Genesco Inc. Reports Fiscal 2022 Second Quarter Results

GENESCO INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)

Quarter 2

Quarter 2

% of

Aug. 1,

% of

2021

2020

Net Sales

Net sales

$ 555,183

100.0%

$ 391,217

100.0%

Cost of sales

282,661

50.9%

224,217

57.3%

   Gross margin

272,522

49.1%

167,000

42.7%

Selling and administrative expenses

252,551

45.5%

187,261

47.9%

Asset impairments and other, net

7,070

1.3%

1,733

0.4%

   Operating income (loss)

12,901

2.3%

(21,994)

-5.6%

Other components of net periodic benefit cost (income)

56

0.0%

(182)

0.0%

Interest expense, net

617

0.1%

1,918

0.5%

   Earnings (loss) from continuing operations before 

     income taxes

12,228

2.2%

(23,730)

-6.1%

Income tax expense (benefit)

1,354

0.2%

(4,806)

-1.2%

   Earnings (loss) from continuing operations

10,874

2.0%

(18,924)

-4.8%

Gain (loss) from discontinued operations, net of tax

63

0.0%

(112)

0.0%

   Net Earnings (Loss)

2.0%

$ (19,036)

-4.9%

Basic earnings (loss) per share:

    Before discontinued operations

$       0.76

$      (1.33)

    Net earnings (loss)

$       0.76

$      (1.34)

Diluted earnings (loss) per share:

    Before discontinued operations

$       0.74

$      (1.33)

    Net earnings (loss)

$       0.75

$      (1.34)

Weighted-average shares outstanding:

    Basic

14,339

14,179

    Diluted

14,611

14,179

GENESCO INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)

Six Months Ended

Six Months Ended

July 31,

% of

Aug. 1,

% of

2021

Net Sales

2020

Net Sales

Net sales

$ 1,093,878

100.0%

$  670,449

100.0%

Cost of sales

563,694

51.5%

383,305

57.2%

   Gross margin

530,184

48.5%

287,144

42.8%

Selling and administrative expenses

492,016

45.0%

376,303

56.1%

Goodwill impairment

–

0.0%

79,259

11.8%

Asset impairments and other, net

9,740

0.9%

9,594

1.4%

   Operating income (loss)

28,428

2.6%

(178,012)

-26.6%

Other components of net periodic benefit cost (income)

17

0.0%

(306)

0.0%

Interest expense, net

1,346

0.1%

2,774

0.4%

   Earnings (loss) from continuing operations before 

     income taxes

27,065

2.5%

(180,480)

-26.9%

Income tax expense (benefit)

7,297

0.7%

(26,932)

-4.0%

   Earnings (loss) from continuing operations

19,768

1.8%

(153,548)

-22.9%

Gain (loss) from discontinued operations, net of tax

47

0.0%

(265)

0.0%

   Net Earnings (Loss)

$      19,815

1.8%

$(153,813)

-22.9%

Basic earnings (loss) per share:

    Before discontinued operations

$          1.38

$     (10.86)

    Net earnings (loss)

$          1.38

$     (10.87)

Diluted earnings (loss) per share:

    Before discontinued operations

$          1.35

$     (10.86)

    Net earnings (loss)

$          1.35

$     (10.87)

Weighted-average shares outstanding:

    Basic

14,313

14,145

    Diluted

14,657

14,145

GENESCO INC.

Sales/Earnings Summary by Segment

(in thousands)

(Unaudited)

Quarter 2

Quarter 2

July 31,

% of

Aug. 1,

% of

2021

Net Sales

2020

Net Sales

Sales:

    Journeys Group

$ 346,275

62.4%

$ 276,631

70.7%

    Schuh Group

106,079

19.1%

71,732

18.3%

    Johnston & Murphy Group

61,159

11.0%

24,097

6.2%

    Licensed Brands

41,670

7.5%

18,757

4.8%

    Net Sales

$ 555,183

100.0%

$ 391,217

100.0%

Operating Income (Loss):

    Journeys Group

$   30,368

8.8%

$   10,160

3.7%

    Schuh Group

3,623

3.4%

(6,838)

-9.5%

    Johnston & Murphy Group

3,951

6.5%

(18,243)

-75.7%

    Licensed Brands

991

2.4%

(1,222)

-6.5%

    Corporate and Other⁽¹⁾

(26,032)

-4.7%

(5,851)

-1.5%

Operating income (loss)

12,901

2.3%

(21,994)

-5.6%

Other components of net periodic benefit cost (income)

56

0.0%

(182)

0.0%

Interest, net

617

0.1%

1,918

0.5%

Earnings (loss) from continuing operations before                    

   income taxes

12,228

2.2%

(23,730)

-6.1%

Income tax expense (benefit)

1,354

0.2%

(4,806)

-1.2%

Earnings (loss) from continuing operations

10,874

2.0%

(18,924)

-4.8%

Gain (loss) from discontinued operations, net of tax

63

0.0%

(112)

0.0%

Net Earnings (Loss)

$   10,937

2.0%

$ (19,036)

-4.9%

(1)

Includes a $7.0 million charge in the second quarter of Fiscal 2022 which includes $6.2 million for professional fees related to the actions  

of a shareholder activist and $1.4 million for retail store asset impairments, partially offset by a $0.6 million insurance gain.   Includes a   

$1.7 million charge in the second quarter of Fiscal 2021 for retail store asset impairments.

GENESCO INC.

Sales/Earnings Summary by Segment

(in thousands)

(Unaudited)

Six Months Ended

Six Months Ended

July 31,

% of

Aug. 1,

% of

2021

Net Sales

2020

Net Sales

Sales:

    Journeys Group

$    722,823

66.1%

$  445,556

66.5%

    Schuh Group

174,790

16.0%

118,897

17.7%

    Johnston & Murphy Group

109,921

10.0%

62,946

9.4%

    Licensed Brands

86,344

7.9%

43,050

6.4%

    Net Sales

$ 1,093,878

100.0%

$  670,449

100.0%

Operating Income (Loss):

    Journeys Group 

$      63,492

8.8%

$   (26,923)

-6.0%

    Schuh Group

(224)

-0.1%

(21,924)

-18.4%

    Johnston & Murphy Group

771

0.7%

(27,827)

-44.2%

    Licensed Brands

3,552

4.1%

(3,723)

-8.6%

    Corporate and Other⁽¹⁾

(39,163)

-3.6%

(18,356)

-2.7%

    Goodwill Impairment

–

0.0%

(79,259)

-11.8%

Operating income (loss)

28,428

2.6%

(178,012)

-26.6%

Other components of net periodic benefit cost (income)

17

0.0%

(306)

0.0%

Interest, net

1,346

0.1%

2,774

0.4%

Earnings (loss) from continuing operations before                    

   income taxes

27,065

2.5%

(180,480)

-26.9%

Income tax expense (benefit)

7,297

0.7%

(26,932)

-4.0%

Earnings (loss) from continuing operations

19,768

1.8%

(153,548)

-22.9%

Gain (loss) from discontinued operations, net of tax

47

0.0%

(265)

0.0%

Net Earnings (Loss)

$      19,815

1.8%

$(153,813)

-22.9%

(1)

Includes a $9.7 million charge in the first six months of Fiscal 2022 which includes $8.5 million for professional fees related to the actions  

of a shareholder activist and $1.8 million for retail store asset impairments, partially offset by a $0.6 million insurance gain.   Includes a $9.6

million charge in the first six months of Fiscal 2021 which includes a $5.3 million charge for trademark impairment and a $4.7 million charge

for retail store asset impairments, partially offset by a $0.4 million gain for the release of an earnout related to the Togast acquisition.

GENESCO INC.

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)

July 31, 2021

Aug. 1, 2020

Assets

Cash and cash equivalents

$       304,039

$     299,144

Accounts receivable

31,872

54,793

Inventories

326,477

365,267

Other current assets⁽¹⁾

91,554

58,454

   Total current assets

753,942

777,658

Property and equipment

202,711

220,458

Operating lease right of use assets

610,188

670,323

Goodwill and other intangibles

69,850

67,939

Other non-current assets

21,929

33,650

$    1,658,620

$  1,770,028

Liabilities and Equity

Accounts payable

$       186,593

$     178,541

Current portion long-term debt

–

24,860

Current portion operating lease liabilities

156,562

199,392

Other current liabilities

134,407

88,047

   Total current liabilities

477,562

490,840

Long-term debt

20,022

186,049

Long-term operating lease liabilities

524,857

593,723

Other long-term liabilities

48,082

38,552

Equity

588,097

460,864

   Total Liabilities and Equity

$    1,658,620

$  1,770,028

⁽¹⁾Includes prepaid income taxes of $60.8 million at July 31, 2021.

GENESCO INC.

Store Count Activity

Balance

Balance

02/01/20

Open

Close

01/30/21

Open

Close

Journeys Group

1,171

8

20

1,159

3

20

1,142

Schuh Group

129

1

7

123

0

0

123

Johnston & Murphy Group

180

4

6

178

1

5

174

Total Retail Units

1,480

13

33

1,460

4

25

GENESCO INC.

Store Count Activity

Balance

Balance

05/01/21

Open

Close

07/31/21

Journeys Group

1,143

3

4

1,142

Schuh Group

123

0

0

123

Johnston & Murphy Group

178

0

4

174

Total Retail Units

1,444

3

8

1,439

GENESCO INC.

Comparable Sales⁽¹⁾

Quarter 2

July 31,

Aug. 1,

July 31,

Aug. 1,

2021

2020

2021

2020

Comparable Direct Sales

-23%

144%

3%

⁽¹⁾As a result of store closures in response to the COVID-19 pandemic 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 the 

   second quarter and six months this year and last year, except for comparable direct sales, as it felt that overall sales 

   was a more meaningful metric during these periods.

GENESCO INC.

COVID-19 Related Items

Decrease (Increase) to Pretax Earnings

(in thousands)

(Unaudited)

Quarter 2

Six Months

July 31, 2021

Aug. 1, 2020

July 31, 2021

Aug. 1, 2020

Goodwill impairment

$                  –

$                –

$                  –

$       79,259

Incremental retail store asset impairment⁽¹⁾

–

1,002

–

3,736

Trademark impairment⁽¹⁾

–

–

–

5,260

Release of Togast earnout⁽¹⁾

–

–

–

(441)

Excess inventory⁽²⁾

(1,826)

2,469

(1,826)

4,277

Non-productive compensation^{(3) and (4)}

(917)

1,443

(200)

4,688

UK property tax relief⁽³⁾

(3,126)

(3,934)

(7,801)

(5,489)

Other governmental relief^{(3) and (5)}

(1,163)

–

(4,387)

–

Rent abatements and temporary rent concessions^{(3) and (6)}

(2,426)

–

(8,574)

–

Incremental bad debt reserve⁽³⁾

–

643

–

3,065

Other⁽³⁾ 

–

1,092

–

894

$          2,715

$        (22,788)

$       95,249

⁽¹⁾Included in asset impairments and other, net on the Condensed Consolidated Statements of Operations.

⁽²⁾Estimated impact of COVID-19 upon permanent markdowns and inventory markdown reserves as well as sell through of inventory previously reserved.

    Included in cost of sales on the Condensed Consolidated Statements of Operations.

⁽³⁾Included in selling and administrative expenses on the Condensed Consolidated Statements of Operations.

⁽⁴⁾Certain compensation paid to furloughed workers and commission based associates, net of the CARES Act, and UK, ROI and Canadian

     government relief.

⁽⁵⁾Includes UK and ROI Relief Grants and Canadian rent subsidy.

⁽⁶⁾Estimated impact of abatements and temporary rent savings agreements that are being recognized when executed if they pertain to a prior period.

Schedule B

Genesco Inc.

Adjustments to Reported Earnings (Loss) from Continuing Operations

Three Months Ended July 31, 2021, August 1, 2020 and August 3, 2019

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 2 

 Quarter 2 

 Quarter 2 

 July 31, 2021 

 August 1, 2020 

 August 3, 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 (loss) from continuing operations, as reported

$           10,874

$0.74

$(18,924)

($1.33)

$   793

$0.05

Asset impairments and other adjustments:

  Retail store asset impairment charges

$            1,410

1,200

0.08

$1,733

1,313

0.09

$   731

451

0.03

  Professional fees related to the actions of a shareholder activist

6,238

0.30

–

–

0.00

–

–

0.00

  Expenses related to new HQ building

1,157

813

0.06

–

–

0.00

–

–

0.00

  Insurance gain

(578)

(408)

(0.03)

–

–

0.00

–

–

0.00

  Change in vacation policy

–

–

0.00

(616)

(463)

(0.03)

–

–

0.00

  Loss on lease terminations

–

–

0.00

–

–

0.00

1,044

717

0.04

  Gain on Hurricane Maria

–

–

–

–

0.00

–

2

0.00

  Total asset impairments and other adjustments

$            8,227

5,998

0.41

$1,117

850

0.06

$1,775

1,170

0.07

Income tax expense adjustments:

  Tax impact share based awards

(1,747)

(0.12)

1,129

0.08

(54)

0.00

  Other tax items

196

0.02

(471)

(0.04)

547

0.03

  Total income tax expense adjustments

(1,551)

(0.10)

658

0.04

493

0.03

Adjusted earnings (loss) from continuing operations^(1)and(2)

$           15,321

$1.05

$(17,416)

($1.23)

$2,456

$0.15

⁽¹⁾The adjusted tax rate for the second quarter of Fiscal 2022, 2021 and 2020 is 25.1%, 23.0% and 45.2%, respectively.

⁽²⁾EPS reflects 14.6 million, 14.2 million and 16.0 million share count for the second quarter of Fiscal 2022, 2021 and 2020, respectively, which includes common stock equivalents in the second quarter of Fiscal 2022 and Fiscal 2020 and excludes common stock equivalents in the second quarter of Fiscal 2021 due to the loss from continuing operations.

Genesco Inc.

Adjustments to Reported Operating Income (Loss) and Selling and Administrative Expenses

Three Months Ended July 31, 2021, August 1, 2020 and August 3, 2019

  Quarter 2 – July 31, 2021  

 Operating 

 Asset Impair 

Adj Operating

In Thousands 

 Income (Loss) 

& Other Adj

 Income (Loss) 

Journeys Group

$           30,368

$                  –

$           30,368

Schuh Group

3,623

–

3,623

Johnston & Murphy Group

3,951

–

3,951

Licensed Brands

991

–

991

Corporate and Other

(26,032)

8,227

(17,805)

Total Operating Income

$           12,901

$             8,227

$           21,128

  % of sales

2.3%

3.8%

 Quarter 2 – August 1, 2020  

 Operating 

 Asset Impair 

Adj Operating

In Thousands 

 Income (Loss) 

& Other Adj

 Income (Loss) 

Journeys Group

$           10,160

$              (263)

$             9,897

Schuh Group

(6,838)

–

(6,838)

Johnston & Murphy Group

(18,243)

(96)

(18,339)

Licensed Brands

(1,222)

(39)

(1,261)

Corporate and Other

(5,851)

1,515

(4,336)

Total Operating Loss 

$          (21,994)

$          (20,877)

  % of sales

-5.6%

-5.3%

 Quarter 2 – August 3, 2019  

 Operating 

 Asset Impair 

Adj Operating

In Thousands 

 Income (Loss) 

& Other Adj

 Income (Loss) 

Journeys Group

$           11,329

$                  –

$           11,329

Schuh Group

39

–

39

Johnston & Murphy Group

1,518

–

1,518

Licensed Brands

(251)

–

(251)

Corporate and Other

(9,673)

1,775

(7,898)

Total Operating Income

$            2,962

$             1,775

$             4,737

  % of sales

0.6%

1.0%

 Quarter 2 

In Thousands

 July 31, 2021 

 August 1, 2020 

 August 3, 2019 

Selling and administrative expenses, as reported

$         252,551

$         187,261

$         231,796

  Expenses related to new HQ building

(1,157)

–

–

  Change in vacation policy

–

616

–

  Total adjustments

(1,157)

–

Adjusted selling and administrative expenses

$         251,394

$         187,877

$         231,796

  % of sales

45.3%

48.0%

47.6%

Schedule B

Genesco Inc.

Adjustments to Reported Earnings (Loss) from Continuing Operations

Six Months Ended July 31, 2021, August 1, 2020 and August 3, 2019

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.

 Six Months 

 Six Months 

 Six Months 

 July 31, 2021 

 August 1, 2020 

 August 3, 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 (loss) from continuing operations, as reported

$        19,768

$1.35

$(153,548)

($10.86)

$7,263

$0.43

Asset impairments and other adjustments:

  Retail store asset impairment charges

$          1,824

1,526

0.10

$  4,775

3,541

0.25

$1,038

663

0.04

  Professional fees related to the actions of a shareholder activist

8,494

5,993

0.41

–

–

0.00

–

–

0.00

  Expenses related to new HQ building

1,754

1,237

0.09

–

–

0.00

–

–

0.00

  Insurance gain

(578)

(408)

(0.03)

–

–

0.00

–

–

0.00

  Trademark impairment

–

–

0.00

5,260

5,153

0.36

–

–

0.00

  Goodwill impairment

–

–

0.00

79,259

79,259

5.60

–

–

0.00

  Release Togast earnout

–

–

0.00

(441)

(323)

(0.02)

–

–

0.00

  Change in vacation policy

–

–

0.00

(1,232)

(914)

(0.06)

–

–

0.00

  Loss on lease terminations

–

–

0.00

–

–

0.00

44

28

0.00

  Gain on Hurricane Maria

–

–

0.00

–

–

0.00

(38)

0.00

  Total asset impairments and other adjustments

$        11,494

8,348

0.57

$87,621

86,716

6.13

$1,044

667

0.04

Income tax expense adjustments:

  Tax impact share based awards

(1,747)

(0.12)

1,129

0.08

(54)

0.00

  Other tax items

596

0.04

(3,161)

(0.22)

489

0.02

  Total income tax expense adjustments

(1,151)

(0.08)

(2,032)

(0.14)

435

0.02

Adjusted earnings (loss) from continuing operations^(1)and(2)

$        26,965

$1.84

$  (68,864)

($4.87)

$8,365

$0.49

⁽¹⁾The adjusted tax rate for the first six months of Fiscal 2022, 2021 and 2020 is 30.1%, 25.8% and 36.1%, respectively.

⁽²⁾EPS reflects 14.7 million, 14.1 million and 16.9 million share count for the first six months of Fiscal 2022, 2021 and 2020, respectively, which includes common stock equivalents in the first six months of Fiscal 2022 and Fiscal 2020 and excludes common stock equivalents in the first six months of Fiscal 2021 due to the loss from continuing operations.

Genesco Inc.

Adjustments to Reported Operating Income (Loss) and Selling and Administrative Expenses

Six Months Ended July 31, 2021, August 1, 2020 and August 3, 2019

 Six Months July 31, 2021  

 Operating 

 Asset Impair 

Adj Operating

In Thousands 

 Income (Loss) 

& Other Adj

 Income (Loss) 

Journeys Group

$        63,492

$               –

$          63,492

Schuh Group

(224)

–

(224)

Johnston & Murphy Group

771

–

771

Licensed Brands

3,552

–

3,552

Corporate and Other

(39,163)

11,494

(27,669)

Total Operating Income

$        28,428

$        11,494

$          39,922

  % of sales

2.6%

3.6%

 Six Months August 1, 2020  

 Operating 

 Asset Impair 

Adj Operating

In Thousands 

 Income (Loss) 

& Other Adj

 Income (Loss) 

Journeys Group

$       (26,923)

$           (526)