Genesco Reports Third Quarter Fiscal 2011 Results
--Third Quarter Comparable Store Sales Increase 9%--

NASHVILLE, Tenn., Nov. 23, 2010 /PRNewswire-FirstCall/ -- Genesco Inc. (NYSE: GCO) today reported earnings from continuing operations for the third quarter ended October 30, 2010, of $17.0  million, or $0.72 per diluted share, compared to earnings from continuing operations of $11.5  million, or $0.50 per diluted share, for the third quarter ended October 31, 2009.  Fiscal 2011 third quarter earnings were reduced by pretax items totaling $3.1 million, or $0.05 per diluted share, after tax, primarily related to fixed asset impairments and purchase price accounting adjustments.  Fiscal 2010 third quarter earnings reflected pretax charges of $2.6 million, or $0.03 per diluted share, after tax, primarily related to fixed asset impairments.  

Adjusted for the listed items in both periods, earnings from continuing operations were $18.1 million, or $0.77 per diluted share, for the third quarter of Fiscal 2011, compared to earnings from continuing operations of $12.3 million, or $0.53 per diluted share, for the third quarter of Fiscal 2010.  For consistency with Fiscal 2011's previously announced earnings expectations and the adjusted results for the prior period announced last year, neither of  which reflected the listed items, the Company believes that disclosure of earnings from continuing operations adjusted for those items will be useful to investors. A reconciliation of the adjusted financial measures to their corresponding measures as reported pursuant to U.S. Generally Accepted Accounting Principles is included in Schedule B to this press release.   

Net sales for the third quarter of Fiscal 2011 increased 19% to $464.8 million from $390.3 million in the third quarter of Fiscal 2010.  Comparable store sales in the third quarter of Fiscal 2011 increased by 9%.  The Lids Sports Group's comparable store sales increased by 13%, the Journeys Group increased by 9%, Johnston & Murphy Retail increased by 7%, and Underground Station increased by 3%.

Robert J. Dennis, chairman, president and chief executive officer of Genesco, said, "Our third quarter performance exceeded our expectations, highlighted by a comparable store sales gain of 9% and strong earnings growth. Our overall businesses produced better than planned top-line results as the positive trends we witnessed in the Back-to-School season continued throughout the quarter. This allowed us to achieve meaningful operating expense leverage and deliver much improved profitability versus the year ago period.

"The fourth quarter has started off well, with comparable store sales across all the Company's retail businesses up 11% through the first three weeks of November. While we anticipate that comparable store sales will moderate from current levels, we are more optimistic in our outlook for the Holiday selling season than when we last updated our guidance for the year.

"Based on stronger than expected third quarter results combined with an improved outlook for the fourth quarter, we are raising our full year earnings guidance. We now expect Fiscal 2011 diluted earnings per share to be in the range of $2.38 to $2.43, up from our previous guidance of between $2.10 and $2.20, a 27% to 30% increase over last year's earnings. Consistent with previous guidance, these expectations do not include expected non-cash asset impairments and other charges, which are projected to total approximately $11 million to $13 million, or $0.28 to $0.33 per share, after tax, in Fiscal 2011. This guidance assumes comparable sales of 5% to 6% for the fourth quarter."  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."

Dennis concluded, "The combined effort of our entire organization and the superior strategic position of our major businesses has allowed us to gain strength both strategically and financially as we have moved through the economic downturn.  This quarter's results and our continuing momentum reflect this strength, as well as the early benefits of the growth initiatives we have pursued over the past year.  We are excited about the new opportunities that continue to unfold."

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 November 23, 2010, 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, 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 and amount of non-cash asset impairments; continuing weakness in the consumer economy particularly as it may affect the crucially important Holiday selling season; 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, including resumption of recent manufacturing and shipping delays affecting Chinese product in particular; 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 acquisitions, expand its business and diversify its product base; and changes in the timing of holidays or in the onset of seasonal weather affecting period-to-period sales comparisons.  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 maintain reductions in occupancy costs achieved in recent lease negotiations, 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 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 more than 2,300 retail stores throughout the U.S. and Canada, principally under the names Journeys, Journeys Kidz, Shi by Journeys, Lids and Lids Locker Room, Johnston & Murphy, and Underground Station,  and on internet websites www.journeys.com, www.journeyskidz.com, www.shibyjourneys.com, www.undergroundstation.com, http://www.johnstonmurphy.com, www.dockersshoes.com,  and www.lids.com.  The Company's Lids Sports division operates the Lids headwear stores and the lids.com website, the Lids Locker Room 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 licensed Dockers brand 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


 Nine Months Ended




October 30,


October 31,


October 30,


October 31,


In Thousands

2010


2009


2010


2009


Net sales

$            464,838


$           390,302


$            1,229,345


$            1,095,326


Cost of sales 

228,097


190,136


600,489


535,993


Selling and administrative expenses*

207,942


179,271


584,484


531,071


Restructuring and other, net

2,120


2,571


6,564


10,864


Earnings from operations

26,679


18,324


37,808


17,398


Loss on early retirement of debt

-


-


-


5,119


Interest expense, net 

306


921


768


4,033


Earnings from continuing operations









   before income taxes

26,373


17,403


37,040


8,246












Income tax expense 

9,406


5,880


13,906


4,989


Earnings from continuing operations

16,967


11,523


23,134


3,257












Provision for discontinued operations

(50)


(80)


(784)


(298)


Net Earnings 

$              16,917


$             11,443


$                 22,350


$                   2,959













*For the three months and nine months ended October 31, 2009, bank fees of $1.0 million and $2.8 million, respectively, were reclassified from interest expense to selling and administrative expenses to conform to the current year presentation.  




Earnings Per Share Information











 Three Months Ended


 Nine Months Ended




October 30,


October 31,


October 30,


October 31,


In Thousands (except per share amounts)

2010


2009


2010


2009


Preferred dividend requirements

$                     49


$                    49


$                      148


$                      148












Average common shares - Basic EPS

23,069


21,952


23,337


20,868












Basic earnings per share:









    Before discontinued operations

$0.73


$0.52


$0.98


$0.15


    Net earnings


$0.73


$0.52


$0.95


$0.13












Average common and common









   equivalent shares - Diluted EPS

23,562


23,741


23,770


21,086












Diluted earnings per share:









    Before discontinued operations

$0.72


$0.50


$0.97


$0.15


    Net earnings

$0.72


$0.50


$0.93


$0.13



GENESCO INC.












Consolidated Earnings Summary 




Three Months Ended


 Nine Months Ended




October 30,


October 31,


October 30,


October 31,


In Thousands

2010


2009


2010


2009


Sales:









   Journeys Group

$            215,976


$           198,407


$               550,834


$               523,846


   Underground Station Group

21,729


21,946


64,946


67,235


   Lids Sports Group

152,703


105,739


405,273


313,373


   Johnston & Murphy Group

45,399


40,361


129,001


118,745


   Licensed Brands

28,663


23,701


78,319


71,654


   Corporate and Other

368


148


972


473


   Net Sales

$            464,838


$           390,302


$            1,229,345


$            1,095,326


Operating Income (Loss):









   Journeys Group

$              22,316


$             17,902


$                 26,872


$                 20,256


   Underground Station Group

(1,268)


(1,862)


(3,973)


(6,101)


   Lids Sports Group

12,709


7,010


34,452


24,060


   Johnston & Murphy Group

1,816


1,660


4,194


1,358


   Licensed Brands

3,573


3,921


10,464


9,525


   Corporate and Other*

(12,467)


(10,307)


(34,201)


(31,700)


  Earnings from operations

26,679


18,324


37,808


17,398


  Loss on early retirement of debt

-


-


-


5,119


  Interest, net

306


921


768


4,033


Earnings from continuing operations









   before income taxes

26,373


17,403


37,040


8,246


Income tax expense

9,406


5,880


13,906


4,989


Earnings from continuing operations

16,967


11,523


23,134


3,257












Provision for discontinued operations

(50)


(80)


(784)


(298)


Net Earnings

$              16,917


$             11,443


$                 22,350


$                   2,959













*Includes a $2.1 million charge in the third quarter of Fiscal 2011 for asset impairments and includes $6.6 million of other charges in the first nine months of Fiscal 2011 which includes $6.4 million for asset impairments and $0.2 million for other legal matters.  Includes $2.6 million of other charges in the third quarter of Fiscal 2010, primarily asset impairments and includes $10.9 million of other charges in the first nine months of Fiscal 2010 which includes $10.5 million in asset impairments, $0.3 million in other legal matters and $0.1 million for lease terminations.  



GENESCO INC.






















Consolidated Balance Sheet








October 30,


October 31,


In Thousands






2010


2009


Assets










Cash and cash equivalents





$                 24,574


$                 23,620


Accounts receivable






47,923


33,425


Inventories






450,902


359,684


Other current assets






52,155


56,855


Total current assets






575,554


473,584


Property and equipment





200,495


221,264


Other non-current assets





241,921


183,431


Total Assets






$            1,017,970


$               878,279


Liabilities and Shareholders' Equity









Accounts payable






$               199,299


$               152,273


Other current liabilities






95,216


62,694


Total current liabilities






294,515


214,967


Long-term debt






30,400


29,042


Other long-term liabilities





108,281


112,279


Shareholders' equity






584,774


521,991


Total Liabilities and Shareholders' Equity





$            1,017,970


$               878,279





GENESCO INC.











































Retail Units Operated - Nine Months Ended October 30, 2010 





Balance


Acquisi-






Balance



Acquisi-



Balance





01/31/09


tions


Open


Close


01/30/10


Open

tions

Close


10/30/10



Journeys Group


1,012


0


19


6


1,025


7

0

11


1,021



   Journeys


816


0


9


6


819


5

0

9


815



   Journeys Kidz


141


0


9


0


150


2

0

2


150



   Shi by Journeys


55


0


1


0


56


0

0

0


56



Underground Station Group


180


0


0


10


170


0

0

13


157



Lids Sports Group


885


38


35


37


921


25

48

20


974



Johnston & Murphy Group


157


0


7


4


160


3

0

4


159



   Shops


114


0


5


3


116


2

0

4


114



   Factory Outlets


43


0


2


1


44


1

0

0


45



Total Retail Units


2,234


38


61


57


2,276


35

48

48


2,311





Retail Units Operated - Three Months Ended October 30, 2010 





Balance




Acquisi-




Balance





07/31/10


Open


tions


Close


10/30/10



Journeys Group


1,026


0


0


5


1,021



   Journeys


819


0


0


4


815



   Journeys Kidz


151


0


0


1


150



   Shi by Journeys


56


0


0


0


56



Underground Station Group


162


0


0


5


157



Lids Sports Group


916


14


48


4


974



Johnston & Murphy Group


160


0


0


1


159



   Shops


115


0


0


1


114



   Factory Outlets


45


0


0


0


45



Total Retail Units


2,264


14


48


15


2,311





Comparable Store Sales





Three Months Ended


Nine Months Ended





October 30,


October 31,


October 30,


October 31,





2010


2009


2010


2009



Journeys Group


9%


-2%


5%


-3%



Underground Station Group


3%


-6%


0%


-10%



Lids Sports Group


13%


1%


10%


2%



Johnston & Murphy Group


7%


-2%


6%


-12%



Total Comparable Store Sales


9%


-2%


6%


-3%



Schedule B


Genesco Inc.

Adjustments to Reported Earnings from Continuing Operations

Three Months Ended October 30, 2010 and October 31, 2009









3 mos

Impact

3 mos

Impact

In Thousands (except per share amounts)


Oct 2010

on EPS

Oct 2009

on EPS

Earnings from continuing operations, as reported


$     16,967

$   0.72

$  11,523

$   0.50







Adjustments:  (1)






Impairment & lease termination charges


1,341

0.06

1,600

0.07

Purchase price accounting adjustment - margin


533

0.02

-

-

Purchase price accounting adjustment - expense


92

-

-

-

Convertible debt interest restatement (APB 14-1)


-

-

179

-

Higher (lower) effective tax rate


(796)

(0.03)

(965)

(0.04)







Adjusted earnings from continuing operations (2)


$     18,137

$   0.77

$  12,337

$   0.53













(1) All adjustments are net of tax.  The tax rate for the third quarter of Fiscal 2011 is 38.2% excluding a FIN 48 discrete item of $0.1 million.  The tax rate for the third quarter of Fiscal 2010 is 38.6% excluding a FIN 48 discrete item of $0.2 million.


(2) Reflects 23.5 million share count for Fiscal 2011 and 23.7 million share count for Fiscal 2010 which does include common stock equivalents in both years.


The Company believes that disclosure of earnings and earnings per share from continuing operations on a pro forma basis 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.







Schedule B


Genesco Inc.

Adjustments to Reported Earnings from Continuing Operations

Nine Months Ended October 30, 2010 and October 31, 2009









9 mos

Impact

9 mos

Impact

In Thousands (except per share amounts)


Oct 2010

on EPS

Oct 2009

on EPS

Earnings from continuing operations, as reported


$  23,134

$   0.97

$    3,257

$   0.15







Adjustments:  (1)






Impairment & lease termination charges


3,923

0.17

6,483

0.31

Other legal matters


95

-

206

0.01

Loss on early retirement of debt


-

-

3,061

0.14

Flood loss


215

0.01

-

-

Purchase price accounting adjustment - margin


766

0.03

-

-

Purchase price accounting adjustment - expense


266

0.01

-

-

Expenses related to aborted acquisition


127

-

-

-

Convertible debt interest restatement (APB 14-1)


-

-

842

0.04

Higher (lower) effective tax rate


(776)

(0.03)

1,575

0.07







Adjusted earnings from continuing operations (2)


$  27,750

$   1.16

$  15,424

$   0.72













(1) All adjustments are net of tax.  The tax rate for the nine months of Fiscal 2011 is 38.75% excluding a FIN 48 discrete item of $0.3 million.  The tax rate for the nine months of Fiscal 2010 is 39.0% excluding a FIN 48 discrete item of $0.3 million.


(2) Reflects 23.8 million share count for Fiscal 2011 and 21.1 million share count for Fiscal 2010 which includes common stock equivalents in both years.


The Company believes that disclosure of earnings and earnings per share from continuing operations on a pro forma basis 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.



Schedule B


Genesco Inc.

Adjustments to Forecasted Earnings from Continuing Operations

Quarter Ending January 29, 2011







High Guidance

Low Guidance

In Thousands (except per share amounts)

Fiscal 2011

Fiscal 2011

Forecasted earnings from continuing operations

$ 27,361

$ 1.17

$ 26,209

$ 1.12






Adjustments:  (1)





Impairment and other charges including tax adjustments

2,696

0.11

2,696

0.11






Adjusted forecasted earnings from continuing operations (2)

$ 30,057

$ 1.28

$ 28,905

$ 1.23






(1) All adjustments are net of tax.  The forecasted tax rate for the fourth quarter of Fiscal 2011 is 39.6%.


(2) Reflects 23.4 million share count for the fourth quarter of Fiscal 2011 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.  



Schedule B


Genesco Inc.

Adjustments to Forecasted Earnings from Continuing Operations

Fiscal Year Ending January 29, 2011







High Guidance

Low Guidance

In Thousands (except per share amounts)

Fiscal 2011

Fiscal 2011

Forecasted earnings from continuing operations

$ 50,495

$ 2.13

$ 49,310

$ 2.08






Adjustments:  (1)





Impairment and other charges including tax adjustments

7,311

0.30

7,311

0.30






Adjusted forecasted earnings from continuing operations (2)

$ 57,806

$ 2.43

$ 56,621

$ 2.38






(1) All adjustments are net of tax.  The forecasted tax rate for Fiscal 2011 is 39.5%.


(2) Reflects 23.7 million share count for Fiscal 2011 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.  



SOURCE Genesco Inc.

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