EXHIBIT 99.1
FINANCIAL CONTACT: JAMES S. GULMI (615) 367-8325
MEDIA CONTACT: CLAIRE S. MCCALL (615) 367-8283
GENESCO REVISES FOURTH QUARTER SALES
AND EARNINGS GUIDANCE
-- ANNOUNCES PLAN TO IMPROVE JOHNSTON & MURPHY BUSINESS --
NASHVILLE, Tenn., Feb. 7, 2003 --- Genesco Inc. (NYSE: GCO) said today it has
revised its sales and earnings expectations for the fourth quarter ended
February 1, 2003, primarily due to weakness in its Johnston & Murphy business
and a period of slow retail sales in the middle of the Holiday season. The
Company also announced plans to refocus the Johnston & Murphy operation to
strengthen its brand position and improve its profitability.
Hal N. Pennington, Genesco's president and chief executive officer,
said, "Like many retailers, our Journeys and Underground Station/Jarman stores
had a strong beginning to the Holiday selling season Thanksgiving weekend,
followed by disappointing weeks in early and mid-December. Beginning Christmas
week, we saw some of our largest same store sales increases of the entire year
at Journeys and a strongly positive trend in the Underground Station/Jarman
group. Journeys comparable sales were up 5.5% in January, its strongest month of
the fiscal year. Unfortunately, this strength did not fully make up for the
weakness at Johnston & Murphy and the slow period at retail in December."
The Company now expects to report net sales in the range of $249
million to $251 million for the quarter, compared to $222 million for the fourth
quarter last year. The Company's same store sales increased by 2.4% for the
quarter. Journeys' same store sales were up 1.5%, while same store sales
increased 9.2% for the Jarman Group led by Underground Station and decreased by
3.1% for Johnston & Murphy over the same period.
-more-
GENESCO --- ADD ONE
The Company expects to report earnings in the range of $0.60 to
$0.63 per share for the quarter, before $1.5 million to $1.9 million, or $0.05
to $0.07 per share, in charges (after tax) primarily associated with the
Johnston & Murphy plan. This compares to earnings of $0.60 per share before
discontinued operations and excluding certain unusual items for the fourth
quarter of the previous year. The expected charges in the quarter ended February
1, 2003, primarily include the costs of closing or recognizing asset impairment
in up to 14 underperforming retail stores identified as suitable for closing if
acceptable lease terminations can be negotiated, and severance. (Tables
reconciling pro forma net earnings per share calculations for the fourth
quarters of fiscal 2002 and 2003 contained in this paragraph to net earnings per
share calculated pursuant to generally accepted accounting principles appear at
the end of this release.) The Company's expectations for the full fiscal year
currently include sales in the $828 million to $830 million range, with earnings
per share between $1.51 and $1.55 before the charges.
Pennington said that the Company plans to refocus Johnston & Murphy
on its core heritage as a premier men's footwear brand, emphasizing its strength
in the dress casual and dress segments of the market. "We will present a unified
and coherent product line that is true to the Johnston & Murphy heritage."
Pennington said that the first priority under the plan developed by
Johnston & Murphy's new leadership team will be to improve Johnston & Murphy's
profitability through enhanced operational disciplines in both the retail and
wholesale segments of the business. "Our goals for brand positioning and profit
improvement point to the same course of action. Johnston & Murphy must work
harder to resist the promotional pressures that have increasingly characterized
a difficult high-end men's footwear market over the past several seasons, both
to ensure the integrity of the brand and to generate acceptable financial
performance. Our wholesale team will focus its efforts on growing sales only in
those accounts that are profitable for the Company.
-more-
GENESCO --- ADD TWO
"While this strategy may limit Johnston & Murphy's sales growth at
least in the near term, we are confident that we can achieve acceptable profit
margins and preserve Johnston & Murphy's position as a premier brand only if we
become more disciplined in our approach to the overly promotional market."
Pennington noted that the Company plans to announce its results for
the fourth quarter and fiscal year and to discuss the results and the outlook
for the new fiscal year in a conference call on March 5, 2003. "As we finalize
our financial plans for the new year, the most significant departure from our
previous expectations we see at this point is the recent weakness in the dollar
versus the euro. At current levels, the exchange rate will negatively affect
Johnston & Murphy by $0.08 to $0.13 per share for the year because of the
importance of Italian-made shoes in its line, diminishing the positive effects
we expect from our efforts to refocus the brand and improve its performance. We
are exploring alternative sourcing strategies to improve on these numbers, but
the weak dollar will unquestionably affect Johnston & Murphy's year.
Fortunately, the effect of the euro exchange rate is limited to the Johnston &
Murphy business and does not change our assessment of the prospects of our other
businesses in the new year."
This release contains forward-looking statements, including those
regarding the Company's sales and earnings outlook. Actual results could turn
out materially different from the expectations reflected in these statements. A
number of factors could cause differences. These include adjustments to
estimates and preliminary data that occur in the course of closing the books for
the quarter and audit adjustments in connection with the annual audit. They also
include continuing weakness in consumer demand for products sold by the Company,
which could lead to lower than expected sales and product margins and,
consequently, profits. They also include changes in buying patterns by
significant wholesale customers, disruptions in product supply or distribution,
further unfavorable trends in foreign exchange rates and other factors affecting
the cost of products, changes in business strategies by the Company's
competitors, the Company's ability to open, staff and support additional retail
stores on schedule and at acceptable expense levels, and the outcome of
litigation and
-more-
GENESCO --- ADD THREE
environmental matters involving the Company. Forward-looking statements reflect
the expectations of the Company at the time they are made. The Company disclaims
any obligation to update such statements.
Genesco, based in Nashville, sells footwear and accessories in more
than 975 retail stores in the U.S., principally under the names Journeys,
Journeys Kidz, Johnston & Murphy, Jarman and Underground Station, and on
internet websites www.journeys.com and www.johnstonmurphy.com The Company also
sells footwear at wholesale under its Johnston & Murphy brand and under the
licensed Dockers brand. Additional information on Genesco and its operating
divisions may be accessed at its website www.genesco.com.
GENESCO INC.
GUIDANCE RANGES
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4th Qtr - FY2003
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Net sales (in millions) $249 - $251
EPS before after tax
charges $0.60 - $0.63
Impairment/Severance
after tax charges $0.05 - $0.07
EPS as reported $0.53 - $0.58
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Comparative Data
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4th Qtr - FY2002
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EPS before discontinued
operations and unusual
items $0.60
Unusual items (net gain) $(0.01)
EPS before discontinued
operations, as reported $0.61
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