GENESCO Inc. (GCO, Financial) filed Quarterly Report for the period ended 2008-11-01.
Genesco is a leading retailer and wholesaler of branded footwear. The company operates two segments: Specialty Retail Footwear and Branded Footwear. The company's owned and licensed footwear brands sold through both wholesale and retail channels of distribution include Johnston & Murphy Dockers Footwear and Nautica Footwear. The company alsooperates the Volunteer Leather Company a leather tanning and finishing business. GENESCO Inc. has a market cap of $297.68 million; its shares were traded at around $13.58 with a P/E ratio of 8.82 and P/S ratio of 0.2. GENESCO Inc. had an annual average earning growth of 10.4% over the past 10 years. GuruFocus rated GENESCO Inc. the business predictability rank of 3-star.
Earnings before income taxes from continuing operations (pretax earnings) for the third quarter ended November 1, 2008 were $13.8, million compared to $10.3 million for the third quarter ended November 3, 2007. Pretax earnings for the third quarter ended November 1, 2008 included restructuring and other charges of $2.3 million, primarily for retail store asset impairments and lease terminations. Pretax earnings for the third quarter of Fiscal 2009 also included $0.2 million in merger-related expenses. Pretax earnings for the third quarter ended November 3, 2007 included restructuring and other charges of $0.1 million, primarily for retail store asset impairments and $6.1 million in merger-related expenses.
Corporate and other expenses for the third quarter ended November 1, 2008 were $10.5 million compared to $11.6 million for the third quarter ended November 3, 2007. Corporate expenses in the third quarter this year included $2.3 million in restructuring and other charges, primarily for retail store asset impairments and lease terminations and $0.2 million in merger-related litigation costs. Last years third quarter included $6.1 million in merger-related expenses and litigation costs and $0.1 million in restructuring and other charges, primarily for retail store asset impairments.
The Companys net sales in the nine months ended November 1, 2008 increased 6.3% to $1.10 billion from $1.04 billion in the nine months ended November 3, 2007. Gross margin increased 7.1% to $560.6 million in the first nine months of this year from $523.5 million in the same period last year and increased as a percentage of net sales from 50.6% to 51.0%. Selling and administrative expenses in the first nine months this year increased 6.7% from the first nine months last year and increased as a percentage of net sales from 48.2% to 48.4%. The first nine months of this year includes $7.8 million of merger-related litigation expenses in connection with the terminated merger with The Finish Line, while the first nine months of last year included $11.6 million of merger-related expenses. Explanations of the changes in results of operations are provided by business segment in discussions following these introductory paragraphs.
Earnings before income taxes from continuing operations (pretax earnings) for the nine months ended November 1, 2008 were $217.3 million, compared to $8.5 million for the nine months ended November 3, 2007. Pretax earnings for the nine months ended November 1, 2008 included a gain of $204.1 million from the settlement of merger-related litigation with The Finish Line and UBS and restructuring and other charges of $7.8 million primarily for retail store asset impairments, lease terminations and other legal matters. Pretax earnings for the nine months ended November 1, 2008 also included $7.8 million in merger-related expenses. Pretax earnings for the nine months ended November 3, 2007 included restructuring and other charges of $6.8 million, primarily for retail store asset impairments in underperforming urban stores in the Underground Station Group and to the lease termination of one Hat World store offset by an excise tax refund. Pretax earnings for the nine months ended November 3, 2007 also included $11.6 million in merger-related expenses.
Net earnings for the nine months ended November 1, 2008 were $128.9 million ($5.41 diluted earnings per share) compared to $3.6 million ($0.15 diluted earnings per share) for the nine months ended November 3, 2007. Net earnings for the nine months ended November 1, 2008 included a $5.5 million ($0.23 diluted loss per share) charge to earnings (net of tax) primarily for an environmental liability relating to settlement negotiations with the Environmental Protection Agency concerning the site of a factory in New York, which the Company operated in the late 1960s. Net earnings for the nine months ended November 3, 2007 included a $1.2 million ($0.05 diluted loss per share) charge to earnings (net of tax) primarily for additional environmental remediation costs. The Company recorded an effective income tax rate of 38.1% in the first nine months this year compared to 42.5% in the same period last year. The variance in the effective tax rate for the first nine months this year compared to the first nine months last year is attributable to the deduction of prior period merger-related expenses that became deductible upon termination of the Finish Line merger agreement this year offset by an income tax liability recorded as a result of the increase in value of the shares of common stock received in the settlement of litigation with The Finish Line that had no corresponding recording of income in the financial statements. In addition, this years effective tax rate is lower due to a $1.2 million reduction in FIN 48 liabilities from an agreement reached on a state income tax contingency. Last years effective tax rate reflected the then non-deductibility of the merger-related expenses.
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Genesco is a leading retailer and wholesaler of branded footwear. The company operates two segments: Specialty Retail Footwear and Branded Footwear. The company's owned and licensed footwear brands sold through both wholesale and retail channels of distribution include Johnston & Murphy Dockers Footwear and Nautica Footwear. The company alsooperates the Volunteer Leather Company a leather tanning and finishing business. GENESCO Inc. has a market cap of $297.68 million; its shares were traded at around $13.58 with a P/E ratio of 8.82 and P/S ratio of 0.2. GENESCO Inc. had an annual average earning growth of 10.4% over the past 10 years. GuruFocus rated GENESCO Inc. the business predictability rank of 3-star.
Highlight of Business Operations:
The Company recorded a pretax charge to earnings of $2.3 million in the third quarter of Fiscal 2009. The charge included $1.9 million in retail store asset impairments and $0.4 million for lease terminations. The Company recorded a pretax charge to earnings of $7.8 million in the first nine months of Fiscal 2009. The charge included $5.5 million in retail store asset impairments, $1.2 million for lease terminations and $1.1 million in other legal matters.Earnings before income taxes from continuing operations (pretax earnings) for the third quarter ended November 1, 2008 were $13.8, million compared to $10.3 million for the third quarter ended November 3, 2007. Pretax earnings for the third quarter ended November 1, 2008 included restructuring and other charges of $2.3 million, primarily for retail store asset impairments and lease terminations. Pretax earnings for the third quarter of Fiscal 2009 also included $0.2 million in merger-related expenses. Pretax earnings for the third quarter ended November 3, 2007 included restructuring and other charges of $0.1 million, primarily for retail store asset impairments and $6.1 million in merger-related expenses.
Corporate and other expenses for the third quarter ended November 1, 2008 were $10.5 million compared to $11.6 million for the third quarter ended November 3, 2007. Corporate expenses in the third quarter this year included $2.3 million in restructuring and other charges, primarily for retail store asset impairments and lease terminations and $0.2 million in merger-related litigation costs. Last years third quarter included $6.1 million in merger-related expenses and litigation costs and $0.1 million in restructuring and other charges, primarily for retail store asset impairments.
The Companys net sales in the nine months ended November 1, 2008 increased 6.3% to $1.10 billion from $1.04 billion in the nine months ended November 3, 2007. Gross margin increased 7.1% to $560.6 million in the first nine months of this year from $523.5 million in the same period last year and increased as a percentage of net sales from 50.6% to 51.0%. Selling and administrative expenses in the first nine months this year increased 6.7% from the first nine months last year and increased as a percentage of net sales from 48.2% to 48.4%. The first nine months of this year includes $7.8 million of merger-related litigation expenses in connection with the terminated merger with The Finish Line, while the first nine months of last year included $11.6 million of merger-related expenses. Explanations of the changes in results of operations are provided by business segment in discussions following these introductory paragraphs.
Earnings before income taxes from continuing operations (pretax earnings) for the nine months ended November 1, 2008 were $217.3 million, compared to $8.5 million for the nine months ended November 3, 2007. Pretax earnings for the nine months ended November 1, 2008 included a gain of $204.1 million from the settlement of merger-related litigation with The Finish Line and UBS and restructuring and other charges of $7.8 million primarily for retail store asset impairments, lease terminations and other legal matters. Pretax earnings for the nine months ended November 1, 2008 also included $7.8 million in merger-related expenses. Pretax earnings for the nine months ended November 3, 2007 included restructuring and other charges of $6.8 million, primarily for retail store asset impairments in underperforming urban stores in the Underground Station Group and to the lease termination of one Hat World store offset by an excise tax refund. Pretax earnings for the nine months ended November 3, 2007 also included $11.6 million in merger-related expenses.
Net earnings for the nine months ended November 1, 2008 were $128.9 million ($5.41 diluted earnings per share) compared to $3.6 million ($0.15 diluted earnings per share) for the nine months ended November 3, 2007. Net earnings for the nine months ended November 1, 2008 included a $5.5 million ($0.23 diluted loss per share) charge to earnings (net of tax) primarily for an environmental liability relating to settlement negotiations with the Environmental Protection Agency concerning the site of a factory in New York, which the Company operated in the late 1960s. Net earnings for the nine months ended November 3, 2007 included a $1.2 million ($0.05 diluted loss per share) charge to earnings (net of tax) primarily for additional environmental remediation costs. The Company recorded an effective income tax rate of 38.1% in the first nine months this year compared to 42.5% in the same period last year. The variance in the effective tax rate for the first nine months this year compared to the first nine months last year is attributable to the deduction of prior period merger-related expenses that became deductible upon termination of the Finish Line merger agreement this year offset by an income tax liability recorded as a result of the increase in value of the shares of common stock received in the settlement of litigation with The Finish Line that had no corresponding recording of income in the financial statements. In addition, this years effective tax rate is lower due to a $1.2 million reduction in FIN 48 liabilities from an agreement reached on a state income tax contingency. Last years effective tax rate reflected the then non-deductibility of the merger-related expenses.
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GCO is in the portfolios of Joel Greenblatt.More on GCO:
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10-year financial history of GCO.
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