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Genesco CEO pleased with performance of Journeys & Hat World

19
Nov '08
Genesco Inc. announced that it currently expects to report net sales of approximately $390 million for the third quarter ended November 2, 2008, compared to $372 million for the same period last year, or an increase of 5%.

The Company said that it estimates that total same store sales for the third quarter increased 2%, with the Journeys Group up 5%, Hat World Group up 2%, Underground Station Group up 1% and Johnston & Murphy Group down 15%. The Company now expects to report earnings per diluted share of $0.41 to $0.43 for the third quarter compared to $0.23 for the corresponding period a year ago.

Third quarter earnings per diluted share are expected to reflect restructuring charges of approximately $2.3 million pretax, which included fixed asset impairments and store closing costs, and $0.2 million pretax of merger-related expenses, offset by a favorable FIN 48 tax adjustment of $1.2 million.

Adjusting for these items, earnings from continuing operations would have been $9.0 million to $9.5 million or $0.41 to $0.43 per diluted share in the third quarter. Last year's results included $6.2 million pretax, or approximately $0.16 per diluted share, primarily of litigation and other expenses related to the Company's proposed merger and retail store impairment charges.

Adjusting for such items, earnings from continuing operations would have been $10.0 million, or approximately $0.39 per share, in the third quarter last year. The presentation of results excluding these restructuring charges, the favorable tax adjustment and merger-related expenses is consistent with earlier quarterly disclosures and the Company's previously announced earnings expectations for the year.

The Company believes that the provision of annual earnings guidance and the disclosure of earnings before discontinued operations for the current fiscal year and the presentation of comparable measures from the year-earlier period is useful to investors, particularly because of the magnitude of a gain from a settlement of merger-related litigation during the second quarter of the current year, the income tax effects of the settlement, merger-related expenses in both years and other items that distort the period-to-period comparisons.

The Company also stated that it expects inventories to be down approximately 4% for the quarter.

Genesco President and Chief Executive Officer Robert J. Dennis said, "We were pleased with the performance of both the Journeys Group and Hat World Group during the quarter, particularly given the extremely challenging retail environment and the solid results underscore their strong competitive positions in the marketplace.

And while Underground Station missed its sales targets, stronger than expected gross margins allowed it to essentially meet its profit expectations. The biggest shortfall was at Johnston & Murphy, as the difficult macroeconomic environment, especially for retailersat the better end, negatively impacted its results for the quarter."


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