EXHIBIT 99.1
Financial Contact: James S. Gulmi (615) 367-8325
Media Contact: Claire S. McCall (615) 367-8283
GENESCO REPORTS SECOND QUARTER RESULTS
--COMPANY REPORTS SECOND QUARTER DILUTED EARNINGS PER SHARE OF $0.21--
--RAISES FISCAL 2005 GUIDANCE--
NASHVILLE, Tenn., Aug. 19, 2004 - Genesco Inc. (NYSE: GCO) today reported net
earnings of $4.8 million, or $0.21 per diluted share, for the second quarter
ended July 31, 2004. Items including the recognition of a gain on the
curtailment of the Company's defined benefit plan and a tax benefit partially
offset by retail store asset impairments and retail store closings, added $0.02
per diluted share in the second quarter of fiscal 2005. This compares with a net
loss of $891,000, or $0.04 per diluted share, for the second quarter last year,
which included a net loss of $0.07 per diluted share primarily related to the
Company's refinancing of its convertible subordinated notes in the second
quarter of fiscal 2004. Net sales for the second quarter of fiscal 2005
increased 37% to $246 million compared to $179 million for the second quarter of
fiscal 2004.
Genesco President and Chief Executive Officer Hal N. Pennington, said,
"We are very pleased to be able to once again exceed expectations for the second
quarter. Our results were primarily driven by continued strength at Hat World, a
solid performance at Journeys and ongoing improvements at Johnston & Murphy and
Dockers. As we head into the second half of the fiscal year, we are encouraged
by our momentum and believe we are well positioned to take advantage of the
current trends in the marketplace.
"Total sales at Journeys increased 8.5% to approximately $106 million
and both same store sales and footwear unit comps rose 2%. We continued to
benefit from the strong trend in athletic and solid gains in women's fashion
footwear, offset in part by the impact of the shift in the tax-free timing in
some states. We think our merchandise selection looks great for back-to-school
and we are excited about our prospects.
"Underground Station reported a same store sales decline of 11%
compared to a 9% increase last year. As expected, Underground Station's business
remained challenging during the quarter due
1
to difficult same store sales and product comparisons. Looking ahead,
comparisons begin to moderate and we remain focused on improving this business.
"Hat World registered another strong quarter, with total sales up 30%
and same store sales up 16% reflecting robust demand for our core sports product
and ongoing strength in our fashion and branded businesses. We remain excited
about this acquisition and the short and long-term opportunities of this
business.
"Johnston & Murphy posted its second consecutive quarter of increased
profitability. Operating margin improved significantly as we continued to
benefit from enhanced sourcing efficiencies, less promotional selling and a
higher mix of premium product. We believe the strong positive feedback that we
recently received at WSA is further evidence that our initiatives are working
and we remain committed to executing our strategic plan for this business.
"Finally, Dockers generated meaningful gains in terms of sales and
operating income during the second quarter. Revenues grew 20.3% to $14.2 million
and operating margin increased to 9.2% compared to a negative operating margin
of 2.2% last year. Over the past six months we have made significant progress at
Dockers and we are optimistic that this positive momentum will continue into the
back half of the fiscal year."
Genesco also stated that it is revising upward its fiscal 2005
guidance. The Company now expects sales for the year of approximately $1.1
billion and earnings per share to range from $1.89 to $1.92, including
previously announced charges of approximately $0.08 to $0.09 per share
associated with the planned closing of Jarman and other underperforming stores
in fiscal 2005.
This release contains forward-looking statements, including those
regarding the Company's sales and earnings outlook and all other statements not
addressing solely historical facts or present conditions. Actual results could
vary materially from the expectations reflected in these statements. A number of
factors could cause differences. These include weakness in consumer demand for
products sold by the Company, fashion trends that affect the sales or product
margins of the Company's retail product offerings, 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
2
competitors (including pricing and promotional discounts), the integration of
the Hat World acquisition, the ability to open, staff and support additional
retail stores on schedule and at acceptable expense levels and to renew leases
in existing stores on schedule and at acceptable expense levels, variations from
expected pension-related charges caused by conditions in the financial markets,
and the outcome of litigation and environmental matters involving the Company.
Forward-looking statements reflect the expectations of the Company at the time
they are made. They also include the impact of proposed changes in the
accounting treatment of the contingent conversion feature of the Company's
4 1/8% convertible subordinated notes due 2023 and the triggering of that
feature by certain increases in the trading price of the Company's common stock,
either of which could result in an increase in common shares deemed outstanding
in the calculation of earnings per share by 3.9 million shares. The Company
disclaims any obligation to update such statements.
The Company's live conference call on August 19, 2004, at 7:30 a.m.
(Central time) may be accessed through the Company's internet website,
www.genesco.com. The Company expects to discuss results from the second quarter,
and its current expectations for the fiscal year ending January 29, 2005, during
the call. To listen live, please go to the website at least 15 minutes early to
register, download and install any necessary software.
Genesco Inc., a Nashville-based specialty retailer, sells footwear,
headwear and accessories in more than 1,550 retail stores in the United States
and Canada, principally under the names Journeys, Journeys Kidz, Johnston &
Murphy, Underground Station, Hatworld, Lids, Hat Zone, Cap Factory, Cap
Connection and Head Quarters, and on internet websites www.journeys.com,
www.johnstonmurphy.com, www.lids.com, www.hatworld.com, and www.lidscyo.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.
3
GENESCO INC.
CONSOLIDATED EARNINGS SUMMARY
===================================================================================================================================
Three Months Ended Six Months Ended
------------------------- ------------------------
JULY 31, August 2, JULY 31, August 2,
In Thousands 2004 2003 2004 2003
- -----------------------------------------------------------------------------------------------------------------------------------
Net sales $245,939 $ 179,478 $ 471,465 $ 372,224
Cost of sales 124,050 95,989 238,898 200,643
Selling and administrative expenses 112,085 80,271 211,315 160,924
Restructuring and other, net 186 139 40 139
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings from operations before interest and other 9,990 3,357 21,292 10,796
Loss on early retirement of debt -- 2,581 -- 2,581
Interest expense, net 2,896 2,149 4,778 4,181
- -----------------------------------------------------------------------------------------------------------------------------------
EARNINGS (LOSS) BEFORE INCOME TAXES FROM
CONTINUING OPERATIONS 7,094 (1,373) 16,514 4,034
Income tax expense (benefit)* 2,301 (482) 5,897 1,588
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) from continuing operations 4,793 (891) 10,617 2,446
Provision for discontinued operations, net (21) -- (21) --
- -----------------------------------------------------------------------------------------------------------------------------------
NET EARNINGS (LOSS) $ 4,772 $ (891) $ 10,596 $ 2,446
===================================================================================================================================
* Includes favorable tax settlements of $0.4 million and $0.5 million in the
second quarter and six months of Fiscal 2005, respectively.
EARNINGS PER SHARE INFORMATION
===================================================================================================================================
Three Months Ended Six Months Ended
------------------------- ------------------------
JULY 31, August 2, JULY 31, August 2,
In Thousands (except per share amounts) 2004 2003 2004 2003
- -----------------------------------------------------------------------------------------------------------------------------------
Preferred dividend requirements $ 73 $ 73 $ 146 $ 147
Average common shares - Basic EPS 21,903 21,754 21,833 21,748
Basic earnings (loss) per share:
Before discontinued operations $ 0.22 ($0.04) $ 0.48 $ 0.11
Net earnings (loss) $ 0.21 ($0.04) $ 0.48 $ 0.11
Average common and common
equivalent shares - Diluted EPS 22,391 21,754 22,309 22,041
Diluted earnings (loss) per share:
Before discontinued operations $ 0.21 ($0.04) $ 0.47 $ 0.10
Net earnings (loss) $ 0.21 ($0.04) $ 0.47 $ 0.10
===================================================================================================================================
4
GENESCO INC.
CONSOLIDATED EARNINGS SUMMARY
===============================================================================================================================
Three Months Ended Six Months Ended
------------------------- -------------------------
JULY 31, August 2, JULY 31, August 2,
In Thousands 2004 2003 2004 2003
- -------------------------------------------------------------------------------------------------------------------------------
Sales:
Journeys $105,785 $ 97,474 $220,026 $196,189
Underground Station Group 28,462 30,722 63,591 65,295
Hat World 57,956 -- 76,041 --
Johnston & Murphy 39,413 39,392 79,954 79,608
Dockers 14,223 11,821 31,703 31,010
Corporate and Other 100 69 150 122
- -------------------------------------------------------------------------------------------------------------------------------
NET SALES $245,939 $179,478 $471,465 $372,224
===============================================================================================================================
Pretax Earnings (Loss):
Journeys $ 6,058 $ 6,711 $ 15,330 $ 12,274
Underground Station Group (1,485) 231 137 1,791
Hat World 7,519 -- 9,116 --
Johnston & Murphy 1,285 174 3,626 1,974
Dockers 1,311 (263) 3,055 2,290
Corporate and Other* (4,698) (3,496) (9,972) (7,533)
- -------------------------------------------------------------------------------------------------------------------------------
Operating income 9,990 3,357 21,292 10,796
Loss on early retirement of debt -- 2,581 -- 2,581
Interest, net 2,896 2,149 4,778 4,181
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL PRETAX EARNINGS (LOSS) 7,094 (1,373) 16,514 4,034
Income tax expense (benefit)** 2,301 (482) 5,897 1,588
- -------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) from continuing operations 4,793 (891) 10,617 2,446
Provision for discontinued operations (21) -- (21) --
- -------------------------------------------------------------------------------------------------------------------------------
NET EARNINGS (LOSS) $ 4,772 $ (891) $ 10,596 $ 2,446
===============================================================================================================================
* Includes $0.4 million and $0.6 million of other charges for asset impairment
and lease terminations in the second quarter and six months of Fiscal 2005
offset by a $0.6 million pension curtailment gain in the second quarter and
six months of Fiscal 2005 and a $0.1 million restructuring adjustment in the
second quarter and six months of Fiscal 2004.
** Includes favorable tax settlements of $0.4 million and $0.5 million in the
second quarter and six months of Fiscal 2005, respectively.
5
GENESCO INC.
CONSOLIDATED BALANCE SHEET
==========================================================================================================================
JULY 31, August 2,
In Thousands 2004 2003
- --------------------------------------------------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 15,380 $ 32,968
Accounts receivable 17,449 14,579
Inventories 263,377 213,440
Other current assets 23,918 22,073
- --------------------------------------------------------------------------------------------------------------------------
Total current assets 320,124 283,060
- --------------------------------------------------------------------------------------------------------------------------
Property and equipment 148,279 125,865
Other non-current assets 162,563 27,344
- --------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $630,966 $436,269
==========================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $104,468 $ 80,074
Current portion - long-term debt 13,000 --
Other current liabilities 51,621 36,750
- --------------------------------------------------------------------------------------------------------------------------
Total current liabilities 169,089 116,824
- --------------------------------------------------------------------------------------------------------------------------
Long-term debt 189,250 86,250
Other long-term liabilities 42,924 47,342
Shareholders' equity 229,703 185,853
- --------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $630,966 $436,269
==========================================================================================================================
6
GENESCO INC.
RETAIL UNITS OPERATED - SIX MONTHS ENDED JULY 31, 2004
=================================================================================================================================
BALANCE BALANCE ACQUISI- BALANCE
02/01/03 OPEN CONV CLOSE 01/31/04 TIONS OPEN CONV CLOSE 07/31/04
- ---------------------------------------------------------------------------------------------------------------------------------
Journeys 614 55 0 4 665 18 0 3 680
Journeys 579 50 0 4 625 17 0 3 639
Journeys Kidz 35 5 0 0 40 1 0 0 41
Underground Station Group 229 18 0 14 233 8 0 11 230
Underground Station 114 18 8 3 137 8 4 1 148
Jarman Retail 115 0 (8) 11 96 0 (4) 10 82
Hat World/Lids 0 0 0 0 0 503 18 0 2 519
Johnston & Murphy 148 7 0 7 148 3 0 9 142
Shops 115 5 0 5 115 0 0 8 107
Factory Outlets 33 2 0 2 33 3 0 1 35
- ---------------------------------------------------------------------------------------------------------------------------------
Total Retail Units 991 80 0 25 1,046 503 47 0 25 1,571
=================================================================================================================================
RETAIL UNITS OPERATED - THREE MONTHS ENDED JULY 31, 2004
=====================================================================================================
BALANCE ACQUISI- BALANCE
05/01/04 TIONS OPEN CONV CLOSE 07/31/04
- -----------------------------------------------------------------------------------------------------
Journeys 677 5 0 2 680
Journeys 636 5 0 2 639
Journeys Kidz 41 0 0 0 41
Underground Station Group 231 3 0 4 230
Underground Station 142 3 3 0 148
Jarman Retail 89 0 (3) 4 82
Hat World/Lids 492 17 12 0 2 519
Johnston & Murphy 147 1 0 6 142
Shops 112 0 0 5 107
Factory Outlets 35 1 0 1 35
----------------------------------------------------------------------------------------------------
Total Retail Units 1,547 17 21 0 14 1,571
=====================================================================================================
CONSTANT STORE SALES
================================================================================
Three Months Ended Six Months Ended
--------------------- -----------------------
JULY 31, August 2, JULY 31, August 2,
2004 2003 2004 2003
- ------------------------------------------------------- ----------- -----------
Journeys 2% -1% 5% -2%
Underground Station Group -10% -3% -6% -2%
Underground Station -11% 9% -6% 8%
Jarman Retail -9% -14% -6% -12%
Johnston & Murphy 0% 2% 4% -3%
Shops 0% 1% 3% -3%
Factory Outlets 0% 8% 6% 0%
- --------------------------------------------------------------------------------
Total Constant Store Sales -1% -1% 3% -2%
================================================================================
================================================================================
Hat World/Lids 16% --
April 1, 2004 - July 31, 2004 17% --
================================================================================