MOSS ADAMS CAPITAL: Apparel and foowear market monitor highlights notable deals, stock prices and results.
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NASHVILLE, Tenn., May 27 /PRNewswire-FirstCall/ -- Genesco Inc. (NYSE:GCO - News) today reported earnings from continuing operations for the first quarter ended May 1, 2010 of $8.6 million, or $0.36 per diluted share, compared to a loss from continuing operations of $5.6 million, or $0.30 per diluted share, for the first quarter ended May 2, 2009. Fiscal 2011 first quarter earnings reflected pretax charges of $2.4 million, or $0.06 per diluted share, related to fixed asset impairments.
Fiscal 2010 first quarter earnings reflected pretax charges of $11 million, or $0.47 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 were $10.1 million, or $0.42 per diluted share, for the first quarter of Fiscal 2011, compared to $3.5 million, or $0.17 per diluted share, for the first quarter of Fiscal 2010. For consistency with Fiscal 2011's previously announced earnings expectations and the adjusted results for the prior period announced last year, neither of which reflected the listed items, the Company believes that disclosure of earnings from continuing operations adjusted for those items will be useful to investors. A reconciliation of the adjusted financial measures to their corresponding measures as reported pursuant to U.S. Generally Accepted Accounting Principles is included in Schedule B to this press release.
Net sales for the first quarter of Fiscal 2011 increased 8% to $401 million from $370 million in the first quarter of Fiscal 2010. Comparable store sales in the first quarter of Fiscal 2011 increased by 5%. The Journeys Group's comparable store sales for the quarter 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%.
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."
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, 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, continuing weakness in the consumer economy, 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 materials costs, and other factors affecting the cost of products, competition in the Company's markets 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 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 our shares, variations from expected pension-related charges caused by conditions in the financial markets, and the 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.
The Company's live conference call on May 27, 2010, 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.
About Genesco Inc.
Genesco Inc., a Nashville-based specialty retailer, sells footwear, headwear, sports apparel and accessories in more than 2,260 retail stores in the United States and Canada, principally under the names Journeys, Journeys Kidz, Shi by Journeys, Johnston & Murphy, Underground Station, Hatworld, Lids, Hat Shack, Hat Zone, Head Quarters, Cap Connection and Sports Fan-Attic and on internet websites www.journeys.com, www.journeyskidz.com, www.shibyjourneys.com, www.undergroundstation.com, http://www.johnstonmurphy.com, www.dockersshoes.com, and www.lids.com. The Company also sells footwear at wholesale under its Johnston & Murphy brand and under the licensed Dockers brand. Additional information on Genesco and its operating divisions may be accessed at its website www.genesco.com.