NASHVILLE, Tenn., July 7, 2021 /PRNewswire/ -- Genesco Inc.
(NYSE: GCO) ("Genesco" or the "Company") today sent a letter to
shareholders in connection with its 2021 Annual Meeting of
Shareholders, to be held on July 20,
2021. The letter and other important information related to
the Annual Meeting can be found at www.genescodrivingvalue.com.
In the letter the company highlighted:
- Genesco's successful execution of its strategic plan, as
evidenced by the Company's share price performance, which has
increased by 99% year-to-date, significantly outperforming
Genesco's peer index (79%) and the Russell 2000 (17%) over the same
period.1
- The strong support received from leading proxy advisory
firm ISS recommending shareholders vote "FOR ALL" nine of Genesco's
nominees, as well as continued support from analysts, and other
third parties.
- Significant work Genesco has done to intentionally refresh
the Board and management team to ensure leadership expertise in
areas that are critical to the growth and evolution of the business
and to support future value creation.
- The risk Legion Partners' unqualified nominees would
introduce to shareholders, given the lack of principal
footwear, public company CEO or CFO, substantial eCommerce, or
public board experience to serve on Genesco's Board.
Genesco urges shareholders not to be misled by Legion's
self-serving campaign for unwarranted change and to vote the BLUE
proxy card FOR ALL the Company's highly qualified and experienced
director nominees. Shareholders are reminded that their vote is
important, no matter how many or how few shares they own. Voting
the WHITE proxy card, even in protest, will revoke any previous
proxy submitted using the BLUE proxy card. Only the
latest-dated proxy counts.
The letter can be viewed here, and the full text of the letter
follows:
Dear Fellow Shareholder,
VOTE THE BLUE PROXY CARD TODAY, FOR ALL THE
GENESCO DIRECTOR NOMINEES
Last week, Institutional Shareholder Services (ISS), a leading
independent proxy advisory firm, issued its analysis
recommending that Genesco shareholders vote the BLUE proxy card
"FOR ALL" nine of the Company's director nominees at
Genesco's Annual Meeting of Shareholders to be held on July 20, 2021. This endorsement from ISS
underscores our strong belief that we have the right Board and
strategy in place, and that Genesco is well-positioned to succeed
and enhance long-term shareholder value in a rapidly evolving
retail landscape.
GENESCO HAS THE RIGHT STRATEGIC PLAN IN PLACE,
WHICH WE BELIEVE HAS DRIVEN OUR RECENT STOCK PRICE PERFORMANCE AND
WILL CONTINUE TO GENERATE SHAREHOLDER VALUE
Genesco's share price has increased as a result of the
successful execution of our footwear focused strategy under our
current Board and management team. Our share price, outlined in the
below indexed stock chart, has increased by 99% year-to-date
(through July 6, 2021), significantly
outperforming Genesco's peer index (79%) and the Russell 2000 (17%)
over the same period. Since Genesco's Q1 earnings announcement on
May 27, 2021 through the close of
business on July 6, 2021, Genesco's
stock has traded above its peer group every single day. In
the 2021 period leading up to Legion's campaign announcement on
April 12, Genesco's stock traded
above its peer group on 76% of days. However, from the time
Legion launched its campaign until Genesco announced Q1 earnings,
Genesco's stock traded below its peer group on 64% of
days.
We believe the data is clear: Genesco's share price
performance is driven by its operational performance, not by
Legion's baseless and value-destructive campaign.
WE BELIEVE OPERATIONAL PERFORMANCE HAS DRIVEN
GENESCO'S STOCK UPWARD
WHILE LEGION'S CAMPAIGN HAS DRIVEN
IT DOWNWARD
PDF OF SHARE PRICE CHART HERE
We are delivering profitable and sustainable growth:
√ Generated record ~$450 million
in FY2021 digital revenue, an increase of ~75% year-over-year by
leveraging pre-pandemic investments in digital capabilities
√ Drove record in-store conversion rates, partially offsetting
reduced store traffic, after quickly reopening ~1,500 locations
√ Achieved 16% reduction in FY2021 operating expenses and
reduced capital spending 50% compared to plan
√ Increased liquidity to $388
million, further strengthening a healthy pre-pandemic
balance sheet
√ Realized significant sequential FY2021 quarterly improvement
in revenue and profit margins with increased free cash flow
- Achieved 10% operating margin in Q4 FY2021, highlighted by
record operating income at Journeys
- Increased free cash flow2 50% over prior year levels
to $134 million in FY2021
√ Increased Q1 FY2022 revenue 9% and Adjusted operating
income3125% over the pre-pandemic period of Q1 FY2020
(GAAP operating income +71% over Q1 FY2020)
Our footwear focused strategy, along with our thoughtful
allocation of capital, continues creating greater value:
√ This strategy has provided a strong platform for growth and
capital efficiency, and the Company is on track to deliver adjusted
operating margin of 6% or more by FY2025
√ Our business is anchored upon a robust, direct-to-consumer
model, which is driven by leading retail brands and a growing
digital platform – our strategy enables us to leverage synergies
across our platforms to enhance scale and profitability
√ We have focused on continuing to build strong omnichannel
capabilities to align with evolving consumer shopping
preferences
√ The Board and management's thoughtful capital allocation
focuses on reinvestment in the business, returning excess capital
to shareholders, and maintaining balance sheet flexibility
LEADING PROXY ADVISORY FIRM, ANALYSTS AND
OTHER THIRD PARTIES HAVE PUBLICLY SUPPORTED GENESCO'S BOARD,
MANAGEMENT TEAM, AND BUSINESS STRATEGY
Genesco's hard work, execution, and strong Board and management
team are clearly being recognized. ISS, research analysts, and
other third parties appreciate that our Board is successfully
transforming Genesco to succeed in a rapidly evolving retail
environment, and that the skills and experience of our directors
will benefit the continued execution of our footwear focused
strategy. In recommending that shareholders vote "FOR
ALL" nine of Genesco's nominees, ISS
noted4:
√ The Board "recruited new directors with
relevant expertise and achievements" including "two
former CEOs of retailers and a current CFO,
following the recruitment of an experienced banker in
late 2020." - ISS Special Situations Research Report,
July 2, 2021
√ "In light of GCO's recent board and management changes, and
given that Legion's nominees do not appear demonstrably
superior to the directors whom they would replace, shareholders are
advised to support the board's nominees at this annual
meeting." - ISS Special Situations Research Report,
July 2, 2021
√ "…all four recently appointed members of the board
appear to be appropriate additions, and the dissident's
critique of interconnections among GCO board members is creative
but unconvincing."- ISS Special Situations Research Report,
July 2, 2021
√ "…the lack of a Legion principal on its slate should
give fellow shareholders pause and lends credence to the
possibility that this campaign may be yet another
remunerative dalliance in the company's shareholder register."
- ISS Special Situations Research Report, July 2, 2021
√ "We are optimistic that the current set of initiatives
combined with a normalization of the environment… and fewer
restrictions during key holiday periods can support better
performance. When combined with recent corporate actions to
create the new position of Chief Strategy and Digital Officer and
to add several highly experienced industry executives to the
Board, we retain a positive bias of the recovery potential
behind the current strategic direction." - Jonathan R. Komp, Baird, May 27, 2021
√ "As difficult as FY21 was, as easy as FY22—maybe—will be. It
is not difficult to 'dream a little dream' and view the balance
of the year as having a pretty massive tailwind for each
business…Barring another generational dislocation, we rarely
see a clearer pathway to outsized earnings. Indeed, the entire
dynamic elucidated above, by the way, will be further aided by the
fact that more marginal providers fell by the wayside over the past
18 months. We view the Q1 print and GCO's near-term prospects
positively." – Steven L.
Marotta, CL King, May 27,
2021
√ "…there is no reason to think that [Legion has] any more
commitment to this campaign than they did in 2018. For one
thing, just like last time, they are not nominating a Legion
principal to the Board…Including a Legion nominee would signal a
long term commitment, and this is even more important after
their 2018 campaign where they started selling four months after
getting non-Legion directors on the Board." – Kenneth Squire, Investor Communications Network
– 13D Monitor, April 12,
2021
√ "GCO appears to be benefiting from proactive actions
taken to enhance focus on the current footwear portfolio and to
improve profitability via a range of cost reductions, which are
supporting solid execution." – Jonathan R. Komp, Baird Equity Research,
December 4, 2020
OUR BOARD IS THE MOST COMPELLING CHOICE TO
DELIVER LONG-TERM VALUE CREATION TO ALL SHAREHOLDERS
Genesco has done significant work intentionally refreshing the
Board and management team to ensure we have leadership expertise in
areas that are critical to the growth and evolution of the
business, and to support future value creation:
√ Genesco's Board is fresh, independent, and diverse
√ Five new highly qualified directors appointed (out of nine
total) and four stepped down since 2019
√ The Board has effectively overseen and implemented a strategic
transformation to address changes in retail, the increasing
importance of digital, and the resultant need for scale and system
efficiencies; deliberate changes have been made to support near-
and long-term value creation
√ Genesco's new footwear focused strategy required different
management and Board competencies, and the Board acted quickly to
ensure the right team was in place to execute on this strategy
WE BELIEVE LEGION'S NOMINEES LACK THE
EXPERIENCE, TRACK RECORD, AND LEADERSHIP REQUIRED TO DELIVER VALUE
AND WOULD PRESENT SIGNIFICANT RISK TO SHAREHOLDERS
We believe Legion's nominees lack the qualifications and the
principal footwear, public company CEO or CFO, substantial
eCommerce, or public board experience to serve on Genesco's Board.
Only two of Legion's nominees have public company experience as a
director or C-suite executive, and those two nominees have an
average board tenure of only 1.4 years. Legion's nominees also have
track records of presiding over companies that have destroyed
shareholder value, and many of them have significant conflicts of
interest.
ISS seems to agree with our assessment, noting in its report
that Legion's nominees, "do not appear demonstrably
superior to the directors whom they would
replace:"5
X "[Marjorie Bowen]
provided very limited details about what she would like to
accomplish in her second term on the board."
X "The company's concerns regarding [Dawn Robertson's] short-lived tenure at many
companies seems valid and based on fact rather than opinion."
X "[Hobart Sichel] lacks public Board experience (which
in this particular situation would seem essential, especially for a
single dissident director), and the board has already considered
him on their own volition and decided against advancing his
candidacy."
X "[Margenett Moore-Roberts] lacks public Board
experience" and her skills of building an inclusive customer base
and work force "do not appear to be among the company's most urgent
needs."
We believe Legion's unqualified nominees would introduce
significant risk for shareholders, and, contrary to Legion's
assertions, would not provide knowledge and expertise that would
bolster our footwear focused strategy.
DO NOT BE MISLED BY LEGION'S SELF-SERVING
CAMPAIGN FOR UNWARRANTED CHANGE
VOTE ON THE BLUE PROXY CARD FOR
ALL OF GENESCO'S NOMINEES TODAY
Your Board and management are fully committed to enhancing
shareholder value by continuing to execute our footwear focused
strategy. We look forward to continuing to engage with you as the
Annual Meeting approaches, and as always, we appreciate your
investment in Genesco.
Thank you for your continued support of Genesco.
Sincerely,
The Genesco Board of Directors
PLEASE VOTE TODAY!
If you have any questions or need help voting
your BLUE proxy card, please call the firm assisting us with
the solicitation of proxies:
Innisfree
1 (877) 825-8772
(toll-free from the U.S. and
Canada)
+1 (412) 232-3651
(from other
locations)
REMEMBER, please vote the
BLUE proxy card today
Support your strong board members by voting the BLUE proxy
card online or by telephone.
You may also sign, date and return the enclosed BLUE proxy
card by mail.
DISCARD the WHITE proxy card from Legion
Partners
Voting the WHITE proxy card, even if even in protest, will revoke
any previous proxy you submitted using the BLUE proxy card.
Only your latest-dated proxy counts
For more information, visit
GenescoDrivingValue.com
About Genesco Inc.
Genesco Inc., a Nashville-based
specialty retailer and branded company, sells footwear and
accessories in more than 1,455 retail stores throughout the U.S.,
Canada, the United Kingdom and the Republic of Ireland, principally under the
names Journeys, Journeys Kidz, Little Burgundy, Schuh, Schuh Kids,
Johnston & Murphy, and on internet websites www.journeys.com,
www.journeyskidz.com, www.journeys.ca, www.littleburgundyshoes.com,
www.schuh.co.uk, www.johnstonmurphy.com, www.johnstonmurphy.ca,
www.nashvilleshoewarehouse.com, and www.dockersshoes.com. In
addition, Genesco sells footwear at wholesale under its Johnston
& Murphy brand, the licensed Levi's brand, the licensed Dockers
brand, the licensed Bass brand, and other brands. For more
information on Genesco and its operating divisions, please visit
www.genesco.com.
Forward-Looking Statements
This release contains forward-looking statements, including those
regarding the performance outlook for the Company and all other
statements not addressing solely historical facts or present
conditions. Forward- looking statements are usually identified by
or are associated with such words as "intend," "expect," "believe,"
"should," "anticipate," "optimistic," "on track" and similar
terminology. Actual results could vary materially from the
expectations reflected in these statements. A number of factors
could cause differences. These include adjustments to projections
reflected in forward-looking statements, including those resulting
from the effects of COVID-19 on the Company's business, including
COVID-19 case spikes in locations in which the Company operates,
the roll-out of COVID-19 vaccines and the public's acceptance of
the vaccines, additional stores closures due to COVID-19, the
timing of the re-opening of our stores, the timing of in-person
back-to-work and back-to-school and sales with respect thereto,
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 the
Company's ability to adequately staff and operate stores.
Differences from expectations could also result from stores
closures and effects on the business as a result of civil
disturbances; the level and timing of promotional activity
necessary to maintain inventories at appropriate levels; the
imposition of tariffs on product imported by the Company or its
vendors as well as the ability and costs to move production of
products in response to tariffs; the Company's 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 COVID-19; unfavorable trends
in fuel costs, foreign exchange rates, foreign labor and material
costs, and other factors affecting the cost of products; the
effects of the British decision to exit the European Union and
other sources of market weakness in the U.K. and Republic of Ireland; the effectiveness of the
Company's omni-channel initiatives; costs associated with changes
in minimum wage and overtime requirements; wage pressure in the
U.S. and the U.K.; weakness in the consumer economy and retail
industry; competition and fashion trends in the Company's markets;
risks related to the potential for terrorist events; risks related
to public health and safety events; changes in buying patterns by
significant wholesale customers; retained liabilities associated
with divestitures of businesses including potential liabilities
under leases as the prior tenant or as a guarantor; 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 the ability
to renew leases in existing stores and control or lower occupancy
costs, and to conduct required remodeling or refurbishment on
schedule and at expected expense levels; the Company's ability to
realize anticipated cost savings, including rent savings; the
Company's ability to achieve expected digital gains and gain market
share; deterioration in the performance of individual businesses or
of the Company's market value relative to its 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 the Company's shares or for
the retail sector in general; costs and reputational harm as a
result of disruptions in the Company's business or information
technology systems either by security breaches and incidents or by
potential problems associated with the implementation of new or
upgraded systems; the Company's ability to realize any anticipated
tax benefits; and the cost and outcome of litigation,
investigations and environmental matters involving the Company, and
the impact of actions initiated by activist shareholders.
Additional factors are cited in the "Risk Factors," "Legal
Proceedings" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" sections of, and elsewhere in,
the Company's SEC filings, copies of which may be obtained from the
SEC website, www.sec.gov, or by contacting the investor relations
department of Genesco via the Company's website, www.genesco.com.
Many of the factors that will determine the outcome of the subject
matter of this release are beyond Genesco's ability to control or
predict. Genesco undertakes no obligation to release publicly the
results of any revisions to these forward-looking statements that
may be made to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
Forward-looking statements reflect the expectations of the Company
at the time they are made. The Company disclaims any obligation to
update such statements.
Important Additional Information and Where to Find It
Genesco has filed a definitive proxy statement (the "Proxy
Statement") and accompanying proxy card in connection with the
solicitation of proxies for the 2021 annual meeting of Genesco
shareholders (the "Annual Meeting"). INVESTORS AND
SHAREHOLDERS ARE STRONGLY ENCOURAGED TO READ THE PROXY STATEMENT
AND ACCOMPANYING PROXY CARD AND OTHER DOCUMENTS FILED WITH THE U.S.
Securities and Exchange Commission (the "SEC") CAREFULLY AND IN
THEIR ENTIRETY WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN
IMPORTANT INFORMATION. Shareholders may obtain the Proxy
Statement, any amendments or supplements to the Proxy Statement and
other documents filed by Genesco with the SEC for no charge at the
SEC's website at www.sec.gov. Copies will also be available
at no charge in the Investors section of Genesco's corporate
website at www.genesco.com.
Participants in the Solicitation
Genesco, its directors and certain of its executive officers may be
deemed to be participants in the solicitation of proxies from
Genesco shareholders in connection with the matters to be
considered at the Annual Meeting. Information regarding the names
of Genesco's directors and executive officers and certain other
individuals and their respective interests in Genesco by security
holdings or otherwise is set forth in the Annual Report on Form
10-K of Genesco for the fiscal year ended January 30, 2021, and in the Proxy Statement. To
the extent holdings of such participants in Genesco's securities
have changed since the amounts described in the Proxy Statement,
such changes have been reflected on Initial Statements of
Beneficial Ownership on Form 3 or Statements of Change in Ownership
on Form 4 filed with the SEC.
Schedule A
|
|
Quarter
1
|
|
|
May 1,
2021
|
|
May 4,
2019
|
|
|
|
Net
of
|
Per
Share
|
|
|
Net
of
|
Per
Share
|
In Thousands (except
per share amounts)
|
|
Pretax
|
Tax
|
Amounts
|
|
Pretax
|
Tax
|
Amounts
|
Earnings from
continuing operations, as reported
|
|
|
$
8,894
|
$0.60
|
|
|
$
6,470
|
$0.36
|
|
|
|
|
|
|
|
|
|
Asset impairments and
other adjustments:
|
|
|
|
|
|
|
|
|
Retail store
asset impairment charges
|
|
$
414
|
326
|
0.02
|
|
$
307
|
212
|
0.01
|
Professional
fees related to actions of an activist shareholder
|
|
2,256
|
1,600
|
0.11
|
|
-
|
-
|
0.00
|
Expenses
related to new HQ building
|
|
597
|
424
|
0.03
|
|
-
|
-
|
0.00
|
Gain on lease
termination
|
|
-
|
-
|
0.00
|
|
(1,000)
|
(689)
|
(0.04)
|
Gain on
Hurricane Maria
|
|
-
|
-
|
0.00
|
|
(38)
|
(26)
|
0.00
|
Total asset
impairments and other adjustments
|
|
$
3,267
|
2,350
|
0.16
|
|
$
(731)
|
(503)
|
(0.03)
|
|
|
|
|
|
|
|
|
|
Income tax expense
adjustments:
|
|
|
|
|
|
|
|
|
Other tax
items
|
|
|
400
|
0.03
|
|
|
(58)
|
0.00
|
Total income
tax expense adjustments
|
|
|
400
|
0.03
|
|
|
(58)
|
0.00
|
|
|
|
|
|
|
|
|
|
Adjusted earnings
from continuing
operations(1)and(2)
|
|
|
$
11,644
|
$0.79
|
|
|
$
5,909
|
$0.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)The
adjusted tax rate for the first quarter of Fiscal 2022 and 2020 is
35.7% and 31.3%, respectively.
|
|
|
|
|
(2)EPS
reflects 14.7 million and 17.9 million share count for the first
quarter of Fiscal 2022 and 2020, respectively, which includes
common stock equivalents in each period.
|
|
|
May 1,
2021
|
|
May 4,
2019
|
|
|
Operating
|
Asset
Impair
|
Adj
Operating
|
|
Operating
|
Asset
Impair
|
Adj
Operating
|
In
Thousands
|
|
Income
(Loss)
|
& Other
Adj
|
Income
(Loss)
|
|
Income
(Loss)
|
& Other
Adj
|
Income
(Loss)
|
Journeys
Group
|
|
$
33,124
|
$
-
|
$
33,124
|
|
$
18,976
|
$
-
|
$
18,976
|
Schuh
Group
|
|
(3,847)
|
-
|
(3,847)
|
|
(5,428)
|
-
|
(5,428)
|
Johnston & Murphy
Group
|
|
(3,180)
|
-
|
(3,180)
|
|
5,106
|
-
|
5,106
|
Licensed
Brands
|
|
2,561
|
-
|
2,561
|
|
429
|
-
|
429
|
Goodwill
Impairment
|
|
-
|
-
|
-
|
|
-
|
-
|
-
|
Corporate and
Other
|
|
(13,131)
|
3,267
|
(9,864)
|
|
(9,999)
|
(731)
|
(10,730)
|
Total Operating
Income
|
|
$
15,527
|
$
3,267
|
$
18,794
|
|
$
9,084
|
$
(731)
|
$
8,353
|
% of
sales
|
|
2.9%
|
|
3.5%
|
|
1.8%
|
|
1.7%
|
1
|
Through July 6,
2021.
|
2
|
Free cash flow
defined as cash flow operations less capital
expenditures.
|
3
|
Adjusted operating
income excludes fees related to the shareholder activist, retail
store asset impairments and expenses related to the new
headquarters building, net of tax effect in the first quarter of
Fiscal 2022 (the "Excluded Items"). A reconciliation of operating
income in accordance with U.S. Generally Accepted Accounting
Principles and the adjusted operating income numbers is set forth
on Schedule A hereto. Genesco believes that disclosure of adjusted
operating income adjusted for the Excluded Items will be meaningful
to investors since the Excluded Items were not reflected in the
Company's previously announced expectations.
|
4
|
Permission to use
quotations neither sought nor obtained from ISS and emphasis added
by Genesco.
|
5
|
Permission to use
quotations neither sought nor obtained from ISS and emphasis added
by Genesco.
|
Media Contacts
Claire S. McCall
cmccall@genesco.com
(615) 308-2483
Or
Jared Levy / Danya Al-Qattan
Sard Verbinnen & Co
Genesco-SVC@sardverb.com
Investor Contacts
Tom George
tgeorge@genesco.com
(615) 367-7465
Or
David Slater
dslater@genesco.com
(615) 367-7604
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SOURCE Genesco Inc.