Top and Bottom-Line Results Exceed
Expectations, Led by Journeys
Reaffirms Fiscal 2025 Outlook
Genesco Inc. (NYSE: GCO) today reported first quarter results
for the three months ended May 4, 2024.
First Quarter Fiscal 2025 Financial Summary
- Total net sales decreased 5%; comparable sales decreased
5%
- Comparable e-commerce sales increased 3%; comparable store
sales decreased 7%
- E-commerce sales represented 23% of retail sales compared to
21% last year
- GAAP EPS was ($2.22) and Non-GAAP EPS was ($2.10)1
- Inventory decreased 17% year-over-year
- Reaffirms fiscal 2025 sales and EPS outlook
Mimi E. Vaughn, Genesco’s Board Chair, President and Chief
Executive Officer, said, “Against continued headwinds in the
operating environment, we executed to our strategic plan to deliver
top and bottom-line results that were ahead of our expectations,
led by our Journeys business. With new Journeys leadership in
place, I am encouraged by the traction we are seeing thus far, as
we work to dramatically accelerate the improvement, elevate our
product assortments and enhance the experience for our consumers.
In the meantime, our efforts to reduce costs and optimize our store
portfolio are resulting in a leaner, more productive operating
model, which will provide a nice profit tailwind as our sales
improve.”
She continued, “While we have more work ahead of us, with an
outstanding team in place, a strong track record of evolving and
improving our businesses, and multiple initiatives already in
progress, we are well positioned to unlock Journeys’ considerable
earnings potential and drive value.”
__________________________
1Excludes a gross margin charge related to a distribution model
transition in Genesco Brands Group, net of tax effect, and charges
for severance and asset impairments, net of tax effect in the first
quarter of Fiscal 2025 (“Excluded Items”). A reconciliation of loss
and loss per share from continuing operations in accordance with
U.S. Generally Accepted Accounting Principles (“GAAP”) with the
adjusted loss and loss per share numbers is set forth on Schedule B
to this press release. The Company believes that disclosure of loss
and loss per share from continuing operations adjusted for the
items not reflected in the previously announced expectations will
be meaningful to investors, especially in light of the impact of
such items on the results.
First Quarter Review
Net sales for the first quarter of Fiscal 2025 of $458 million
decreased 5% compared to $483 million in the first quarter of
Fiscal 2024. The sales decrease was driven by a decline in store
sales, decreased wholesale sales and the impact of net store
closings, partially offset by a 3% increase in e-commerce
comparable sales and a favorable foreign exchange impact. Excluding
the impact of lower foreign exchange rates, net sales decreased 6%
for the first quarter of Fiscal 2025 compared to the first quarter
of Fiscal 2024.
Comparable Sales
Comparable Same Store and E-commerce
Sales:
1QFY25
1QFY24
Journeys Group
(5)%
(14)%
Schuh Group
(7)%
13%
Johnston & Murphy Group
(3)%
18%
Total Genesco Comparable Sales
(5)%
(5)%
Same Store Sales
(7)%
(8)%
Comparable E-commerce Sales
3%
7%
The overall sales decrease of 5% for the first quarter of Fiscal
2025 compared to the first quarter of Fiscal 2024 was driven by a
decrease of 5% at Journeys, a decrease of 1% at Schuh, a decrease
of 4% at Johnston & Murphy and a 25% or $9 million decrease at
Genesco Brands. On a constant currency basis, Schuh sales were down
4% for the first quarter this year.
First quarter gross margin this year was 47.3%, flat compared
with last year. Adjusted gross margin for the first quarter this
year increased 30 basis points as a percentage of sales compared to
last year. The increase as a percentage of sales compared to Fiscal
2024 is due primarily to fewer markdowns at Journeys and a greater
mix of direct to consumer sales, partially offset by brand mix
shift at Schuh.
Selling and administrative expense for the first quarter this
year increased 220 basis points as a percentage of sales compared
with last year. The increase as a percentage of sales compared to
Fiscal 2024 reflects the deleverage of expenses, especially
occupancy expense, selling salaries, professional fees and
depreciation expense as a result of decreased revenue in the first
quarter of Fiscal 2025. In absolute dollars, selling and
administrative expense declined in the first quarter this year
compared to last year, reflecting the impact of our cost savings
initiatives, including store closures.
Genesco’s GAAP operating loss for the first quarter was $32.1
million, or 7.0% of sales this year, compared with $23.0 million,
or 4.8% of sales in the first quarter last year. Adjusted for the
Excluded Items in all periods, the operating loss for the first
quarter was $30.0 million this year compared to $22.7 million last
year. Adjusted operating margin was a loss of 6.5% of sales in the
first quarter of Fiscal 2025 compared to a loss of 4.7% in the
first quarter last year.
The effective tax rate for the quarter was 26.7% in Fiscal 2025
compared to 23.7% in the first quarter last year. The adjusted tax
rate, reflecting Excluded Items, was 26.0% in Fiscal 2025 compared
to 23.3% in the first quarter last year. The higher adjusted tax
rate for the first quarter this year compared to the first quarter
last year reflects an increase in the applicable statutory tax rate
in our U.K. jurisdiction from 24% to 25% and an increase in the
amount of foreign losses for which we are unable to recognize a tax
benefit.
GAAP loss from continuing operations was $24.3 million in the
first quarter of Fiscal 2025 compared to $18.9 million in the first
quarter last year. Adjusted for the Excluded Items in all periods,
the first quarter loss from continuing operations was $22.9
million, or $2.10 per share, in Fiscal 2025, compared to $18.7
million, or $1.59 per share, in the first quarter last year.
Cash, Borrowings and Inventory
Cash as of May 4, 2024, was $19.2 million, compared with $31.8
million as of April 29, 2023. Total debt at the end of the first
quarter of Fiscal 2025 was $59.4 million compared with $118.2
million at the end of last year’s first quarter. Inventories
decreased 17% on a year-over-year basis, reflecting decreased
inventory for Journeys and Johnston & Murphy, partially offset
by small increases at Schuh and Genesco Brands.
Capital Expenditures and Store Activity
For the first quarter this year, capital expenditures were $6
million, related primarily to retail stores and digital and
omnichannel initiatives. Depreciation and amortization was $13
million. During the quarter, the Company opened one store and
closed 21 stores. The Company ended the quarter with 1,321 stores
compared with 1,396 stores at the end of the first quarter last
year, or a decrease of 5%. Square footage was down 4% on a
year-over-year basis.
Share Repurchases
The Company did not repurchase any shares during the first
quarter of Fiscal 2025. During the second quarter of Fiscal 2025,
through May 30, 2024, the Company repurchased 7,700 shares for $0.2
million, or $24.90 per share. The Company currently has $51.9
million remaining on its expanded share repurchase authorization
announced in June 2023.
Store Closing and Cost Savings Update
- The Company closed 17 Journeys stores in the first quarter of
Fiscal 2025 and continues to evaluate up to 50 Journeys store
closures in Fiscal 2025
- The Company's cost savings program remains on track to achieve
a reduction in the annualized run rate of $45 to $50 million by the
end of Fiscal 2025
Fiscal 2025 Outlook
For Fiscal 2025, the Company:
- Continues to expect total sales to decrease 2% to 3% compared
to Fiscal 2024, or down 1% to 2% excluding the 53rd week in Fiscal
2024
- Continues to expect adjusted diluted earnings per share from
continuing operations in the range of $0.60 to $1.00 2
- Guidance assumes no further share repurchases and a tax rate of
26%
__________________________
2A reconciliation of the adjusted financial measures cited in
the guidance to their corresponding measures as reported pursuant
to GAAP is included in Schedule B to this press release.
Conference Call, Management Commentary and Investor
Presentation
The Company has posted detailed financial commentary and a
supplemental financial presentation of first quarter results on its
website, www.genesco.com, in the investor relations section. The
Company's live conference call on May 31, 2024, at 7:30 a.m.
(Central time), may be accessed through the Company's 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.
Safe Harbor Statement
This release contains forward-looking statements, including
those regarding future sales, earnings, operating income, gross
margins, expenses, capital expenditures, depreciation and
amortization, tax rates, store openings and closures, cost
reductions, ESG progress and all other statements not addressing
solely historical facts or present conditions. Forward-looking
statements are usually identified by or are associated with such
words as “intend,” “expect,” “feel,” “should,” “believe,”
“anticipate,” “optimistic,” “confident” and similar terminology.
Actual results could vary materially from the expectations
reflected in these statements. A number of factors could cause
differences. These include adjustments to projections reflected in
forward-looking statements, including those resulting from weakness
in store and shopping mall traffic, restrictions on operations
imposed by government entities and/or landlords, changes in public
safety and health requirements, and limitations on the Company’s
ability to adequately staff and operate stores. Differences from
expectations could also result from store closures and effects on
the business as a result of civil disturbances; the level and
timing of promotional activity necessary to maintain inventories at
appropriate levels; our ability to pass on price increases to our
customers; the imposition of tariffs on product imported by the
Company or its vendors as well as the ability and costs to move
production of products in response to tariffs; the Company’s
ability to obtain from suppliers products that are in-demand on a
timely basis and effectively manage disruptions in product supply
or distribution, including disruptions as a result of pandemics or
geopolitical events, including shipping disruptions in the Red Sea;
unfavorable trends in fuel costs, foreign exchange rates, foreign
labor and material costs, and other factors affecting the cost of
products; our ability to renew our license agreements; impacts of
the Russia-Ukraine war, and other sources of market weakness in the
U.K. and Republic of Ireland; the effectiveness of the Company's
omnichannel initiatives; costs associated with changes in minimum
wage and overtime requirements; wage pressure in the U.S. and the
U.K.; weakness in the consumer economy and retail industry;
competition and fashion trends in the Company's markets; risks
related to the potential for terrorist events; risks related to
public health and safety events; changes in buying patterns by
significant wholesale customers; retained liabilities associated
with divestitures of businesses including potential liabilities
under leases as the prior tenant or as a guarantor; and changes in
the timing of holidays or in the onset of seasonal weather
affecting period-to-period sales comparisons. Additional factors
that could cause differences from expectations include the ability
to secure allocations to refine product assortments to address
consumer demand; the ability to renew leases in existing stores and
control or lower occupancy costs, to open or close stores in the
number and on the planned schedule, and to conduct required
remodeling or refurbishment on schedule and at expected expense
levels; the Company’s ability to realize anticipated cost savings,
including rent savings; the amount and timing of share repurchases;
the Company’s ability to achieve expected digital gains and gain
market share; 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, operating lease
right of use assets or intangible assets or other adverse financial
consequences and the timing and amount of such impairments or other
consequences; unexpected changes to the market for the Company's
shares or for the retail sector in general; our ability to meet our
sustainability, stewardship, emission and diversity, equity and
inclusion related ESG projections, goals and commitments; costs and
reputational harm as a result of disruptions in the Company’s
business or information technology systems either by security
breaches and incidents or by potential problems associated with the
implementation of new or upgraded systems; the Company’s ability to
realize any anticipated tax benefits in both the amount and
timeframe anticipated; and the cost and outcome of litigation,
investigations, environmental matters and other disputes 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, the Company’s 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 the Company’s 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.
About Genesco Inc.
Genesco Inc. (NYSE: GCO) is a footwear focused company with
distinctively positioned retail and lifestyle brands and proven
omnichannel capabilities offering customers the footwear they
desire in engaging shopping environments, including approximately
1,320 retail stores and branded e-commerce websites. Its Journeys,
Little Burgundy and Schuh brands serve teens, kids and young adults
with on-trend fashion footwear that inspires youth culture in the
U.S., Canada and the U.K. Johnston & Murphy serves the
successful, affluent man and woman with premium footwear, apparel
and accessories in the U.S. and Canada, and Genesco Brands Group
sells branded lifestyle footwear to leading retailers under
licensed brands including Levi’s, Dockers and G.H. Bass. Founded in
1924, Genesco is based in Nashville, Tennessee. For more
information on Genesco and its operating divisions, please visit
www.genesco.com.
GENESCO INC. Condensed Consolidated Statements of
Operations (in thousands, except per share data)
(Unaudited)
Quarter 1
Quarter 1
May 4,
% of
April 29,
% of
2024
Net Sales
2023
Net Sales
Net sales
$
457,597
100.0%
$
483,332
100.0%
Cost of sales
241,316
52.7%
254,524
52.7%
Gross margin(1)
216,281
47.3%
228,808
47.3%
Selling and administrative expenses
247,831
54.2%
251,497
52.0%
Asset impairments and other, net(2)
578
0.1%
308
0.1%
Operating loss
(32,128
)
-7.0%
(22,997
)
-4.8%
Other components of net periodic benefit cost
109
0.0%
92
0.0%
Interest expense, net
890
0.2%
1,651
0.3%
Loss from continuing operations before income taxes
(33,127
)
-7.2%
(24,740
)
-5.1%
Income tax benefit
(8,839
)
-1.9%
(5,865
)
-1.2%
Loss from continuing operations
(24,288
)
-5.3%
(18,875
)
-3.9%
Loss from discontinued operations, net of tax
(59
)
0.0%
(15
)
0.0%
Net Loss
$
(24,347
)
-5.3%
$
(18,890
)
-3.9%
Basic loss per share:
Before discontinued operations
$
(2.22
)
$
(1.60
)
Net loss
$
(2.23
)
$
(1.60
)
Diluted loss per share:
Before discontinued operations
$
(2.22
)
$
(1.60
)
Net loss
$
(2.23
)
$
(1.60
)
Weighted-average shares outstanding:
Basic
10,930
11,818
Diluted
10,930
11,818
(1) Includes a $1.6 million gross margin charge related to a
distribution model transition in Genesco Brands Group. (2) Includes
a $0.6 million charge in the first quarter of Fiscal 2025 which
includes $0.3 million for severance and $0.3 million for asset
impairments. Includes a $0.3 million charge in the first quarter of
Fiscal 2024 for asset impairments.
GENESCO INC.
Sales/Earnings Summary by Segment (in thousands)
(Unaudited) Quarter 1 Quarter 1
May 4,
% of
April 29,
% of
2024
Net Sales
2023
Net Sales
Sales: Journeys Group
$
259,445
56.7%
$
272,190
56.3%
Schuh Group
92,349
20.2%
93,105
19.3%
Johnston & Murphy Group
79,207
17.3%
82,627
17.1%
Genesco Brands Group
26,596
5.8%
35,410
7.3%
Net Sales
$
457,597
100.0%
$
483,332
100.0%
Operating income (loss): Journeys Group
$
(18,822
)
-7.3%
$
(18,362
)
-6.7%
Schuh Group
(5,896
)
-6.4%
(1,790
)
-1.9%
Johnston & Murphy Group
2,355
3.0%
4,806
5.8%
Genesco Brands Group(1)
(986
)
-3.7%
(32
)
-0.1%
Corporate and Other(2)
(8,779
)
-1.9%
(7,619
)
-1.6%
Operating loss
(32,128
)
-7.0%
(22,997
)
-4.8%
Other components of net periodic benefit cost
109
0.0%
92
0.0%
Interest expense, net
890
0.2%
1,651
0.3%
Loss from continuing operations before income taxes
(33,127
)
-7.2%
(24,740
)
-5.1%
Income tax benefit
(8,839
)
-1.9%
(5,865
)
-1.2%
Loss from continuing operations
(24,288
)
-5.3%
(18,875
)
-3.9%
Loss from discontinued operations, net of tax
(59
)
0.0%
(15
)
0.0%
Net Loss
$
(24,347
)
-5.3%
$
(18,890
)
-3.9%
(1) Includes a $1.6 million gross margin charge related to a
distribution model transition in Genesco Brands Group. (2) Includes
a $0.6 million charge in the first quarter of Fiscal 2025 which
includes $0.3 million for severance and $0.3 million for asset
impairments. Includes a $0.3 million charge in the first quarter of
Fiscal 2024 for asset impairments.
GENESCO INC.
Condensed Consolidated Balance
Sheets
(in thousands)
(Unaudited)
May 4, 2024
April 29, 2023
Assets
Cash
$
19,247
$
31,786
Accounts receivable
50,119
54,068
Inventories
392,671
470,763
Other current assets
46,003
42,325
Total current assets
508,040
598,942
Property and equipment
233,601
239,120
Operating lease right of use assets
420,133
477,962
Goodwill and other intangibles
36,331
65,466
Non-current prepaid income taxes
57,441
54,567
Other non-current assets
51,871
59,255
Total Assets
$
1,307,417
$
1,495,312
Liabilities and Equity
Accounts payable
$
108,847
$
143,814
Current portion operating lease liabilities
125,450
131,830
Other current liabilities
73,888
75,992
Total current liabilities
308,185
351,636
Long-term debt
59,444
118,151
Long-term operating lease liabilities
345,670
399,374
Other long-term liabilities
45,665
43,526
Equity
548,453
582,625
Total Liabilities and Equity
$
1,307,417
$
1,495,312
GENESCO INC. Store Count Activity
Balance
Balance
Balance
01/28/23
Open
Close
02/03/24
Open
Close
05/04/24
Journeys Group
1,130
27
94
1,063
1
17
1,047
Schuh Group
122
3
3
122
0
0
122
Johnston & Murphy Group
158
2
4
156
0
4
152
Total Retail Stores
1,410
32
101
1,341
1
21
1,321
GENESCO INC. Comparable Sales
Quarter 1
May 4,
Apr. 29,
2024
2023
Journeys Group
-5%
-14%
Schuh Group
-7%
13%
Johnston & Murphy Group
-3%
18%
Total Comparable Sales
-5%
-5%
Same Store Sales
-7%
-8%
Comparable E-commerce Sales
3%
7%
Schedule B Genesco Inc. Adjustments to Reported Loss
from Continuing Operations Three Months Ended May 4, 2024 and April
29, 2023 The Company believes that disclosure of earnings
(loss) and earnings (loss) per share from continuing operations and
operating income (loss) adjusted for the items not reflected in the
previously announced expectations will be meaningful to investors,
especially in light of the impact of such items on the results.
Quarter 1
Quarter 1
May 4, 2024
April 29, 2023
In Thousands (except per share amounts)
Pretax
Net of Tax
Per Share
Amounts
Pretax
Net of Tax
Per Share Amounts
Loss from continuing operations, as reported
$
(24,288
)
($2.22
)
$
(18,875
)
($1.60
)
Gross margin adjustment: Charges related to distribution
model transition
$
1,581
1,151
0.10
$
-
-
0.00
Asset impairments and other adjustments: Asset impairment
charges
$
244
178
0.02
$
308
233
0.02
Severance
334
243
0.02
-
-
0.00
Total asset impairments and other adjustments
$
578
421
0.04
$
308
233
0.02
Income tax expense adjustments: Tax impact share based
awards
130
0.01
(47
)
0.00
Other tax items
(345
)
(0.03
)
(55
)
(0.01
)
Total income tax expense adjustments
(215
)
(0.02
)
(102
)
(0.01
)
Adjusted loss from continuing operations (1) and (2)
$
(22,931
)
($2.10
)
$
(18,744
)
($1.59
)
(1) The adjusted tax rate for the first quarter of Fiscal
2025 and 2024 is 26.0% and 23.3%, respectively. (2) EPS
reflects 10.9 million and 11.8 million share count for the first
quarter of Fiscal 2025 and 2024, respectively, which excludes
common stock equivalents in both periods due to the loss from
continuing operations. Genesco Inc. Adjustments to Reported
Operating Income (Loss) and Gross Margin Three Months Ended May 4,
2024 and April 29, 2023
Quarter 1 - May 4, 2024
Operating Asset Impair Adj Operating In
Thousands
Income (Loss) & Other Adj Income
(Loss) Journeys Group
$
(18,822
)
$
-
$
(18,822
)
Schuh Group
(5,896
)
-
(5,896
)
Johnston & Murphy Group
2,355
-
2,355
Genesco Brands Group
(986
)
1,581
595
Corporate and Other
(8,779
)
578
(8,201
)
Total Operating Loss
$
(32,128
)
$
2,159
$
(29,969
)
% of sales
-7.0
%
-6.5
%
Quarter 1 - April 29, 2023 Operating Asset Impair Adj
Operating In Thousands Income (Loss) & Other Adj Income (Loss)
Journeys Group
$
(18,362
)
$
-
$
(18,362
)
Schuh Group
(1,790
)
-
(1,790
)
Johnston & Murphy Group
4,806
-
4,806
Genesco Brands Group
(32
)
-
(32
)
Corporate and Other
(7,619
)
308
(7,311
)
Total Operating Loss
$
(22,997
)
$
308
$
(22,689
)
% of sales
-4.8
%
-4.7
%
Quarter 1 In Thousands
May 4, 2024 April 29,
2023 Gross margin, as reported
$
216,281
$
228,808
% of sales
47.3
%
47.3
%
Charges related to distribution model transition
1,581
-
Total adjustments
1,581
-
Adjusted gross margin
$
217,862
$
228,808
% of sales
47.6
%
47.3
%
Schedule B Genesco Inc. Adjustments to Forecasted Earnings
from Continuing Operations Fiscal Year Ending February 1, 2025
In millions (except per share amounts) High Guidance Low
Guidance Fiscal 2025 Fiscal 2025 Net of Tax Per Share Net of Tax
Per Share Forecasted earnings from continuing operations
$
9.0
$
0.80
$
4.0
$
0.36
Charges related to distribution model transition
1.2
0.10
1.2
0.10
Asset impairments and other adjustments: Asset impairments
and other matters
1.1
0.10
1.5
0.14
Total asset impairments and other adjustments (1)
1.1
0.10
1.5
0.14
Adjusted forecasted earnings from continuing operations (2)
$
11.3
$
1.00
$
6.7
$
0.60
(1) All adjustments are net of tax where applicable.
The forecasted tax rate for Fiscal 2025 is approximately 26%.
(2) EPS reflects 11.2 million share count for Fiscal 2025
which includes common stock equivalents. This reconciliation
reflects estimates and current expectations of future results.
Actual results may vary materially from these expectations and
estimates, for reasons including those included in the discussion
of forward-looking statements elsewhere in this release. The
Company disclaims any obligation to update such expectations and
estimates.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240530889134/en/
Genesco Financial Contact
Thomas A. George (615) 367-7465 tgeorge@genesco.com
Genesco Media Contact Claire
S. McCall (615) 367-8283 cmccall@genesco.com
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