US: Genesco Q1 profit soars on Finish Line settlement
Compensation from the long drawn-out and failed takeover bid by Finish Line has helped shoe, hat and accessories retailer Genesco Inc to a huge gain in first quarter profit.
The Nashville-based retailer today (29 May) said quarterly earnings from continuing operations were $129.9m, or $5.14 per share, compared to $2.2m, or $0.10 per share, for the same period last year.
Earnings include a pre-tax gain of $204.1m, or $4.84 per share, from the settlement of merger-related litigation with The Finish Line Inc and UBS Securities.
This was partially offset by expenses related to the litigation and store closings totalling $9.5m, or $0.23 per share.
For the three months to 3 May, net sales rose by 7% to $357m, from $335m last time. Comparable store sales increased 2%.
Genesco chairman and chief executive officer Hal N Pennington said the company's first quarter performance "exceeded expectations," and "represents a solid start to the new fiscal year."
The company's Journeys, Hat World and Underground Station chains all posted better than expected results, with same-store sales up 8%, 11% and 9% respectively. Johnston & Murphy same store sales fell 1%.
Genesco, which operates more than 2,175 retail stores in the US and Canada, raised its full-year outlook on the back of the settlement.
It now expects earnings per share in the range of $2.09 to $2.19 for the full fiscal year.
The $1.5bn takeover deal between Genesco and Finish Line was beset by a series of mis-steps and increasingly acrimonious claims since it was agreed last June.
Finish Line and its lender UBS threatened to pull out amid concerns over Genesco's financial condition and performance.
In response, Nashville, Tennessee-based Genesco, owner of brands such as Journeys and Johnston & Murphy, filed a court order seeking closure of the takeover. The companies agreed a settlement in March.
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