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Genesco Reports Second Quarter Fiscal 2013 Results
--Second Quarter Comparable Store Sales Increased 4%--
-- Company Raises Fiscal 2013 Outlook--
--Announces New Share Repurchase Authorization--

NASHVILLE, Tenn., Aug. 29, 2012 /PRNewswire/ -- Genesco Inc. (NYSE: GCO) today reported earnings from continuing operations for the second quarter ended July 28, 2012, of $10.6 million, or $0.44 per diluted share, compared to earnings from continuing operations of $0.4 million, or $0.01 per diluted share, for the second quarter ended July 30, 2011.  Fiscal 2013 second quarter results reflect pretax items of $3.3 million, or $0.06 per diluted share after tax, primarily including compensation expenses related to deferred purchase price payments in connection with the acquisition of Schuh Group Limited in June 2011, decreased by tax rate adjustments, and asset impairment charges.  As previously announced, because the obligation to pay the deferred purchase price for Schuh is contingent upon the continued employment of the payees, U.S. Generally Accepted Accounting Principles require that it be treated as compensation expense. Last year, second quarter results included $8.1 million pretax, or $0.21 per diluted share after tax, of acquisition-related expenses including deferred purchase price, decreased by a tax rate adjustment, and asset impairment charges.

Adjusted for the items described above in both periods, earnings from continuing operations were $12.1 million, or $0.50 per diluted share, for the second quarter of Fiscal 2013, compared to earnings from continuing operations of $5.2 million, or $0.22 per diluted share, for the second quarter of Fiscal 2012.  For consistency with Fiscal 2013's previously announced earnings expectations and with previously reported adjusted results for the prior year period, the Company believes that the disclosure of the results from continuing operations adjusted for these items will be useful to investors. Additionally, the Company believes that the presentation of earnings from continuing operations before the compensation expense associated with the Schuh deferred purchase price will enable investors to understand the effect attributable to incorporating a continuing employment condition into the obligation to pay deferred purchase price.  A reconciliation of earnings and earnings per share from continuing operations in accordance with U.S. Generally Accepted Accounting Principles with the adjusted earnings and earnings per share numbers presented in this paragraph is set forth on Schedule B to this press release.

Net sales for the second quarter of Fiscal 2013 increased 15% to $543.5 million from $470.6 million in the second quarter of Fiscal 2012, reflecting the addition of sales from Schuh Group and a comparable store sales increase of 4%.  The Lids Sports Group's comparable store sales increased by 2%, the Journeys Group increased by 6%, and Johnston & Murphy Retail increased by 2%.  The Schuh Group's comparable store sales increased by 9% in the month of July, the first month it was eligible for inclusion in the Company's comparable store numbers.

Robert J. Dennis, chairman, president and chief executive officer of Genesco, said, "We are pleased with the strength of our second quarter performance. We generated significant operating expense leverage on solid sales growth to deliver earnings that were ahead of expectations. With August comparable sales up 9%, the third quarter is off to an encouraging start. We believe our merchandise assortment is well positioned for the remainder of back-to-school and the upcoming holiday season."

Dennis also discussed the Company's updated outlook.  "Based on second quarter performance, we are raising our guidance for the year. We now expect adjusted Fiscal 2013 diluted earnings per share to be in the range of $4.88 to $5.00, an increase from our previous guidance range of $4.70 to $4.82. The new outlook represents an increase of 19% to 22% over last year's adjusted earnings per share of $4.09.  Consistent with previous guidance, these expectations do not include expected non-cash asset impairments and other charges, which are estimated in the range of $1.5 million to $2.5 million pretax, or $0.04 to $0.06 per share, after tax, in Fiscal 2013.

They also do not reflect compensation expense associated with the Schuh deferred purchase price as described above, which is currently estimated at approximately $12.0 million, or $0.49 per diluted share, for the full year. The revised guidance assumes a comparable sales increase in the 4% range for the full fiscal year."  A reconciliation of the adjusted financial measures cited in the guidance to their corresponding measures as reported pursuant to U.S. Generally Accepted Accounting Principles is included in Schedule B to this press release.

Dennis concluded, "Our strong operating performances over the last several quarters highlight the strength of our business model. While the economic conditions in each of our markets have been challenging at times, our portfolio of businesses have continued to perform well, thanks to their strategic advantages and focus on operational excellence."

Share Repurchase Authorization
Genesco also announced that its board of directors has authorized it to repurchase up to $75 million of the Company's common stock. The authorization replaces the remaining balance of a previous $35 million repurchase program authorized in October 2010, pursuant to which the Company has repurchased approximately 366,000 shares at a total cost of approximately $21.5 million, including approximately 346,000 shares repurchased during the second quarter this year, at a total cost of approximately $20.8 million. This program may be implemented through purchases made from time to time using a variety of methods, which may include open market purchases, private transactions, block trades, or otherwise, or by any combination of such methods, in accordance with SEC and other applicable legal requirements. The timing, prices and sizes of purchases will depend upon prevailing stock prices, general economic and market conditions and other considerations. The repurchase program does not obligate the Company to acquire any particular amount of common stock and the repurchase program may be suspended or discontinued at any time at the Company's discretion.

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 August 29, 2012 at 7:30 a.m. (Central time), may be accessed through the Company's internet website, www.genesco.com. To listen live, please go to the website at least 15 minutes early to register, download and install any necessary software.

 Cautionary Note Concerning Forward-Looking Statements
This release contains forward-looking statements, including those regarding the performance outlook for the Company and its individual businesses (including, without limitation, sales, earnings, charges and operating margins), 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 amount of required accruals related to the contingent bonus  potentially payable to Schuh management in four years based on the achievement of certain performance objectives; the costs of responding to and liability in connection with the network intrusion announced in December 2010 and the outcome of other actual and threatened litigation and loss contingencies involving the Company; the timing and amount of non-cash asset impairments; weakness in the consumer economy; competition in the Company's markets; inability of customers to obtain credit; fashion trends that affect the sales or product margins of the Company's retail product offerings; changes in buying patterns by significant wholesale customers; bankruptcies or deterioration in financial condition of significant wholesale customers; disruptions in product supply or distribution; unfavorable trends in fuel costs, foreign exchange rates, foreign labor and material costs, and other factors affecting the cost of products; the Company's ability to continue to complete and integrate acquisitions, expand its business and diversify its product base; 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 lease negotiations in recent years, 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; and variations from expected pension-related charges caused by conditions in the financial markets. 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 2,400 retail stores throughout the U.S., Canada, the United Kingdom and the Republic of Ireland, principally under the names Journeys, Journeys Kidz, Shi by Journeys, Underground by Journeys, Schuh, Lids, Lids Locker Room, Johnston & Murphy, and on internet websites www.journeys.com, www.journeyskidz.com, www.shibyjourneys.com, www.undergroundbyjourneys.com, www.schuh.co.uk, www.johnstonmurphy.comwww.lids.com,  www.lids.ca, www.lidslockerroom.com, www.lidsteamsports.com, www.lidsclubhouse.com ,www.suregripfootwear.com and www.dockersshoes.com.  The Company's Lids Sports Group 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, SureGrip, and other brands. For more information on Genesco and its operating divisions, please visit www.genesco.com.

 

GENESCO INC.













Consolidated Earnings Summary











 

Three Months Ended 


 

Six Months Ended 





July 28, 


July 30, 


July 28, 


July 30, 



In Thousands


2012


2011


2012


2011



Net sales


$  543,522


$  470,591


$ 1,143,666


$      952,093



Cost of sales


269,294


233,307


560,135


467,267



Selling and administrative expenses*

256,869


235,286


530,030


456,059



Asset impairments and other, net

404


347


539


1,591



Earnings from operations*

16,955


1,651


52,962


27,176



Interest expense, net

1,207


1,081


2,324


1,595



Earnings from continuing operations










    before income taxes

15,748


570


50,638


25,581














Income tax expense

5,187


220


19,286


10,256



Earnings from continuing operations

10,561


350


31,352


15,325














Provision for discontinued operations

(41)


(742)


(218)


(924)



Net Earnings (Loss)

$    10,520


$        (392)


$       31,134


$        14,401













*Includes $7.8 million of acquisition related expenses for the three and six months ended July 30, 2011.















Earnings Per Share Information












 

Three Months Ended 


 

Six Months Ended 





July 28, 


July 30, 


July 28, 


July 30, 



In Thousands (except per share amounts)

2012


2011


2012


2011



Preferred dividend requirements

$            35


$            49


$              81


$                98














Average common shares - Basic EPS

23,778


23,126


23,687


23,033














Basic earnings (loss) per share:










     Before discontinued operations

$0.44


$0.01


$1.32


$0.66



     Net earnings (loss)

$0.44


($0.02)


$1.31


$0.62














Average common and common










    equivalent shares - Diluted EPS

24,123


23,635


24,168


23,588














Diluted earnings (loss) per share:










     Before discontinued operations

$0.44


$0.01


$1.29


$0.65



     Net earnings (loss)

$0.43


($0.02)


$1.29


$0.61




































GENESCO INC.













Consolidated Earnings Summary











 

Three Months Ended 


 

Six Months Ended 





July 28, 


July 30, 


July 28, 


July 30, 



In Thousands


2012


2011


2012


2011



Sales:











    Journeys Group

$  209,439


$  194,693


$    473,279


$      429,210



    Schuh Group


81,156


33,973


151,468


33,973



    Lids Sports Group

181,879


177,523


365,015


347,199



    Johnston & Murphy Group

48,279


45,571


99,692


93,622



    Licensed Brands

22,256


18,518


53,522


47,468



    Corporate and Other

513


313


690


621



    Net Sales


$  543,522


$  470,591


$ 1,143,666


$      952,093



Operating Income (Loss):










    Journeys Group

$      2,065


$     (3,875)


$       27,347


$        13,583



    Schuh Group (1)

(545)


(77)


(3,496)


(77)



    Lids Sports Group

20,571


18,106


39,739


32,110



    Johnston & Murphy Group

1,814


2,155


5,823


5,050



    Licensed Brands

1,427


994


4,792


4,298



    Corporate and Other (2)

(8,377)


(15,652)


(21,243)


(27,788)



   Earnings from operations

16,955


1,651


52,962


27,176



   Interest, net


1,207


1,081


2,324


1,595



Earnings from continuing operations










    before income taxes

15,748


570


50,638


25,581



Income tax expense

5,187


220


19,286


10,256



Earnings from continuing operations

10,561


350


31,352


15,325














Provision for discontinued operations

(41)


(742)


(218)


(924)



Net Earnings (Loss)

$    10,520


$        (392)


$       31,134


$        14,401













(1) Includes $2.9 million and $5.9 million in deferred payments related to the Schuh acquisition in the second quarter and first


six months ended July 28, 2012, respectively, and $1.4 million for each of the second quarter and six months ended


July 30, 2011.





















(2) Includes a $0.4 million charge and a $0.5 million charge in the second quarter and first six months of Fiscal 2013,



respectively, primarily for asset impairments.  Includes a $0.4 million charge in the second quarter of Fiscal 2012



primarily for asset impairments and includes $1.6 million of other charges in the first six months of Fiscal 2012 which


includes $1.1 million for asset impairments, $0.4 million for network intrusion expenses and $0.1 million for other legal


matters. The second quarter and first six months of Fiscal 2012 also included $6.4 million of acquisition related expenses.













GENESCO INC.
























Consolidated Balance Sheet
















July 28, 


July 30, 



In Thousands






2012


2011



Assets











Cash and cash equivalents





$       47,222


$        35,582



Accounts receivable





45,709


43,305



Inventories






555,626


474,951



Other current assets





80,675


81,046



Total current assets





729,232


634,884



Property and equipment





231,528


229,317



Other non-current assets





420,198


396,680



Total Assets






$ 1,380,958


$  1,260,881



Liabilities and  Equity










Accounts payable





$    212,938


$      197,653



Other current liabilities





154,949


126,809



Total current liabilities





367,887


324,462



Long-term debt






95,001


159,406



Other long-term liabilities





180,338


123,897



Equity






737,732


653,116



Total Liabilities and Equity





$ 1,380,958


$  1,260,881













 



GENESCO INC.





















































Retail Units Operated - Six Months Ended July 28, 2012



















Balance


Acquisi-






Balance


Acquisi-






Balance







01/29/11


tions


Open


Close


01/28/12


tions


Open


Close


07/28/12





Journeys Group


1,168


0


18


32


1,154


0


12


19


1,147





    Journeys


813


0


14


15


812


0


8


10


810





    Underground by Journeys


151


0


0


14


137


0


0


4


133





    Journeys Kidz


149


0


4


1


152


0


3


3


152





    Shi by Journeys


55


0


0


2


53


0


1


2


52





Schuh Group


0


75


6


3


78


0


5


0


83





     Schuh UK


0


51


6


1


56


0


5


0


61





     Schuh ROI


0


8


0


0


8


0


0


0


8





     Schuh Concessions


0


16


0


2


14


0


0


0


14





Lids Sports Group


985


10


40


33


1,002


12


18


11


1,021





Johnston & Murphy Group


156


0


6


9


153


0


2


2


153





    Shops


111


0


1


9


103


0


2


2


103





    Factory Outlets


45


0


5


0


50


0


0


0


50





Total Retail Units


2,309


85


70


77


2,387


12


37


32


2,404




















































Retail Units Operated - Three Months Ended July 28, 2012



















Balance


Acquisi-






Balance















04/28/12


tions


Open


Close


07/28/12













Journeys Group


1,154


0


3


10


1,147













    Journeys


814


0


2


6


810













    Underground by Journeys


135


0


0


2


133













    Journeys Kidz


152


0


1


1


152













    Shi by Journeys


53


0


0


1


52













Schuh Group


79


0


4


0


83













     Schuh UK


57


0


4


0


61













     Schuh ROI


8


0


0


0


8













     Schuh Concessions


14


0


0


0


14













Lids Sports Group


1,001


12


12


4


1,021













Johnston & Murphy Group


152


0


2


1


153













    Shops


102


0


2


1


103













    Factory Outlets


50


0


0


0


50













Total Retail Units


2,386


12


21


15


2,404




























































Constant Store Sales

























 

          Three Months Ended


 

       Six Months Ended

















July 28,


July 30,


July 28,


July 30,

















2012


2011


2012


2011















Journeys Group


6%


15%


9%


14%















Schuh Group*


9%


-


9%


-















Lids Sports Group


2%


12%


3%


14%















Johnston & Murphy Group


2%


17%


3%


13%















Total Constant Store Sales


4%


14%


7%


14%














*One month ended July 28, 2012.






















































































































Schedule B



Genesco Inc.



Adjustments to Reported Earnings from Continuing Operations



Three Months Ended July 28, 2012 and July 30, 2011














 Impact on 


 Impact on 





 3 mos 

 Diluted 

3 mos 

 Diluted 



In Thousands (except per share amounts)


 July 2012 

 EPS 

 July 2011 

 EPS 



Earnings from continuing operations, as reported


$     10,561

$   0.44

$          350

$   0.01











Adjustments:  (1)








Impairment charges


248

0.01

191

0.01



Acquisition expenses


-

-

5,422

0.23



Deferred payment - Schuh acquisition


2,928

0.12

1,419

0.06



Network intrusion expenses


9

-

20

-



Lower effective tax rate


(1,643)

(0.07)

(2,209)

(0.09)











Adjusted earnings from continuing operations (2)


$     12,103

$   0.50

$       5,193

$   0.22



















(1) All adjustments are net of tax where applicable.  The tax rate for the second quarter of Fiscal 2013 is 36.0%



    excluding a FIN 48 discrete item of $0.1 million.  The tax rate for the second quarter of Fiscal 2012 is 39.0% 



    excluding a FIN 48 discrete item of $0.1 million.















(2) Reflects 24.1 million share count for Fiscal 2013 and 23.6 million share count for Fiscal 2012 which includes 



     common stock equivalents in both years.
















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



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



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








































Schuh Group





Adjustments to Reported Operating Income (Loss)





Three Months Ended July 28, 2012 and July 30, 2011















 3 mos 

 3 mos 





In Thousands 


 July 2012 

 July 2011 





Operating loss


$        (545)

$     (77)













Adjustments: 








Deferred payment - Schuh acquisition


2,928

1,419













Adjusted operating income 


$      2,383

$  1,342



















 

 







Schedule B



Genesco Inc.



Adjustments to Reported Earnings from Continuing Operations



Six Months Ended July 28, 2012 and July 30, 2011














 Impact on 


 Impact on 





 6 mos 

  Diluted 

 6 mos 

  Diluted 



In Thousands (except per share amounts)


 July 2012 

 EPS 

 July 2011 

 EPS 



Earnings from continuing operations, as reported


$     31,352

$   1.29

$      15,325

$   0.65











Adjustments:  (1)








Impairment charges


277

0.01

642

0.03



Acquisition expenses


-

-

5,422

0.23



Deferred payment - Schuh acquisition


5,883

0.25

1,419

0.06



Other legal matters


-

-

60

-



Network intrusion expenses


65

-

261

0.01



Lower effective tax rate


(1,655)

(0.07)

(2,196)

(0.10)











Adjusted earnings from continuing operations (2)


$     35,922

$   1.48

$      20,933

$   0.88



















(1) All adjustments are net of tax where applicable.  The tax rate for the first six months of Fiscal 2013 is 36.7%



    excluding a FIN 48 discrete item of $0.2 million.  The tax rate for the first six months of Fiscal 2012 is 39.5% 



    excluding a FIN 48 discrete item of $0.2 million.















(2) Reflects 24.2 million share count for Fiscal 2013 and 23.6 million share count for Fiscal 2012 which includes 



     common stock equivalents in both years.
















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



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



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








































Schuh Group





Adjustments to Reported Operating Income (Loss)





Six Months Ended July 28, 2012 and July 30, 2011















 3 mos 

 3 mos 





In Thousands 


 July 2012 

 July 2011 





Operating loss


$     (3,496)

$     (77)













Adjustments: 








Deferred payment - Schuh acquisition


5,883

1,419













Adjusted operating income 


$      2,387

$  1,342














































Schedule B



Genesco Inc.



Adjustments to Forecasted Earnings from Continuing Operations



Fiscal Year Ending February 2, 2013











In Thousands (except per share amounts)


High Guidance

Low Guidance





Fiscal 2013

Fiscal 2013



Forecasted earnings from continuing operations 


$    107,674

$       4.46

$ 104,946

$       4.34











Adjustments:  (1)








Impairment


1,247

0.05

1,247

0.05



Deferred payment - Schuh acquisition


11,883

0.49

11,883

0.49











Adjusted forecasted earnings from continuing operations (2)

$    120,804

$       5.00

$ 118,076

$       4.88











(1) All adjustments are net of tax where applicable.  The forecasted tax rate for Fiscal 2013 is approximately 37% excluding a FIN 48 



    discrete item of $0.4 million.
















(2) Reflects 24.2 million share count for Fiscal 2013 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.

Financial Contact, James S. Gulmi, +1-615-367-8325, or Media Contact, Claire S. McCall, +1-615-367-8283