EXHIBIT 99.1
FINANCIAL CONTACT: JAMES S. GULMI (615) 367-8325
MEDIA CONTACT: CLAIRE S. MCCALL (615) 367-8283
GENESCO REPORTS FOURTH QUARTER AND FISCAL 2006 RESULTS
--COMPANY REPORTS FOURTH QUARTER DILUTED EPS BEFORE DISCONTINUED OPERATIONS OF
$1.15 AND FISCAL 2006 DILUTED EPS BEFORE DISCONTINUED OPERATIONS OF $2.38--
NASHVILLE, Tenn., March 2, 2006 -- Genesco Inc. (NYSE: GCO) today reported
earnings before discontinued operations of $31.2 million, or $1.15 per diluted
share, for the fourth quarter ended January 28, 2006. Earnings before
discontinued operations were $25.4 million, or $0.97 per diluted share, for the
fourth quarter ended January 29, 2005. Net sales for the fourth quarter of
fiscal 2006 increased 15% to $406 million compared to $353 million for the
fourth quarter of fiscal 2005.
For the fiscal year ended January 28, 2006, the Company reported
earnings before discontinued operations of $62.6 million, or $2.38 per diluted
share. Earnings before discontinued operations were $48.5 million, or $1.92 per
diluted share, in fiscal 2005. Net sales for fiscal 2006 increased 15% to $1.28
billion compared to $1.11 billion for fiscal 2005.
Genesco Chairman, President and Chief Executive Officer Hal N.
Pennington, said, "A strong fourth quarter concluded another strong year for
Genesco. During the year we successfully executed our strategic plan, enhancing
our leadership position in the market by opening 155 net new stores, expanding
our mall and non-mall presence, and launching a test of a promising new retail
concept. At the same time, we increased sales by 15%, expanded margins and
generated double digit bottom line growth. These results reflect the talent and
dedication of the entire Genesco organization.
"Net sales at Journeys increased 17.5% to approximately $193 million in
the fourth quarter, same store sales rose more than 10% and footwear unit comps
increased 12%. Fashion athletic, fusion, board sport and women's fashion and
casual footwear all performed well in the quarter. With more than 700 stores, an
unparalleled selection of product, powerful vendor relationships and a world
class merchandising team, Journeys remains the destination retailer for
teenagers and young
adults for footwear and accessories. Its success in both mall and non-mall
locations -- including lifestyle centers, outlets and city streets -- supports
its potential for ongoing growth.
"An important component of our growth strategy is to leverage our
platform and extend our brand strength and expertise across new concepts. In
doing so, we see the opportunity to grow with our customer from toddler to
teenager to adult. We have been successful with Journeys Kidz and we are now
planning a more aggressive store roll-out for it in fiscal 2007. We have
recently opened our first Shi by Journeys store designed to cater to fashionable
women in their early 20s to mid 30s, continuing to serve an important Journeys
customer as her tastes, needs and lifestyle change. While it is still very early
in the testing process, we are encouraged by the store's initial performance.
"Hat World registered another strong quarter, with total sales up 21%
to $98 million. Same store sales rose 6%, matching a 6% gain in the same period
last year that was driven in part by strong demand for Boston Red Sox products
associated with the team's 2005 World Series victory. The Major League Baseball
and NFL categories continued to perform well in the fourth quarter of fiscal
2006. We continue to roll out embroidery machines, which represent an attractive
add-on business in the larger stores. Given its versatility, illustrated by
successful operations not only in malls, but also in airports, outlets, street
locations, tourist destinations and kiosks, we remain confident about Hat
World's significant growth potential. We plan to open 85 new Lids locations in
fiscal 2007 and believe that we can eventually grow this chain to at least 900
stores in North America.
"Net sales for the Underground Station Group, which includes Jarman,
increased 7% to $54 million and comparable store sales rose 4% in the fourth
quarter. Underground Station posted a solid 6% comparable store gain, primarily
driven by increased average selling prices. Throughout the year, the Underground
Station team continued to execute its long-term strategic plan, growing the
number of Underground Station locations while reducing the Jarman store base in
a financially prudent manner. We ended the year with 180 Underground Station
stores, up approximately 9% from the previous year, and 49 Jarman stores,
roughly half the number of Jarman stores in operation two years ago. We are
pleased with our progress at Underground Station and remain encouraged about its
prospects for the future.
"Johnston & Murphy continued to deliver improved results during the
fourth quarter, with net sales increasing 9% to $49 million and same store sales
up 9%. Johnston & Murphy's performance for both the fourth quarter and the year
was driven by meaningful gains in dress casual and casual footwear, coupled with
growth in non footwear categories, which now include luggage, belts, socks,
outerwear and personal leather goods. Over the past two years we have worked
hard to reposition the Johnston & Murphy brand to broaden its appeal and attract
new consumers, while at the same time driving gains in gross margin and
profitability. Our results reflect our success so far, and we will continue to
focus on improving our operations.
"Fourth quarter sales of Licensed Brands were $14 million, essentially
flat with a year ago and in line with our projections. Early indications of
stronger demand for Dockers Footwear's spring product make us optimistic about
the opportunities for improvements in the business in the upcoming year."
Genesco also reaffirmed its fiscal 2007 guidance. The Company now
expects sales of approximately $1.46 billion for the year and diluted earnings
per share to be approximately $2.62. The earnings per share estimate includes
expected FAS 123 (R) stock incentive expense and the amortization of recently
granted restricted stock totaling approximately $0.17 per share. Last year's EPS
reflected expenses of $0.01 per share related to employee restricted stock
grants in the third quarter.
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 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 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 (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 March 2, 2006, 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 1,750 retail stores in the United States
and Canada, principally under the names Journeys, Journeys Kidz, Johnston &
Murphy, Underground Station, Hat World, 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 and Perry Ellis brands. 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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Fourth Quarter Fiscal Year Ended
-------------------------------- ------------------------------------
In Thousands 2006 2005 2006 2005
- ------------------------------------------------------------------------------------------------------------------------------
Net sales $ 406,287 $ 352,818 $ 1,283,876 $ 1,112,681
Cost of sales 200,902 177,669 631,469 561,597
Selling and administrative expenses 151,898 130,958 537,327 461,799
Restructuring and other, net (2) 649 2,253 1,221
- ------------------------------------------------------------------------------------------------------------------------------
Earnings from operations 53,489 43,542 112,827 88,064
Interest expense, net 2,416 3,046 10,357 10,962
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EARNINGS BEFORE INCOME TAXES FROM
CONTINUING OPERATIONS 51,073 40,496 102,470 77,102
Income tax expense 19,877 15,050 39,844 28,642
- ------------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations 31,196 25,446 62,626 48,460
Earnings from (provision for) discontinued
operations, net 90 250 60 (211)
- ------------------------------------------------------------------------------------------------------------------------------
NET EARNINGS $ 31,286 $ 25,696 $ 62,686 $ 48,249
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EARNINGS PER SHARE INFORMATION
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Fourth Quarter Fiscal Year Ended
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In Thousands (except per share amounts) 2006 2005 2006 2005
- ------------------------------------------------------------------------------------------------------------------------------
Preferred dividend requirements $ 64 $ 73 $ 273 $ 292
Average common shares - Basic EPS 23,193 22,326 22,804 22,008
Basic earnings per share:
Before discontinued operations $1.34 $1.14 $2.73 $2.19
Net earnings $1.35 $1.15 $2.74 $2.18
Average common and common
equivalent shares - Diluted EPS 27,672 26,833 27,265 26,377
Diluted earnings per share:
Before discontinued operations $1.15 $0.97 $2.38 $1.92
Net earnings $1.15 $0.98 $2.38 $1.91
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GENESCO INC.
CONSOLIDATED EARNINGS SUMMARY
=============================================================================================================================
Fourth Quarter Fiscal Year Ended
-------------------------------- ------------------------------------
In Thousands 2006 2005 2006 2005
- -----------------------------------------------------------------------------------------------------------------------------
Sales:
Journeys $ 192,635 $ 163,931 $ 593,516 $ 521,942
Underground Station Group 53,637 50,175 164,054 148,039
Hat World 97,739 80,752 297,271 216,270
Johnston & Murphy 48,518 44,389 170,015 162,599
Licensed Brands 13,665 13,471 58,730 63,508
Corporate and Other 93 100 290 323
- -----------------------------------------------------------------------------------------------------------------------------
NET SALES $ 406,287 $ 352,818 $ 1,283,876 $ 1,112,681
=============================================================================================================================
Operating Income (Loss):
Journeys $ 31,076 $ 26,989 $ 73,346 $ 60,065
Underground Station Group 6,990 6,101 10,890 6,963
Hat World 17,778 13,908 40,133 30,522
Johnston & Murphy 4,044 3,564 10,396 9,230
Licensed Brands 622 880 4,167 6,075
Corporate and Other* (7,021) (7,900) (26,105) (24,791)
- -----------------------------------------------------------------------------------------------------------------------------
Earnings from operations 53,489 43,542 112,827 88,064
Interest, net 2,416 3,046 10,357 10,962
- -----------------------------------------------------------------------------------------------------------------------------
EARNINGS BEFORE INCOME TAXES FROM
CONTINUING OPERATIONS 51,073 40,496 102,470 77,102
Income tax expense 19,877 15,050 39,844 28,642
- -----------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations 31,196 25,446 62,626 48,460
Earnings from (provision for)
discontinued operations 90 250 60 (211)
- -----------------------------------------------------------------------------------------------------------------------------
NET EARNINGS $ 31,286 $ 25,696 $ 62,686 $ 48,249
=============================================================================================================================
* Includes $0.6 million of other charges for asset impairment and lease
terminations and a $1.7 million charge for the litigation settlement in
Fiscal 2006. Includes $0.6 million and $1.2 million of other charges for
asset impairment and lease terminations in the fourth quarter and year of
Fiscal 2005 offset by a $0.6 million pension curtailment gain in Fiscal
2005.
GENESCO INC.
CONSOLIDATED BALANCE SHEET
==============================================================================================================
JANUARY 28, January 29,
In Thousands 2006 2005
- --------------------------------------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 61,591 $ 60,068
Accounts receivable 21,171 17,906
Inventories 230,648 207,197
Other current assets 28,918 20,748
- --------------------------------------------------------------------------------------------------------------
Total current assets 342,328 305,919
- --------------------------------------------------------------------------------------------------------------
Property and equipment 188,047 168,670
Other non-current assets 156,883 160,982
- --------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 687,258 $ 635,571
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LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 75,068 $ 65,599
Current portion - long-term debt -- --
Other current liabilities 82,274 64,075
- --------------------------------------------------------------------------------------------------------------
Total current liabilities 157,342 129,674
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Long-term debt 106,250 161,250
Other long-term liabilities 74,915 72,582
Shareholders' equity 348,751 272,065
- --------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 687,258 $ 635,571
==============================================================================================================
GENESCO INC.
RETAIL UNITS OPERATED - TWELVE MONTHS ENDED JANUARY 28, 2006
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BALANCE ACQUISI- BALANCE BALANCE
01/31/04 TIONS OPEN CONV CLOSE 01/29/05 OPEN CONV CLOSE 01/28/06
-------------------------------------------------------------------------------------------------------------------------------
Journeys 665 37 0 7 695 71 0 5 761
Journeys 625 35 0 6 654 61 0 4 711
Journeys Kidz 40 2 0 1 41 10 0 1 50
Underground Station Group 233 21 0 25 229 21 0 21 229
Underground Station 137 21 12 5 165 21 2 8 180
Jarman Retail 96 0 (12) 20 64 0 (2) 13 49
Hat World 0 503 55 0 6 552 96 0 7 641
Johnston & Murphy 148 7 0 13 142 5 0 5 142
Shops 115 3 0 11 107 4 0 4 107
Factory Outlets 33 4 0 2 35 1 0 1 35
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Total Retail Units 1,046 503 120 0 51 1,618 193 0 38 1,773
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RETAIL UNITS OPERATED - THREE MONTHS ENDED JANUARY 28, 2006
========================================================================================
BALANCE BALANCE
10/29/05 OPEN CONV CLOSE 01/28/06
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Journeys Group 724 37 0 0 761
Journeys 683 28 0 0 711
Journeys Kidz 41 9 0 0 50
Underground Station Group 230 6 0 7 229
Underground Station 176 6 0 2 180
Jarman Retail 54 0 0 5 49
Hat World 621 23 0 3 641
Johnston & Murphy 143 1 0 2 142
Shops 109 0 0 2 107
Factory Outlets 34 1 0 0 35
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Total Retail Units 1,718 67 0 12 1,773
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CONSTANT STORE SALES
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Three Months Ended Twelve Months Ended
---------------------- -------------------------
JANUARY 28, January 29, JANUARY 28, January 29,
2006 2005 2006 2005
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Journeys 10% 4% 7% 5%
Underground Station/Jarman Group 4% 3% 7% -3%
Underground Station 6% 5% 10% -2%
Jarman Retail -2% -2% -1% -6%
Johnston & Murphy 9% 3% 7% 3%
Shops 10% 3% 7% 2%
Factory Outlets 5% 4% 5% 4%
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Total Constant Store Sales 9% 4% 7% 3%
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Hat World 6% 6% 4%
April 1, 2004 - January 29, 2005 11%
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