GENESCO INC. REPORTS FISCAL 2023 FIRST QUARTER RESULTS
Genesco reported a 3% drop in net sales to $521 million for Q1 Fiscal 2023, yet an improvement of 5% over Q1FY20. Gross margin rose by 50 basis points to 48.3%. GAAP EPS decreased to $0.37 from $0.60 last year, while non-GAAP EPS was $0.44, down from $0.79. The company highlighted a sequential retail sales improvement in April and May and reaffirmed its earnings guidance for Fiscal 2023 between $7.00 and $7.75 per share. E-commerce sales plummeted 29% year-over-year, impacting overall performance.
- Gross margin increased by 50 basis points to 48.3%.
- Adjusted EPS for Q1FY23 increased 33% compared to pre-pandemic levels.
- Sequential retail sales improvement in April and May.
- Reaffirmation of Fiscal 2023 EPS guidance between $7.00 and $7.75.
- Net sales decreased by 3% from last year.
- GAAP operating income fell 47% to $8.2 million.
- E-commerce sales dropped 29% from the previous year.
-- Profitability Exceeds Expectations --
-- Reaffirms Fiscal 2023 Outlook --
First Quarter Fiscal 2023 Financial Summary
- Net sales of
$521 million , a decrease of3% from last year and an increase of5% over Q1FY20 with 90 fewer stores compared with three years ago - Gross margin increased 50 basis points over last year
- GAAP operating income decreased
47% from last year and down9% over Q1FY20 - Non-GAAP operating income decreased
50% from last year and increased14% over Q1FY20 - E-commerce sales decreased
29% from last year and increased74% from Q1FY20 - E-commerce sales represented
19% of retail sales this year versus25% of retail sales last year and11% of retail sales in Q1FY20 - GAAP EPS from continuing operations was
$0.37 vs.$0.60 last year and$0.36 in Q1FY20 - Non-GAAP EPS from continuing operations was
$0.44 1 vs.$0.79 last year and$0.33 in Q1FY20 - Sequential retail sales improvement in April and May to-date compared with last year
NASHVILLE, Tenn., May 26, 2022 /PRNewswire/ -- Genesco Inc. (NYSE: GCO) today reported GAAP earnings from continuing operations per diluted share of
Mimi E. Vaughn, Genesco board chair, president and chief executive officer, said, "We are very pleased with our start to fiscal 2023, particularly our ability to exceed profitability expectations. While the year ago period posed a difficult comparison due to government stimulus-fueled consumer spending, especially for our Journeys business, our top and bottom line performance on a multi-year basis underscores the success of our footwear focused strategy and our conviction that our company is fundamentally stronger than prior to the pandemic. Importantly, our business accelerated sequentially in April and thus far in May versus last year as inventory levels improved. Our work on increasing digital penetration, improving store economics, and growing branded sales has put us in a great position to drive profitable growth across all channels. We believe these results are a good indication of the positive things to come as we move into the back to school and holiday selling seasons."
_____________________ |
1Excludes a gain related to the pension plan termination, retail store asset impairments and expenses related to the new headquarters building, net of tax effect in the first quarter of Fiscal 2023 ("Excluded Items"). A reconciliation of earnings/loss and earnings/loss per share from continuing operations in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") with the adjusted earnings/loss and earnings/loss per share numbers is set forth on Schedule B to this press release. The Company believes that disclosure of earnings/loss and earnings/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. |
Thomas A. George, Genesco chief financial officer, commented, "Our first quarter results were highlighted by strong full priced selling as we continue to experience healthy demand for our merchandise offerings. While sales would have been higher if not for inventory shortfalls, we are pleased that our top-line grew
Net sales for the first quarter of Fiscal 2023 decreased
The overall sales decrease of
First quarter gross margin this year was
Selling and administrative expense for the first quarter this year increased 230 basis points as a percentage of sales as compared with last year and decreased 90 basis points compared with Fiscal 2020. Adjusted selling and administrative expense for the first quarter this year increased 220 basis points as a percentage of sales compared with last year and decreased 120 basis points compared with Fiscal 2020. The increase as compared to Fiscal 2022 is due in large part to one-time benefits for rent credits and government tax relief in the first quarter of Fiscal 2022. In addition, increased selling salaries were partially offset by decreased performance-based compensation expense.
Genesco's GAAP operating income for the first quarter was
The effective tax rate for the quarter was
GAAP earnings from continuing operations were
Cash and cash equivalents at April 30, 2022, were
For the first quarter, capital expenditures excluding the new headquarters building were
The Company repurchased 102,895 shares during the first quarter of Fiscal 2023 at a cost of
The Company reaffirms its Fiscal 2023 full year EPS guidance:
- Sales to be up
1% to3% , compared to FY22, incorporating the impact of the lower exchange rates with a stronger U.S. dollar. - Adjusted diluted earnings per share from continuing operations in the range of
$7.00 to$7.75 , with an expectation that earnings per share for the year will be near the mid-point of the range.2
Please refer to the Q1FY23 conference call and Q1FY23 Summary Results presentation for details regarding guidance assumptions.
__________________________ |
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. |
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 26, 2022, 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.
This release contains forward-looking statements, including those regarding future sales, earnings, gross margins, expenses, capital expenditures, depreciation and amortization, tax rates, stores openings and closures 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," "believe," "anticipate," "optimistic" 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 the effects of COVID-19 on the Company's business, including COVID-19 case spikes in locations in which the Company operates, additional stores closures due to COVID-19, 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 stores 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 COVID-19 or geopolitical events; unfavorable trends in fuel costs, foreign exchange rates, foreign labor and material costs, and other factors affecting the cost of products; the effects of the British decision to exit the European Union 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 renew leases in existing stores and control or lower occupancy costs, 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; 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; and the cost and outcome of litigation, investigations and environmental matters 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.
Genesco Inc., a Nashville-based specialty retailer and branded company, sells footwear and accessories in more than 1,410 retail stores throughout the U.S., Canada, the United Kingdom and the Republic of Ireland, principally under the names Journeys, Journeys Kidz, Little Burgundy, Schuh, Schuh Kids, Johnston & Murphy, and on internet websites www.journeys.com, www.journeyskidz.com, www.journeys.ca, www.littleburgundyshoes.com, www.schuh.co.uk, www.schuh.ie, www.schuh.eu, www.johnstonmurphy.com, www.johnstonmurphy.ca, www.nashvilleshoewarehouse.com, and www.dockersshoes.com. In addition,
Genesco sells footwear at wholesale under its Johnston & Murphy brand, the licensed Levi's brand, the licensed Dockers brand, the licensed Bass brand, and other brands. Genesco is committed to progress in its diversity, equity and inclusion efforts, and the Company's environmental, social and governance stewardship. 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 | ||||||||
April 30, | % of | May 1, | % of | ||||||
2022 | Net Sales | 2021 | Net Sales | ||||||
Net sales | $ 520,748 | $ 538,695 | |||||||
Cost of sales | 269,304 | 281,033 | |||||||
Gross margin | 251,444 | 257,662 | |||||||
Selling and administrative expenses | 243,481 | 239,465 | |||||||
Asset impairments and other, net | (283) | - | 2,670 | ||||||
Operating income | 8,246 | 15,527 | |||||||
Other components of net periodic benefit cost (income) | 98 | (39) | |||||||
Interest expense, net | 297 | 729 | |||||||
Earnings from continuing operations before | |||||||||
income taxes | 7,851 | 14,837 | |||||||
Income tax expense | 2,882 | 5,943 | |||||||
Earnings from continuing operations | 4,969 | 8,894 | |||||||
Loss from discontinued operations, net of tax | (22) | (16) | |||||||
Net Earnings | $ 4,947 | $ 8,878 | |||||||
Basic earnings per share: | |||||||||
Before discontinued operations | $ 0.38 | $ 0.62 | |||||||
Net earnings | $ 0.38 | $ 0.62 | |||||||
Diluted earnings per share: | |||||||||
Before discontinued operations | $ 0.37 | $ 0.60 | |||||||
Net earnings | $ 0.37 | $ 0.60 | |||||||
Weighted-average shares outstanding: | |||||||||
Basic | 12,961 | 14,287 | |||||||
Diluted | 13,369 | 14,702 | |||||||
GENESCO INC. | |||||||||
Sales/Earnings Summary by Segment | |||||||||
(in thousands) | |||||||||
(Unaudited) | |||||||||
Quarter 1 | Quarter 1 | ||||||||
April 30, | % of | May 1, | % of | ||||||
2022 | Net Sales | 2021 | Net Sales | ||||||
Sales: | |||||||||
Journeys Group | $ 314,445 | $ 376,548 | |||||||
Schuh Group | 88,159 | 68,711 | |||||||
Johnston & Murphy Group | 71,016 | 48,762 | |||||||
Licensed Brands | 47,128 | 44,674 | |||||||
Net Sales | $ 520,748 | $ 538,695 | |||||||
Operating income (loss): | |||||||||
Journeys Group | $ 14,930 | $ 33,124 | |||||||
Schuh Group | (2,746) | - | (3,847) | - | |||||
Johnston & Murphy Group | 550 | (3,180) | - | ||||||
Licensed Brands | 3,793 | 2,561 | |||||||
Corporate and Other(1) | (8,281) | - | (13,131) | - | |||||
Operating income | 8,246 | 15,527 | |||||||
Other components of net periodic benefit cost (income) | 98 | (39) | |||||||
Interest expense, net | 297 | 729 | |||||||
Earnings from continuing operations before | |||||||||
income taxes | 7,851 | 14,837 | |||||||
Income tax expense | 2,882 | 5,943 | |||||||
Earnings from continuing operations | 4,969 | 8,894 | |||||||
Loss from discontinued operations, net of tax | (22) | (16) | |||||||
Net Earnings | $ 4,947 | $ 8,878 | |||||||
(1) Includes a | |||||||||
partially offset by | |||||||||
includes | |||||||||
GENESCO INC. | |||||||
Condensed Consolidated Balance Sheets | |||||||
(in thousands) | |||||||
(Unaudited) | |||||||
April 30, 2022 | May 1, 2021 | ||||||
Assets | |||||||
Cash and cash equivalents | $ 200,623 | $ 258,044 | |||||
Accounts receivable | 48,868 | 45,891 | |||||
Inventories | 401,479 | 301,017 | |||||
Other current assets (1) | 74,609 | 117,467 | |||||
Total current assets | 725,579 | 722,419 | |||||
Property and equipment | 219,421 | 208,759 | |||||
Operating lease right of use assets | 508,986 | 639,575 | |||||
Goodwill and other intangibles | 66,785 | 70,056 | |||||
Other non-current assets | 27,671 | 21,558 | |||||
Total Assets | $ 1,548,442 | $ 1,662,367 | |||||
Liabilities and Equity | |||||||
Accounts payable | $ 243,224 | $ 164,975 | |||||
Current portion operating lease liabilities | 137,770 | 158,295 | |||||
Other current liabilities | 83,882 | 112,648 | |||||
Total current liabilities | 464,876 | 435,918 | |||||
Long-term debt | 14,712 | 44,169 | |||||
Long-term operating lease liabilities | 430,606 | 555,204 | |||||
Other long-term liabilities | 37,910 | 48,068 | |||||
Equity | 600,338 | 579,008 | |||||
Total Liabilities and Equity | $ 1,548,442 | $ 1,662,367 | |||||
(1) Includes prepaid income taxes of | |||||||
May 1, 2021, respectively. | |||||||
GENESCO INC. | |||||||||||
Store Count Activity | |||||||||||
Balance | Balance | Balance | |||||||||
01/30/21 | Open | Close | 01/29/22 | Open | Close | 04/30/22 | |||||
Journeys Group | 1,159 | 5 | 29 | 1,135 | 3 | 8 | 1,130 | ||||
Schuh Group | 123 | 0 | 0 | 123 | 1 | 2 | 122 | ||||
Johnston & Murphy Group | 178 | 1 | 12 | 167 | 0 | 5 | 162 | ||||
Total Retail Stores | 1,460 | 6 | 41 | 1,425 | 4 | 15 | 1,414 | ||||
GENESCO INC. | ||||||||||
Comparable Sales | ||||||||||
Quarter 1 | ||||||||||
Apr. 30, | May 1, | |||||||||
2022(1) | 2021(1) | |||||||||
Comparable Direct Sales | - | |||||||||
(1) As a result of store closures in response to the COVID-19 pandemic during the first quarter of Fiscal 2022, and the | ||||||||||
Company's policy of removing any store closed for seven consecutive days from comparable sales, the Company has | ||||||||||
not included comparable sales for both the first quarter this year and last year, except for comparable direct sales, as it | ||||||||||
felt that overall sales is a more meaningful metric during these periods. | ||||||||||
Schedule B | |||||||||||||
Genesco Inc. | |||||||||||||
Adjustments to Reported Earnings from Continuing Operations | |||||||||||||
Three Months Ended April 30, 2022, May 1, 2021 and May 4, 2019 | |||||||||||||
The Company believes that disclosure of earnings and earnings per share from continuing operations and operating income 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. | |||||||||||||
April 30, 2022 | May 1, 2021 | May 4, 2019 | |||||||||||
Net of | Per Share | Net of | Per Share | Net of | Per Share | ||||||||
In Thousands (except per share amounts) | Pretax | Tax | Amounts | Pretax | Tax | Amounts | Pretax | Tax | Amounts | ||||
Earnings from continuing operations, as reported | $ 4,969 | $ 8,894 | $ 6,470 | ||||||||||
Asset impairments and other adjustments: | |||||||||||||
Retail store asset impairment charges | $ 412 | 359 | 0.03 | $ 414 | 326 | 0.02 | $ 307 | 212 | 0.01 | ||||
Gain on pension termination | (695) | (511) | (0.04) | - | - | 0.00 | - | - | 0.00 | ||||
Fees related to shareholder activist | - | - | 0.00 | 2,256 | 1,600 | 0.11 | - | - | 0.00 | ||||
Expenses related to new HQ building | 1,526 | 1,122 | 0.08 | 597 | 424 | 0.03 | - | - | 0.00 | ||||
Gain on lease termination | - | - | 0.00 | - | - | 0.00 | (1,000) | (689) | (0.04) | ||||
Gain on Hurricane Maria | - | - | 0.00 | - | - | 0.00 | (38) | (26) | 0.00 | ||||
Total asset impairments and other adjustments | $ 1,243 | 970 | 0.07 | $ 3,267 | 2,350 | 0.16 | $ (731) | (503) | (0.03) | ||||
Income tax expense adjustments: | |||||||||||||
Other tax items | (3) | (0.00) | 400 | 0.03 | (58) | 0.00 | |||||||
Total income tax expense adjustments | (3) | (0.00) | 400 | 0.03 | (58) | 0.00 | |||||||
Adjusted earnings from continuing operations (1) and (2) | $ 5,936 | $ 11,644 | $ 5,909 | ||||||||||
(1) The adjusted tax rate for the first quarter of Fiscal 2023, 2022 and 2020 is | |||||||||||||
(2) EPS reflects 13.4 million, 14.7 million and 17.9 million share count for the first quarter of Fiscal 2023, 2022 and 2020, respectively, which includes common stock equivalents in all periods. | |||||||||||||
Genesco Inc. | ||||
Adjustments to Reported Operating Income and Selling and Administrative Expenses | ||||
Three Months Ended April 30, 2022, May 1, 2021 and May 4, 2019 | ||||
April 30, 2022 | ||||
Operating | Asset Impair | Adj Operating | ||
In Thousands | Income (Loss) | & Other Adj | Income (Loss) | |
Journeys Group | $ 14,930 | $ - | $ 14,930 | |
Schuh Group | (2,746) | - | (2,746) | |
Johnston & Murphy Group | 550 | - | 550 | |
Licensed Brands | 3,793 | - | 3,793 | |
Corporate and Other | (8,281) | 1,243 | (7,038) | |
Total Operating Income | $ 8,246 | $ 1,243 | $ 9,489 | |
% of sales | ||||
May 1, 2021 | ||||
Operating | Asset Impair | Adj Operating | ||
In Thousands | Income (Loss) | & Other Adj | Income (Loss) | |
Journeys Group | $ 33,124 | $ - | $ 33,124 | |
Schuh Group | (3,847) | - | (3,847) | |
Johnston & Murphy Group | (3,180) | - | (3,180) | |
Licensed Brands | 2,561 | - | 2,561 | |
Corporate and Other | (13,131) | 3,267 | (9,864) | |
Total Operating Income | $ 15,527 | $ 3,267 | $ 18,794 | |
% of sales | ||||
May 4, 2019 | ||||
Operating | Asset Impair | Adj Operating | ||
In Thousands | Income (Loss) | & Other Adj | Income (Loss) | |
Journeys Group | $ 18,976 | $ - | $ 18,976 | |
Schuh Group | (5,428) | - | (5,428) | |
Johnston & Murphy Group | 5,106 | - | 5,106 | |
Licensed Brands | 429 | - | 429 | |
Corporate and Other | (9,999) | (731) | (10,730) | |
Total Operating Income | $ 9,084 | $ (731) | $ 8,353 | |
% of sales | ||||
In Thousands | April 30, 2022 | May 1, 2021 | May 4, 2019 | |
Selling and administrative expenses, as reported | $ 243,481 | $ 239,465 | $ 236,555 | |
Expenses related to new HQ building | (1,526) | (597) | - | |
Total adjustments | (1,526) | (597) | - | |
Adjusted selling and administrative expenses | $ 241,955 | $ 238,868 | $ 236,555 | |
% of sales | ||||
Schedule B | |||||
Genesco Inc. | |||||
Adjustments to Forecasted Earnings from Continuing Operations | |||||
Fiscal Year Ending January 28, 2023 | |||||
In millions (except per share amounts) | High Guidance | Low Guidance | |||
Fiscal 2023 | Fiscal 2023 | ||||
Net of Tax | Per Share | Net of Tax | Per Share | ||
Forecasted earnings from continuing operations | $ 102.0 | $ 7.59 | $ 91.6 | $ 6.81 | |
Asset impairments and other adjustments: | |||||
Retail store asset impairments and other matters | 0.6 | 0.04 | 0.9 | 0.07 | |
New building costs | 1.6 | 0.12 | 1.6 | 0.12 | |
Total asset impairments and other adjustments (1) | 2.2 | 0.16 | 2.5 | 0.19 | |
Adjusted forecasted earnings from continuing operations (2) | $ 104.2 | $ 7.75 | $ 94.1 | $ 7.00 | |
(1) All adjustments are net of tax where applicable. The forecasted tax rate for Fiscal 2023 is approximately | |||||
(2) EPS reflects 13.4 million share count for Fiscal 2023 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 original content:https://www.prnewswire.com/news-releases/genesco-inc-reports-fiscal-2023-first-quarter-results-301555490.html
SOURCE Genesco Inc.
FAQ
What are Genesco's Q1 FY23 earnings results?
What is Genesco's sales performance for Q1 FY23?
What are the future earnings expectations for Genesco (GCO)?
How did Genesco's e-commerce sales perform in Q1 FY23?
What was the gross margin for Genesco in Q1 FY23?
