Press Release:
NASHVILLE, Tenn., May 23, 2012 /PRNewswire/ — Genesco Inc. (GCO) today reported earnings from continuing operations for the first quarter ended April 28, 2012, of $20.8 million, or $0.86 per diluted share, compared to earnings from continuing operations of $15.0 million, or $0.63 per diluted share, for the first quarter ended April 30, 2011. Fiscal 2013 first quarter results reflect pretax items of $3.1 million, or $0.12 per diluted share after tax, primarily including compensation expense related to deferred purchase price payments in connection with the acquisition of Schuh Group Limited in June 2011, decreased by a tax rate adjustment reflecting the tax treatment of the deferred purchase price.
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. Fiscal 2012 first quarter results also reflect pretax items totaling $1.2 million, or $0.04 per diluted share after tax, related to asset impairments and other expenses.
Adjusted for the items described above in both periods, earnings from continuing operations were $23.8 million, or $0.98 per diluted share, for the first quarter of Fiscal 2013, compared to earnings from continuing operations of $15.7 million, or $0.67 per diluted share, for the first 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 first quarter of Fiscal 2013 increased 25% to $600 million from $482 million in the first quarter of Fiscal 2012, reflecting the addition of sales from Schuh and a comparable store sales increase of 9%. The Lids Sports Group’s comparable store sales increased by 4%, the Journeys Group increased by 12%, and Johnston & Murphy Retail increased by 4%.
Robert J. Dennis, chairman, president and chief executive officer of Genesco, said, “Our first quarter results reflect the continuation of the positive sales trends that have characterized our business for the past several quarters. The combination of favorable fashion trends, excellent execution, and the strong strategic positions of our businesses has helped us maintain momentum even in the face of tougher comparisons. The strength in sales once again drove improved expense leverage and profitability above expectations.”
Dennis also discussed the Company’s updated outlook. “Based on first quarter performance and current visibility, we are raising our guidance. We now expect adjusted Fiscal 2013 diluted earnings per share to be in the range of $4.70 to $4.82, an increase from our previous guidance range of $4.58 to $4.70. The new outlook represents an increase of 15% to 18% 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 $1.4 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 of 3% to 4% 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, “We are very pleased with our start to Fiscal 2013. Our sales and merchandising strategies are continuing to generate strong results. At the same time, initiatives aimed at further enhancing our ecommerce capabilities and expanding our retail footprint in both the U.S. and abroad are progressing well. We remain optimistic about the Company’s prospects and are pleased with our progress toward our near-term and long-term goals.”
Conference Call and Management Commentary
About Genesco Inc.
Genesco Inc., a Nashville-based specialty retailer, sells footwear, headwear, sports apparel and accessories in more than 2,380 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.com, www.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.
