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Genesco CEO to expect sufficient liquidity under baseline plan

06 Mar '09

6 min read

Genesco Inc reported earnings from continuing operations for the fourth quarter ended January 31, 2009, of $23.7 million, or $1.05 per diluted share, compared to earnings from continuing operations of $3.6 million, or $0.16 per diluted share, for the fourth quarter ended February 2, 2008. Fiscal 2009 fourth quarter earnings reflected charges of $0.01 per diluted share, including asset impairments, store closing costs and final expenses related to a terminated merger agreement, offset by a gain on a lease termination transaction and tax rate adjustments.

Fiscal 2008 fourth quarter earnings included expenses related to then-pending merger related litigation , asset impairments, store closing costs and tax rate adjustments totaling $0.85 per diluted share. Adjusted for the listed items in both periods, earnings from continuing operations were $23.9 million, or $1.06 per diluted share, for the fourth quarter of Fiscal 2009, compared to $26.4 million, or $1.01 per diluted share, in the fourth quarter of Fiscal 2008.

Because of the magnitude of the merger- related expenses in the previous year's results and for consistency with Fiscal 2009's previously announced results and earnings expectations, which did not reflect the listed items, the Company believes that disclosure of earnings from continuing operations adjusted for these items will be useful to investors.

Net sales for the fourth quarter of Fiscal 2009 declined 3.3% to $452 million from $467 million in the fourth quarter of Fiscal 2008. Comparable store sales in the fourth quarter of Fiscal 2009 declined by 5%. The Journeys Group's comparable store sales for the quarter declined by 2%, the Hat World Group's by 4%, Underground Station's by 12%, and Johnston & Murphy Retail's by 17%.

Robert J. Dennis, president and chief executive officer of Genesco, said, "Our retail sales in the fourth quarter were characterized by wide swings from week to week. After a generally lackluster trend for most of the period between Thanksgiving and Christmas, we enjoyed solid increases in comparable store sales for the weeks on either side of Christmas. A marked softening in sales in early January caused us to fall short of the sales expectations we announced at mid-month.

"Although sales rebounded strongly in the month of February, when our combined retail operations posted a comparable sales increase of 7%, we are not convinced that the choppiness in sales that we experienced throughout the fourth quarter is behind us. We remain cautious in our outlook on the economy and are running our business accordingly, with inventory quality and cash generation as primary emphases.

"We believe that our focus on inventory management in the fourth quarter has positioned us to do as well as consumer demand will allow as we look toward the spring season. We ended the year with inventory levels only 2% above the previous year-end, and retail inventories per square foot down 7%. Our inventories are fresh, and we believe we have the capacity to move with the market in the coming months.

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