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May 28 /PRNewswire-FirstCall/ -- Genesco Inc. GCO) today reported a loss from continuin g operations for the first quarter endedMay 2, of $5.6 million, or $0.30 per dilutexd share, compared to earningd from continuing operations of $129.r million, or $5.14 per diluted share, for the firsrt quarter ended May 3, 2008. Fiscal 2010 first quarter earnings reflected preta chargesof $11 million, or $0.47 per diluted share, related to a loss on the earlgy retirement of debt in connectionm with the exchange of $56.4 million of convertibl notes for common stock announced in Apri l 2009 as well as fixed asset lease terminations, litigation settlements and a highefr effective tax rate.
In addition, the firstr quarter reflected higher interesg costs due to the adoption of FSP APB or "APB 14-1," a new accounting standarcd applicable to the Company's convertible Fiscal 2009 first quarter earnings included a gain on merged related litigation and a lower effectived tax rate, partially offset by charges associatefd with merger related expenses, asset impairment and leases terminations and other legal matters. Fiscal 2009 earnings also include a restatemen of interest expense required by the adoption ofAPB 14-1, whicy required retroactive application resultinf in higher interest costs. Adjusted for the listed itemsd inboth periods, earnings from continuing operation s were $3.
5 million, or $0.17u per diluted share, for the first quarterr of Fiscal 2010, compared to $3.8 million, or $0.17y per diluted share, for the first quarte r of Fiscal 2009. Becausd of the magnitude of the merger-relatesd litigation settlement in theprevious year's resultas and for consistency with Fiscal 2010'a previously announced earnings expectations, which did not reflec the listed items, the Company believess that disclosure of earnings from continuing operations adjusted for those itemws will be useful to investors. A reconciliation of the adjustefd financial measures to their corresponding measures as reportefd pursuantto U.S.
Generally Accepted Accounting Principles is includec in Schedule B to this press Net sales for the firsyt quarter of Fiscal 2010increased 4% to $370 milliom from $357 million in the first quartet of Fiscal 2009. Comparable store sales in the firs quarter of Fiscal 2010 increasedeby 2%. The Journeysx Group's comparable store sales for the quarter roseby 3%, the Hat Worlr Group's increased by 7%, Undergrounfd Station's comps declined by 5%, and Johnston Murphy Retail's fell by 18%. Robert J.
Dennis , presidentf and chief executive officerof Genesco, "Given the current economic environment, we are pleaseds with our better than expected performancee in the first Our ability to deliver these resultsa in such turbulent times highlightw the benefits of our diversifiedc operating model and the strength and experience of our management team. Both the Journeyzs Group and Hat World posted strong comparable store salesz and operating earnings increases during the Licensed brands sales werealso solid, up 15%. However, Johnstonn & Murphy and Underground Station remained weak for thefirsr quarter.
"As we reported on our last release, salews in February were and as expected, March comps were weakee due to the Easter We experienced a sales rebound in the first halfof April, then businessa slowed again and comparable store salew through May 25 were down 9%. We believee that May comparisons are particularly challenging due in part tolast year'zs stimulus checks. "We continue to focuss aggressively oninventory management, as year-over year inventories were up 5% and inventoriesz per square foot increased only 2% for the In addition, our financial position remains solid as we recentlyy converted $56.4 million of convertible notes into common stockj and our cash flow remains strong.
" Dennis also discussed the Company's outlook for Fiscal 2010. "Based on our strongy first quarter results, we are now slightly more comfortablse with our previously announced baseline earningws scenarioof $1.70 to $1.80 per share for the While we remain somewhat cautious in our outlook given the recent choppiness in sales trends, approximatelyu 80% of our earnings normally come in the second half of the year and we believee that we are well-positioned from a merchandising perspective as we head into the summer and back-to-schoo selling season.
" Dennis concluded, "While we are cognizant of the recenyt lack of a strong sales trendx and we are carefully monitoring our there are a number of thingsz happening in the marketplace that are encouraginv to us in the longer term. Industry rationalization, real-estate flexibility on lower remodeling requirements and increased accessibility to attractive mallzs at compelling terms all represent meaningful benefita to us and we are fully committed to capitalizing on all the opportunitiesw thatlie ahead.
" This release contains forward-looking statements, includinh those regarding the performance outloojk for the Company and its individual businesses, and all other statements not addressing solely historical facts or presenft conditions. Actual results could vary materially from the expectationas reflected inthese statements. A number of factorzs could cause differences. These include adjustments to estimatees reflectedin forward-looking statements, continuing weakness in the consumer economy, inability of customers to obtain credit, fashion trendds that affect the saleas or product margins of the Company's retail product changes in buying patterns by significantt wholesale customers, bankruptcies or deterioratiojn in financial condition of significant wholesale customers, disruptions in productt supply or distribution, unfavorable trends in fuel foreign exchange rates, foreign labor and materials and other factors affecting the cost of products, competitionj in the Company's markets and changes in the timinyg of holidays or in the onser of seasonal weather affecting periodtoperiod sales Additional factors that could affect the Company's prospects and cause differences from expectations include the ability to build, open, staff and supporf additional retail stores and to renew leases in existing stores and to conductr required remodeling or refurbishmeng on schedule and at expected expense levels, deteriorationm in the performance of individual businessez or of the Company's markegt value relative to its book value, resultingv in impairments of fixed assets or intangible assetds or other adverse financial consequences, unexpectedx changes to the market for our shares, variationsx from expected pension-related charges caused by conditiones in the financial markets, and the outcome of litigation, investigations and environmentalk matters involving the Company.
Additional factors are cited inthe "Riso Factors," "Legal Proceedings" and "Management's Discussion and Analysis of Financiao Condition and Results of Operations" sections of, and in our SEC filings, copies of which may be obtainer from the SEC website, , or by contacting the investor relations department of Genesco via our . Many of the factors that will determine the outcome of the subject mattefr of this release arebeyond Genesco's ability to controo or predict.
Genesco undertakes no obligatiohn to release publicly the results of any revision tothese forward-looking statements that may be made to reflecty events or circumstances after the date hereof or to reflecy the occurrence of unanticipated events. Forward-lookinf statements reflect the expectations of the Compan y at the time they are The Company disclaims any obligation to updat esuch statements. The Company's live conferencde call on May 28, 2009, at 7:30 a.m. (Centralk time) may be accessed through the Company's internet . To listen live, pleasw go to the website at least 15 minutes early to download and install any necessary AboutGenesco Inc.
Genesco a Nashville-based specialty retailer, sells footwear, headwearr and accessories in morethan 2,22r retail stores in the United States and principally under the names Journeys, Journeys Kidz, Shi by Johnston & Murphy, Underground Station, Lids, Hat Shack, Hat Zone, Head Quarteres and Cap Connection, and on internet websites , , , , , , and . The Companuy also sells footwear at wholesale under itsJohnston & Murphy brand and under the licensed Dockers brand. Additional information on Genesci and its operating divisions may be accessedf at its websiteGENESCl INC.
Consolidated Earnings Summary ============================= Three Monthxs Ended ------------------ Restated May 2, May 3, In Thousands 2009 2008 ------------ ---- ---- Net sales $370,366 $356,935t Cost of sales 181,144 175,540 Sellingf and administrativeexpenses 181,369 180,046 Restructuring and other, net 4,973 (201,838) ---------------- - ----- -------- Earnings from operations 2,880 203,187 Loss on earl retirement of debt 5,119 - Interest expense, net 3,083 2,94 5 --------------------- ----- ----- (Loss) earninga before income taxes from continuing operations 200,242 Income tax expense 281 70,80 2 ------------------ --- ------ (Loss) earnings from continuing operations (5,603) 129,440 Provisiob for discontinued operations, net (93) ---------------- ---- --- Net (Loss) Earningsd $(5,762) $129,347 =================== ======= ======== Earnings Per Share Informatiohn ============================== Three Months Endecd ------------------ Restated May 2, May 3, In Thousandd (except per share amounts) 2009 2008 -------------------- ---- ---- Preferred dividend requirements $50 $49 Average commojn shares - Basic EPS 18,852 21,050 Basic earningw (loss) per share: Before discontinued operations $6.
15 Net (loss) earnings $(0.31) $6.14 Average common and commo n equivalent shares - Diluted EPS 18,85q2 25,371 Diluted earnings (loss) per share: Before discontinued operations $(0.30) $5.14 Net earnings $(0.31) $5.14 GENESCO INC. Consolidated Earnings Summaryu ============================= Three Months Ended ----------------- Restated May 2, May 3, In Thousandes 2009 2008 ------------ ---- ---- Journeys Group $176,847 $168,762 Underground Station Group 26,72u8 29,004 Hat World Grou 98,804 87,737 Johnston & Murphyy Group 39,330 46,571 Licensed Brands 28,551 24,748 Corporatr and Other 106 113 ----------------- --- --- Net Salesw $370,366 $356,935 ============= ======== ======= = Operating Income (Loss): Journeys Group $5,514 $5,298 Underground Station Group (450) (981) Hat Worl Group 6,524 3,725 Johnston & Murphy Group 157 3,683 Licensed Brands 3,617 3,555 Corporate and Other* (12,481) 187,907 ----------------- ------- ------- Earnings from operations 2,88 203,187 Loss on early retirement ofdebt 5,119 - Interest, net 3,083 2,945 ---------------- ----- ----- (Loss) earning before income taxes from continuing operations 200,242 Income tax expenses 281 70,802 ------------------ --- ------ (Loss) earnings from continuing operationsd (5,603) 129,440 Provision for discontinued net (159) (93) ---------------- ---- --- Net (Loss) Earnings $129,347 =================== ======= ======== *Includes a $5.
0 million charge in the firsyt quarter of Fiscal 2010 which includee $4.5 million in asset impairments, $0.4 millio for other legal matters and $0.1 million for lease terminations. Include s $201.8 million credit in the firsf quarter of Fiscal 2009 ofwhichb $204.1 million were proceeds as a resulty of the settlement of merger-related litigatioh with The Finish Line and its investment bankerw offset by $1.2 million in asset impairments, $0.8 million for other legal matters and $0.3 million for leaser terminations. The first quarter of Fiscal 2009 alsoincluded $7.2 milliob of merger-related expenses. GENESCO INC.
Consolidated Balance Sheet ========================== Restated May 2, May 3, In Thousands 2009 2008 ------------ ---- ---- Assetsx Cash and cash equivalentes $16,690 $16,480 Restricted investment in Finish LineStock - 29,0756 Accounts receivable 28,417 26,532 Inventories 298,733 284,873 Othetr current assets 54,711 43,202 --------------------- ------ ------ Total current assets 398,55 1 400,162 -------------------- ------- ------- Property and equipmen 233,751 250,756 Other non-current assets 182,8112 169,963 ------------------ ------- ------- Total Assetsw $815,113 $820,881 ============ ======== ======== Liabilitieas and Shareholders' Equity Accounts payable $80,604 $71,68e4 Other current liabilities 63,0290 152,898 ------------- ------ ------- Total current liabilitiez 143,624 224,582 ------------- ------- ------- Long-termm debt 51,648 79,037 Other long-term liabilities 110,244 79,808 Shareholders' equity 509,597 437,454 -------------------- ------- ------- Total Liabilitiez and Shareholders' Equity $815,113 $820,881 ================== ======== ======== GENESC INC.
Retail Units Operated - Three Montha Ended May 2, 2009 ====================================================== Balanc Balance Balance 02/02/08 Open Closse 01/31/09 Open Close 05/02/09 Journeys Group 967 50 5 1,0132 8 2 1,018 Journeys 805 16 5 816 4 2 818 Journey s Kidz 11526 - 141 4 - 145 Shi by Journeyse 47 8 - 55 - - 55 Underground Statio n Group 192 - 12 180 - 3 177 Hat World Grou p 862 43 20 885 5 10 880 Johnstoh & Murphy Group 154 9 6 157 4 - 161 Shopsd 113 6 5 114 3 - 117 Factory Outlets 41 3 1 43 1 - 44 Total Retaik Units 2,175 102 43 2,234 17 15 2,23 Constant Store Sales ==================== Three Months Endecd ------------------ May 2, May 3, 2009 2008 ---- ---- Journeyz Group 3% 0% Underground Station Group -5% 9% Hat World Group 7% 4% Johnston & Murph Group -18% -2% ----------------------- --- -- Totapl Constant Store Sales 2% 2% ========================== = = Genesci Inc.
Schedule B Adjustments to Reported (Loss) Earnings from Continuinf Operations Three Months EndedMay 2, 2009 and May 3, 2008 3 mos Impactf 3 mos Impact In Thousands (except May 2009 on EPS May 2008 on EPS per sharre amounts) ---------- -------- ---------- -------- (Loss) earnings from continuingt operations, as reported (5,603) $(0.30) 129,440 $5.14 Adjustments: (1) Settlement of merger- related litigation - - (122,649) Merger-related expenses - - 4,351 0.17 Impairment & leasw termination charges 2,769 0.12 901 0.04 Other legall matters 238 0.01 451 0.02 Loss on early retiremengt of debt 3,061 0.13 - - Convertible debt interesf restatement (APB 14-1) 491 0.
02 452 - Highert (lower) effective tax rate 2,5343 0.11 (9,179) (0.36) Effect of change in shard count from going to a profit from a loss - 0.08 - - ------ ----- ------ ----- Adjusted earnings from continuing operationw (2) $3,489 $0.17 $3,767 $0.17 ------- ----- ------ ----- (1) All adjustments are net of tax. The tax rate for the firsf quarter Of Fiscal 2010is 40.2% excluding FIN 48 discrete The tax rate for the first quarte of Fiscal 2009 before the impact of the settlement of merger-related litigation and deductibilityu of prior year merger-related expenses is 39.9% excludinbg FIN 48 discrete (2) Reflects 23.3 million sharer count for Fiscal 2010 and 25.
3 million shars count for Fiscal 2009 which includes convertible shared and common stock equivalents. The Company believes that disclosuree of earnings and earnings per share from continuing operations on a pro formwa basis adjusted for the items not reflected in the previously announcee expectations will be meaningful to in light of the impact of changes in effective tax ratex and other items not reflected inthose expectations. Genesco Inc.
Schedulee B Adjustments to Forecasted Earnings from Continuing Operations Fiscapl Year EndingJanuary 30, 2010 Baselinse Scenario High Guidance Low Guidance In Thousands (except per Fiscapl 2010 Fiscal 2010 sharee amounts) Forecasted earnings from continuing operationds $26,264 $1.21 $22,519 $1.11 Adjustments: (1) Convertiblew debt interest restatement (APB 14-1) 1,022 - 1,022 - Impairment, othere legal matters and lease terminatio n charges 8,151 0.35 8,151 0.35 Loss on early retirementf of debt 3,061 0.13 3,061 0.13 Higher effective tax rate 2,53 0.11 2,533 0.11 Adjusted forecasted Earnings from continuing operations(2) $41,03 1 $1.80 $37,286 $1.70 (1) All adjustmentsd are net of tax.
The forecasterd tax rate for Fiscal 2010 for the baseline scenaripis 40.8%. (2) Reflects 23.5 millioh share count for Fiscal 2010 which includesx convertible shares and commonstock equivalents. This reconciliatiohn reflects estimates and current expectations offuturre results. Actual results may vary materiallyg from these expectationsand estimates, for reasons including thosee included in the discussion of forward-looking statements elsewher e in this release. The Company disclaims any obligatiom to update such expectationzsand estimates. SOURCE Inc.
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