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Genesco Reports Second Quarter Fiscal 2016 Results

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NASHVILLE, Tenn., Sept. 3, 2015 /PRNewswire/ -- Genesco Inc. (NYSE: GCO) today reported earnings from continuing operations for the second quarter ended August 1, 2015, of $7.6 million, or $0.32 per diluted share, compared to earnings from continuing operations of $4.8 million, or $0.20 per diluted share, for the second quarter ended August 2, 2014.  Fiscal 2016 second quarter results reflect pretax items of $1.8 million, or $0.04 per share after tax, including $0.6 million of expenses related to deferred purchase price payments in connection with the acquisition of Schuh Group Limited, which are required to be expensed as compensation because the payment is contingent upon the payees' continued employment; and $1.2 million for asset impairment charges and network intrusion expenses.  Fiscal 2015 second quarter results reflected pretax items of $3.6 million, or $0.14 per share after tax, including $2.2 million of expenses related to deferred purchase price payments in connection with the acquisition of Schuh Group Limited and $1.4 million in network intrusion expenses, asset impairment charges and other legal matters. 

Adjusted for the items described above in both periods, earnings from continuing operations were $8.5 million, or $0.36 per diluted share, for the second quarter of Fiscal 2016, compared to $8.0 million, or $0.34 per diluted share, for the second quarter of Fiscal 2015.   For consistency with Fiscal 2016's previously announced earnings expectations and with previously reported adjusted results for the prior year period, the Company believes that the disclosure of the results from continuing operations adjusted for these items will be useful to investors. A reconciliation of earnings and earnings per share from continuing operations in accordance with U.S. Generally Accepted Accounting Principles with the adjusted earnings and earnings per share numbers presented in this paragraph is set forth on Schedule B to this press release.

Net sales for the second quarter of Fiscal 2016 increased 7% to $656 million from $615 million in the second quarter of Fiscal 2015.  Comparable sales in the second quarter of 2016 increased 7% for the Company, with a 4% increase in the Journeys Group, an 8% increase in the Lids Sports Group, an 8% increase in the Schuh Group, and a 10% increase in the Johnston & Murphy Group. Comparable sales for the Company reflected a 5% increase in same store sales and a 26% increase in e-commerce sales.

"The second quarter saw strong comparable sales growth despite the later start to the back-to-school selling season," said Robert J. Dennis, chairman, president and chief executive officer of Genesco. "Our top-line performance helped offset expected gross margin pressure from our continued efforts to right size the Lids Sports Group's inventory levels.

"The third quarter is off to a strong start in spite of a later Labor Day, aided by the ramp up in the start of school in many areas of the country and the corresponding tax free shopping periods. Comparable sales for the month of August increased 6%.

"Based on our second quarter results and start to the third quarter balanced with some uncertainty around the extent of gross margin pressure that will be necessary to complete the right-sizing of the Lids Sports Group's inventory, we are reiterating our outlook for Fiscal 2016, which calls for adjusted earnings per share in the range of $4.70 to $4.80. Consistent with previous guidance, these expectations do not include expected non-cash asset impairments and other charges, estimated in the range of $8.1 million to $8.6 million pretax, or $0.22 to $0.23 per share after tax, for the full fiscal year. These expectations also do not reflect expenses related to Schuh deferred purchase price payments as described above, which are $1.5 million, or $0.06 per diluted share, for the full year. This guidance assumes comparable sales increases in the 4% to 5% range for the full year." A reconciliation of the adjusted financial measures cited in the guidance to their corresponding measures as reported pursuant to U.S. Generally Accepted Accounting Principles is included in Schedule B to this press release.

Conference Call and Management Commentary

The Company has posted detailed financial commentary in writing on its website, www.genesco.com, in the investor relations section. The Company's live conference call on September 3, 2015 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.

Cautionary Note Concerning Forward-Looking Statements

This release contains forward-looking statements, including those regarding the performance outlook for the Company and its individual businesses (including, without limitation, sales, expenses, margins and earnings) 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 adjustments to estimates reflected in forward-looking statements, including the timing, costs and effectiveness of our initiatives to improve performance in the Lids Sports Group; the timing and amount of non-cash asset impairments related to retail store fixed assets or to intangible assets of acquired businesses; the effectiveness of our omnichannel initiatives; weakness in the consumer economy; competition in the Company's markets; inability of customers to obtain credit; fashion trends that affect the sales or product margins of the Company's retail product offerings; changes in buying patterns by significant wholesale customers; bankruptcies or deterioration in financial condition of significant wholesale customers; disruptions in product supply or distribution; unfavorable trends in fuel costs, foreign exchange rates, foreign labor and material costs, and other factors affecting the cost of products; the Company's ability to continue to complete and integrate acquisitions, expand its business and diversify its product base; changes in the timing of holidays or in the onset of seasonal weather affecting period-to-period sales comparisons; and the performance of athletic teams, the participants in major sporting events such as the Super Bowl and World Series, developments with respect to certain individual athletes, and other sports-related events or changes that may affect period-to-period comparisons in the Company's Lids Sports Group retail business. Additional factors that could affect the Company's prospects and cause differences from expectations include the ability to build, open, staff and support additional retail stores and to renew leases in existing stores and control occupancy costs, and to conduct required remodeling or refurbishment on schedule and at expected expense levels; deterioration in the performance of individual businesses or of the Company's market value relative to its book value, resulting in impairments of fixed assets or intangible assets or other adverse financial consequences; unexpected changes to the market for the Company's shares; variations from expected pension-related charges caused by conditions in the financial markets; and the cost and outcome of litigation, investigations and environmental matters involving the Company. Additional factors are cited in the "Risk Factors," "Legal Proceedings" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of, and elsewhere in, our SEC filings, copies of which may be obtained from the SEC website, www.sec.gov, or by contacting the investor relations department of Genesco via our website, www.genesco.com. Many of the factors that will determine the outcome of the subject matter of this release are beyond Genesco's ability to control or predict. Genesco undertakes no obligation to release publicly the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Forward-looking statements reflect the expectations of the Company at the time they are made. The Company disclaims any obligation to update such statements.

About Genesco Inc.

Genesco Inc., a Nashville-based specialty retailer, sells footwear, headwear, sports apparel and accessories in 2,800 retail stores and leased departments throughout the U.S., Canada, the United Kingdom and the Republic of Ireland, principally under the names Journeys, Journeys Kidz, Shi by Journeys, Schuh, Schuh Kids, Lids, Locker Room by Lids, Lids Clubhouse, Johnston & Murphy, and on internet websites www.journeys.com, www.journeyskidz.com, www.shibyjourneys.com, www.schuh.co.uk, www.johnstonmurphy.com, www.lids.com, www.lids.ca, www.lidslockerroom.com, www.lidsteamsports.com, www.lidsclubhouse.com, www.trask.com, www.suregripfootwear.com  and www.dockersshoes.com .  The Company's Lids Sports Group division operates the Lids headwear stores, the Locker Room by Lids and other team sports fan shops and single team clubhouse stores, and the Lids Team Sports team dealer business.   In addition, Genesco sells wholesale footwear under its Johnston & Murphy brand, the Trask brand, the licensed Dockers brand, SureGrip, and other brands. For more information on Genesco and its operating divisions, please visit www.genesco.com.

 

 

GENESCO INC.













Consolidated Earnings Summary











 

Three Months Ended 


 

Six Months Ended 





Aug. 1,


Aug. 2,


Aug. 1,


Aug. 2,



In Thousands


2015


2014


2015


2014



Net sales


$  655,525


$  615,474


$ 1,316,122


$  1,244,299



Cost of sales


335,434


313,729


669,698


626,610



Selling and administrative expenses*

306,422


290,239


613,855


583,576



Asset impairments and other, net

1,173


1,422


3,819


311



Earnings from operations

12,496


10,084


28,750


33,802



Interest expense, net

928


782


1,573


1,483



Earnings from continuing operations










    before income taxes

11,568


9,302


27,177


32,319














Income tax expense

3,975


4,534


9,639


13,453



Earnings from continuing operations

7,593


4,768


17,538


18,866














Provision for discontinued operations

(73)


(74)


(140)


(199)



Net Earnings 


$      7,520


$      4,694


$       17,398


$        18,667













*

Includes $0.6 million and $1.5 million in deferred payments related to the Schuh acquisition in the second quarter and first six months ended August 1, 2015, respectively, and $2.2 million and $5.3 million for the second quarter and first six months ended August 2, 2014, respectively.

























Earnings Per Share Information











 

Three Months Ended 


 

Six Months Ended 





Aug. 1,


Aug. 2,


Aug. 1,


Aug. 2,



In Thousands (except per share amounts)

2015


2014


2015


2014














Average common shares - Basic EPS

23,538


23,496


23,544


23,432














Basic earnings per share:










     Before discontinued operations

$0.32


$0.20


$0.74


$0.81



     Net earnings 

$0.32


$0.20


$0.74


$0.80














Average common and common










    equivalent shares - Diluted EPS

23,616


23,622


23,695


23,657














Diluted earnings per share:










     Before discontinued operations

$0.32


$0.20


$0.74


$0.80



     Net earnings 

$0.32


$0.20


$0.73


$0.79



































GENESCO INC.













Consolidated Earnings Summary











 

Three Months Ended 


 

Six Months Ended 





Aug. 1,


Aug. 2,


Aug. 1,


Aug. 2,



In Thousands


2015


2014


2015


2014



Sales:











    Journeys Group

$  247,177


$  236,838


$    525,809


$      498,961



    Schuh Group


103,204


99,770


181,766


181,046



    Lids Sports Group

222,218


199,317


428,547


388,583



    Johnston & Murphy Group

60,822


54,995


127,184


118,392



    Licensed Brands

21,942


24,292


52,519


56,754



    Corporate and Other

162


262


297


563



    Net Sales


$  655,525


$  615,474


$ 1,316,122


$  1,244,299



Operating Income (Loss):










    Journeys Group

$      9,228


$      6,820


$       33,650


$        26,497



    Schuh Group (1)

4,892


(197)


2,231


(5,338)



    Lids Sports Group

5,593


8,474


2,196


16,611



    Johnston & Murphy Group

846


(424)


4,823


4,072



    Licensed Brands

1,158


1,873


4,181


5,394



    Corporate and Other (2)

(9,221)


(6,462)


(18,331)


(13,434)



   Earnings from operations

12,496


10,084


28,750


33,802



   Interest, net


928


782


1,573


1,483



Earnings from continuing operations










    before income taxes

11,568


9,302


27,177


32,319



Income tax expense

3,975


4,534


9,639


13,453



Earnings from continuing operations

7,593


4,768


17,538


18,866














Provision for discontinued operations

(73)


(74)


(140)


(199)



Net Earnings 


$      7,520


$      4,694


$       17,398


$        18,667














(1) Includes $0.6 million and $1.5 million in deferred payments related to the Schuh acquisition in the second quarter and first six months ended August 1, 2015, respectively, and $2.2 million and $5.3 million for the second quarter and first six months ended August 2, 2014, respectively.















(2) Includes a $1.2 million charge in the second quarter of Fiscal 2016 which includes $1.0 million for asset impairments and $0.2 million for network intrusion expenses.  Includes a $3.8 million charge for the first six months of Fiscal 2016 which includes $2.0 million for network intrusion expenses, $1.7 million for asset impairments and $0.1 million for other legal matters.  Includes a $1.4 million charge in the second quarter of Fiscal 2015 which includes $0.6 million for network intrusion expenses, $0.4 million for asset impairments and $0.6 million for other legal matters, partially offset by a $0.2 million gain for a lease termination.  Includes a $0.3 million charge for the first six months of Fiscal 2015 which includes a $3.3 million gain on a lease termination, offset by $1.8 million for network intrusion expenses, $1.2 million for asset impairments and $0.6 million for other legal matters.






























GENESCO INC.
























Consolidated Balance Sheet


























Aug. 1,


Aug. 2,



In Thousands






2015


2014



Assets











Cash and cash equivalents





$       48,997


$        59,303



Accounts receivable





58,385


54,142



Inventories






734,803


669,388



Other current assets





99,836


96,414



Total current assets





942,021


879,247



Property and equipment





310,415


296,407



Goodwill and other intangibles





393,155


379,925



Other non-current assets





38,710


25,258



Total Assets






$ 1,684,301


$  1,580,837



Liabilities and  Equity










Accounts payable





$    271,021


$      237,777



Current portion long-term debt





18,764


29,284



Other current liabilities





135,986


172,991



Total current liabilities





425,771


440,052



Long-term debt






94,694


47,083



Pension liability





21,686


8,793



Deferred rent and other long-term liabilities





146,135


139,618



Equity






996,015


945,291



Total Liabilities and Equity





$ 1,684,301


$  1,580,837













 

 

GENESCO INC.




Retail Units Operated - Six Months Ended August 1, 2015














Balance


Acquisi-






Balance






Balance






02/01/14


tions


Open


Close


01/31/15


Open


Close


08/01/15




Journeys Group


1,168


0


34


20


1,182


9


20


1,171




    Journeys


827


0


16


9


834


4


4


834




    Underground by Journeys


117


0


0


7


110


0


8


102




    Journeys Kidz


174


0


18


3


189


5


5


189




    Shi by Journeys


50


0


0


1


49


0


3


46




Schuh Group


99


0


13


4


108


5


0


113




     Schuh UK


90


0


12


4


98


4


0


102




     Schuh Germany


0


0


0


0


0


1


0


1




     Schuh ROI


9


0


1


0


10


0


0


10




Lids Sports Group*


1,133


56


218


43


1,364


9


29


1,344




Johnston & Murphy Group


168


0


8


6


170


4


2


172




    Shops


106


0


3


4


105


1


2


104




    Factory Outlets


62


0


5


2


65


3


0


68




Total Retail Units


2,568


56


273


73


2,824


27


51


2,800






















 

 



Retail Units Operated - Three Months Ended August 1, 2015










Balance


Acquisi-






Balance






05/02/15


tions


Open


Close


08/01/15




Journeys Group


1,171


0


5


5


1,171




    Journeys


833


0


2


1


834




    Underground by Journeys


104


0


0


2


102




    Journeys Kidz


187


0


3


1


189




    Shi by Journeys


47


0


0


1


46




Schuh Group


111


0


2


0


113




     Schuh UK


100


0


2


0


102




     Schuh Germany


1


0


0


0


1




     Schuh ROI


10


0


0


0


10




Lids Sports Group*


1,351


0


3


10


1,344




Johnston & Murphy Group


172


0


2


2


172




    Shops


105


0


1


2


104




    Factory Outlets


67


0


1


0


68




Total Retail Units


2,805


0


12


17


2,800


















* Includes 184 Locker Room by Lids in Macy's stores as of August 1, 2015.






 



Comparable Sales (including same store and comparable direct sales)







 

          Three Months Ended


 

 

       Six Months Ended







Aug. 1,


Aug. 2,


Aug. 1,


Aug. 2,







2015


2014


2015


2014





Journeys Group


4%


5%


5%


3%





Schuh Group


8%


1%


6%


0%





Lids Sports Group


8%


-2%


6%


-1%





Johnston & Murphy Group


10%


2%


6%


1%





Total Comparable Sales


7%


2%


6%


1%



 

 

Schedule B


Genesco Inc.

Adjustments to Reported Earnings from Continuing Operations

Three Months Ended August 1, 2015 and August 2, 2014









 Three 

 Impact on 

 Three 

 Impact on 



 Months 

  Diluted 

 Months 

  Diluted 

In Thousands (except per share amounts)


 Jul 2015 

 EPS 

 Jul 2014 

 EPS 

Earnings from continuing operations, as reported


$      7,593

$        0.32

$       4,768

$   0.20







Adjustments:  (1)






Impairment charges


594

0.03

260

0.01

Deferred payment - Schuh acquisition


553

0.02

2,227

0.09

Gain on lease termination


-

-

(113)

-

Other legal matters


10

-

386

0.02

Network intrusion expenses


147

0.01

360

0.02

Higher (lower) effective tax rate


(417)

(0.02)

129

-







Adjusted earnings from continuing operations (2)


$      8,480

$        0.36

$       8,017

$   0.34













(1) All adjustments are net of tax where applicable.  The tax rate for the second quarter of Fiscal 2016 is 36.0% excluding a FIN 48 discrete item of less than $0.1 million.  The tax rate for the second quarter of Fiscal 2015 is 37.9% excluding a FIN 48 discrete item of less than $0.1 million.  







(2) EPS reflects 23.6 million share count for Fiscal 2016 and 2015, which includes common stock equivalents in both

     years.












The Company believes that disclosure of earnings and earnings per share from continuing operations adjusted

for the items not reflected in the previously announced expectations will be meaningful to investors, especially

in light of the impact of such items on the results.






























Genesco Inc.


Adjustments to Reported Operating Income 


Three Months Ended August 1, 2015 and August 2, 2014










 Three Months Ended August 1, 2015 




 Operating 


Adj Operating


In Thousands 


 Income 

 Other Adj 

Income


Journeys Group


$      9,228

$           -

$       9,228


Schuh Group*


4,892

553

5,445


Lids Sports Group


5,593

-

5,593


Johnston & Murphy Group


846

-

846


Licensed Brands


1,158

-

1,158


Corporate and Other


(9,221)

1,173

(8,048)


Total Operating Income


$     12,496

$      1,726

$      14,222








*Schuh Group adjustments include $0.6 million in deferred purchase price payments.











 Three Months Ended August 2, 2014 




 Operating 


Adj Operating


In Thousands 


 Income 

 Other Adj 

Income


Journeys Group


$      6,820

$           -

$       6,820


Schuh Group*


(197)

2,227

2,030


Lids Sports Group


8,474

-

8,474


Johnston & Murphy Group


(424)

-

(424)


Licensed Brands


1,873

-

1,873


Corporate and Other


(6,462)

1,422

(5,040)


Total Operating Income


$     10,084

$      3,649

$      13,733








*Schuh Group adjustments include $2.2 million in deferred purchase price payments.



 

 

Schedule B


Genesco Inc.

Adjustments to Reported Earnings from Continuing Operations

Six Months Ended August 1, 2015 and August 2, 2014









 Six 

 Impact on 

 Six 

 Impact on 



 Months 

  Diluted 

 Months 

  Diluted 

In Thousands (except per share amounts)


 Jul 2015 

 EPS 

 Jul 2014 

 EPS 

Earnings from continuing operations, as reported


$     17,538

$        0.74

$      18,866

$   0.80







Adjustments:  (1)






Impairment charges


1,081

0.05

779

0.03

Deferred payment - Schuh acquisition


1,490

0.06

5,329

0.22

Gain on lease termination


-

-

(2,104)

(0.09)

Change in accounting for bonus awards


-

-

3,575

0.15

Other legal matters


75

-

399

0.02

Network intrusion expenses


1,277

0.05

1,121

0.05

Higher (lower) effective tax rate


(812)

(0.03)

(654)

(0.03)







Adjusted earnings from continuing operations (2)


$     20,649

$        0.87

$      27,311

$   1.15













(1) All adjustments are net of tax where applicable.  The tax rate for the first six months of Fiscal 2016 is 36.3% excluding a FIN 48 discrete item of less than $0.1 million.  The tax rate for the first six months of Fiscal 2015 is 37.3% excluding a FIN 48 discrete item of less than $0.1 million.  







(2) EPS reflects 23.7 million share count for Fiscal 2016 and 2015, which includes common stock equivalents in both 

     years.












The Company believes that disclosure of earnings and earnings per share from continuing operations adjusted

for the items not reflected in the previously announced expectations will be meaningful to investors, especially

in light of the impact of such items on the results.






























Genesco Inc.


Adjustments to Reported Operating Income 


Six Months Ended August 1, 2015 and August 2, 2014










 Six Months Ended August 1, 2015 




 Operating 


Adj Operating


In Thousands 


 Income 

 Other Adj 

Income


Journeys Group


$     33,650

$           -

$      33,650


Schuh Group*


2,231

1,490

3,721


Lids Sports Group


2,196

-

2,196


Johnston & Murphy Group


4,823

-

4,823


Licensed Brands


4,181

-

4,181


Corporate and Other


(18,331)

3,819

(14,512)


Total Operating Income


$     28,750

$      5,309

$      34,059








*Schuh Group adjustments include $1.5 million in deferred purchase price payments.










 Six Months Ended August 2, 2014 




 Operating 

 Bonus Adj 

Adj Operating


In Thousands 


 Income 

 and Other 

Income


Journeys Group


$     26,497

$      4,919

$      31,416


Schuh Group*


(5,338)

5,329

(9)


Lids Sports Group


16,611

-

16,611


Johnston & Murphy Group


4,072

25

4,097


Licensed Brands


5,394

-

5,394


Corporate and Other


(13,434)

1,046

(12,388)


Total Operating Income


$     33,802

$    11,319

$      45,121








*Schuh Group adjustments include $5.3 million in deferred purchase price payments.


 

 

Schedule B


Genesco Inc.

Adjustments to Forecasted Earnings from Continuing Operations

Fiscal Year Ending January 30, 2016







In Thousands (except per share amounts)


High Guidance

Low Guidance



Fiscal 2016

Fiscal 2016

Forecasted earnings from continuing operations 


$    106,464

$       4.52

$ 103,789

$       4.41







Adjustments:  (1)






Asset impairment and other charges


5,116

0.22

5,432

0.23

Deferred payment - Schuh acquisition


1,490

0.06

1,490

0.06







Adjusted forecasted earnings from continuing operations (2)

$    113,070

$       4.80

$ 110,711

$       4.70







(1) All adjustments are net of tax where applicable.  The forecasted tax rate for Fiscal 2016 is approximately 36.7% 

    excluding a FIN 48 discrete item of $0.1 million.












(2) EPS reflects 23.5 million share count for Fiscal 2016 which includes common stock equivalents.








This reconciliation reflects estimates and current expectations of future results. Actual results may vary 


materially from these expectations and estimates, for reasons including those included in the discussion 


of forward-looking statements elsewhere in this release. The Company disclaims any obligation to update 


such expectations and estimates.  






 

 

 

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/genesco-reports-second-quarter-fiscal-2016-results-300137552.html

SOURCE Genesco Inc.

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