GCO
$42.43
Genesco
Earnings Details
1st Quarter April 2019
Friday, May 31, 2019 6:50:00 AM
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Summary

Genesco Guides to Higher-end of Range

Genesco (GCO) reported 1st Quarter April 2019 earnings of $0.33 per share on revenue of $495.7 million. The consensus earnings estimate was $0.04 per share on revenue of $466.2 million. Revenue fell 23.1% compared to the same quarter a year ago.

The company said it now expects fiscal year earnings to be near the higher-end of $3.35 to $3.75 per share. The company's previous guidance was for earnings to be near the midpoint of the range and the current consensus earnings estimate is $3.50 per share for the year ending January 31, 2020.

Genesco Inc is engaged in the design and sourcing, marketing and distribution of footwear, apparel and accessories through retail stores.

Results
Reported Earnings
$0.33
Earnings Whisper
-
Consensus Estimate
$0.04
Reported Revenue
$495.7 Mil
Revenue Estimate
$466.2 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Genesco Inc. Reports Fiscal 2020 First Quarter Results

NASHVILLE, Tenn., May 31, 2019 /PRNewswire/ --

First Quarter Fiscal 2020 Financial Summary

  • Net sales increased 2% to $496 million
  • Comparable sales increased 5%
  • GAAP EPS from continuing operations was $0.36 vs. $0.10 last year
  • Non-GAAP EPS from continuing operations was $0.331vs. $0.14 last year

Genesco Inc. (NYSE: GCO) today reported GAAP earnings from continuing operations per diluted share of $0.36 for the three months ended May 4, 2019, compared to earnings from continuing operations per diluted share of $0.10 in the first quarter last year.  Adjusted for the excluded items in both periods, the Company reported first quarter earnings from continuing operations per diluted share of $0.33, compared to earnings from continuing operations per diluted share of $0.14 last year.

Robert J. Dennis, Genesco Chairman, President and Chief Executive Officer, said: "Fiscal 2020 is off to a good start with improved results in every business.  In our first quarter as a footwear-focused company following the recent sale of the Lids Sports Group, we delivered top and bottom line results that exceeded expectations.  Our overall performance was fueled by the continued strength of our Journeys business, as the momentum from the successful back-to-school and holiday seasons carried over into the new year.  The combination of strong consolidated comparable sales, which included positive store and digital comps, higher gross margins and the benefits from our recent cost reduction efforts drove earnings per share well ahead of our projection and up meaningfully compared with last year. 

"Based on our better than expected first quarter performance, coupled with the repurchase of more shares than originally planned, we now view the higher end of our EPS range of $3.35 to $3.75 as the likely outcome for the year, compared with our previous view of something closer to the mid-point.  Overall consolidated comps in the second quarter-to- date continue to be positive, with Journeys leading the way.  We are now, however, more cautious about Johnston & Murphy and Schuh going forward given their performance to date.  Due to this, plus the potential for more stranded costs this year resulting from a shorter than initially planned transition services period following the Lids sale, we are now a little more conservative about the outlook for the balance of the year.  In addition, we are mindful of the macro-economic environments both in the U.S. and the U.K.  For these reasons, we decided to maintain our current range versus increasing it, despite our favorable beginning to Fiscal 2020. Looking further ahead, we believe the work we've done sharpening our focus on operating footwear retail businesses and owning brands will fuel improved profitability and increased shareholder value over the long-term."

First Quarter Review

Net sales for the first quarter of Fiscal 2020 increased 2% to $496 million from $486 million in the first quarter of Fiscal 2019. Excluding the effect of lower exchange rates, net sales would have increased 3%. Comparable sales increased 5%, with stores up 4% and direct up 15%. Direct-to-consumer sales were 11% of total retail sales for the quarter, compared to 10% last year.

Comparable Sales




Comparable Same Store and Direct Sales:

1QFY20

1QFY19

Journeys Group

7%

6%

Schuh Group

2%

(13)%

Johnston & Murphy Group

0%

7%

Total Genesco Comparable Sales

5%

2%

Same Store Sales

4%

1%

Comparable Direct Sales

15%

10%

First quarter gross margin this year was 49.4%, up 40 basis points, compared with 49.0% last year. The increase as a percentage of sales reflects decreased markdowns for Journeys Group and a higher mix of retail in Johnston & Murphy Group, partially offset by increased promotions at Schuh Group.

Selling and administrative expense for the first quarter this year was 47.7%, down 30 basis points, compared to 48.0% of sales for the same period last year.  The decrease as a percentage of sales reflects strong leverage from rent and contributions from selling salaries and other expenses, partially offset by increased bonus expense.

Genesco's GAAP operating income for the first quarter was $9.1 million, or 1.8% of sales this year compared with $3.7 million, or 0.8% of sales last year.  Adjusted for the excluded items in both periods, operating income for the first quarter was $8.4 million this year compared with $4.8 million last year.  Adjusted operating margin was 1.7% of sales in the first quarter of Fiscal 2019 and 1.0% last year.

The effective tax rate for the quarter was 30.7% in Fiscal 2020 compared to 31.1% last year.  The adjusted tax rate, reflecting excluded items, was 31.3% in Fiscal 2020 compared to 28.2% last year.  The higher adjusted tax rate for this year reflects the inability to recognize a tax benefit for certain foreign losses.

GAAP earnings from continuing operations were $6.5 million in the first quarter of Fiscal 2020, compared to $1.9 million in the first quarter last year.  Adjusted for the excluded items in both periods, first quarter earnings from continuing operations were $5.9 million, or $0.33 earnings per share in Fiscal 2020, compared to earnings from continuing operations of $2.7 million, or $0.14 earnings per share last year. 

Cash, Borrowings and Inventory

Cash and cash equivalents at May 4, 2019, were $156.7 million, compared with $30.9 million at May 5, 2018.   Total debt at the end of the first quarter of Fiscal 2020 was $73.7 million compared with $105.7 million at the end of last year's first quarter, a decrease of 30%. Inventories decreased 4% in the first quarter of Fiscal 2020 on a year-over-year basis.   

Capital Expenditures and Store Activity

For the first quarter, capital expenditures were $7 million, which consisted of $4 million related to store remodels and new stores and $3 million related to direct-to-consumer, omnichannel, information technology, distribution center and other projects. Depreciation and amortization was $13 million.  During the quarter, the Company opened three new stores and closed 11 stores.  The Company ended the quarter with 1,504 stores compared with 1,539 stores at the end of the first quarter last year, or a decrease of 2%.  Square footage was down 2% on a year-over-year basis.

Share Repurchases

For the first quarter of Fiscal 2020, the Company repurchased 1,809,112 shares for approximately $80.0 million at an average price of $44.20 per share, as part of a $125 million share repurchase program approved by the Board of Directors in December 2018.  With the completion of the $125 million share repurchase program, the Board of Directors approved a new $100 million share repurchase program in May 2019. For the second quarter of Fiscal 2020 through May 24, 2019, the Company has repurchased 515,457 shares for approximately $22.8 million at an average price of $44.27 per share, leaving approximately $76 million available to repurchase under the current authorization.

Fiscal 2020 Outlook

For Fiscal 2020, the Company now expects:

  • Comparable sales to be up 1% to 2%, and
  • Adjusted diluted earnings per share from continuing operations in the range of $3.35 to $3.75 with an expectation that earnings for the year will be near the higher end of the range. 2

Access the conference call for details regarding guidance assumptions.

Conference Call, Management Commentary and Investor Presentation

The Company has posted a supplemental financial presentation of first quarter results and Non-GAAP Fiscal 2019 results by quarter reflecting the sale of Lids Sports Group on its website, www.genesco.com, in the investor relations section.  The Company's live conference call on May 31, 2019, 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.

Safe Harbor Statement
This release contains forward-looking statements, including those regarding the performance outlook for the Company and its individual businesses (including, without limitation, sales, expenses, margins and earnings) 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 and projections reflected in forward-looking statements, including the level and timing of promotional activity necessary to maintain inventories at appropriate levels; the timing and amount of any share repurchases by the Company; the imposition of tariffs on imported products; 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 effects of the British decision to exit the European Union, including potential effects on consumer demand, currency exchange rates, and the supply chain; the effectiveness of the Company's omnichannel initiatives; costs associated with changes in minimum wage and overtime requirements; cost associated with wage pressure associated with a full employment environment in the U.S. and the U.K.; weakness in the consumer economy and retail industry for the products we sell; competition in the Company's markets, including online and including competition from some of the Company's vendors in the branded footwear market; fashion trends, including the lack of new fashion trends or products, that affect the sales or product margins of the Company's retail product offerings; weakness in shopping mall traffic and challenges to the viability of malls where the Company operates stores, related to planned closings of department stores or other factors and the extent and pace of growth of online shopping; changes in buying patterns by significant wholesale customers; bankruptcies or deterioration in financial condition of significant wholesale customers or the inability of wholesale customers or consumers to obtain credit; the Company's ability to continue to complete and integrate acquisitions, expand its business and diversify its product base; retained liabilities associated with divestitures of businesses including potential liabilities under leases as the prior tenant or as a guarantor of certain leases; 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 control or lower occupancy costs, and to conduct required remodeling or refurbishment on schedule and at expected expense levels; our ability to eliminate stranded costs associated with dispositions, including the sale of the Lids Sport Group business; our ability to realize anticipated cost savings; 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 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; 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; and the cost and outcome of litigation, investigations and environmental matters involving the Company. Additional factors are cited in the "Risk Factors," "Legal Proceedings" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of, and elsewhere in, our SEC filings, copies of which may be obtained from the SEC website, www.sec.gov, or by contacting the investor relations department of Genesco via our website, www.genesco.com. Many of the factors that will determine the outcome of the subject matter of this release are beyond Genesco's ability to control or predict. Genesco undertakes no obligation to release publicly the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Forward-looking statements reflect the expectations of the Company at the time they are made. The Company disclaims any obligation to update such statements.

About Genesco Inc.
Genesco Inc., a Nashville-based specialty retailer, sells footwear and accessories in more than 1,500 retail stores throughout the U.S., Canada, the United Kingdom, the Republic of Ireland and Germany, principally under the names Journeys, Journeys Kidz, Schuh, Schuh Kids, Little Burgundy, Johnston & Murphy, and on internet websites www.journeys.com, www.journeyskidz.com, www.journeys.ca, www.schuh.co.uk, www.littleburgundyshoes.com, www.johnstonmurphy.com, www.johnstonmurphy.ca, www.trask.com, and www.dockersshoes.com.   In addition, Genesco sells wholesale footwear under its Johnston & Murphy brand, the Trask brand, the licensed Dockers brand, and other brands. For more information on Genesco and its operating divisions, please visit www.genesco.com.

1 Excludes a gain for lease terminations, partially offset by asset impairment charges, net of tax effect in the first quarter of Fiscal 2020 ("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 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.

2 A 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.

 

GENESCO INC.


Condensed Consolidated Statements of Operations


(in thousands, except per share data)


(Unaudited)
















Quarter 1


Quarter 1






May 4,

% of


May 5,

% of






2019

Net Sales


2018

Net Sales



Net sales



$ 495,651

100.0%


$ 486,219

100.0%



Cost of sales


250,743

50.6%


248,213

51.0%



   Gross margin


244,908

49.4%


238,006

49.0%



Selling and administrative expenses

236,555

47.7%


233,176

48.0%



Asset impairments and other, net

(731)

-0.1%


1,118

0.2%



   Operating income


9,084

1.8%


3,712

0.8%



Other components of net periodic benefit cost

(86)

0.0%


(8)

0.0%



Interest expense, net


(166)

0.0%


1,028

0.2%



   Earnings from continuing operations before 








     income taxes


9,336

1.9%


2,692

0.6%



Income tax expense 


2,866

0.6%


836

0.2%



   Earnings from continuing operations

6,470

1.3%


1,856

0.4%



Loss from discontinued operations, net of tax

(124)

0.0%


(4,187)

-0.9%



   Net Earnings (Loss)


$     6,346

1.3%


$    (2,331)

-0.5%













Basic earnings (loss) per share:








    Before discontinued operations

$       0.37



$       0.10




    Net earnings (loss)


$       0.36



$      (0.12)














Weighted-average shares outstanding - Basic

17,645



19,278














Diluted earnings (loss) per share:








    Before discontinued operations

$       0.36



$       0.10




    Net earnings (loss)


$       0.36



$      (0.12)














Weighted-average shares outstanding - Diluted

17,850



19,455













 

GENESCO INC.


Sales/Earnings Summary by Segment


(in thousands)


(Unaudited)
















Quarter 1


Quarter 1






May 4,

% of


May 5,

% of






2019

Net Sales


2018

Net Sales



Sales:










    Journeys Group


$ 323,972

65.4%


$ 306,142

63.0%



    Schuh Group


76,844

15.5%


80,266

16.5%



    Johnston & Murphy Group

74,734

15.1%


75,684

15.6%



    Licensed Brands


20,083

4.1%


24,065

4.9%



    Corporate and Other


18

0.0%


62

0.0%



    Net Sales



$ 495,651

100.0%


$ 486,219

100.0%



Operating Income (Loss):









    Journeys Group


$   18,976

5.9%


$   12,992

4.2%



    Schuh Group


(5,428)

-7.1%


(5,640)

-7.0%



    Johnston & Murphy Group

5,106

6.8%


4,867

6.4%



    Licensed Brands


429

2.1%


276

1.1%



    Corporate and Other(1)


(9,999)

-2.0%


(8,783)

-1.8%



Operating income


9,084

1.8%


3,712

0.8%



Other components of net periodic benefit cost

(86)

0.0%


(8)

0.0%



Interest, net



(166)

0.0%


1,028

0.2%













Earnings from continuing operations before                    







   income taxes


9,336

1.9%


2,692

0.6%



Income tax expense 


2,866

0.6%


836

0.2%



Earnings from continuing operations

6,470

1.3%


1,856

0.4%



Loss from discontinued operations, net of tax

(124)

0.0%


(4,187)

-0.9%



Net Earnings (Loss)


$     6,346

1.3%


$    (2,331)

-0.5%























(1)Includes a ($0.7) million gain in the first quarter of Fiscal 2020 which includes a gain of ($1.0) million for lease terminations, partially 



   offset by a $0.3 million charge for asset impairments.  Includes a $1.1 million charge in the first quarter of Fiscal 2019 which includes 


   $1.0 million for asset impairments and $0.2 million in legal and other matters, partially offset by a gain of ($0.1) million related to



   Hurricane Maria.








 


GENESCO INC.



Condensed Consolidated Balance Sheets



(in thousands)



(Unaudited)






















May 4, 2019


May 5, 2018



Assets








Cash and cash equivalents



$           156,655


$           30,880



Accounts receivable



33,275


42,158



Inventories



367,998


383,115



Other current assets



43,116


57,198



Current assets - discontinued operations


-


193,145



   Total current assets



601,044


706,496



Property and equipment



271,320


296,096



Operating lease right of use asset


769,922


-



Goodwill and other intangibles



124,623


129,102



Other non-current assets



49,164


49,598



Non-current assets - discontinued operations

-


136,133



   Total Assets



$        1,816,073


$      1,317,425











Liabilities and Equity








Accounts payable



$           121,655


$         106,732



Current portion long-term debt



13,914


1,690



Current portion operating lease liability


138,758


-



Other current liabilities



89,537


73,498



Current liabilities - discontinued operations

-


59,083



   Total current liabilities



363,864


241,003



Long-term debt



59,762


103,994



Long-term operating lease liability


690,432


-



Other long-term liabilities



39,089


118,787



Non-current liabilities - discontinued operations

-


24,802



Equity



662,926


828,839



   Total Liabilities and Equity



$        1,816,073


$      1,317,425










 

GENESCO INC.

Store Count Activity
























Balance




Balance





Balance


02/03/18

Open

Close


02/02/19


Open

Close


05/04/19

Journeys Group

1,220

26

53


1,193


1

6


1,188

Schuh Group

134

6

4


136


1

1


136

Johnston & Murphy Group

181

4

2


183


1

4


180

Total Retail Units

1,535

36

59


1,512


3

11


1,504













































GENESCO INC.

Comparable Sales




















Quarter 1









May 4,


May 5,









2019


2018

Journeys Group








7%


6%

Schuh Group








2%


(13)%

Johnston & Murphy Group








0%


7%

  Total Comparable Sales








5%


2%












Same Store Sales








4%


1%

Comparable Direct Sales








15%


10%












 

Schedule B

Genesco Inc.

Adjustments to Reported Earnings from Continuing Operations

Three Months Ended May 4, 2019 and May 5, 2018











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 1 




 May 4, 2019 


 May 5, 2018 





 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



$        6,470

$0.36



$       1,856

$0.10












Asset impairments and other adjustments:










  Impairment charges


$             307

212

0.01


$       1,025

741

0.04


  Gain on lease terminations


(1,000)

(689)

(0.04)


-

-

0.00


  Legal and other matters


-

-

0.00


193

140

0.00


  Gain on Hurricane Maria


(38)

(26)

0.00


(100)

(72)

0.00


  Total asset impairments and other adjustments


$            (731)

(503)

(0.03)


$       1,118

809

0.04












Income tax expense adjustments:










  Other tax items



(58)

0.00



69

0.00


  Total income tax expense adjustments



(58)

0.00



69

0.00












Adjusted earnings from continuing operations(1)and(2)



$        5,909

$0.33



$       2,734

$0.14






















(1)The adjusted tax rate for the first quarter of Fiscal 2020 and 2019 is 31.3% and 28.2%, respectively, including a FIN 48 discrete item of less 


    than $0.1 million in each period.




















(2)EPS reflects 17.9 million and 19.5 million share count for the first quarter of Fiscal 2020 and 2019, respectively, which includes common stock 


    equivalents in each period.






























Genesco Inc.






Adjustments to Reported Operating Income 






Three Months Ended May 4, 2019 and May 5, 2018


















 Quarter 1 - May 4, 2019 








 Operating 

 Asset Impair 

Adj Operating






In Thousands 


 Income (Loss) 

& Other Adj

 Income (Loss) 






Journeys Group


$        18,976

$             -

$         18,976






Schuh Group


(5,428)

-

(5,428)






Johnston & Murphy Group


5,106

-

5,106






Licensed Brands


429

-

429






Corporate and Other


(9,999)

(731)

(10,730)






Total Operating Income 


$          9,084

$          (731)

$           8,353






  % of sales


1.8%


1.7%


















 Quarter 1 - May 5, 2018 








 Operating 

 Asset Impair 

Adj Operating






In Thousands 


 Income (Loss) 

& Other Adj

 Income (Loss) 






Journeys Group


$        12,992

$             -

$         12,992






Schuh Group


(5,640)

-

(5,640)






Johnston & Murphy Group


4,867

-

4,867






Licensed Brands


276

-

276






Corporate and Other


(8,783)

1,118

(7,665)






Total Operating Income 


$          3,712

$        1,118

$           4,830






  % of sales


0.8%


1.0%






 

Schedule B

Genesco Inc.

Adjustments to Forecasted Earnings from Continuing Operations

Fiscal Year Ending February 1, 2020







In millions (except per share amounts)


High Guidance

Low Guidance



Fiscal 2020

Fiscal 2020

Forecasted earnings from continuing operations 


$         51.5

$       3.06

$       44.2

$       2.62







Adjustments: (1)






Store impairments and other matters


1.5

0.09

2.2

0.13

Pension plan termination


10.2

0.60

10.2

0.60







Adjusted forecasted earnings from continuing operations (2)

$         63.2

$       3.75

$       56.6

$       3.35













(1)All adjustments are net of tax where applicable.  The forecasted tax rate for Fiscal 2020 is approximately 27.0%.







(2)EPS reflects 16.9 million share count for Fiscal 2020 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.  






 

Cision View original content:http://www.prnewswire.com/news-releases/genesco-inc-reports-fiscal-2020-first-quarter-results-300859605.html

SOURCE Genesco Inc.