EXHIBIT 99.1
FINANCIAL CONTACT: JAMES S. GULMI (615) 367-8325
MEDIA CONTACT: CLAIRE S. MCCALL (615) 367-8283
GENESCO REPORTS FIRST QUARTER RESULTS
--DILUTED EPS BEFORE DISCONTINUED OPERATIONS INCREASE 33% TO $0.32,
INCLUDING CHARGES ASSOCIATED WITH PREVIOUSLY ANNOUNCED CLASS ACTION SUIT--
--RAISES FISCAL 2006 GUIDANCE--
NASHVILLE, Tenn., May 26, 2005 - Genesco Inc. (NYSE: GCO) today reported
earnings before discontinued operations of $8.2 million, or $0.32 per diluted
share, for the first quarter ended April 30, 2005. This compares with earnings
before discontinued operations of $5.8 million, or $0.24 per diluted share, for
the first quarter last year. These results include previously announced charges
of $1.6 million, or $0.06 per diluted share after taxes, associated with the
anticipated settlement of a previously disclosed class action suit. Net sales
for the first quarter of fiscal 2006 increased 27% to $286 million compared to
$226 million for the first quarter of fiscal 2005.
Genesco Chairman, President and Chief Executive Officer Hal N.
Pennington, said, "Our results for the quarter, which significantly exceeded
plan, were fueled by better than expected performances at Journeys, Hat World,
Underground Station and Johnston & Murphy. Sales, margins, and cash flow were
strong, and we ended the quarter with a good inventory position. We look forward
to building on our momentum in the marketplace.
"Journeys' same store sales increased 7%, footwear unit comparable
sales rose 11%, and gross margins came in above plan. Journeys generated
meaningful leverage on the strong sales as operating margin improved 270 basis
points to 10.7%. Our stores are focused and our merchandise selection is
reflective of what is currently happening in the marketplace, helping us sustain
the favorable same store sales trend.
"Once again, Hat World performed well during the quarter. Total
sales increased to $62 million and same store sales increased 7%, against a 23%
comp gain for the same period last year. These strong results and our continued
success with multiple stores within malls, street locations
and tourist destinations increase our confidence in Hat World's expansion
potential. Hat World's operating margins and aggressive growth plans give it the
potential to make a significant contribution to our long-term sales and earnings
growth objectives.
"Total sales for the Underground Station Group were up 13% to
approximately $40 million during the quarter, comparable store sales rose 9% and
operating margin increased 120 basis points to 5.8% due to improved gross margin
and increased expense leverage. Same store sales for the Underground Station
stores increased 11%, driven by continued increases in average selling prices
and a 6% gain in footwear unit comps. We believe the early success of our new
Underground Station store in Brooklyn, New York, which shares a location with a
Lids store, demonstrates the potential for dual concept stores to contribute to
Genesco's retail growth. Our momentum remains positive and we are committed to
fully capitalizing on Underground Station's unique position in the marketplace.
"Johnston & Murphy registered another strong quarter as total sales
grew to roughly $42 million, same store sales rose 3% and wholesale sales
increased 9%. We believe that Johnston & Murphy's updated image, reflected in
its new logo, packaging, website, catalog and print ads will help to attract new
customers and drive incremental sales. We remain encouraged about Johnston &
Murphy's prospects and it moves forward with great product, innovative marketing
and clean inventories.
"Dockers Footwear sales were impacted by internal and external
issues during the quarter. We are working hard to improve our market position
and we remain confident that Dockers' brand value-equation continues to occupy
an important space in the mind of our consumer."
Genesco also stated that it is revising upward its fiscal 2006
guidance. The Company now expects sales for the year to range between $1.27
billion and $1.28 billion and earnings per share to range from $2.21 to $2.24,
including the previously announced charges of approximately $0.06 per share
associated with the anticipated class action settlement.
Pennington concluded, "These excellent results, which come on the
heels of a strong fourth quarter, are a great way to start the new fiscal year.
We continue to see the positive results of
all of our hard work and we remain committed to effectively executing our
strategic plan, aimed at driving long-term growth and increasing shareholder
value."
This release contains forward-looking statements, including those
regarding the Company's sales and earnings outlook, the anticipated class action
settlement 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,
including 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 the timing of holidays or in the onset of seasonal weather
affecting period to period sales comparisons, changes in buying patterns by
significant wholesale customers, disruptions in product availability or
distribution, unfavorable trends in foreign exchange rates and other factors
affecting the cost of products, changes in business strategies by the Company's
competitors (including pricing and promotional discounts), 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. The Company disclaims
any obligation to update such statements.
The Company's live conference call on May 26, 2005, at 7:30 a.m.
(Central time) may be accessed through the Company's internet website,
www.genesco.com. 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 1,600 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, Head
Quarters and Cap Connection, and on internet websites www.journeys.com ,
www.journeyskidz.com , www.undergroundstation.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.
GENESCO INC.
CONSOLIDATED EARNINGS SUMMARY
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Three Months Ended
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APRIL 30, May 1,
In Thousands 2005 2004
- -------------------------------------------------------------------------------------------------------------
Net sales $ 286,085 $ 225,526
Cost of sales 139,532 114,848
Selling and administrative expenses 127,697 99,338
Restructuring and other, net 2,867 68
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Earnings from operations before interest 15,989 11,272
Interest expense, net 2,704 1,882
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EARNINGS BEFORE INCOME TAXES FROM CONTINUING OPERATIONS 13,285 9,390
Income tax expense 5,131 3,584
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Earnings from continuing operations 8,154 5,806
Excess provision for discontinued operations, net 65 --
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NET EARNINGS $ 8,219 $ 5,806
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EARNINGS PER SHARE INFORMATION
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Three Months Ended
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APRIL 30, May 1,
In Thousands (except per share amounts) 2005 2004
- -------------------------------------------------------------------------------------------------------------
Preferred dividend requirements $ 73 $ 73
Average common shares - Basic EPS 22,525 21,763
Basic earnings per share:
Before discontinued operations $0.36 $ 0.26
Net earnings $0.36 $ 0.26
Average common and common
equivalent shares - Diluted EPS 26,898 26,126
Diluted earnings per share:
Before discontinued operations $ 0.32 $ 0.24
Net earnings $ 0.33 $ 0.24
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GENESCO INC.
CONSOLIDATED EARNINGS SUMMARY
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Three Months Ended
-----------------------------
APRIL 30, May 1,
In Thousands 2005 2004
- --------------------------------------------------------------------------------------------------------
Sales:
Journeys $ 128,844 $ 114,241
Underground Station Group 39,836 35,129
Hat World 62,147 18,085
Johnston & Murphy 41,508 40,541
Licensed Brands 13,692 17,480
Corporate and Other 58 50
- --------------------------------------------------------------------------------------------------------
NET SALES $ 286,085 $ 225,526
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Pretax Earnings (Loss):
Journeys $ 13,768 $ 9,163
Underground Station Group 2,298 1,625
Hat World 5,482 1,551
Johnston & Murphy 2,407 2,385
Licensed Brands 746 1,744
Corporate and Other* (8,712) (5,196)
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Operating income 15,989 11,272
Interest, net 2,704 1,882
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TOTAL PRETAX EARNINGS 13,285 9,390
Income tax expense 5,131 3,584
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Earnings from continuing operations 8,154 5,806
Excess provision for discontinued operations, net 65 --
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NET EARNINGS $ 8,219 $ 5,806
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*Includes $2.9 million of other charges in the first quarter of Fiscal 2006,
including $2.6 million for a litigation settlement and the remaining $0.3
million for asset impairment and lease terminations. Includes $0.1 million
of other charges in the first quarter of Fiscal 2005 for lease terminations.
GENESCO INC.
CONSOLIDATED BALANCE SHEET
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APRIL 30, May 1,
In Thousands 2005 2004
- ---------------------------------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 62,377 $ 11,536
Accounts receivable 17,514 13,465
Inventories 217,086 215,190
Other current assets 20,885 20,615
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Total current assets 317,862 260,806
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Property and equipment 170,802 162,912
Other non-current assets 160,923 165,195
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TOTAL ASSETS $ 649,587 $ 588,913
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LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 81,828 $ 67,207
Current portion - long-term debt -- 10,000
Other current liabilities 52,824 42,407
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Total current liabilities 134,652 119,614
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Long-term debt 161,250 180,250
Other long-term liabilities 68,790 70,334
Shareholders' equity 284,895 218,715
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 649,587 $ 588,913
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GENESCO INC.
RETAIL UNITS OPERATED - THREE MONTHS ENDED APRIL 30, 2005
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Balance Acquisi- Balance Balance
01/31/04 tions Open Conv Close 01/29/05 Open Conv Close 04/30/05
- ---------------------------------------------------------------------------------------------------------------------------
Journeys Group 665 37 0 7 695 9 0 3 701
Journeys 625 35 0 6 654 8 0 2 660
Journeys Kidz 40 2 0 1 41 1 0 1 41
Underground Station Group 233 21 0 25 229 2 0 4 227
Underground Station 137 21 12 5 165 2 1 2 166
Jarman Retail 96 0 (12) 20 64 0 (1) 2 61
Hat World 0 503 55 0 6 552 16 0 0 568
Johnston & Murphy 148 7 0 13 142 1 0 0 143
Shops 115 3 0 11 107 1 0 0 108
Factory Outlets 33 4 0 2 35 0 0 0 35
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Total Retail Units 1,046 503 120 0 51 1,618 28 0 7 1,639
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CONSTANT STORE SALES
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Three Months Ended
---------------------
APRIL 30, May 1,
2005 2004
- ------------------------------------------------------------------------------
Journeys 7% 9%
Underground Station Group 9% -3%
Underground Station 11% -2%
Jarman Retail 4% -4%
Johnston & Murphy 3% 8%
Shops 3% 6%
Factory Outlets 3% 14%
- ------------------------------------------------------------------------------
Total Constant Store Sales 7% 6%
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Hat World 7%
April 1, 2004 - May 1, 2004 20%
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