Genesco Inc GCO
Q1 2014 Earnings Call Transcript

Transcript Call Date 05/31/2013

Operator: Good day, everyone and welcome to the Genesco First Quarter Fiscal 2014 Conference Call. Just a reminder, today's call is being recorded.

Participants on the call expect to make forward-looking statements. These statements reflect the participants' expectations as of today, but actual results could be different. Genesco refers you to this morning's earning release and to the Company's SEC filings including the most recent 10-K filing for some of the factors that could cause differences from the expectations reflected in the forward-looking statements made during the call today.

Participants also expect to refer to certain adjusted financial measures during the call. All non-GAAP financial measures referred to in the prepared remarks are reconciled to their GAAP counterparts in the attachments to this morning's press release and the schedules available on the Company's home page under Investor Relations.

I will now turn the call over to Bob Dennis, Genesco's Chairman, President, and Chief Executive Officer. Please go ahead, sir.

Robert J. Dennis - Chairman, President and CEO: Good morning, and thank you for being with us. Joining me today is Jim Gulmi, our Chief Financial Officer. As a reminder, Jim's detailed review of the quarterly financials has been posted to our website along with the press release from earlier this morning.

I'll begin today's call with some remarks about first quarter results and our strategic outlook. Then I'll turn the call over to Jim for a review of the numbers and guidance and then after that I will return to give a little color on our operating segments before opening up the call to questions. As a reminder, we are now reporting a combined comparable sales number that includes stores and our direct business, which includes both e-commerce and catalog sales. However, to be clear our direct sales do not include digitally assisted transactions run up within the store but (fulfilled) from the DC or another store. For a more detailed breakdown of our comp performance please see Jim's commentary online.

First quarter sales were challenging but improved in March and April after a tough February. For the quarter comparable sales were down 4%. February comps were down 8% but for March and April which we look at on a combined basis to eliminate the Easter shift, comps improved to negative 1% and May comps through last Saturday were up 1%.

For the quarter adjusted EPS was $0.94, compared to $0.98 last year. Although comp sales were negative we benefited from good expense control, especially from the compensation expense leverage that is a feature of our EVA bonus, something we have talked about in the past. As we discussed on our year end call, the IRS delay in processing federal tax refunds created a temporary headwind for Lids and Journeys in late January and early February. The impact on our business from the delay was a sizable hurdle right out of the gate that was difficult to fully overcome. While we generally avoid blaming weather for performance we believe an unseasonably wet, cold spring depressed demand for most of the quarter in the U.S. The weather in the U.K. was even more unfavorable with an extraordinarily cold March. As warmer weather has finally arrived on both sides of the Atlantic in May, we have seen a slight pickup in business.

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