Genesco Inc announced plans to close or convert up to 57 underperforming stores, primarily in the Underground Station Group. The 57 targeted stores also include up to 8 urban stores in the Hat World Group. The Company also said it has revised its previously announced earnings outlook for the first quarter ended May 5, 2007.
The Company said that it expects its earnings for the first quarter ended May 5, 2007, to reflect fixed asset impairment non cash pretax charges of $6.2 million to $7 million primarily relating to stores included in the plan, or $0.14 to $0.16 per diluted share.
The Company also expects to incur pretax charges of $14 million to $15 million (or $0.32 to $0.34 per diluted share) for additional asset write downs, lease terminations, and other costs related to the planned store closings over the next 18 months, primarily in the current fiscal year, subject to its ability to negotiate acceptable lease terminations. The stores targeted for closure in the plan had an aggregate pre-tax operating loss of $4.9 million and sales of approximately $22 million for the 12 fiscal months ended May 5, 2007.
Due to the expected impairment charges, weaker than expected retail operating results, a slightly higher than expected effective tax rate, and professional and other expenses incurred in connection with an unsolicited acquisition proposal by Foot Locker Inc, the Company has revised its previously announced earnings outlook for the first quarter ended May 5, 2007. The Company said it now expects to report earnings in the range of $0.09 to $0.12 per diluted share for the quarter compared to the original guidance of $0.28 per share.
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