Genesco Inc. reported earnings nearly tripled in its first quarter ended May 31 before special items in both periods. Sales increased 8% to $401 million from $370 million a year ago. Comparable store sales grew 5%. The Journeys Group’s comps rose by 2%, the Lids Sports Group’s increased by 10%, Underground Station’s comps were flat, and Johnston & Murphy Retail’s increased by 10%. The company also raised its EPS guidance for the year.
Earnings from continuing operations reached $8.6 million, or 36 per diluted share, for the first quarter ended May 1, 2010 compared to a loss from continuing operations of $5.6 million, or 30 cents, a year ago.
Fiscal 2011 first quarter earnings reflected pretax charges of $2.4 million, or 6 cents per diluted share, related to fixed asset impairments. Fiscal 2010 first quarter earnings reflected pretax charges of $11 million, or 47 cents per diluted share, related to a loss on the early retirement of debt in connection with the exchange of $56.4 million of convertible notes for common stock as well as fixed asset impairments, lease terminations, litigation settlements, a higher effective tax rate and higher interest costs due to the adoption of a new accounting standard applicable to the company’s convertible debt.
Adjusted for the listed items in both periods, earnings from continuing operations vaulted 189% to $10.1 million, or 42 cents per diluted share, for the first quarter of Fiscal 2011, compared to $3.5 million, or 17 cents per diluted share, for the first quarter of Fiscal 2010.
Robert J. Dennis, chairman, president and chief executive officer of Genesco, said, "We are very pleased with our first quarter performance. We experienced solid top-line growth as consumer demand in our retail, wholesale and direct-to-consumer channels rebounded from year ago levels. The combination of comparable sales gains, improved gross margins, and better expense leverage allowed us to report earnings that exceeded expectations. May is off to a good start with comparable store sales through May 22 up 3%."
Dennis also discussed the company’s outlook for Fiscal 2011. "Based on our better than expected first quarter results we are raising our earnings outlook for fiscal 2011. We now expect full year earnings per share between $2.10 and $2.20, up from our previous expectation of earnings per share between $2.00 and $2.10. Consistent with previous years, this guidance does not include expected non-cash asset impairments which are projected to be approximately $9 million to $11 million, or $0.22 to $0.27 per share, in fiscal 2011. It also excludes an estimated $0.9 million, or $0.02 per share, of asset write offs associated with flood damage to four Nashville-based stores, which we anticipate in the second quarter. This guidance assumes full-year comparable sales in the positive 2% to 3% range."
Dennis concluded, "We are encouraged by our first quarter results and move toward our key selling seasons excited about the current state of each of our operating segments. Long-term, we believe that our diversified business model will continue to yield positive benefits and with $105 million in cash and no debt, we are well positioned to pursue the many growth opportunities still in front of us."
GENESCO INC.
Consolidated Earnings Summary
=============================
Three Months Ended
——————
May 1, May 2,
In Thousands 2010 2009
———— —- —-
Net sales $400,853 $370,366
Cost of sales 192,782 181,144
Selling and administrative expenses* 191,077 182,291
Restructuring and other, net 2,443 4,973
—————————- —– —–
Earnings from operations 14,551 1,958
Loss on early retirement of debt - 5,119
Interest expense, net* 235 2,161
———————- — —–
Earnings (loss) from continuing operations
before income taxes 14,316 (5,322)
Income tax expense 5,753 281
—————— —– —
Earnings (loss) from continuing operations 8,563 (5,603)
Earnings from (provision for) discontinued
operations, net 53 (159)
—————————————— — —-
Net Earnings (Loss) $8,616 $(5,762)
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GENESCO INC. Consolidated Earnings Summary ============================= Three Months Ended ------------------ May 1, May 2, In Thousands 2010 2009 ------------ ---- ---- Sales: Journeys Group $181,891 $176,847 Underground Station Group 26,073 26,728 Lids Sports Group 119,988 98,804 Johnston & Murphy Group 44,537 39,330 Licensed Brands 28,142 28,551 Corporate and Other 222 106 ------------------- --- --- Net Sales $400,853 $370,366 ========= ======== ======== Operating Income (Loss): Journeys Group $9,082 $5,513 Underground Station Group 765 (450) Lids Sports Group 9,792 6,524 Johnston & Murphy Group 2,273 157 Licensed Brands 4,632 3,617 Corporate and Other* (11,993) (13,403) -------------------- ------- ------- Earnings from operations 14,551 1,958 Loss on early retirement of debt - 5,119 Interest, net 235 2,161 ------------- --- -----
Earnings (loss) from continuing operations before income taxes 14,316 (5,322)
Income tax expense 5,753 281 ------------------ ----- --- Earnings (loss) from continuing operations 8,563 (5,603) Earnings from (provision for) discontinued operations, net 53 (159) ------------------------------------------ --- ---- Net Earnings (Loss) $8,616 $(5,762)