May is off to a good start – President of Genesco
Genesco Inc. 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."