Q2 results in line with expectations, Genesco President
Genesco Inc. reported a loss from continuing operations for the second quarter ended July 31, 2010, of $2.4 million, or $0.10 per diluted share, compared to a loss from continuing operations of $2.7 million, or $0.12 per diluted share, for the second quarter ended
August 1, 2009. Fiscal 2011 second quarter earnings reflected pretax charges of $3.2 million, or $0.08 per diluted share, primarily related to fixed asset impairments, purchase price accounting adjustments, a loss related to the Nashville flood and acquisition expenses. Fiscal 2010 second quarter earnings reflected pretax charges of $3.3 million, or $0.10 per diluted share, primarily related to fixed asset impairments.
Adjusted for the listed items in both periods, the loss from continuing operations was $0.5 million, or $0.02 per diluted share, for the second quarter of Fiscal 2011, compared to a loss of $0.4 million, or $0.02 per diluted share, for the second 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 second quarter of Fiscal 2011 increased 9% to $364 million from $335 million the second quarter of Fiscal 2010. Comparable store sales in the second quarter of Fiscal 2011 increased by 3%. The Lids Sports Group's comparable store sales increased by 7% and the Journeys Group by 2%, while Johnston & Murphy Retail's comparable store sales were flat and the Underground Station Group declined 4%.
Robert J. Dennis, chairman, president and chief executive officer of Genesco, said, "Our second quarter results were in line with our expectations, with a same store sales increase for the Company, thanks to increases in the Lids Sports Group and Journeys Group. Increases in incentive compensation accruals related to improved performance masked declines in store occupancy cost and other key expense items as a percent of sales.
"The Back-to-School season has been strong for us so far, with comparable store sales up 8% for August. While we expect this trend to moderate as we proceed through the third quarter, this is an encouraging start to the second half of the year."
Dennis also reaffirmed the Company's outlook for Fiscal 2011. "We are reiterating our Fiscal 2011 outlook for full year earnings between $2.10 and $2.20. Consistent with previous years, this guidance does not include expected non-cash asset impairments and other charges, which are projected to be approximately $10 million to $12 million, or $0.26 to $0.31 per share, in Fiscal 2011. This guidance assumes comparable sales in the low single digits for the second half."
Dennis concluded, "We are pleased with the overall pace of our business as we pass the halfway mark of Fiscal 2011. Our Lids Sports segment continues to expand and diversify, creating new market opportunities and greater economies of scale. Meanwhile, we believe we have some distinct product advantages in Journeys that should drive comparable store sales gains and improved profitability over the next few quarters."