      Earnings from operations before
       interest                          29,075    23,212    59,338    44,522
      Interest expense, net               2,669     3,138     7,941     7,916

      Earnings before income taxes
       from continuing operations        26,406    20,074    51,397    36,606

      Income tax expense                 10,168     7,691    19,967    13,592

      Earnings from continuing
       operations                        16,238    12,383    31,430    23,014

      Provision for discontinued
       operations, net                      (95)     (440)      (30)     (461)

      Net Earnings                      $16,143   $11,943   $31,400   $22,553