Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Genesco Inc. Reports Fiscal 2024 Third Quarter Results By: Genesco Inc. via Business Wire December 01, 2023 at 06:50 AM EST Genesco Inc. (NYSE: GCO) today reported third quarter results for the three months ended October 28, 2023. Third Quarter Fiscal 2024 Financial Summary Net sales of $579 million decreased 4% compared to Q3FY23 Comps down 4%, with stores down 7% and direct up 8% E-commerce sales represented 21% of retail sales compared to 18% last year GAAP EPS from continuing operations was $0.60 vs. $1.66 last year Non-GAAP EPS from continuing operations was $0.571 vs. $1.65 last year Mimi E. Vaughn, Genesco’s Board Chair, President and Chief Executive Officer, said, “Following a good Back-to-School season, demand in October softened in an ongoing challenging operating environment, along with a delayed start to the fall selling season. Disruptions related to implementation of a new ERP system for our branded businesses added to the pressure, all leading to results that were below our expectations. Despite these headwinds, we were pleased to see sales trends within our Journeys business continue to sequentially improve, and Schuh and Johnston & Murphy deliver record third-quarter sales. In the meantime, we continued to inject Journeys’ product assortment with more of the newness and must-have items our customer desires, while also executing on our cost reduction and store closure plans.” Vaughn continued, “Fourth quarter-to-date, I’m pleased to say our total comps are currently running positive and we experienced a strong start to the holiday season. However, as consumer shopping behavior remains choppy, we plan to increase our promotional activity, especially at Journeys, for the remainder of the holiday season to be more competitive and drive sales in this environment. Our revised Fiscal 2024 outlook reflects this, partially offset by a somewhat more conservative view for our other businesses. Looking ahead, I have confidence that our strategic initiatives and specific efforts to elevate Journeys in the marketplace will help us continue to drive progress in the near term while positioning us even more strongly to create value for the longer term.” __________________________ 1Excludes a charge for asset impairments, net of tax effect in the third quarter of Fiscal 2024 (“Excluded Items”). A reconciliation of earnings (loss) and earnings (loss) per share from continuing operations in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) with the adjusted earnings (loss) and earnings (loss) per share numbers is set forth on Schedule B to this press release. The Company believes that disclosure of earnings (loss) and earnings (loss) 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. Third Quarter Review Net sales for the third quarter of Fiscal 2024 of $579 million decreased 4% compared to $604 million in the third quarter of Fiscal 2023. The sales decrease compared to last year was driven by decreased store sales in Journeys Group and decreased wholesale sales in Genesco Brands Group, partially offset by an 8% increase in e-commerce comparable sales and a favorable foreign exchange impact. Comparable Sales Comparable Same Store and Direct Sales: 3QFY24 3QFY23 Journeys Group (8)% 1% Schuh Group 5% 3% Johnston & Murphy Group 1% 20% Total Genesco Comparable Sales (4)% 3% Same Store Sales (7)% 2% Comparable Direct Sales 8% 6% The overall sales decrease of 4% for the third quarter of Fiscal 2024 compared to the third quarter of Fiscal 2023 was driven by a decrease of 8% at Journeys and a 22% or $8 million decrease at Genesco Brands, partially offset by an increase of 13% at Schuh and an increase of 2% at Johnston & Murphy. On a constant currency basis, Schuh had record third quarter sales, which were up 5%. Third quarter gross margin this year was 48.1%, down 60 basis points compared with 48.7% last year. The decrease as a percentage of sales compared to Fiscal 2023 is due primarily to increased promotional activity at Journeys, including introductory coupons for their new loyalty program, more normalized markdowns and closeouts at Johnston & Murphy and increased shipping and warehouse expense in all retail businesses, reflecting increased warehouse costs and higher e-commerce penetration, partially offset by improved margins at Schuh and Genesco Brands. Selling and administrative expense for the third quarter this year increased 190 basis points as a percentage of sales compared with last year. Adjusted selling and administrative expense for the third quarter this year also increased 190 basis points as a percentage of sales compared with last year. The increase as a percentage of sales compared to Fiscal 2023 reflects the deleverage of expenses, especially compensation, marketing and depreciation expenses, as a result of decreased revenue in the third quarter of Fiscal 2024. In absolute dollars, selling and administrative expenses were flat for the third quarter this year compared to last year. Genesco’s GAAP operating income for the third quarter was $10.9 million, or 1.9% of sales this year, compared with $26.1 million, or 4.3% of sales in the third quarter last year. Adjusted for the Excluded Items in all periods, operating income for the third quarter was $11.0 million this year compared to $26.3 million last year. Adjusted operating margin was 1.9% of sales in the third quarter of Fiscal 2024 and 4.4% in the third quarter last year. The effective tax rate for the quarter was 22.5% in Fiscal 2024 compared to 18.7% in the third quarter last year. The adjusted tax rate, reflecting Excluded Items, was 27.8% in Fiscal 2024 compared to 19.6% in the third quarter last year. The higher adjusted tax rate for the third quarter this year compared to the third quarter last year primarily reflects that we are no longer subject to a valuation allowance in certain jurisdictions. GAAP earnings from continuing operations were $6.6 million in the third quarter of Fiscal 2024 compared to $20.4 million in the third quarter last year. Adjusted for the Excluded Items in all periods, third quarter earnings from continuing operations were $6.2 million, or $0.57 per share, in Fiscal 2024, compared to $20.4 million, or $1.65 per share, in the third quarter last year. Cash, Borrowings and Inventory Cash as of October 28, 2023 was $21.7 million, compared with $32.1 million as of October 29, 2022. Total debt at the end of the third quarter of Fiscal 2024 was $128.2 million compared with $89.4 million at the end of last year’s third quarter. Inventories decreased 8% on a year over year basis reflecting decreased inventory for Journeys and Johnston & Murphy, partially offset by an increase at Schuh. Capital Expenditures and Store Activity For the third quarter this year, capital expenditures were $15 million, related primarily to retail stores and digital and omnichannel initiatives. Depreciation and amortization was $12 million. During the quarter, the Company opened five stores and closed 20 stores. The Company ended the quarter with 1,360 stores compared with 1,404 stores at the end of the third quarter last year, or a decrease of 3%. Square footage was down 1% on a year-over-year basis. Share Repurchases The Company did not repurchase any shares during the third quarter of Fiscal 2024. The Company currently has $52.1 million remaining on its expanded share repurchase authorization announced in June 2023. Store Closing and Cost Savings Update The Company remains on track to close approximately 100 Journeys stores in Fiscal 2024 The Company continues to anticipate up to $40 million in cost reductions by the end of Fiscal 2025 Revised Fiscal 2024 EPS Outlook For Fiscal 2024, the Company: Now expects sales to be down 1% to 2%, or down 2% to 3% excluding the 53rd week this year, compared to Fiscal 2023 Now expects adjusted diluted earnings per share from continuing operations in the range of $1.50 to $2.00, with an expectation that EPS will be near the mid-point of the range 2 Guidance assumes no further share repurchases and a tax rate of 24% Conference Call, Management Commentary and Investor Presentation The Company has posted detailed financial commentary and a supplemental financial presentation of third quarter results on its website, www.genesco.com, in the investor relations section. The Company's live conference call on December 1, 2023, at 7:30 a.m. (Central time), may be accessed through the Company's 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. __________________________ 2A reconciliation of the adjusted financial measures cited in the guidance to their corresponding measures as reported pursuant to GAAP is included in Schedule B to this press release. Safe Harbor Statement This release contains forward-looking statements, including those regarding future sales, earnings, operating income, gross margins, expenses, capital expenditures, depreciation and amortization, tax rates, store openings and closures, cost reductions, ESG progress and all other statements not addressing solely historical facts or present conditions. Forward-looking statements are usually identified by or are associated with such words as “intend,” “expect,” “feel,” “believe,” “anticipate,” “optimistic,” “confident” and similar terminology. Actual results could vary materially from the expectations reflected in these statements. A number of factors could cause differences. These include adjustments to projections reflected in forward-looking statements, including those resulting from weakness in store and shopping mall traffic, restrictions on operations imposed by government entities and/or landlords, changes in public safety and health requirements, and limitations on the Company’s ability to adequately staff and operate stores. Differences from expectations could also result from store closures and effects on the business as a result of civil disturbances; the level and timing of promotional activity necessary to maintain inventories at appropriate levels; our ability to pass on price increases to our customers; the imposition of tariffs on product imported by the Company or its vendors as well as the ability and costs to move production of products in response to tariffs; the Company’s ability to obtain from suppliers products that are in-demand on a timely basis and effectively manage disruptions in product supply or distribution, including disruptions as a result of pandemics or geopolitical events; unfavorable trends in fuel costs, foreign exchange rates, foreign labor and material costs, and other factors affecting the cost of products; our ability to renew our license agreements; impacts of the Russia-Ukraine war, and other sources of market weakness in the U.K. and Republic of Ireland; the effectiveness of the Company's omnichannel initiatives; costs associated with changes in minimum wage and overtime requirements; wage pressure in the U.S. and the U.K.; weakness in the consumer economy and retail industry; competition and fashion trends in the Company's markets; risks related to the potential for terrorist events; risks related to public health and safety events; changes in buying patterns by significant wholesale customers; retained liabilities associated with divestitures of businesses including potential liabilities under leases as the prior tenant or as a guarantor; and changes in the timing of holidays or in the onset of seasonal weather affecting period-to-period sales comparisons. Additional factors that could cause differences from expectations include the ability to secure allocations to refine product assortments to address consumer demand; the ability to renew leases in existing stores and control or lower occupancy costs, to open or close stores in the number and on the planned schedule, and to conduct required remodeling or refurbishment on schedule and at expected expense levels; the Company’s ability to realize anticipated cost savings, including rent savings; the amount and timing of share repurchases; the Company’s ability to achieve expected digital gains and gain market share; 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, operating lease right of use assets or intangible assets or other adverse financial consequences and the timing and amount of such impairments or other consequences; unexpected changes to the market for the Company's shares or for the retail sector in general; our ability to meet our sustainability, stewardship, emission and diversity, equity and inclusion related ESG projections, goals and commitments; costs and reputational harm as a result of disruptions in the Company’s business or information technology systems either by security breaches and incidents or by potential problems associated with the implementation of new or upgraded systems; the Company’s ability to realize any anticipated tax benefits in both the amount and timeframe anticipated; and the cost and outcome of litigation, investigations, environmental matters and other disputes 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, the Company’s 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 the Company’s 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. (NYSE: GCO) is a footwear focused company with distinctively positioned retail and lifestyle brands and proven omnichannel capabilities offering customers the footwear they desire in engaging shopping environments, including approximately 1,350 retail stores and branded e-commerce websites. Its Journeys, Little Burgundy and Schuh brands serve teens, kids and young adults with on-trend fashion footwear that inspires youth culture in the U.S., Canada and the U.K. Johnston & Murphy serves the successful, affluent man and woman with premium footwear, apparel and accessories in the U.S. and Canada, and Genesco Brands Group sells branded lifestyle footwear to leading retailers under licensed brands including Levi’s, Dockers and G.H. Bass. Founded in 1924, Genesco is based in Nashville, Tennessee. For more information on Genesco and its operating divisions, please visit www.genesco.com. GENESCO INC. Condensed Consolidated Statements of Operations (in thousands, except per share data) (Unaudited) Quarter 3 Quarter 3 October 28, % of October 29, % of 2023 Net Sales 2022 Net Sales Net sales $ 579,315 100.0 % $ 603,788 100.0 % Cost of sales 300,890 51.9 % 309,981 51.3 % Gross margin 278,425 48.1 % 293,807 48.7 % Selling and administrative expenses 267,474 46.2 % 267,734 44.3 % Asset impairments and other, net 99 0.0 % - 0.0 % Operating income 10,852 1.9 % 26,073 4.3 % Other components of net periodic benefit cost 148 0.0 % 50 0.0 % Interest expense, net 2,207 0.4 % 906 0.2 % Earnings from continuing operations before income taxes 8,497 1.5 % 25,117 4.2 % Income tax expense 1,908 0.3 % 4,693 0.8 % Earnings from continuing operations 6,589 1.1 % 20,424 3.4 % Loss from discontinued operations, net of tax (50 ) 0.0 % (48 ) 0.0 % Net Earnings $ 6,539 1.1 % $ 20,376 3.4 % Basic earnings per share: Before discontinued operations $ 0.60 $ 1.68 Net earnings $ 0.60 $ 1.68 Diluted earnings per share: Before discontinued operations $ 0.60 $ 1.66 Net earnings $ 0.60 $ 1.65 Weighted-average shares outstanding: Basic 10,898 12,138 Diluted 10,972 12,326 GENESCO INC. Condensed Consolidated Statements of Operations (in thousands, except per share data) (Unaudited) Nine Months Ended Nine Months Ended October 28, % of October 29, % of 2023 Net Sales 2022 Net Sales Net sales $ 1,585,674 100.0 % $ 1,659,868 100.0 % Cost of sales 828,921 52.3 % 860,303 51.8 % Gross margin 756,753 47.7 % 799,565 48.2 % Selling and administrative expenses 778,491 49.1 % 756,318 45.6 % Goodwill impairment 28,453 1.8 % - 0.0 % Asset impairments and other, net 581 0.0 % (154 ) 0.0 % Operating income (loss) (50,772 ) -3.2 % 43,401 2.6 % Other components of net periodic benefit cost 388 0.0 % 198 0.0 % Interest expense, net 6,241 0.4 % 1,608 0.1 % Earnings (loss) from continuing operations before income taxes (57,401 ) -3.6 % 41,595 2.5 % Income tax expense (benefit) (13,483 ) -0.9 % 8,551 0.5 % Earnings (loss) from continuing operations (43,918 ) -2.8 % 33,044 2.0 % Loss from discontinued operations, net of tax (98 ) 0.0 % (78 ) 0.0 % Net Earnings (Loss) $ (44,016 ) -2.8 % $ 32,966 2.0 % Basic earnings (loss) per share: Before discontinued operations $ (3.87 ) $ 2.61 Net earnings (loss) $ (3.88 ) $ 2.61 Diluted earnings (loss) per share: Before discontinued operations $ (3.87 ) $ 2.56 Net earnings (loss) $ (3.88 ) $ 2.56 Weighted-average shares outstanding: Basic 11,353 12,637 Diluted 11,353 12,901 GENESCO INC. Sales/Earnings Summary by Segment (in thousands) (Unaudited) Quarter 3 Quarter 3 October 28, % of October 29, % of 2023 Net Sales 2022 Net Sales Sales: Journeys Group $ 349,367 60.3 % $ 380,619 63.0 % Schuh Group 118,129 20.4 % 104,809 17.4 % Johnston & Murphy Group 81,411 14.1 % 79,614 13.2 % Genesco Brands Group 30,408 5.2 % 38,746 6.4 % Net Sales $ 579,315 100.0 % $ 603,788 100.0 % Operating Income (Loss): Journeys Group $ 11,975 3.4 % $ 27,083 7.1 % Schuh Group 5,484 4.6 % 5,912 5.6 % Johnston & Murphy Group 2,706 3.3 % 3,494 4.4 % Genesco Brands Group (1,560 ) -5.1 % (1,927 ) -5.0 % Corporate and Other(1) (7,753 ) -1.3 % (8,489 ) -1.4 % Operating income 10,852 1.9 % 26,073 4.3 % Other components of net periodic benefit cost 148 0.0 % 50 0.0 % Interest, net 2,207 0.4 % 906 0.2 % Earnings from continuing operations before income taxes 8,497 1.5 % 25,117 4.2 % Income tax expense 1,908 0.3 % 4,693 0.8 % Earnings from continuing operations 6,589 1.1 % 20,424 3.4 % Loss from discontinued operations, net of tax (50 ) 0.0 % (48 ) 0.0 % Net Earnings $ 6,539 1.1 % $ 20,376 3.4 % (1) Includes a $0.1 million charge in the third quarter of Fiscal 2024 for asset impairments. GENESCO INC. Sales/Earnings Summary by Segment (in thousands) (Unaudited) Nine Months Ended Nine Months Ended October 28, % of October 29, % of 2023 Net Sales 2022 Net Sales Sales: Journeys Group $ 908,832 57.3 % $ 1,016,396 61.2 % Schuh Group 334,033 21.1 % 294,486 17.7 % Johnston & Murphy Group 241,823 15.3 % 225,448 13.6 % Genesco Brands Group 100,986 6.4 % 123,538 7.4 % Net Sales $ 1,585,674 100.0 % $ 1,659,868 100.0 % Operating Income (Loss): Journeys Group $ (21,265 ) -2.3 % $ 51,235 5.0 % Schuh Group 12,110 3.6 % 5,260 1.8 % Johnston & Murphy Group 10,178 4.2 % 7,256 3.2 % Genesco Brands Group 259 0.3 % 2,551 2.1 % Corporate and Other(1) (23,601 ) -1.5 % (22,901 ) -1.4 % Goodwill Impairment (28,453 ) -1.8 % - 0.0 % Operating income (loss) (50,772 ) -3.2 % 43,401 2.6 % Other components of net periodic benefit cost 388 0.0 % 198 0.0 % Interest, net 6,241 0.4 % 1,608 0.1 % Earnings (loss) from continuing operations before income taxes (57,401 ) -3.6 % 41,595 2.5 % Income tax expense (benefit) (13,483 ) -0.9 % 8,551 0.5 % Earnings (loss) from continuing operations (43,918 ) -2.8 % 33,044 2.0 % Loss from discontinued operations, net of tax (98 ) 0.0 % (78 ) 0.0 % Net Earnings (Loss) $ (44,016 ) -2.8 % $ 32,966 2.0 % (1) Includes a $0.6 million charge in the first nine months of Fiscal 2024 for asset impairments. Includes a $0.2 million gain in the first nine months of Fiscal 2023 which includes a $0.7 million gain on the termination of the pension plan, partially offset by $0.5 million for asset impairments. GENESCO INC. Condensed Consolidated Balance Sheets (in thousands) (Unaudited) October 28, 2023 October 29, 2022 Assets Cash $ 21,691 $ 32,113 Accounts receivable 56,934 48,670 Inventories 516,735 563,490 Other current assets(1) 43,350 37,575 Total current assets 638,710 681,848 Property and equipment 245,009 221,207 Operating lease right of use assets 459,524 483,403 Goodwill and other intangibles 35,725 64,111 Non-current prepaid income taxes 55,632 52,319 Other non-current assets 58,331 34,105 Total Assets $ 1,492,931 $ 1,536,993 Liabilities and Equity Accounts payable $ 186,683 $ 223,404 Current portion long-term debt - 3,484 Current portion operating lease liabilities 134,850 136,294 Other current liabilities 75,631 82,193 Total current liabilities 397,164 445,375 Long-term debt 128,163 85,904 Long-term operating lease liabilities 387,347 413,096 Other long-term liabilities 43,299 33,275 Equity 536,958 559,343 Total Liabilities and Equity $ 1,492,931 $ 1,536,993 (1) Includes prepaid income taxes of $18.0 million and $13.3 million at October 28, 2023 and October 29, 2022, respectively. GENESCO INC. Store Count Activity Balance Balance Balance 01/29/22 Open Close 01/28/23 Open Close 10/28/23 Journeys Group 1,135 22 27 1,130 24 74 1,080 Schuh Group 123 4 5 122 2 0 124 Johnston & Murphy Group 167 2 11 158 1 3 156 Total Retail Stores 1,425 28 43 1,410 27 77 1,360 GENESCO INC. Store Count Activity Balance Balance 07/29/23 Open Close 10/28/23 Journeys Group 1,095 5 20 1,080 Schuh Group 124 0 0 124 Johnston & Murphy Group 156 0 0 156 Total Retail Stores 1,375 5 20 1,360 GENESCO INC. Comparable Sales(1) Quarter 3 Nine Months Oct. 28, Oct. 29, Oct. 28, Oct. 29, 2023 2022 2023 2022 Journeys Group -8 % 1 % -10 % NA Schuh Group 5 % 3 % 11 % NA Johnston & Murphy Group 1 % 20 % 10 % NA Total Comparable Sales -4 % 3 % -4 % NA Same Store Sales -7 % 2 % -7 % NA Comparable Direct Sales 8 % 6 % 10 % -9 % (1) As a result of store closures in response to the COVID-19 pandemic during the first quarter of Fiscal 2022, and the Company's policy of removing any store closed for seven consecutive days from comparable sales, the Company did not include comparable sales for the first nine months of Fiscal 2023, except for comparable direct sales, as it felt that overall sales was a more meaningful metric last year. Schedule B Genesco Inc. Adjustments to Reported Earnings from Continuing Operations Three Months Ended October 28, 2023 and October 29, 2022 The Company believes that disclosure of earnings and earnings per share from continuing operations and operating income 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. Quarter 3 Quarter 3 October 28, 2023 October 29, 2022 Net of Per Share Net of Per Share In Thousands (except per share amounts) Pretax Tax Amounts Pretax Tax Amounts Earnings from continuing operations, as reported $ 6,589 $0.60 $ 20,424 $1.66 Asset impairments and other adjustments: Asset impairment charges $ 99 79 0.01 $ - (3 ) 0.00 Fees related to shareholder activist - - 0.00 - (2 ) 0.00 Expenses related to new HQ building - - 0.00 257 200 0.01 Total asset impairments and other adjustments $ 99 79 0.01 $ 257 195 0.01 Income tax expense adjustments: Tax impact share based awards 48 0.00 28 0.00 Other tax items (509 ) (0.04 ) (251 ) (0.02 ) Total income tax expense adjustments (461 ) (0.04 ) (223 ) (0.02 ) Adjusted earnings from continuing operations (1) and (2) $ 6,207 $0.57 $ 20,396 $1.65 (1) The adjusted tax rate for the third quarter of Fiscal 2024 and 2023 is 27.8% and 19.6%, respectively. (2) EPS reflects 11.0 million and 12.3 million share count for the third quarter of Fiscal 2024 and 2023, respectively, which includes common stock equivalents in both periods. Genesco Inc. Adjustments to Reported Operating Income and Selling and Administrative Expenses Three Months Ended October 28, 2023 and October 29, 2022 Quarter 3 - October 28, 2023 Operating Asset Impair Adj Operating In Thousands Income (Loss) & Other Adj Income (Loss) Journeys Group $ 11,975 $ - $ 11,975 Schuh Group 5,484 - 5,484 Johnston & Murphy Group 2,706 - 2,706 Genesco Brands Group (1,560 ) - (1,560 ) Goodwill Impairment - - - Corporate and Other (7,753 ) 99 (7,654 ) Total Operating Income $ 10,852 $ 99 $ 10,951 % of sales 1.9 % 1.9 % Quarter 3 - October 29, 2022 Operating Asset Impair Adj Operating In Thousands Income (Loss) & Other Adj Income (Loss) Journeys Group $ 27,083 $ - $ 27,083 Schuh Group 5,912 - 5,912 Johnston & Murphy Group 3,494 - 3,494 Genesco Brands Group (1,927 ) - (1,927 ) Corporate and Other (8,489 ) 257 (8,232 ) Total Operating Income $ 26,073 $ 257 $ 26,330 % of sales 4.3 % 4.4 % Quarter 3 In Thousands Oct. 28, 2023 Oct. 29, 2022 Selling and administrative expenses, as reported $ 267,474 $ 267,734 Expenses related to new HQ building - (257 ) Total adjustments - (257 ) Adjusted selling and administrative expenses $ 267,474 $ 267,477 % of sales 46.2 % 44.3 % Schedule B Genesco Inc. Adjustments to Reported Earnings (Loss) from Continuing Operations Nine Months Ended October 28, 2023 and October 29, 2022 The Company believes that disclosure of earnings (loss) and earnings (loss) per share from continuing operations and operating income (loss) 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. Nine Months Nine Months October 28, 2023 October 29, 2022 Net of Per Share Net of Per Share In Thousands (except per share amounts) Pretax Tax Amounts Pretax Tax Amounts Earnings (loss) from continuing operations, as reported $ (43,918 ) ($3.87 ) $ 33,044 $2.56 Asset impairments and other adjustments: Asset impairment charges $ 581 446 0.04 $ 541 454 0.04 Goodwill impairment charge 28,453 21,858 1.93 - - 0.00 Gain on pension termination - - 0.00 (695 ) (520 ) (0.04 ) Expenses related to new HQ building - - 0.00 2,545 1,905 0.15 Total asset impairments and other adjustments $ 29,034 22,304 1.97 $ 2,391 1,839 0.15 Income tax expense adjustments: Tax impact share based awards 1,059 0.09 (635 ) (0.05 ) Other tax items (1,578 ) (0.14 ) (250 ) (0.02 ) Total income tax expense adjustments (519 ) (0.05 ) (885 ) (0.07 ) Adjusted earnings (loss) from continuing operations (1) and (2) $ (22,133 ) ($1.95 ) $ 33,998 $2.64 (1) The adjusted tax rate for the first nine months of Fiscal 2024 and 2023 is 22.0% and 22.7%, respectively. (2) EPS reflects 11.4 million and 12.9 million share count for the first nine months of Fiscal 2024 and 2023, respectively, which includes common stock equivalents in the first nine months last year but not in this year due to the loss from continuing operations. Genesco Inc. Adjustments to Reported Operating Income (Loss) and Selling and Administrative Expenses Nine Months Ended October 28, 2023 and October 29, 2022 Nine Months October 28, 2023 Operating Asset Impair Adj Operating In Thousands Income (Loss) & Other Adj Income (Loss) Journeys Group $ (21,265 ) $ - $ (21,265 ) Schuh Group 12,110 - 12,110 Johnston & Murphy Group 10,178 - 10,178 Genesco Brands Group 259 - 259 Goodwill Impairment (28,453 ) 28,453 - Corporate and Other (23,601 ) 581 (23,020 ) Total Operating Loss $ (50,772 ) $ 29,034 $ (21,738 ) % of sales -3.2 % -1.4 % Nine Months October 29, 2022 Operating Asset Impair Adj Operating In Thousands Income (Loss) & Other Adj Income (Loss) Journeys Group $ 51,235 $ - $ 51,235 Schuh Group 5,260 - 5,260 Johnston & Murphy Group 7,256 - 7,256 Genesco Brands Group 2,551 - 2,551 Corporate and Other (22,901 ) 2,391 (20,510 ) Total Operating Income $ 43,401 $ 2,391 $ 45,792 % of sales 2.6 % 2.8 % Nine Months In Thousands Oct. 28, 2023 Oct. 29, 2022 Selling and administrative expenses, as reported $ 778,491 $ 756,318 Expenses related to new HQ building - (2,545 ) Total adjustments - (2,545 ) Adjusted selling and administrative expenses $ 778,491 $ 753,773 % of sales 49.1 % 45.4 % Schedule B Genesco Inc. Adjustments to Forecasted Earnings (Loss) from Continuing Operations Fiscal Year Ending February 3, 2024 In millions (except per share amounts) High Guidance Low Guidance Fiscal 2024 Fiscal 2024 Net of Tax Per Share Net of Tax Per Share Forecasted earnings (loss) from continuing operations $ (0.7 ) $ (0.06 ) $ (6.8 ) $ (0.60 ) Asset impairments and other adjustments: Asset impairments and other matters 1.5 0.13 1.9 0.17 Goodwill impairment 21.9 1.93 21.9 1.93 Total asset impairments and other adjustments (1) 23.4 2.06 23.8 2.10 Adjusted forecasted earnings from continuing operations (2) $ 22.7 $ 2.00 $ 17.0 $ 1.50 (1) All adjustments are net of tax where applicable. The forecasted tax rate for Fiscal 2024 is approximately 24%. (2) EPS reflects 11.4 million share count for Fiscal 2024 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20231130578344/en/Contacts Genesco Financial Contacts Thomas A. George (615) 367-7465 tgeorge@genesco.com Darryl MacQuarrie (615) 367-7672 dmacquarrie@genesco.com Genesco Media Contact Claire S. McCall (615) 367-8283 cmccall@genesco.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Genesco Inc. Reports Fiscal 2024 Third Quarter Results By: Genesco Inc. via Business Wire December 01, 2023 at 06:50 AM EST Genesco Inc. (NYSE: GCO) today reported third quarter results for the three months ended October 28, 2023. Third Quarter Fiscal 2024 Financial Summary Net sales of $579 million decreased 4% compared to Q3FY23 Comps down 4%, with stores down 7% and direct up 8% E-commerce sales represented 21% of retail sales compared to 18% last year GAAP EPS from continuing operations was $0.60 vs. $1.66 last year Non-GAAP EPS from continuing operations was $0.571 vs. $1.65 last year Mimi E. Vaughn, Genesco’s Board Chair, President and Chief Executive Officer, said, “Following a good Back-to-School season, demand in October softened in an ongoing challenging operating environment, along with a delayed start to the fall selling season. Disruptions related to implementation of a new ERP system for our branded businesses added to the pressure, all leading to results that were below our expectations. Despite these headwinds, we were pleased to see sales trends within our Journeys business continue to sequentially improve, and Schuh and Johnston & Murphy deliver record third-quarter sales. In the meantime, we continued to inject Journeys’ product assortment with more of the newness and must-have items our customer desires, while also executing on our cost reduction and store closure plans.” Vaughn continued, “Fourth quarter-to-date, I’m pleased to say our total comps are currently running positive and we experienced a strong start to the holiday season. However, as consumer shopping behavior remains choppy, we plan to increase our promotional activity, especially at Journeys, for the remainder of the holiday season to be more competitive and drive sales in this environment. Our revised Fiscal 2024 outlook reflects this, partially offset by a somewhat more conservative view for our other businesses. Looking ahead, I have confidence that our strategic initiatives and specific efforts to elevate Journeys in the marketplace will help us continue to drive progress in the near term while positioning us even more strongly to create value for the longer term.” __________________________ 1Excludes a charge for asset impairments, net of tax effect in the third quarter of Fiscal 2024 (“Excluded Items”). A reconciliation of earnings (loss) and earnings (loss) per share from continuing operations in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) with the adjusted earnings (loss) and earnings (loss) per share numbers is set forth on Schedule B to this press release. The Company believes that disclosure of earnings (loss) and earnings (loss) 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. Third Quarter Review Net sales for the third quarter of Fiscal 2024 of $579 million decreased 4% compared to $604 million in the third quarter of Fiscal 2023. The sales decrease compared to last year was driven by decreased store sales in Journeys Group and decreased wholesale sales in Genesco Brands Group, partially offset by an 8% increase in e-commerce comparable sales and a favorable foreign exchange impact. Comparable Sales Comparable Same Store and Direct Sales: 3QFY24 3QFY23 Journeys Group (8)% 1% Schuh Group 5% 3% Johnston & Murphy Group 1% 20% Total Genesco Comparable Sales (4)% 3% Same Store Sales (7)% 2% Comparable Direct Sales 8% 6% The overall sales decrease of 4% for the third quarter of Fiscal 2024 compared to the third quarter of Fiscal 2023 was driven by a decrease of 8% at Journeys and a 22% or $8 million decrease at Genesco Brands, partially offset by an increase of 13% at Schuh and an increase of 2% at Johnston & Murphy. On a constant currency basis, Schuh had record third quarter sales, which were up 5%. Third quarter gross margin this year was 48.1%, down 60 basis points compared with 48.7% last year. The decrease as a percentage of sales compared to Fiscal 2023 is due primarily to increased promotional activity at Journeys, including introductory coupons for their new loyalty program, more normalized markdowns and closeouts at Johnston & Murphy and increased shipping and warehouse expense in all retail businesses, reflecting increased warehouse costs and higher e-commerce penetration, partially offset by improved margins at Schuh and Genesco Brands. Selling and administrative expense for the third quarter this year increased 190 basis points as a percentage of sales compared with last year. Adjusted selling and administrative expense for the third quarter this year also increased 190 basis points as a percentage of sales compared with last year. The increase as a percentage of sales compared to Fiscal 2023 reflects the deleverage of expenses, especially compensation, marketing and depreciation expenses, as a result of decreased revenue in the third quarter of Fiscal 2024. In absolute dollars, selling and administrative expenses were flat for the third quarter this year compared to last year. Genesco’s GAAP operating income for the third quarter was $10.9 million, or 1.9% of sales this year, compared with $26.1 million, or 4.3% of sales in the third quarter last year. Adjusted for the Excluded Items in all periods, operating income for the third quarter was $11.0 million this year compared to $26.3 million last year. Adjusted operating margin was 1.9% of sales in the third quarter of Fiscal 2024 and 4.4% in the third quarter last year. The effective tax rate for the quarter was 22.5% in Fiscal 2024 compared to 18.7% in the third quarter last year. The adjusted tax rate, reflecting Excluded Items, was 27.8% in Fiscal 2024 compared to 19.6% in the third quarter last year. The higher adjusted tax rate for the third quarter this year compared to the third quarter last year primarily reflects that we are no longer subject to a valuation allowance in certain jurisdictions. GAAP earnings from continuing operations were $6.6 million in the third quarter of Fiscal 2024 compared to $20.4 million in the third quarter last year. Adjusted for the Excluded Items in all periods, third quarter earnings from continuing operations were $6.2 million, or $0.57 per share, in Fiscal 2024, compared to $20.4 million, or $1.65 per share, in the third quarter last year. Cash, Borrowings and Inventory Cash as of October 28, 2023 was $21.7 million, compared with $32.1 million as of October 29, 2022. Total debt at the end of the third quarter of Fiscal 2024 was $128.2 million compared with $89.4 million at the end of last year’s third quarter. Inventories decreased 8% on a year over year basis reflecting decreased inventory for Journeys and Johnston & Murphy, partially offset by an increase at Schuh. Capital Expenditures and Store Activity For the third quarter this year, capital expenditures were $15 million, related primarily to retail stores and digital and omnichannel initiatives. Depreciation and amortization was $12 million. During the quarter, the Company opened five stores and closed 20 stores. The Company ended the quarter with 1,360 stores compared with 1,404 stores at the end of the third quarter last year, or a decrease of 3%. Square footage was down 1% on a year-over-year basis. Share Repurchases The Company did not repurchase any shares during the third quarter of Fiscal 2024. The Company currently has $52.1 million remaining on its expanded share repurchase authorization announced in June 2023. Store Closing and Cost Savings Update The Company remains on track to close approximately 100 Journeys stores in Fiscal 2024 The Company continues to anticipate up to $40 million in cost reductions by the end of Fiscal 2025 Revised Fiscal 2024 EPS Outlook For Fiscal 2024, the Company: Now expects sales to be down 1% to 2%, or down 2% to 3% excluding the 53rd week this year, compared to Fiscal 2023 Now expects adjusted diluted earnings per share from continuing operations in the range of $1.50 to $2.00, with an expectation that EPS will be near the mid-point of the range 2 Guidance assumes no further share repurchases and a tax rate of 24% Conference Call, Management Commentary and Investor Presentation The Company has posted detailed financial commentary and a supplemental financial presentation of third quarter results on its website, www.genesco.com, in the investor relations section. The Company's live conference call on December 1, 2023, at 7:30 a.m. (Central time), may be accessed through the Company's 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. __________________________ 2A reconciliation of the adjusted financial measures cited in the guidance to their corresponding measures as reported pursuant to GAAP is included in Schedule B to this press release. Safe Harbor Statement This release contains forward-looking statements, including those regarding future sales, earnings, operating income, gross margins, expenses, capital expenditures, depreciation and amortization, tax rates, store openings and closures, cost reductions, ESG progress and all other statements not addressing solely historical facts or present conditions. Forward-looking statements are usually identified by or are associated with such words as “intend,” “expect,” “feel,” “believe,” “anticipate,” “optimistic,” “confident” and similar terminology. Actual results could vary materially from the expectations reflected in these statements. A number of factors could cause differences. These include adjustments to projections reflected in forward-looking statements, including those resulting from weakness in store and shopping mall traffic, restrictions on operations imposed by government entities and/or landlords, changes in public safety and health requirements, and limitations on the Company’s ability to adequately staff and operate stores. Differences from expectations could also result from store closures and effects on the business as a result of civil disturbances; the level and timing of promotional activity necessary to maintain inventories at appropriate levels; our ability to pass on price increases to our customers; the imposition of tariffs on product imported by the Company or its vendors as well as the ability and costs to move production of products in response to tariffs; the Company’s ability to obtain from suppliers products that are in-demand on a timely basis and effectively manage disruptions in product supply or distribution, including disruptions as a result of pandemics or geopolitical events; unfavorable trends in fuel costs, foreign exchange rates, foreign labor and material costs, and other factors affecting the cost of products; our ability to renew our license agreements; impacts of the Russia-Ukraine war, and other sources of market weakness in the U.K. and Republic of Ireland; the effectiveness of the Company's omnichannel initiatives; costs associated with changes in minimum wage and overtime requirements; wage pressure in the U.S. and the U.K.; weakness in the consumer economy and retail industry; competition and fashion trends in the Company's markets; risks related to the potential for terrorist events; risks related to public health and safety events; changes in buying patterns by significant wholesale customers; retained liabilities associated with divestitures of businesses including potential liabilities under leases as the prior tenant or as a guarantor; and changes in the timing of holidays or in the onset of seasonal weather affecting period-to-period sales comparisons. Additional factors that could cause differences from expectations include the ability to secure allocations to refine product assortments to address consumer demand; the ability to renew leases in existing stores and control or lower occupancy costs, to open or close stores in the number and on the planned schedule, and to conduct required remodeling or refurbishment on schedule and at expected expense levels; the Company’s ability to realize anticipated cost savings, including rent savings; the amount and timing of share repurchases; the Company’s ability to achieve expected digital gains and gain market share; 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, operating lease right of use assets or intangible assets or other adverse financial consequences and the timing and amount of such impairments or other consequences; unexpected changes to the market for the Company's shares or for the retail sector in general; our ability to meet our sustainability, stewardship, emission and diversity, equity and inclusion related ESG projections, goals and commitments; costs and reputational harm as a result of disruptions in the Company’s business or information technology systems either by security breaches and incidents or by potential problems associated with the implementation of new or upgraded systems; the Company’s ability to realize any anticipated tax benefits in both the amount and timeframe anticipated; and the cost and outcome of litigation, investigations, environmental matters and other disputes 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, the Company’s 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 the Company’s 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. (NYSE: GCO) is a footwear focused company with distinctively positioned retail and lifestyle brands and proven omnichannel capabilities offering customers the footwear they desire in engaging shopping environments, including approximately 1,350 retail stores and branded e-commerce websites. Its Journeys, Little Burgundy and Schuh brands serve teens, kids and young adults with on-trend fashion footwear that inspires youth culture in the U.S., Canada and the U.K. Johnston & Murphy serves the successful, affluent man and woman with premium footwear, apparel and accessories in the U.S. and Canada, and Genesco Brands Group sells branded lifestyle footwear to leading retailers under licensed brands including Levi’s, Dockers and G.H. Bass. Founded in 1924, Genesco is based in Nashville, Tennessee. For more information on Genesco and its operating divisions, please visit www.genesco.com. GENESCO INC. Condensed Consolidated Statements of Operations (in thousands, except per share data) (Unaudited) Quarter 3 Quarter 3 October 28, % of October 29, % of 2023 Net Sales 2022 Net Sales Net sales $ 579,315 100.0 % $ 603,788 100.0 % Cost of sales 300,890 51.9 % 309,981 51.3 % Gross margin 278,425 48.1 % 293,807 48.7 % Selling and administrative expenses 267,474 46.2 % 267,734 44.3 % Asset impairments and other, net 99 0.0 % - 0.0 % Operating income 10,852 1.9 % 26,073 4.3 % Other components of net periodic benefit cost 148 0.0 % 50 0.0 % Interest expense, net 2,207 0.4 % 906 0.2 % Earnings from continuing operations before income taxes 8,497 1.5 % 25,117 4.2 % Income tax expense 1,908 0.3 % 4,693 0.8 % Earnings from continuing operations 6,589 1.1 % 20,424 3.4 % Loss from discontinued operations, net of tax (50 ) 0.0 % (48 ) 0.0 % Net Earnings $ 6,539 1.1 % $ 20,376 3.4 % Basic earnings per share: Before discontinued operations $ 0.60 $ 1.68 Net earnings $ 0.60 $ 1.68 Diluted earnings per share: Before discontinued operations $ 0.60 $ 1.66 Net earnings $ 0.60 $ 1.65 Weighted-average shares outstanding: Basic 10,898 12,138 Diluted 10,972 12,326 GENESCO INC. Condensed Consolidated Statements of Operations (in thousands, except per share data) (Unaudited) Nine Months Ended Nine Months Ended October 28, % of October 29, % of 2023 Net Sales 2022 Net Sales Net sales $ 1,585,674 100.0 % $ 1,659,868 100.0 % Cost of sales 828,921 52.3 % 860,303 51.8 % Gross margin 756,753 47.7 % 799,565 48.2 % Selling and administrative expenses 778,491 49.1 % 756,318 45.6 % Goodwill impairment 28,453 1.8 % - 0.0 % Asset impairments and other, net 581 0.0 % (154 ) 0.0 % Operating income (loss) (50,772 ) -3.2 % 43,401 2.6 % Other components of net periodic benefit cost 388 0.0 % 198 0.0 % Interest expense, net 6,241 0.4 % 1,608 0.1 % Earnings (loss) from continuing operations before income taxes (57,401 ) -3.6 % 41,595 2.5 % Income tax expense (benefit) (13,483 ) -0.9 % 8,551 0.5 % Earnings (loss) from continuing operations (43,918 ) -2.8 % 33,044 2.0 % Loss from discontinued operations, net of tax (98 ) 0.0 % (78 ) 0.0 % Net Earnings (Loss) $ (44,016 ) -2.8 % $ 32,966 2.0 % Basic earnings (loss) per share: Before discontinued operations $ (3.87 ) $ 2.61 Net earnings (loss) $ (3.88 ) $ 2.61 Diluted earnings (loss) per share: Before discontinued operations $ (3.87 ) $ 2.56 Net earnings (loss) $ (3.88 ) $ 2.56 Weighted-average shares outstanding: Basic 11,353 12,637 Diluted 11,353 12,901 GENESCO INC. Sales/Earnings Summary by Segment (in thousands) (Unaudited) Quarter 3 Quarter 3 October 28, % of October 29, % of 2023 Net Sales 2022 Net Sales Sales: Journeys Group $ 349,367 60.3 % $ 380,619 63.0 % Schuh Group 118,129 20.4 % 104,809 17.4 % Johnston & Murphy Group 81,411 14.1 % 79,614 13.2 % Genesco Brands Group 30,408 5.2 % 38,746 6.4 % Net Sales $ 579,315 100.0 % $ 603,788 100.0 % Operating Income (Loss): Journeys Group $ 11,975 3.4 % $ 27,083 7.1 % Schuh Group 5,484 4.6 % 5,912 5.6 % Johnston & Murphy Group 2,706 3.3 % 3,494 4.4 % Genesco Brands Group (1,560 ) -5.1 % (1,927 ) -5.0 % Corporate and Other(1) (7,753 ) -1.3 % (8,489 ) -1.4 % Operating income 10,852 1.9 % 26,073 4.3 % Other components of net periodic benefit cost 148 0.0 % 50 0.0 % Interest, net 2,207 0.4 % 906 0.2 % Earnings from continuing operations before income taxes 8,497 1.5 % 25,117 4.2 % Income tax expense 1,908 0.3 % 4,693 0.8 % Earnings from continuing operations 6,589 1.1 % 20,424 3.4 % Loss from discontinued operations, net of tax (50 ) 0.0 % (48 ) 0.0 % Net Earnings $ 6,539 1.1 % $ 20,376 3.4 % (1) Includes a $0.1 million charge in the third quarter of Fiscal 2024 for asset impairments. GENESCO INC. Sales/Earnings Summary by Segment (in thousands) (Unaudited) Nine Months Ended Nine Months Ended October 28, % of October 29, % of 2023 Net Sales 2022 Net Sales Sales: Journeys Group $ 908,832 57.3 % $ 1,016,396 61.2 % Schuh Group 334,033 21.1 % 294,486 17.7 % Johnston & Murphy Group 241,823 15.3 % 225,448 13.6 % Genesco Brands Group 100,986 6.4 % 123,538 7.4 % Net Sales $ 1,585,674 100.0 % $ 1,659,868 100.0 % Operating Income (Loss): Journeys Group $ (21,265 ) -2.3 % $ 51,235 5.0 % Schuh Group 12,110 3.6 % 5,260 1.8 % Johnston & Murphy Group 10,178 4.2 % 7,256 3.2 % Genesco Brands Group 259 0.3 % 2,551 2.1 % Corporate and Other(1) (23,601 ) -1.5 % (22,901 ) -1.4 % Goodwill Impairment (28,453 ) -1.8 % - 0.0 % Operating income (loss) (50,772 ) -3.2 % 43,401 2.6 % Other components of net periodic benefit cost 388 0.0 % 198 0.0 % Interest, net 6,241 0.4 % 1,608 0.1 % Earnings (loss) from continuing operations before income taxes (57,401 ) -3.6 % 41,595 2.5 % Income tax expense (benefit) (13,483 ) -0.9 % 8,551 0.5 % Earnings (loss) from continuing operations (43,918 ) -2.8 % 33,044 2.0 % Loss from discontinued operations, net of tax (98 ) 0.0 % (78 ) 0.0 % Net Earnings (Loss) $ (44,016 ) -2.8 % $ 32,966 2.0 % (1) Includes a $0.6 million charge in the first nine months of Fiscal 2024 for asset impairments. Includes a $0.2 million gain in the first nine months of Fiscal 2023 which includes a $0.7 million gain on the termination of the pension plan, partially offset by $0.5 million for asset impairments. GENESCO INC. Condensed Consolidated Balance Sheets (in thousands) (Unaudited) October 28, 2023 October 29, 2022 Assets Cash $ 21,691 $ 32,113 Accounts receivable 56,934 48,670 Inventories 516,735 563,490 Other current assets(1) 43,350 37,575 Total current assets 638,710 681,848 Property and equipment 245,009 221,207 Operating lease right of use assets 459,524 483,403 Goodwill and other intangibles 35,725 64,111 Non-current prepaid income taxes 55,632 52,319 Other non-current assets 58,331 34,105 Total Assets $ 1,492,931 $ 1,536,993 Liabilities and Equity Accounts payable $ 186,683 $ 223,404 Current portion long-term debt - 3,484 Current portion operating lease liabilities 134,850 136,294 Other current liabilities 75,631 82,193 Total current liabilities 397,164 445,375 Long-term debt 128,163 85,904 Long-term operating lease liabilities 387,347 413,096 Other long-term liabilities 43,299 33,275 Equity 536,958 559,343 Total Liabilities and Equity $ 1,492,931 $ 1,536,993 (1) Includes prepaid income taxes of $18.0 million and $13.3 million at October 28, 2023 and October 29, 2022, respectively. GENESCO INC. Store Count Activity Balance Balance Balance 01/29/22 Open Close 01/28/23 Open Close 10/28/23 Journeys Group 1,135 22 27 1,130 24 74 1,080 Schuh Group 123 4 5 122 2 0 124 Johnston & Murphy Group 167 2 11 158 1 3 156 Total Retail Stores 1,425 28 43 1,410 27 77 1,360 GENESCO INC. Store Count Activity Balance Balance 07/29/23 Open Close 10/28/23 Journeys Group 1,095 5 20 1,080 Schuh Group 124 0 0 124 Johnston & Murphy Group 156 0 0 156 Total Retail Stores 1,375 5 20 1,360 GENESCO INC. Comparable Sales(1) Quarter 3 Nine Months Oct. 28, Oct. 29, Oct. 28, Oct. 29, 2023 2022 2023 2022 Journeys Group -8 % 1 % -10 % NA Schuh Group 5 % 3 % 11 % NA Johnston & Murphy Group 1 % 20 % 10 % NA Total Comparable Sales -4 % 3 % -4 % NA Same Store Sales -7 % 2 % -7 % NA Comparable Direct Sales 8 % 6 % 10 % -9 % (1) As a result of store closures in response to the COVID-19 pandemic during the first quarter of Fiscal 2022, and the Company's policy of removing any store closed for seven consecutive days from comparable sales, the Company did not include comparable sales for the first nine months of Fiscal 2023, except for comparable direct sales, as it felt that overall sales was a more meaningful metric last year. Schedule B Genesco Inc. Adjustments to Reported Earnings from Continuing Operations Three Months Ended October 28, 2023 and October 29, 2022 The Company believes that disclosure of earnings and earnings per share from continuing operations and operating income 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. Quarter 3 Quarter 3 October 28, 2023 October 29, 2022 Net of Per Share Net of Per Share In Thousands (except per share amounts) Pretax Tax Amounts Pretax Tax Amounts Earnings from continuing operations, as reported $ 6,589 $0.60 $ 20,424 $1.66 Asset impairments and other adjustments: Asset impairment charges $ 99 79 0.01 $ - (3 ) 0.00 Fees related to shareholder activist - - 0.00 - (2 ) 0.00 Expenses related to new HQ building - - 0.00 257 200 0.01 Total asset impairments and other adjustments $ 99 79 0.01 $ 257 195 0.01 Income tax expense adjustments: Tax impact share based awards 48 0.00 28 0.00 Other tax items (509 ) (0.04 ) (251 ) (0.02 ) Total income tax expense adjustments (461 ) (0.04 ) (223 ) (0.02 ) Adjusted earnings from continuing operations (1) and (2) $ 6,207 $0.57 $ 20,396 $1.65 (1) The adjusted tax rate for the third quarter of Fiscal 2024 and 2023 is 27.8% and 19.6%, respectively. (2) EPS reflects 11.0 million and 12.3 million share count for the third quarter of Fiscal 2024 and 2023, respectively, which includes common stock equivalents in both periods. Genesco Inc. Adjustments to Reported Operating Income and Selling and Administrative Expenses Three Months Ended October 28, 2023 and October 29, 2022 Quarter 3 - October 28, 2023 Operating Asset Impair Adj Operating In Thousands Income (Loss) & Other Adj Income (Loss) Journeys Group $ 11,975 $ - $ 11,975 Schuh Group 5,484 - 5,484 Johnston & Murphy Group 2,706 - 2,706 Genesco Brands Group (1,560 ) - (1,560 ) Goodwill Impairment - - - Corporate and Other (7,753 ) 99 (7,654 ) Total Operating Income $ 10,852 $ 99 $ 10,951 % of sales 1.9 % 1.9 % Quarter 3 - October 29, 2022 Operating Asset Impair Adj Operating In Thousands Income (Loss) & Other Adj Income (Loss) Journeys Group $ 27,083 $ - $ 27,083 Schuh Group 5,912 - 5,912 Johnston & Murphy Group 3,494 - 3,494 Genesco Brands Group (1,927 ) - (1,927 ) Corporate and Other (8,489 ) 257 (8,232 ) Total Operating Income $ 26,073 $ 257 $ 26,330 % of sales 4.3 % 4.4 % Quarter 3 In Thousands Oct. 28, 2023 Oct. 29, 2022 Selling and administrative expenses, as reported $ 267,474 $ 267,734 Expenses related to new HQ building - (257 ) Total adjustments - (257 ) Adjusted selling and administrative expenses $ 267,474 $ 267,477 % of sales 46.2 % 44.3 % Schedule B Genesco Inc. Adjustments to Reported Earnings (Loss) from Continuing Operations Nine Months Ended October 28, 2023 and October 29, 2022 The Company believes that disclosure of earnings (loss) and earnings (loss) per share from continuing operations and operating income (loss) 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. Nine Months Nine Months October 28, 2023 October 29, 2022 Net of Per Share Net of Per Share In Thousands (except per share amounts) Pretax Tax Amounts Pretax Tax Amounts Earnings (loss) from continuing operations, as reported $ (43,918 ) ($3.87 ) $ 33,044 $2.56 Asset impairments and other adjustments: Asset impairment charges $ 581 446 0.04 $ 541 454 0.04 Goodwill impairment charge 28,453 21,858 1.93 - - 0.00 Gain on pension termination - - 0.00 (695 ) (520 ) (0.04 ) Expenses related to new HQ building - - 0.00 2,545 1,905 0.15 Total asset impairments and other adjustments $ 29,034 22,304 1.97 $ 2,391 1,839 0.15 Income tax expense adjustments: Tax impact share based awards 1,059 0.09 (635 ) (0.05 ) Other tax items (1,578 ) (0.14 ) (250 ) (0.02 ) Total income tax expense adjustments (519 ) (0.05 ) (885 ) (0.07 ) Adjusted earnings (loss) from continuing operations (1) and (2) $ (22,133 ) ($1.95 ) $ 33,998 $2.64 (1) The adjusted tax rate for the first nine months of Fiscal 2024 and 2023 is 22.0% and 22.7%, respectively. (2) EPS reflects 11.4 million and 12.9 million share count for the first nine months of Fiscal 2024 and 2023, respectively, which includes common stock equivalents in the first nine months last year but not in this year due to the loss from continuing operations. Genesco Inc. Adjustments to Reported Operating Income (Loss) and Selling and Administrative Expenses Nine Months Ended October 28, 2023 and October 29, 2022 Nine Months October 28, 2023 Operating Asset Impair Adj Operating In Thousands Income (Loss) & Other Adj Income (Loss) Journeys Group $ (21,265 ) $ - $ (21,265 ) Schuh Group 12,110 - 12,110 Johnston & Murphy Group 10,178 - 10,178 Genesco Brands Group 259 - 259 Goodwill Impairment (28,453 ) 28,453 - Corporate and Other (23,601 ) 581 (23,020 ) Total Operating Loss $ (50,772 ) $ 29,034 $ (21,738 ) % of sales -3.2 % -1.4 % Nine Months October 29, 2022 Operating Asset Impair Adj Operating In Thousands Income (Loss) & Other Adj Income (Loss) Journeys Group $ 51,235 $ - $ 51,235 Schuh Group 5,260 - 5,260 Johnston & Murphy Group 7,256 - 7,256 Genesco Brands Group 2,551 - 2,551 Corporate and Other (22,901 ) 2,391 (20,510 ) Total Operating Income $ 43,401 $ 2,391 $ 45,792 % of sales 2.6 % 2.8 % Nine Months In Thousands Oct. 28, 2023 Oct. 29, 2022 Selling and administrative expenses, as reported $ 778,491 $ 756,318 Expenses related to new HQ building - (2,545 ) Total adjustments - (2,545 ) Adjusted selling and administrative expenses $ 778,491 $ 753,773 % of sales 49.1 % 45.4 % Schedule B Genesco Inc. Adjustments to Forecasted Earnings (Loss) from Continuing Operations Fiscal Year Ending February 3, 2024 In millions (except per share amounts) High Guidance Low Guidance Fiscal 2024 Fiscal 2024 Net of Tax Per Share Net of Tax Per Share Forecasted earnings (loss) from continuing operations $ (0.7 ) $ (0.06 ) $ (6.8 ) $ (0.60 ) Asset impairments and other adjustments: Asset impairments and other matters 1.5 0.13 1.9 0.17 Goodwill impairment 21.9 1.93 21.9 1.93 Total asset impairments and other adjustments (1) 23.4 2.06 23.8 2.10 Adjusted forecasted earnings from continuing operations (2) $ 22.7 $ 2.00 $ 17.0 $ 1.50 (1) All adjustments are net of tax where applicable. The forecasted tax rate for Fiscal 2024 is approximately 24%. (2) EPS reflects 11.4 million share count for Fiscal 2024 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20231130578344/en/Contacts Genesco Financial Contacts Thomas A. George (615) 367-7465 tgeorge@genesco.com Darryl MacQuarrie (615) 367-7672 dmacquarrie@genesco.com Genesco Media Contact Claire S. McCall (615) 367-8283 cmccall@genesco.com
Genesco Inc. (NYSE: GCO) today reported third quarter results for the three months ended October 28, 2023. Third Quarter Fiscal 2024 Financial Summary Net sales of $579 million decreased 4% compared to Q3FY23 Comps down 4%, with stores down 7% and direct up 8% E-commerce sales represented 21% of retail sales compared to 18% last year GAAP EPS from continuing operations was $0.60 vs. $1.66 last year Non-GAAP EPS from continuing operations was $0.571 vs. $1.65 last year Mimi E. Vaughn, Genesco’s Board Chair, President and Chief Executive Officer, said, “Following a good Back-to-School season, demand in October softened in an ongoing challenging operating environment, along with a delayed start to the fall selling season. Disruptions related to implementation of a new ERP system for our branded businesses added to the pressure, all leading to results that were below our expectations. Despite these headwinds, we were pleased to see sales trends within our Journeys business continue to sequentially improve, and Schuh and Johnston & Murphy deliver record third-quarter sales. In the meantime, we continued to inject Journeys’ product assortment with more of the newness and must-have items our customer desires, while also executing on our cost reduction and store closure plans.” Vaughn continued, “Fourth quarter-to-date, I’m pleased to say our total comps are currently running positive and we experienced a strong start to the holiday season. However, as consumer shopping behavior remains choppy, we plan to increase our promotional activity, especially at Journeys, for the remainder of the holiday season to be more competitive and drive sales in this environment. Our revised Fiscal 2024 outlook reflects this, partially offset by a somewhat more conservative view for our other businesses. Looking ahead, I have confidence that our strategic initiatives and specific efforts to elevate Journeys in the marketplace will help us continue to drive progress in the near term while positioning us even more strongly to create value for the longer term.” __________________________ 1Excludes a charge for asset impairments, net of tax effect in the third quarter of Fiscal 2024 (“Excluded Items”). A reconciliation of earnings (loss) and earnings (loss) per share from continuing operations in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) with the adjusted earnings (loss) and earnings (loss) per share numbers is set forth on Schedule B to this press release. The Company believes that disclosure of earnings (loss) and earnings (loss) 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. Third Quarter Review Net sales for the third quarter of Fiscal 2024 of $579 million decreased 4% compared to $604 million in the third quarter of Fiscal 2023. The sales decrease compared to last year was driven by decreased store sales in Journeys Group and decreased wholesale sales in Genesco Brands Group, partially offset by an 8% increase in e-commerce comparable sales and a favorable foreign exchange impact. Comparable Sales Comparable Same Store and Direct Sales: 3QFY24 3QFY23 Journeys Group (8)% 1% Schuh Group 5% 3% Johnston & Murphy Group 1% 20% Total Genesco Comparable Sales (4)% 3% Same Store Sales (7)% 2% Comparable Direct Sales 8% 6% The overall sales decrease of 4% for the third quarter of Fiscal 2024 compared to the third quarter of Fiscal 2023 was driven by a decrease of 8% at Journeys and a 22% or $8 million decrease at Genesco Brands, partially offset by an increase of 13% at Schuh and an increase of 2% at Johnston & Murphy. On a constant currency basis, Schuh had record third quarter sales, which were up 5%. Third quarter gross margin this year was 48.1%, down 60 basis points compared with 48.7% last year. The decrease as a percentage of sales compared to Fiscal 2023 is due primarily to increased promotional activity at Journeys, including introductory coupons for their new loyalty program, more normalized markdowns and closeouts at Johnston & Murphy and increased shipping and warehouse expense in all retail businesses, reflecting increased warehouse costs and higher e-commerce penetration, partially offset by improved margins at Schuh and Genesco Brands. Selling and administrative expense for the third quarter this year increased 190 basis points as a percentage of sales compared with last year. Adjusted selling and administrative expense for the third quarter this year also increased 190 basis points as a percentage of sales compared with last year. The increase as a percentage of sales compared to Fiscal 2023 reflects the deleverage of expenses, especially compensation, marketing and depreciation expenses, as a result of decreased revenue in the third quarter of Fiscal 2024. In absolute dollars, selling and administrative expenses were flat for the third quarter this year compared to last year. Genesco’s GAAP operating income for the third quarter was $10.9 million, or 1.9% of sales this year, compared with $26.1 million, or 4.3% of sales in the third quarter last year. Adjusted for the Excluded Items in all periods, operating income for the third quarter was $11.0 million this year compared to $26.3 million last year. Adjusted operating margin was 1.9% of sales in the third quarter of Fiscal 2024 and 4.4% in the third quarter last year. The effective tax rate for the quarter was 22.5% in Fiscal 2024 compared to 18.7% in the third quarter last year. The adjusted tax rate, reflecting Excluded Items, was 27.8% in Fiscal 2024 compared to 19.6% in the third quarter last year. The higher adjusted tax rate for the third quarter this year compared to the third quarter last year primarily reflects that we are no longer subject to a valuation allowance in certain jurisdictions. GAAP earnings from continuing operations were $6.6 million in the third quarter of Fiscal 2024 compared to $20.4 million in the third quarter last year. Adjusted for the Excluded Items in all periods, third quarter earnings from continuing operations were $6.2 million, or $0.57 per share, in Fiscal 2024, compared to $20.4 million, or $1.65 per share, in the third quarter last year. Cash, Borrowings and Inventory Cash as of October 28, 2023 was $21.7 million, compared with $32.1 million as of October 29, 2022. Total debt at the end of the third quarter of Fiscal 2024 was $128.2 million compared with $89.4 million at the end of last year’s third quarter. Inventories decreased 8% on a year over year basis reflecting decreased inventory for Journeys and Johnston & Murphy, partially offset by an increase at Schuh. Capital Expenditures and Store Activity For the third quarter this year, capital expenditures were $15 million, related primarily to retail stores and digital and omnichannel initiatives. Depreciation and amortization was $12 million. During the quarter, the Company opened five stores and closed 20 stores. The Company ended the quarter with 1,360 stores compared with 1,404 stores at the end of the third quarter last year, or a decrease of 3%. Square footage was down 1% on a year-over-year basis. Share Repurchases The Company did not repurchase any shares during the third quarter of Fiscal 2024. The Company currently has $52.1 million remaining on its expanded share repurchase authorization announced in June 2023. Store Closing and Cost Savings Update The Company remains on track to close approximately 100 Journeys stores in Fiscal 2024 The Company continues to anticipate up to $40 million in cost reductions by the end of Fiscal 2025 Revised Fiscal 2024 EPS Outlook For Fiscal 2024, the Company: Now expects sales to be down 1% to 2%, or down 2% to 3% excluding the 53rd week this year, compared to Fiscal 2023 Now expects adjusted diluted earnings per share from continuing operations in the range of $1.50 to $2.00, with an expectation that EPS will be near the mid-point of the range 2 Guidance assumes no further share repurchases and a tax rate of 24% Conference Call, Management Commentary and Investor Presentation The Company has posted detailed financial commentary and a supplemental financial presentation of third quarter results on its website, www.genesco.com, in the investor relations section. The Company's live conference call on December 1, 2023, at 7:30 a.m. (Central time), may be accessed through the Company's 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. __________________________ 2A reconciliation of the adjusted financial measures cited in the guidance to their corresponding measures as reported pursuant to GAAP is included in Schedule B to this press release. Safe Harbor Statement This release contains forward-looking statements, including those regarding future sales, earnings, operating income, gross margins, expenses, capital expenditures, depreciation and amortization, tax rates, store openings and closures, cost reductions, ESG progress and all other statements not addressing solely historical facts or present conditions. Forward-looking statements are usually identified by or are associated with such words as “intend,” “expect,” “feel,” “believe,” “anticipate,” “optimistic,” “confident” and similar terminology. Actual results could vary materially from the expectations reflected in these statements. A number of factors could cause differences. These include adjustments to projections reflected in forward-looking statements, including those resulting from weakness in store and shopping mall traffic, restrictions on operations imposed by government entities and/or landlords, changes in public safety and health requirements, and limitations on the Company’s ability to adequately staff and operate stores. Differences from expectations could also result from store closures and effects on the business as a result of civil disturbances; the level and timing of promotional activity necessary to maintain inventories at appropriate levels; our ability to pass on price increases to our customers; the imposition of tariffs on product imported by the Company or its vendors as well as the ability and costs to move production of products in response to tariffs; the Company’s ability to obtain from suppliers products that are in-demand on a timely basis and effectively manage disruptions in product supply or distribution, including disruptions as a result of pandemics or geopolitical events; unfavorable trends in fuel costs, foreign exchange rates, foreign labor and material costs, and other factors affecting the cost of products; our ability to renew our license agreements; impacts of the Russia-Ukraine war, and other sources of market weakness in the U.K. and Republic of Ireland; the effectiveness of the Company's omnichannel initiatives; costs associated with changes in minimum wage and overtime requirements; wage pressure in the U.S. and the U.K.; weakness in the consumer economy and retail industry; competition and fashion trends in the Company's markets; risks related to the potential for terrorist events; risks related to public health and safety events; changes in buying patterns by significant wholesale customers; retained liabilities associated with divestitures of businesses including potential liabilities under leases as the prior tenant or as a guarantor; and changes in the timing of holidays or in the onset of seasonal weather affecting period-to-period sales comparisons. Additional factors that could cause differences from expectations include the ability to secure allocations to refine product assortments to address consumer demand; the ability to renew leases in existing stores and control or lower occupancy costs, to open or close stores in the number and on the planned schedule, and to conduct required remodeling or refurbishment on schedule and at expected expense levels; the Company’s ability to realize anticipated cost savings, including rent savings; the amount and timing of share repurchases; the Company’s ability to achieve expected digital gains and gain market share; 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, operating lease right of use assets or intangible assets or other adverse financial consequences and the timing and amount of such impairments or other consequences; unexpected changes to the market for the Company's shares or for the retail sector in general; our ability to meet our sustainability, stewardship, emission and diversity, equity and inclusion related ESG projections, goals and commitments; costs and reputational harm as a result of disruptions in the Company’s business or information technology systems either by security breaches and incidents or by potential problems associated with the implementation of new or upgraded systems; the Company’s ability to realize any anticipated tax benefits in both the amount and timeframe anticipated; and the cost and outcome of litigation, investigations, environmental matters and other disputes 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, the Company’s 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 the Company’s 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. (NYSE: GCO) is a footwear focused company with distinctively positioned retail and lifestyle brands and proven omnichannel capabilities offering customers the footwear they desire in engaging shopping environments, including approximately 1,350 retail stores and branded e-commerce websites. Its Journeys, Little Burgundy and Schuh brands serve teens, kids and young adults with on-trend fashion footwear that inspires youth culture in the U.S., Canada and the U.K. Johnston & Murphy serves the successful, affluent man and woman with premium footwear, apparel and accessories in the U.S. and Canada, and Genesco Brands Group sells branded lifestyle footwear to leading retailers under licensed brands including Levi’s, Dockers and G.H. Bass. Founded in 1924, Genesco is based in Nashville, Tennessee. For more information on Genesco and its operating divisions, please visit www.genesco.com. GENESCO INC. Condensed Consolidated Statements of Operations (in thousands, except per share data) (Unaudited) Quarter 3 Quarter 3 October 28, % of October 29, % of 2023 Net Sales 2022 Net Sales Net sales $ 579,315 100.0 % $ 603,788 100.0 % Cost of sales 300,890 51.9 % 309,981 51.3 % Gross margin 278,425 48.1 % 293,807 48.7 % Selling and administrative expenses 267,474 46.2 % 267,734 44.3 % Asset impairments and other, net 99 0.0 % - 0.0 % Operating income 10,852 1.9 % 26,073 4.3 % Other components of net periodic benefit cost 148 0.0 % 50 0.0 % Interest expense, net 2,207 0.4 % 906 0.2 % Earnings from continuing operations before income taxes 8,497 1.5 % 25,117 4.2 % Income tax expense 1,908 0.3 % 4,693 0.8 % Earnings from continuing operations 6,589 1.1 % 20,424 3.4 % Loss from discontinued operations, net of tax (50 ) 0.0 % (48 ) 0.0 % Net Earnings $ 6,539 1.1 % $ 20,376 3.4 % Basic earnings per share: Before discontinued operations $ 0.60 $ 1.68 Net earnings $ 0.60 $ 1.68 Diluted earnings per share: Before discontinued operations $ 0.60 $ 1.66 Net earnings $ 0.60 $ 1.65 Weighted-average shares outstanding: Basic 10,898 12,138 Diluted 10,972 12,326 GENESCO INC. Condensed Consolidated Statements of Operations (in thousands, except per share data) (Unaudited) Nine Months Ended Nine Months Ended October 28, % of October 29, % of 2023 Net Sales 2022 Net Sales Net sales $ 1,585,674 100.0 % $ 1,659,868 100.0 % Cost of sales 828,921 52.3 % 860,303 51.8 % Gross margin 756,753 47.7 % 799,565 48.2 % Selling and administrative expenses 778,491 49.1 % 756,318 45.6 % Goodwill impairment 28,453 1.8 % - 0.0 % Asset impairments and other, net 581 0.0 % (154 ) 0.0 % Operating income (loss) (50,772 ) -3.2 % 43,401 2.6 % Other components of net periodic benefit cost 388 0.0 % 198 0.0 % Interest expense, net 6,241 0.4 % 1,608 0.1 % Earnings (loss) from continuing operations before income taxes (57,401 ) -3.6 % 41,595 2.5 % Income tax expense (benefit) (13,483 ) -0.9 % 8,551 0.5 % Earnings (loss) from continuing operations (43,918 ) -2.8 % 33,044 2.0 % Loss from discontinued operations, net of tax (98 ) 0.0 % (78 ) 0.0 % Net Earnings (Loss) $ (44,016 ) -2.8 % $ 32,966 2.0 % Basic earnings (loss) per share: Before discontinued operations $ (3.87 ) $ 2.61 Net earnings (loss) $ (3.88 ) $ 2.61 Diluted earnings (loss) per share: Before discontinued operations $ (3.87 ) $ 2.56 Net earnings (loss) $ (3.88 ) $ 2.56 Weighted-average shares outstanding: Basic 11,353 12,637 Diluted 11,353 12,901 GENESCO INC. Sales/Earnings Summary by Segment (in thousands) (Unaudited) Quarter 3 Quarter 3 October 28, % of October 29, % of 2023 Net Sales 2022 Net Sales Sales: Journeys Group $ 349,367 60.3 % $ 380,619 63.0 % Schuh Group 118,129 20.4 % 104,809 17.4 % Johnston & Murphy Group 81,411 14.1 % 79,614 13.2 % Genesco Brands Group 30,408 5.2 % 38,746 6.4 % Net Sales $ 579,315 100.0 % $ 603,788 100.0 % Operating Income (Loss): Journeys Group $ 11,975 3.4 % $ 27,083 7.1 % Schuh Group 5,484 4.6 % 5,912 5.6 % Johnston & Murphy Group 2,706 3.3 % 3,494 4.4 % Genesco Brands Group (1,560 ) -5.1 % (1,927 ) -5.0 % Corporate and Other(1) (7,753 ) -1.3 % (8,489 ) -1.4 % Operating income 10,852 1.9 % 26,073 4.3 % Other components of net periodic benefit cost 148 0.0 % 50 0.0 % Interest, net 2,207 0.4 % 906 0.2 % Earnings from continuing operations before income taxes 8,497 1.5 % 25,117 4.2 % Income tax expense 1,908 0.3 % 4,693 0.8 % Earnings from continuing operations 6,589 1.1 % 20,424 3.4 % Loss from discontinued operations, net of tax (50 ) 0.0 % (48 ) 0.0 % Net Earnings $ 6,539 1.1 % $ 20,376 3.4 % (1) Includes a $0.1 million charge in the third quarter of Fiscal 2024 for asset impairments. GENESCO INC. Sales/Earnings Summary by Segment (in thousands) (Unaudited) Nine Months Ended Nine Months Ended October 28, % of October 29, % of 2023 Net Sales 2022 Net Sales Sales: Journeys Group $ 908,832 57.3 % $ 1,016,396 61.2 % Schuh Group 334,033 21.1 % 294,486 17.7 % Johnston & Murphy Group 241,823 15.3 % 225,448 13.6 % Genesco Brands Group 100,986 6.4 % 123,538 7.4 % Net Sales $ 1,585,674 100.0 % $ 1,659,868 100.0 % Operating Income (Loss): Journeys Group $ (21,265 ) -2.3 % $ 51,235 5.0 % Schuh Group 12,110 3.6 % 5,260 1.8 % Johnston & Murphy Group 10,178 4.2 % 7,256 3.2 % Genesco Brands Group 259 0.3 % 2,551 2.1 % Corporate and Other(1) (23,601 ) -1.5 % (22,901 ) -1.4 % Goodwill Impairment (28,453 ) -1.8 % - 0.0 % Operating income (loss) (50,772 ) -3.2 % 43,401 2.6 % Other components of net periodic benefit cost 388 0.0 % 198 0.0 % Interest, net 6,241 0.4 % 1,608 0.1 % Earnings (loss) from continuing operations before income taxes (57,401 ) -3.6 % 41,595 2.5 % Income tax expense (benefit) (13,483 ) -0.9 % 8,551 0.5 % Earnings (loss) from continuing operations (43,918 ) -2.8 % 33,044 2.0 % Loss from discontinued operations, net of tax (98 ) 0.0 % (78 ) 0.0 % Net Earnings (Loss) $ (44,016 ) -2.8 % $ 32,966 2.0 % (1) Includes a $0.6 million charge in the first nine months of Fiscal 2024 for asset impairments. Includes a $0.2 million gain in the first nine months of Fiscal 2023 which includes a $0.7 million gain on the termination of the pension plan, partially offset by $0.5 million for asset impairments. GENESCO INC. Condensed Consolidated Balance Sheets (in thousands) (Unaudited) October 28, 2023 October 29, 2022 Assets Cash $ 21,691 $ 32,113 Accounts receivable 56,934 48,670 Inventories 516,735 563,490 Other current assets(1) 43,350 37,575 Total current assets 638,710 681,848 Property and equipment 245,009 221,207 Operating lease right of use assets 459,524 483,403 Goodwill and other intangibles 35,725 64,111 Non-current prepaid income taxes 55,632 52,319 Other non-current assets 58,331 34,105 Total Assets $ 1,492,931 $ 1,536,993 Liabilities and Equity Accounts payable $ 186,683 $ 223,404 Current portion long-term debt - 3,484 Current portion operating lease liabilities 134,850 136,294 Other current liabilities 75,631 82,193 Total current liabilities 397,164 445,375 Long-term debt 128,163 85,904 Long-term operating lease liabilities 387,347 413,096 Other long-term liabilities 43,299 33,275 Equity 536,958 559,343 Total Liabilities and Equity $ 1,492,931 $ 1,536,993 (1) Includes prepaid income taxes of $18.0 million and $13.3 million at October 28, 2023 and October 29, 2022, respectively. GENESCO INC. Store Count Activity Balance Balance Balance 01/29/22 Open Close 01/28/23 Open Close 10/28/23 Journeys Group 1,135 22 27 1,130 24 74 1,080 Schuh Group 123 4 5 122 2 0 124 Johnston & Murphy Group 167 2 11 158 1 3 156 Total Retail Stores 1,425 28 43 1,410 27 77 1,360 GENESCO INC. Store Count Activity Balance Balance 07/29/23 Open Close 10/28/23 Journeys Group 1,095 5 20 1,080 Schuh Group 124 0 0 124 Johnston & Murphy Group 156 0 0 156 Total Retail Stores 1,375 5 20 1,360 GENESCO INC. Comparable Sales(1) Quarter 3 Nine Months Oct. 28, Oct. 29, Oct. 28, Oct. 29, 2023 2022 2023 2022 Journeys Group -8 % 1 % -10 % NA Schuh Group 5 % 3 % 11 % NA Johnston & Murphy Group 1 % 20 % 10 % NA Total Comparable Sales -4 % 3 % -4 % NA Same Store Sales -7 % 2 % -7 % NA Comparable Direct Sales 8 % 6 % 10 % -9 % (1) As a result of store closures in response to the COVID-19 pandemic during the first quarter of Fiscal 2022, and the Company's policy of removing any store closed for seven consecutive days from comparable sales, the Company did not include comparable sales for the first nine months of Fiscal 2023, except for comparable direct sales, as it felt that overall sales was a more meaningful metric last year. Schedule B Genesco Inc. Adjustments to Reported Earnings from Continuing Operations Three Months Ended October 28, 2023 and October 29, 2022 The Company believes that disclosure of earnings and earnings per share from continuing operations and operating income 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. Quarter 3 Quarter 3 October 28, 2023 October 29, 2022 Net of Per Share Net of Per Share In Thousands (except per share amounts) Pretax Tax Amounts Pretax Tax Amounts Earnings from continuing operations, as reported $ 6,589 $0.60 $ 20,424 $1.66 Asset impairments and other adjustments: Asset impairment charges $ 99 79 0.01 $ - (3 ) 0.00 Fees related to shareholder activist - - 0.00 - (2 ) 0.00 Expenses related to new HQ building - - 0.00 257 200 0.01 Total asset impairments and other adjustments $ 99 79 0.01 $ 257 195 0.01 Income tax expense adjustments: Tax impact share based awards 48 0.00 28 0.00 Other tax items (509 ) (0.04 ) (251 ) (0.02 ) Total income tax expense adjustments (461 ) (0.04 ) (223 ) (0.02 ) Adjusted earnings from continuing operations (1) and (2) $ 6,207 $0.57 $ 20,396 $1.65 (1) The adjusted tax rate for the third quarter of Fiscal 2024 and 2023 is 27.8% and 19.6%, respectively. (2) EPS reflects 11.0 million and 12.3 million share count for the third quarter of Fiscal 2024 and 2023, respectively, which includes common stock equivalents in both periods. Genesco Inc. Adjustments to Reported Operating Income and Selling and Administrative Expenses Three Months Ended October 28, 2023 and October 29, 2022 Quarter 3 - October 28, 2023 Operating Asset Impair Adj Operating In Thousands Income (Loss) & Other Adj Income (Loss) Journeys Group $ 11,975 $ - $ 11,975 Schuh Group 5,484 - 5,484 Johnston & Murphy Group 2,706 - 2,706 Genesco Brands Group (1,560 ) - (1,560 ) Goodwill Impairment - - - Corporate and Other (7,753 ) 99 (7,654 ) Total Operating Income $ 10,852 $ 99 $ 10,951 % of sales 1.9 % 1.9 % Quarter 3 - October 29, 2022 Operating Asset Impair Adj Operating In Thousands Income (Loss) & Other Adj Income (Loss) Journeys Group $ 27,083 $ - $ 27,083 Schuh Group 5,912 - 5,912 Johnston & Murphy Group 3,494 - 3,494 Genesco Brands Group (1,927 ) - (1,927 ) Corporate and Other (8,489 ) 257 (8,232 ) Total Operating Income $ 26,073 $ 257 $ 26,330 % of sales 4.3 % 4.4 % Quarter 3 In Thousands Oct. 28, 2023 Oct. 29, 2022 Selling and administrative expenses, as reported $ 267,474 $ 267,734 Expenses related to new HQ building - (257 ) Total adjustments - (257 ) Adjusted selling and administrative expenses $ 267,474 $ 267,477 % of sales 46.2 % 44.3 % Schedule B Genesco Inc. Adjustments to Reported Earnings (Loss) from Continuing Operations Nine Months Ended October 28, 2023 and October 29, 2022 The Company believes that disclosure of earnings (loss) and earnings (loss) per share from continuing operations and operating income (loss) 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. Nine Months Nine Months October 28, 2023 October 29, 2022 Net of Per Share Net of Per Share In Thousands (except per share amounts) Pretax Tax Amounts Pretax Tax Amounts Earnings (loss) from continuing operations, as reported $ (43,918 ) ($3.87 ) $ 33,044 $2.56 Asset impairments and other adjustments: Asset impairment charges $ 581 446 0.04 $ 541 454 0.04 Goodwill impairment charge 28,453 21,858 1.93 - - 0.00 Gain on pension termination - - 0.00 (695 ) (520 ) (0.04 ) Expenses related to new HQ building - - 0.00 2,545 1,905 0.15 Total asset impairments and other adjustments $ 29,034 22,304 1.97 $ 2,391 1,839 0.15 Income tax expense adjustments: Tax impact share based awards 1,059 0.09 (635 ) (0.05 ) Other tax items (1,578 ) (0.14 ) (250 ) (0.02 ) Total income tax expense adjustments (519 ) (0.05 ) (885 ) (0.07 ) Adjusted earnings (loss) from continuing operations (1) and (2) $ (22,133 ) ($1.95 ) $ 33,998 $2.64 (1) The adjusted tax rate for the first nine months of Fiscal 2024 and 2023 is 22.0% and 22.7%, respectively. (2) EPS reflects 11.4 million and 12.9 million share count for the first nine months of Fiscal 2024 and 2023, respectively, which includes common stock equivalents in the first nine months last year but not in this year due to the loss from continuing operations. Genesco Inc. Adjustments to Reported Operating Income (Loss) and Selling and Administrative Expenses Nine Months Ended October 28, 2023 and October 29, 2022 Nine Months October 28, 2023 Operating Asset Impair Adj Operating In Thousands Income (Loss) & Other Adj Income (Loss) Journeys Group $ (21,265 ) $ - $ (21,265 ) Schuh Group 12,110 - 12,110 Johnston & Murphy Group 10,178 - 10,178 Genesco Brands Group 259 - 259 Goodwill Impairment (28,453 ) 28,453 - Corporate and Other (23,601 ) 581 (23,020 ) Total Operating Loss $ (50,772 ) $ 29,034 $ (21,738 ) % of sales -3.2 % -1.4 % Nine Months October 29, 2022 Operating Asset Impair Adj Operating In Thousands Income (Loss) & Other Adj Income (Loss) Journeys Group $ 51,235 $ - $ 51,235 Schuh Group 5,260 - 5,260 Johnston & Murphy Group 7,256 - 7,256 Genesco Brands Group 2,551 - 2,551 Corporate and Other (22,901 ) 2,391 (20,510 ) Total Operating Income $ 43,401 $ 2,391 $ 45,792 % of sales 2.6 % 2.8 % Nine Months In Thousands Oct. 28, 2023 Oct. 29, 2022 Selling and administrative expenses, as reported $ 778,491 $ 756,318 Expenses related to new HQ building - (2,545 ) Total adjustments - (2,545 ) Adjusted selling and administrative expenses $ 778,491 $ 753,773 % of sales 49.1 % 45.4 % Schedule B Genesco Inc. Adjustments to Forecasted Earnings (Loss) from Continuing Operations Fiscal Year Ending February 3, 2024 In millions (except per share amounts) High Guidance Low Guidance Fiscal 2024 Fiscal 2024 Net of Tax Per Share Net of Tax Per Share Forecasted earnings (loss) from continuing operations $ (0.7 ) $ (0.06 ) $ (6.8 ) $ (0.60 ) Asset impairments and other adjustments: Asset impairments and other matters 1.5 0.13 1.9 0.17 Goodwill impairment 21.9 1.93 21.9 1.93 Total asset impairments and other adjustments (1) 23.4 2.06 23.8 2.10 Adjusted forecasted earnings from continuing operations (2) $ 22.7 $ 2.00 $ 17.0 $ 1.50 (1) All adjustments are net of tax where applicable. The forecasted tax rate for Fiscal 2024 is approximately 24%. (2) EPS reflects 11.4 million share count for Fiscal 2024 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20231130578344/en/
Genesco Financial Contacts Thomas A. George (615) 367-7465 tgeorge@genesco.com Darryl MacQuarrie (615) 367-7672 dmacquarrie@genesco.com Genesco Media Contact Claire S. McCall (615) 367-8283 cmccall@genesco.com