0000950170-23-026918.txt : 20230608 0000950170-23-026918.hdr.sgml : 20230608 20230608090840 ACCESSION NUMBER: 0000950170-23-026918 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 58 CONFORMED PERIOD OF REPORT: 20230429 FILED AS OF DATE: 20230608 DATE AS OF CHANGE: 20230608 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENESCO INC CENTRAL INDEX KEY: 0000018498 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-SHOE STORES [5661] IRS NUMBER: 620211340 STATE OF INCORPORATION: TN FISCAL YEAR END: 0203 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03083 FILM NUMBER: 231000821 BUSINESS ADDRESS: STREET 1: 535 MARRIOTT DRIVE STREET 2: 12TH FLOOR CITY: NASHVILLE STATE: TN ZIP: 37214 BUSINESS PHONE: 6153677000 MAIL ADDRESS: STREET 1: 535 MARRIOTT DRIVE STREET 2: 12TH FLOOR CITY: NASHVILLE STATE: TN ZIP: 37214 10-Q 1 gco-20230429.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended April 29, 2023

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from to

Commission File No. 1-3083

Genesco Inc.

(Exact name of registrant as specified in its charter)

Tennessee

62-0211340

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

 

 

535 Marriott Drive

 

37214

Nashville,

Tennessee

 

(Zip Code)

(Address of principal executive offices)

 

 

 

Registrant's telephone number, including area code: (615) 367-7000

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $1.00 par value

GCO

New York Stock Exchange

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer; an accelerated filer; a non-accelerated filer; a smaller reporting company; or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes No

As of May 26, 2023, there were 12,563,156 shares of the registrant's common stock outstanding.

 


 

INDEX

 

Part I. Financial Information

Item 1. Financial Statements:

Condensed Consolidated Balance Sheets - April 29, 2023, January 28, 2023 and April 30, 2022

4

Condensed Consolidated Statements of Operations - Three Months ended April 29, 2023 and April 30, 2022

5

Condensed Consolidated Statements of Comprehensive Income (Loss) - Three Months ended April 29, 2023 and April 30, 2022

6

Condensed Consolidated Statements of Cash Flows - Three Months ended April 29, 2023 and April 30, 2022

7

Condensed Consolidated Statements of Equity - Three Months ended April 29, 2023 and April 30, 2022

8

Notes to Condensed Consolidated Financial Statements

9

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3. Quantitative and Qualitative Disclosures about Market Risk

21

Item 4. Controls and Procedures

21

Part II. Other Information

22

Item 1. Legal Proceedings

22

Item 1A. Risk Factors

22

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

22

Item 6. Exhibits

23

Signature

24

 

 

 

2


 

cautionary notice regarding forward-looking statements

Statements in this Quarterly Report on Form 10-Q include certain forward-looking statements, which include statements regarding our intent, belief or expectations and all statements other than those made solely with respect to historical fact. Actual results could differ materially from those reflected by the forward-looking statements in this Quarterly Report on Form 10-Q and a number of factors may adversely affect the forward-looking statements and our future results, liquidity, capital resources or prospects. These include, but are not limited to, 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 our 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; our 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; the level of consumer spending on our merchandise and interest in our brands and in general, 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 timing and amount of any share repurchases by us; the imposition of tariffs on products imported by us or our vendors as well as the ability and costs to move production of products in response to tariffs; unfavorable trends in fuel costs, foreign exchange rates, foreign labor and material costs; a disruption in shipping or increase in cost of our imported products, and other factors affecting the cost of products; our dependence on third-party vendors and licensors for the products we sell; our ability to renew our license agreements; the effects of the British decision to exit the European Union, impacts of the Russia-Ukraine war, and other sources of market weakness in the U.K. and the Republic of Ireland; the effectiveness of our omnichannel initiatives; costs associated with changes in minimum wage and overtime requirements; wage pressure in the U.S. and the U.K.; labor shortages; the effects of inflation; the evolving regulatory landscape related to our use of social media; the establishment and protection of our intellectual property; weakness in the consumer economy and retail industry; competition and fashion trends in our markets, including trends with respect to the popularity of casual and dress footwear; any failure to increase sales at our existing stores, given our high fixed expense cost structure, and in our e-commerce businesses; risks related to the potential for terrorist events; changes in buying patterns by significant wholesale customers; changes in consumer preferences; our ability to continue to complete and integrate acquisitions; our ability to expand our business and diversify our product base; impairment of goodwill in connection with acquisitions; payment related risks that could increase our operating cost, expose us to fraud or theft, subject us to potential liability and disrupt our business; retained liabilities associated with divestitures of businesses including potential liabilities under leases as the prior tenant or as a guarantor of certain leases; 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 our 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; our ability to realize anticipated cost savings, including rent savings; our ability to make our occupancy costs more variable; realize any anticipated tax benefits in both the amount and timeframe anticipated, and achieve expected digital gains and gain market share; deterioration in the performance of individual businesses or of our market value relative to our 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 our 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 our business or information technology systems either by security breaches and incidents or by potential problems associated with the implementation of new or upgraded systems, and the cost and outcome of litigation, investigations and environmental matters that involve us. For a full discussion of risk factors, see Item 1A, "Risk Factors".

Readers are cautioned not to place undue reliance on forward-looking statements as such statements speak only as of the date they were made and involve risks and uncertainties that could cause actual events or results to differ materially from the events or results described in the forward-looking statements. The most important factors which could cause our actual results to differ from our forward-looking statements are set forth in our description of risk factors in Item 1A contained in our Annual Report on Form 10-K for the fiscal year ended January 28, 2023, which should be read in conjunction with the forward-looking statements in this Quarterly Report on Form 10-Q. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update any forward-looking statement.

The events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. As a result, our actual results may differ materially from the results contemplated by these forward-looking statements.

We maintain a website at www.genesco.com where investors and other interested parties may obtain, free of charge, press releases and other information as well as gain access to our periodic filings with the Securities and Exchange Commission (“SEC”). The information contained on this website should not be considered to be a part of this or any other report filed with or furnished to the SEC.

3


 

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

 

Genesco Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share amounts)

 

Assets

 

April 29, 2023

 

 

January 28, 2023

 

 

April 30, 2022

 

Current Assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

31,786

 

 

$

47,990

 

 

$

200,623

 

Accounts receivable, net of allowances of $4,051 at April 29, 2023,

 

 

 

 

 

 

 

 

 

   $3,710 at January 28, 2023 and $5,074 at April 30, 2022

 

 

54,068

 

 

 

40,818

 

 

 

48,868

 

Inventories

 

 

470,763

 

 

 

458,017

 

 

 

401,479

 

Prepaids and other current assets

 

 

42,325

 

 

 

25,844

 

 

 

74,609

 

Total current assets

 

 

598,942

 

 

 

572,669

 

 

 

725,579

 

Property and equipment, net

 

 

239,120

 

 

 

233,733

 

 

 

219,421

 

Operating lease right of use assets

 

 

477,962

 

 

 

470,991

 

 

 

508,986

 

Non-current prepaid income taxes

 

 

54,567

 

 

 

54,111

 

 

 

 

Goodwill

 

 

37,928

 

 

 

38,123

 

 

 

38,487

 

Other intangibles

 

 

27,538

 

 

 

27,430

 

 

 

28,298

 

Deferred income taxes

 

 

28,729

 

 

 

28,563

 

 

 

4,269

 

Other noncurrent assets

 

 

30,526

 

 

 

30,806

 

 

 

23,402

 

Total Assets

 

 

1,495,312

 

 

 

1,456,426

 

 

 

1,548,442

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

143,814

 

 

 

144,998

 

 

 

243,224

 

Current portion - operating lease liabilities

 

 

131,830

 

 

 

134,458

 

 

 

137,770

 

Other accrued liabilities

 

 

75,992

 

 

 

81,327

 

 

 

83,882

 

Total current liabilities

 

 

351,636

 

 

 

360,783

 

 

 

464,876

 

Long-term debt

 

 

118,151

 

 

 

44,858

 

 

 

14,712

 

Long-term operating lease liabilities

 

 

399,374

 

 

 

401,113

 

 

 

430,606

 

Other long-term liabilities

 

 

43,526

 

 

 

42,706

 

 

 

37,910

 

Total liabilities

 

 

912,687

 

 

 

849,460

 

 

 

948,104

 

Commitments and contingent liabilities

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

 

Non-redeemable preferred stock

 

 

812

 

 

 

815

 

 

 

818

 

Common equity:

 

 

 

 

 

 

 

 

 

Common stock, $1 par value:

 

 

 

 

 

 

 

 

 

Authorized: 80,000,000 shares

 

 

 

 

 

 

 

 

 

 Issued common stock

 

 

13,052

 

 

 

13,089

 

 

 

14,217

 

Additional paid-in capital

 

 

308,817

 

 

 

305,260

 

 

 

294,628

 

Retained earnings

 

 

318,538

 

 

 

346,870

 

 

 

348,757

 

Accumulated other comprehensive loss

 

 

(40,737

)

 

 

(41,211

)

 

 

(40,225

)

Treasury shares, at cost (488,464 shares)

 

 

(17,857

)

 

 

(17,857

)

 

 

(17,857

)

Total equity

 

 

582,625

 

 

 

606,966

 

 

 

600,338

 

Total Liabilities and Equity

 

$

1,495,312

 

 

$

1,456,426

 

 

$

1,548,442

 

 

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

4


 

Genesco Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

 

 

 

 

Three Months Ended

 

 

 

April 29, 2023

 

 

April 30, 2022

 

Net sales

 

$

483,332

 

 

$

520,748

 

Cost of sales

 

 

254,524

 

 

 

269,304

 

Gross margin

 

 

228,808

 

 

 

251,444

 

Selling and administrative expenses

 

 

251,497

 

 

 

243,481

 

Asset impairments and other, net

 

 

308

 

 

 

(283

)

Operating income (loss)

 

 

(22,997

)

 

 

8,246

 

Other components of net periodic benefit cost

 

 

92

 

 

 

98

 

Interest expense, net

 

 

1,651

 

 

 

297

 

Earnings (loss) from continuing operations before income taxes

 

 

(24,740

)

 

 

7,851

 

Income tax expense (benefit)

 

 

(5,865

)

 

 

2,882

 

Earnings (loss) from continuing operations

 

 

(18,875

)

 

 

4,969

 

Loss from discontinued operations, net of tax

 

 

(15

)

 

 

(22

)

Net Earnings (Loss)

 

$

(18,890

)

 

$

4,947

 

 

 

 

 

 

 

Basic earnings (loss) per common share:

 

 

 

 

 

 

Continuing operations

 

$

(1.60

)

 

$

0.38

 

Discontinued operations

 

 

0.00

 

 

 

0.00

 

Net earnings (loss)

 

$

(1.60

)

 

$

0.38

 

 

 

 

 

 

 

 

Diluted earnings (loss) per common share:

 

 

 

 

 

 

Continuing operations

 

$

(1.60

)

 

$

0.37

 

Discontinued operations

 

 

0.00

 

 

 

0.00

 

Net earnings (loss)

 

$

(1.60

)

 

$

0.37

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

Basic

 

 

11,818

 

 

 

12,961

 

Diluted

 

 

11,818

 

 

 

13,369

 

 

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

5


 

Genesco Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

 

 

 

 

Three Months Ended

 

 

 

April 29, 2023

 

 

April 30, 2022

 

Net earnings (loss)

 

$

(18,890

)

 

$

4,947

 

Other comprehensive income (loss):

 

 

 

 

 

 

Postretirement liability adjustments, net of tax

 

 

29

 

 

 

50

 

Foreign currency translation adjustments

 

 

445

 

 

 

(3,867

)

Total other comprehensive income (loss)

 

 

474

 

 

 

(3,817

)

Comprehensive Income (Loss)

 

$

(18,416

)

 

$

1,130

 

 

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

6


 

 

Genesco Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

 

 

 

Three Months Ended

 

 

 

April 29, 2023

 

 

April 30, 2022

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net earnings (loss)

 

$

(18,890

)

 

$

4,947

 

Adjustments to reconcile net earnings (loss) to net cash provided by (used in)

 

 

 

 

 

 

operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

11,286

 

 

 

10,551

 

Deferred income taxes

 

 

16

 

 

 

(2,820

)

Impairment of long-lived assets

 

 

308

 

 

 

413

 

Share-based compensation expense

 

 

3,772

 

 

 

3,239

 

Other

 

 

315

 

 

 

499

 

Changes in working capital and other assets and liabilities, net of
   acquisitions/dispositions:

 

 

 

 

 

 

Accounts receivable

 

 

(13,367

)

 

 

(9,977

)

Inventories

 

 

(11,789

)

 

 

(126,674

)

Prepaids and other current assets

 

 

(16,364

)

 

 

(3,490

)

Accounts payable

 

 

359

 

 

 

92,061

 

Other accrued liabilities

 

 

(4,843

)

 

 

(44,194

)

Other assets and liabilities

 

 

(11,248

)

 

 

(16,622

)

Net cash used in operating activities

 

 

(60,445

)

 

 

(92,067

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Capital expenditures

 

 

(17,235

)

 

 

(15,397

)

Proceeds from asset sales

 

 

87

 

 

 

 

Net cash used in investing activities

 

 

(17,148

)

 

 

(15,397

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Borrowings under revolving credit facility

 

 

152,569

 

 

 

2,609

 

Payments on revolving credit facility

 

 

(79,469

)

 

 

(2,609

)

Shares repurchased related to share repurchase plan

 

 

(9,170

)

 

 

(11,280

)

Shares repurchased related to taxes for share-based awards

 

 

(449

)

 

 

 

Change in overdraft balances

 

 

(1,698

)

 

 

 

Other

 

 

 

 

 

(2

)

Net cash provided by (used in) financing activities

 

 

61,783

 

 

 

(11,282

)

Effect of foreign exchange rate fluctuations on cash

 

 

(394

)

 

 

(1,156

)

Net decrease in cash and cash equivalents

 

 

(16,204

)

 

 

(119,902

)

Cash and cash equivalents at beginning of period

 

 

47,990

 

 

 

320,525

 

Cash and cash equivalents at end of period

 

$

31,786

 

 

$

200,623

 

Supplemental information:

 

 

 

 

 

 

Interest paid

 

$

1,147

 

 

$

327

 

Income taxes paid

 

 

626

 

 

 

225

 

Cash paid for amounts included in measurement of operating lease liabilities

 

 

52,963

 

 

 

57,278

 

Operating lease assets obtained in exchange for new operating lease liabilities

 

 

50,199

 

 

 

13,935

 

 

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

7


 

Genesco Inc. and Subsidiaries

Condensed Consolidated Statements of Equity

(In thousands)

 

 

Non-
Redeemable
Preferred
Stock

 

Common
Stock

 

Additional
Paid-In
Capital

 

Retained
Earnings

 

Accumulated
Other
Comprehensive
Loss

 

Treasury
Shares

 

Total
Equity

 

Balance January 29, 2022

$

827

 

$

14,256

 

$

291,444

 

$

350,206

 

$

(36,408

)

$

(17,857

)

$

602,468

 

Net earnings

 

 

 

 

 

 

 

4,947

 

 

 

 

 

 

4,947

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

(3,817

)

 

 

 

(3,817

)

Share-based compensation expense

 

 

 

 

 

3,239

 

 

 

 

 

 

 

 

3,239

 

Restricted stock issuance

 

 

 

78

 

 

(78

)

 

 

 

 

 

 

 

 

Shares repurchased

 

 

 

(104

)

 

 

 

(6,396

)

 

 

 

 

 

(6,500

)

Other

 

(9

)

 

(13

)

 

23

 

 

 

 

 

 

 

 

1

 

 Balance April 30, 2022

$

818

 

$

14,217

 

$

294,628

 

$

348,757

 

$

(40,225

)

$

(17,857

)

$

600,338

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-
Redeemable
Preferred
Stock

 

Common
Stock

 

Additional
Paid-In
Capital

 

Retained
Earnings

 

Accumulated
Other
Comprehensive
Loss

 

Treasury
Shares

 

Total
Equity

 

Balance January 28, 2023

$

815

 

$

13,089

 

$

305,260

 

$

346,870

 

$

(41,211

)

$

(17,857

)

$

606,966

 

Net earnings (loss)

 

 

 

 

 

 

 

(18,890

)

 

 

 

 

 

(18,890

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

474

 

 

 

 

474

 

Share-based compensation expense

 

 

 

 

 

3,772

 

 

 

 

 

 

 

 

3,772

 

Restricted stock issuance

 

 

 

234

 

 

(234

)

 

 

 

 

 

 

 

 

Restricted shares withheld for taxes

 

 

 

(13

)

 

13

 

 

(449

)

 

 

 

 

 

(449

)

Shares repurchased

 

 

 

(255

)

 

 

 

(8,915

)

 

 

 

 

 

(9,170

)

Other

 

(3

)

 

(3

)

 

6

 

 

(78

)

 

 

 

 

 

(78

)

Balance April 29, 2023

$

812

 

$

13,052

 

$

308,817

 

$

318,538

 

$

(40,737

)

$

(17,857

)

$

582,625

 

 

 

 

 

 

 

 

 

 

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

8


Genesco Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

 

 

Note 1

Summary of Significant Accounting Policies

Basis of Presentation

These Condensed Consolidated Financial Statements should be read in conjunction with our Consolidated Financial Statements and Notes for Fiscal 2023, which are contained in our Annual Report on Form 10-K as filed with the SEC on March 22, 2023. The Condensed Consolidated Financial Statements and Notes contained in this report are unaudited but reflect all adjustments, including normal recurring adjustments, necessary for a fair presentation of the results for the interim periods of the fiscal year ending February 3, 2024 ("Fiscal 2024"), which is a 53-week year, and of the fiscal year ended January 28, 2023 ("Fiscal 2023"). All subsidiaries are consolidated in the Condensed Consolidated Financial Statements. All significant intercompany transactions and accounts have been eliminated. The results of operations for any interim period are not necessarily indicative of results for the full year. The Condensed Consolidated Financial Statements and the related Notes have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and notes required by U.S. Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. The Condensed Consolidated Balance Sheet as of January 28, 2023 has been derived from the audited financial statements at that date.

Nature of Operations

Genesco Inc. and its subsidiaries (collectively the "Company", "Genesco," "we", "our", or "us") business includes the sourcing and design, marketing and distribution of footwear and accessories through retail stores in the U.S., Puerto Rico and Canada primarily under the Journeys®, Journeys Kidz®, Little Burgundy® and Johnston & Murphy® banners and under the Schuh® banner in the United Kingdom (“U.K.”) and the Republic of Ireland (“ROI”); through catalogs and e-commerce websites including the following: journeys.com, journeyskidz.com, journeys.ca, littleburgundyshoes.com, schuh.co.uk, schuh.ie, schuh.eu, johnstonmurphy.com, johnstonmurphy.ca, nashvilleshoewarehouse.com and dockersshoes.com and at wholesale, primarily under our Johnston & Murphy brand, the licensed Levi's® brand, the licensed Dockers® brand, the licensed G.H. Bass® brand and other brands that we license for footwear. At April 29, 2023, we operated 1,396 retail stores in the U.S., Puerto Rico, Canada, the U.K. and the ROI.

During the three months ended April 29, 2023 and April 30, 2022, we operated four reportable business segments (not including corporate): (i) Journeys Group, comprised of the Journeys, Journeys Kidz and Little Burgundy retail footwear chains and e-commerce operations; (ii) Schuh Group, comprised of the Schuh retail footwear chain and e-commerce operations; (iii) Johnston & Murphy Group, comprised of Johnston & Murphy retail operations, e-commerce operations and wholesale distribution of products under the Johnston & Murphy brand; and (iv) Genesco Brands Group, comprised of the licensed Dockers, Levi's, and G.H. Bass brands, as well as other brands we license for footwear.

Cash and Cash Equivalents

There were no cash equivalents as of April 29, 2023 and January 28, 2023. There were $95.0 million in cash equivalents as of April 30, 2022 which were invested in institutional money market funds which invest exclusively in highly rated, short-term securities that are issued, guaranteed or collateralized by the U.S. government or by U.S. government agencies and instrumentalities. Due to their short-term nature, the carrying amounts reported in the Condensed Consolidated Balance Sheets approximate the fair value of cash and cash equivalents.

Selling and Administrative Expenses

Wholesale costs of distribution are included in selling and administrative expenses on the Condensed Consolidated Statements of Operations in the amount of $3.5 million and $2.7 million for the first quarters of Fiscal 2024 and Fiscal 2023, respectively.

Retail occupancy costs recorded in selling and administrative expense were $76.4 million and $78.5 million for the first quarters of Fiscal 2024 and Fiscal 2023, respectively.

 

Advertising Costs

Advertising costs were $23.6 million and $22.1 million for the first quarters of Fiscal 2024 and Fiscal 2023, respectively.

 

9


Genesco Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

 

 

Note 1

Summary of Significant Accounting Policies, Continued

Vendor Allowances

Vendor reimbursements of cooperative advertising costs recognized as a reduction of selling and administrative expenses were $4.7 million and $3.2 million for the first quarters of Fiscal 2024 and Fiscal 2023, respectively. During the first three months of each of Fiscal 2024 and Fiscal 2023, our cooperative advertising reimbursements received were not in excess of the costs incurred.

New Accounting Pronouncements

We do not currently have any new accounting pronouncements pending adoption.

Note 2

Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill by segment were as follows:

 

(In thousands)

 

Journeys
Group

 

 

Genesco
Brands
Group

 

 

Total
Goodwill

 

Balance, January 28, 2023

 

$

9,662

 

 

$

28,461

 

 

$

38,123

 

Effect of foreign currency exchange rates

 

 

(192

)

 

 

(3

)

 

 

(195

)

Balance, April 29, 2023

 

$

9,470

 

 

$

28,458

 

 

$

37,928

 

Goodwill Valuation (Genesco Brands Group)

 

We are currently in communication with a licensor regarding renewal of a Genesco Brands Group license. The carrying value of the Togast Goodwill within the Genesco Brands Group assumes current licenses are renewed in normal course. In the event a material license is not renewed, that may be considered an indicator of impairment and requiring assessment whether it is “more likely than not” that an impairment has occurred.

 

Other intangibles by major classes were as follows:

 

 

 

Trademarks

 

Customer Lists

 

 

Other

 

 

Total

 

(In thousands)

 

Apr. 29, 2023

 

 

Jan. 28,
2023

 

Apr. 29, 2023

 

 

Jan. 28,
2023

 

 

Apr. 29, 2023

 

 

Jan. 28,
2023

 

 

Apr. 29, 2023

 

 

Jan. 28,
2023

 

Gross other intangibles

 

$

24,327

 

 

$

24,077

 

$

6,493

 

 

$

6,475

 

 

$

400