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THE BUSINESS OF GENESCO
Genesco Inc. is a leading retailer and wholesaler of branded footwear, apparel and accessories selling through 1,444
retail stores, including Journeys®, Journeys Kidz®, Little Burgundy® and Johnston & Murphy® in the U.S., Puerto Rico
and Canada, through Schuh® stores in the United Kingdom and the Republic of Ireland, and through e-commerce
operations. In addition, we sell certain of our footwear brands wholesale, primarily under our Johnston & Murphy
brand, and the licensed Levi's®, Dockers®, and G.H. Bass® brands, as well as other brands we license for footwear.
TOTAL RETURN TO SHAREHOLDERS
INCLUDES REINVESTMENT OF DIVIDENDS
The graph below compares the cumulative total shareholder return on our common stock for the last five fiscal years with the
cumulative total return of (i) the S&P 500 Index and (ii) the S&P 1500 Footwear Index. The graph assumes the investment of
$100 in our common stock, the S&P 500 Index and the S&P 1500 Footwear Index at the market close on January 30, 2016 and
the reinvestment monthly of all dividends.
COMPARISON OF CUMULATIVE 5 YEAR TOTAL RETURN
250
200
150
100
50
0
1/30/16
Comparison of Cumulative Five Year Total Return
Genesco Inc.
S&P 500 Index
S&P 1500 Footwear Index
1/28/17
2/03/18
2/02/19
2/01/20
1/30/21
ANNUAL RETURN PERCENTAGE
Years Ending
Company / Index
Genesco Inc.
S&P 500 Index
S&P 1500 Footwear Index
1/28/17
-10.34
20.87
-11.31
2/03/18
-44.10
22.83
31.04
2/02/19
36.14
-0.06
20.33
2/01/20
-12.87
21.56
20.09
1/30/21
-1.30
17.25
37.61
Company / Index
Genesco Inc.
S&P 500 Index
S&P 1500 Footwear Index
Base
Period
1/30/16
100
100
100
INDEXED RETURNS
Years Ending
1/28/17
89.66
120.87
88.69
2/03/18
50.12
148.47
116.22
2/02/19
68.23
148.38
139.86
2/01/20
59.45
180.37
167.95
1/30/21
58.68
211.48
231.11
*The S&P 1500 Footwear Index consists of Crocs, Inc., Deckers Outdoor Corporation, Nike, Inc., Skechers U.S.A., Inc., Steven Madden, Ltd. and Wolverine
World Wide, Inc.
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CORPORATE INFORMATION
Annual Meeting of Shareholders
The 2021 Annual Meeting of Shareholders will be held in virtual format on Tuesday, July 20, 2021, at 8:00 a.m. Central Time.
The meeting will be held online via a live webcast at www.cesonlineservices.com/gco21_vm,where shareholders will be able to
vote electronically and submit questions during the meeting. Information on the meeting’s access has been provided in our
2021 proxy statement and is listed on the 2021 proxy card.
Corporate Headquarters
Genesco Park
1415 Murfreesboro Road –P.O. Box 731
Nashville, Tennessee 37202-0731
Independent Auditors
Ernst & Young LLP
222 Second Avenue South, Suite 2100
Nashville, Tennessee 37201
Transfer Agent and Registrar
Communications concerning stock transfer, consolidating accounts, change of address and lost or stolen stock certificates
should be directed to the transfer agent. When corresponding with the transfer agent, shareholders should state the exact
name(s) in which the stock is registered and certificate number, as well as old and new information about the account.
Regular Mail
Computershare
P.O. Box 505000
Louisville, KY 40233-5000
UNITED STATES
Overnight Delivery
Computershare
462 South 4th Street
Suite 1600
Louisville, KY 40202
UNITED STATES
Questions & Inquiries via Computershare’s website:
www.computershare.com/investor
Computershare Phone: (877) 224-0366 Hearing Impaired/TDD: 1-800-952-9245
Investor Relations
Security analysts, portfolio managers or other investment community representatives should contact:
Dave Slater, Vice President, Financial Planning & Analysis and Investor Relations
Genesco Park, Suite 490 –P.O. Box 731
Nashville, Tennessee 37202-0731
(615) 367-7604
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Other Information
A copy of any exhibits to the Annual Report on Form 10-K, as amended, will be furnished to shareholders upon written
request, accompanied by a check in the amount of $15.00 payable to Genesco Inc., addressed to Director, Corporate Relations,
Genesco Inc., Genesco Park, Suite 490, P.O. Box 731, Nashville, Tennessee 37202-0731. Certifications by the Chief Executive
Officer and the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 have been filed as exhibits
of our 2021 Annual Report on Form 10-K, as amended.
Common Stock Listing
New York Stock Exchange: GCO
Shareholder Information
Shareholder information may be accessed at www.genesco.com
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BOARD OF DIRECTORS
Mimi E. Vaughn
President and Chief Executive Officer, Chair of the Board, Genesco Inc.
Nashville, Tennessee
Joanna Barsh
Independent Consultant; Senior Partner Emeritus, McKinsey & Company
New York, New York
Chairperson of the compensation committee, member of the nominating and governance committee
Matthew C. Diamond
Former Chief Executive Officer, Defy Media, LLC
New York, New York
Lead independent director of the Board, chairperson of the nominating and governance committee, member of the
compensation committee
Marty G. Dickens
Retired President, AT&T -Tennessee
Nashville, Tennessee
Member of the audit and the nominating and governance committees
John F. Lambros
President, GCA-U.S.
New York, New York
Member of the compensation committee
Thurgood Marshall, Jr.
Retired Partner, Morgan, Lewis & Bockius LLP
Washington, D.C.
Member of the compensation committee
Angel R. Martinez
Retired Chief Executive Officer and Chairman of the Board of Directors, Deckers Brands
Ojai, California
Member of the nominating and governance committee
Kathleen Mason
Former President and Chief Executive Officer, Tuesday Morning Corporation
Dallas, Texas
Member of the audit committee
Kevin P. McDermott
Former Partner, KPMG LLP and Former Chief Audit Executive, Pinnacle Financial Partners, Inc.
Nashville, Tennessee
Chairperson of the audit committee
Mary E. Meixelsperger
Chief Financial Officer, Valvoline Inc.
Lexington, Kentucky
Member of the audit committee
Gregory A. Sandfort
Former Chief Executive Officer and Director, Tractor Supply Company
Nashville, Tennessee
Member of the compensation committee
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CORPORATE OFFICERS
Mimi E. Vaughn
Board Chair, President and Chief Executive Officer
17 years with Genesco
Scott E. Becker
Senior Vice President, General Counsel, Corporate Secretary
2 years with Genesco
Parag D. Desai
Senior Vice President, Chief Strategy and Digital Officer
7 years with Genesco
Daniel E. Ewoldsen
Senior Vice President, President – Johnston & Murphy Group
18 years with Genesco
Mario Gallione
Senior Vice President, President – Journeys Group
42 years with Genesco
Thomas A. George
Senior Vice President, Finance, Interim Chief Financial Officer
1 year with Genesco
Matthew N. Johnson
Vice President, Treasurer
28 years with Genesco
Brently G. Baxter
Vice President, Chief Accounting Officer
2 years with Genesco
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended January 30, 2021
☐
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
(State or other jurisdiction of
incorporation or organization)
Genesco Park,
Nashville,
1415 Murfreesboro Pike
Tennessee
(Address of principal executive offices)
62-0211340
(I.R.S. Employer
Identification No.)
37217-2895
(Zip Code)
Registrant’s telephone number, including area code: (615) 367-7000
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $1.00 par value
Trading Symbol
GCO
Name of Exchange
on which Registered
New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act:
Employees’ Subordinated Convertible Preferred Stock
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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 reports) 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
Non-accelerated filer
☐
☐
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes ☐ No ☒
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s mo st recently completed second fiscal
quarter - $233,000,000. The market value calculation was determined using a per share price of $15.55, the price at which the common stock was last sold on
the New York Stock Exchange on July 31, 2020, the last business day of the registrant’s most recently completed second fiscal quarter. For purposes of this
calculation, shares of common stock held by nonaffiliates excludes only those shares beneficially owned by officers, directors, and shareholders owning 10% or
more of the outstanding common stock (and, in each case, their immediate family members and affiliates).
Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date: As of March 12, 2021, 14,955,569
shares of the registrant’s common stock were outstanding.
Documents Incorporated by Reference
Certain portions of registrant’s Definitive Proxy Statement for its 2021 Annual Meeting of Shareholders (which is expected to be filed with the Securities and
Exchange Commission within 120 days after the end of the registrant’s fiscal year ended January 30, 2021) are incorporated by reference into Part III of this
Annual Report on Form 10-K..
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TABLE OF CONTENTS
PART I
Business
Item 1.
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Item 3.
Item 4. Mine Safety Disclosures
Item 4A. Executive Officers
Properties
Legal Proceedings
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Reserved
Item 6.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Item 8.
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 10.* Directors, Executive Officers and Corporate Governance
Item 11.* Executive Compensation
Item 12.* Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13.* Certain Relationships and Related Transactions, and Director Independence
Item 14.* Principal Accounting Fees and Services
PART III
Item 15.
Item 16.
Exhibits and Financial Statement Schedules
Form 10-K Summary
PART IV
Page
4
10
24
24
24
25
25
27
27
28
40
41
85
85
85
86
86
86
87
87
88
91
*All or a portion of the referenced section is incorporated by reference from our Definitive Proxy Statement for our 2021 Annual Meeting of
the Shareholders (which is expected to be filed with the SEC within 120 days after the end of Fiscal 2021).
2
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Cautionary Notice Regarding Forward-looking Statements
This Annual Report on Form 10-K (this "report") includes 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 report 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, risks related to public health and safety issues, including, for example, risks related to the ongoing novel
coronavirus ("COVID-19") pandemic, as well as the timing and availability of effective medical treatments and the ongoing
rollout of vaccines in response to the COVID-19 pandemic, including disruptions to our business, sales, supply chain and financial
results, the level of consumer spending on our merchandise and in general, the level and timing of promotional activity necessary
to protect our reputation and maintain inventories at appropriate levels, the timing and amount of any share repurchases by us,
risks related to doing business internationally, including the manufacturing of a portion of our products in China, the increasing
scope of our non-U.S. operations, 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, our ability to obtain from suppliers products that are in-demand on a
timely basis and effectively manage disruptions in product supply or distribution, 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, the effects of
the British decision to exit the European Union and other sources of market weakness in the U.K. and the Republic of Ireland
(“ROI”), 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., 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, weakness in shopping
mall traffic, 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, 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 the ability to open additional retail stores, to renew leases in
existing stores, to control or lower occupancy costs, 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 realize any anticipated
tax benefits, our ability to 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, 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, uncertainty regarding the expected phase out of the
London Interbank Offered Rate ("LIBOR"), 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".
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ITEM 1, BUSINESS
General
PART I
Genesco Inc. ("Genesco", “Company”, "we", "our", or "us"), incorporated in 1934 in the State of Tennessee, is a leading retailer
and wholesaler of branded footwear, apparel and accessories with net sales for Fiscal 2021 of $1.8 billion. During Fiscal 2021,
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) Licensed Brands, comprised of the licensed Dockers®, Levi's®, and G.H. Bass® brands, as well as other brands we license
for footwear.
Effective January 1, 2020, we completed the acquisition of substantially all the assets and the assumption of certain liabilities of
Togast LLC, Togast Direct, LLC and TGB Design, LLC (collectively, "Togast"). Togast specializes in the design, sourcing and
sale of licensed footwear. We also entered into a new U.S. footwear license agreement with Levi Strauss & Co. for the license
of Levi's® footwear for men, women and children in the U.S. concurrently with the Togast acquisition. The acquisition expands
our portfolio to include footwear licenses for G.H. Bass and FUBU, among others. Togast operates in our Licensed Brands
segment.
At January 30, 2021, we operated 1,460 retail footwear and accessory stores located primarily throughout the United States and
in Puerto Rico, but also including 93 footwear stores in Canada and 123 footwear stores in the United Kingdom and the ROI. We
plan to open a total of approximately 15 new retail stores and to close approximately 35 retail stores in Fiscal 2022.
The following table sets forth certain additional information concerning our retail footwear and accessory stores during the five
most recent fiscal years:
Retail Stores
Beginning of year
Opened during year
Closed during year
End of year
Fiscal
2017
Fiscal
2018
Fiscal
2019
Fiscal
2020
Fiscal
2021
1,520
66
(32 )
1,554
1,554
59
(78 )
1,535
1,535
36
(59 )
1,512
1,512
12
(44 )
1,480
1,480
13
(33 )
1,460
We also source, design, market and distribute footwear under our Johnston & Murphy brand and the licensed Levi's, Dockers and
G.H. Bass brands, as well as other brands that we license for footwear to over 1,000 retail accounts in the United States, including
a number of leading department, discount, and specialty stores.
Shorthand references to fiscal years (e.g., “Fiscal 2021”) refer to the fiscal year ended on the Saturday nearest January 31st in the
named year (e.g., January 30, 2021). The terms "Company," "Genesco," "we," "our" or "us" as used herein and unless otherwise
stated or indicated by context refer to Genesco Inc. and its subsidiaries. All information contained in Item 7, “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” which is referred to in this Item 1 of this report, is
incorporated by such reference in Item 1. As discussed above, this report contains forward-looking statements. Actual results
may vary materially and adversely from the expectations reflected in these statements. For a discussion of some of the factors
that may lead to different results, see Item 1A, “Risk Factors” and Item 7, “Management’s Discussion and Analysis of Financial
Condition and Results of Operations.”
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COVID-19
Impacts related to the novel coronavirus global pandemic (“COVID-19”) have been significantly adverse for the retail industry,
our Company, our customers, and our employees. We have experienced significant disruptions to our business due to the COVID-
19 pandemic and related social distancing and shelter-in-place recommendations and mandates, which initially resulted in the
temporary closure of a number of stores and furlough of our employees. During Fiscal 2021, as stores were impacted by negative
mall traffic, we focused on our digital capabilities. As of January 30, 2021, the vast majority of our stores in North America had
reopened, although we continue to see residual impacts on foot traffic and in-store revenues. As of January 30, 2021, essentially
all of the stores in the United Kingdom and the ROI remained closed.
The impacts of the COVID-19 pandemic on our business are discussed in further detail throughout this Business section, Item
1A - Risk Factors, and Part II - Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations
of this Annual Report on Form 10-K.
Strategy
Across our company, we aspire to create and curate leading footwear brands that represent style, innovation and self-expression
and to be the destination for our consumers' favorite fashion footwear. Each of our businesses has a strong strategic position
grounded in a deep and ever-evolving understanding of the customers it serves. The strength of our concepts and the advantages
we have built over time have established long-lasting leadership positions that make our footwear businesses outstanding on their
own, but what they share through the benefit of synergies, makes them even stronger together. We have aligned our business
around six pillars; 1) build deeper consumer insights to strengthen customer relationships and brand equity, 2) intensify product
innovation and trend insight efforts, 3) accelerate digital to grow direct-to-consumer, 4) maximize the relationship between
physical and digital, 5) reshape the cost base to reinvest for future growth, and 6) pursue synergistic acquisitions that add growth
and create shareholder value. We anticipate opening fewer new stores in the future, concentrating on locations that we believe
will be most productive, as well as closing certain stores, perhaps reducing the overall square footage and store count from current
levels, but improving productivity in our existing locations and investing in technology and infrastructure to support omnichannel
and digital retailing.
We have made acquisitions, including the acquisitions of the Schuh Group in June 2011, Little Burgundy in December 2015 and
Togast in January 2020, and anticipate that we may pursue acquisitions reactively rather than proactively until we recover further
from the pandemic. We anticipate that potential acquisitions would either augment existing businesses or facilitate our entry into
new businesses that are compatible with our existing footwear businesses and core expertise.
More generally, we attempt to develop strategies to mitigate the risks we view as material, including those discussed under the
caption “Forward Looking Statements,” above, and those discussed in Item 1A, "Risk Factors". Among the most important of
these factors are those related to consumer demand. Conditions in the economy can affect demand, resulting in changes in sales
and, as prices are adjusted to drive sales and manage inventories, in gross margins. Because fashion trends influencing many of
our target customers can change rapidly, we believe that our ability to react quickly to those changes has been important to our
success. Even when we succeed in aligning our merchandise offerings with consumer preferences, those preferences may affect
results by, for example, driving sales of products with lower average selling prices or products which are more widely available
in the marketplace and thus more subject to competitive pressures than our typical offering. Moreover, economic factors, such as
persistent unemployment, the effects of the ongoing COVID-19 pandemic, and any future economic contraction and changes in
tax policies, may reduce the consumer’s disposable income or his or her willingness to purchase discretionary items, and thus
may reduce demand for our merchandise, regardless of our skill in detecting and responding to fashion trends. We believe our
experience and discipline in merchandising and the buying power associated with our relative size and importance in the industry
segments in which we compete are important factors in our ability to mitigate risks associated with changing customer preferences
and other changes in consumer demand.
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Segments
Journeys Group
The Journeys Group accounted for 69% of our net sales in Fiscal 2021. Journeys retail footwear stores target customers in the
13 to 22 year age group through the use of youth-oriented decor and multi-channel media. Journeys stores carry predominately
branded merchandise across a wide range of prices. The Journeys Kidz retail footwear stores sell footwear and accessories
primarily for younger children, toddler age to 12 years old. Little Burgundy retail footwear stores sell footwear and accessories
to fashion-oriented men and women in the 21 to 34 age group ranging from students to young professionals.
At January 30, 2021, Journeys Group operated 1,159 stores, including 888 Journeys stores, 233 Journeys Kidz stores and 38
Little Burgundy stores averaging approximately 1,975 square feet, located primarily in malls and factory outlet centers throughout
the United States, Puerto Rico and Canada, selling footwear and accessories for young men, women and children. Journeys
Group's e-commerce websites include the following: journeys.com, journeyskidz.com, journeys.ca and littleburgundyshoes.com.
In Fiscal 2021, the Journeys Group closed a net of 12 stores.
Schuh Group
The Schuh Group accounted for 17% of our net sales in Fiscal 2021. Schuh Group stores target teenagers and young adults in the
16 to 24 year age group, selling a broad range of branded casual and athletic footwear along with a meaningful private label
offering. At January 30, 2021, Schuh Group operated 123 Schuh stores, averaging approximately 4,825 square feet, which include
both street-level and mall locations in the United Kingdom and the ROI. Schuh Group's e-commerce website is schuh.co.uk.
Schuh Group closed a net of six stores in Fiscal 2021.
Johnston & Murphy Group
The Johnston & Murphy Group accounted for 8% of our net sales in Fiscal 2021. The majority of Johnston & Murphy wholesale
sales are of the Genesco-owned Johnston & Murphy brand, and all of the group’s retail sales are of Johnston & Murphy branded
products.
Johnston & Murphy Retail Operations. At January 30, 2021, Johnston & Murphy operated 178 retail shops and factory stores
primarily in the United States averaging approximately 1,900 square feet and selling footwear, apparel and accessories primarily
for men in the 35 to 55 year age group, targeting business and professional customers. Johnston & Murphy retail shops are
located primarily in higher-end malls and airports nationwide and sell a broad range of men’s dress and casual footwear, apparel
and accessories. Women’s footwear and accessories are sold in select Johnston & Murphy locations. We also sell Johnston &
Murphy products directly to consumers through e-commerce websites. The websites are johnstonmurphy.com and
johnstonmurphy.ca. Footwear accounted for 60% of Johnston & Murphy retail sales in Fiscal 2021, with the balance consisting
primarily of apparel and accessories. Johnston & Murphy Group closed a net of two shops and factory stores in Fiscal 2021.
Johnston & Murphy Wholesale Operations. Johnston & Murphy men’s and women's footwear and accessories are sold at
wholesale, primarily to better department stores, independent specialty stores and e-commerce. Johnston & Murphy’s wholesale
customers offer the brand’s footwear for dress, dress casual, and casual occasions, with the majority of styles offered in these
channels selling from $100 to $195.
Licensed Brands
The Licensed Brands segment accounted for 6% of our net sales in Fiscal 2021. Licensed Brands sales include footwear marketed
under the Levi's brand, Dockers brand and G.H. Bass brand, among others. The Levi's brand license was entered into concurrently
with the closing of the Togast acquisition. We have had the exclusive Dockers men’s footwear license in the United States since
1991. We acquired the G.H. Bass brand license in conjunction with the acquisition of Togast. In addition, we renewed our men's
Dockers footwear license for the United States. Dockers footwear is marketed to men aged 30 to 55 through many of the same
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national retail chains that carry Dockers pants and sportswear and in department and specialty stores across the country. Suggested
retail prices for Dockers footwear generally range from $50 to $90. Togast designs and sources licensed footwear under the
Levi's and G.H. Bass brand names, among others, and provides services for the sourcing of FUBU licensed footwear.
Manufacturing and Sourcing
We rely on independent third-party manufacturers for production of our footwear products sold at wholesale and our Johnston &
Murphy retail business. We source footwear and accessory products from foreign manufacturers located in Brazil, Canada, China,
Hong Kong, India, Italy, Mexico, Pakistan, Portugal, Peru, and Vietnam. Our retail operations, excluding Johnston & Murphy,
sell primarily branded products from third parties who source primarily overseas.
Competition
Competition is intense in the footwear and accessory industries. Our retail footwear and accessory competitors range from small,
locally owned stores to regional and national department stores, discount stores, specialty chains, our vendors with their own
direct-to-consumer channels and online retailers. We also compete with hundreds of footwear wholesale operations in the United
States and throughout the world, most of which are relatively small, specialized operations, but some of which are large, more
diversified companies. Some of our competitors have resources that are not available to us. Our success depends upon our ability
to remain competitive with respect to the key factors of style, price, quality, comfort, brand loyalty, customer service, store
location and atmosphere, technology, infrastructure and speed of delivery to support e-commerce and the ability to offer relevant
products.
Licenses
We own our Johnston & Murphy® brand and own or license the trade names of our retail concepts either directly or through
wholly-owned subsidiaries. The Dockers® footwear line, introduced in Fiscal 1993, is sold under a license agreement granting us
the exclusive right to sell men’s footwear under the trademark in the United States, Canada and the Caribbean. The Dockers
license agreement expires in 2024. We entered into a new license agreement with Levi Strauss & Co. in January 2020 for the
right to sell men's, women's and children's footwear under the Levi's® trademark in the United States and the Caribbean. The
initial term of the license agreement with respect to Levi's® trademarks is through November 30, 2024 with one additional four-
year renewal term. We license certain other footwear brands, mostly in foreign markets. License royalty income was not material
in Fiscal 2021.
Wholesale Backlog
Most of the orders in our wholesale divisions are for delivery within 150 days. Because most of our business is at-once, the
backlog at any one time is not necessarily indicative of future sales. As of February 27, 2021, our wholesale operations had a
backlog of orders, including unconfirmed customer purchase orders, amounting to approximately $64.6 million, compared to
approximately $24.7 million on February 29, 2020. The increase in backlog reflects the acquisition of Togast. Our backlog may
be more vulnerable to cancellation than is typical due to the COVID-19 pandemic.
Human Capital
Our Employees
We had approximately 19,000 employees as of January 30, 2021 with approximately 16,000 employed in the United States and
Canada, and approximately 3,000 in the United Kingdom and the ROI. The majority of our workforce consists of retail-based,
customer-facing employees with approximately 70% part-time and 30% full-time as of January 30, 2021.
Our values include treating our customers and each other with integrity, trust and respect, and creating an unrivaled home for
talent and diversity to grow and succeed. We consider our employees to be core to our success.
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Employee Health & Safety
COVID-19
Importantly, during Fiscal 2021, we faced many disruptions as a result of the COVID-19 pandemic. During this time, we took a
number of steps to support our employees and customers including:
Increased safety and cleaning protocols
•
• Employee safety training and communications
• Modified visitor and travel policies
• Strict protocols for employee contact tracing
• Technology investments to allow remote work where possible
• Suspension of meetings and events, utilizing virtual alternatives where possible
We also took action to protect employee wages and benefits during periods of store closings and periods of decreased mall and
store traffic. Specifically, we continued benefits and paid employee premiums for employees on furlough due to store closings
and temporarily implemented minimum guarantees in pay for full-time commissioned-based retail store employees. We also
returned all or a portion of salaries lost for employees who were impacted by forced salary reductions.
Benefits
We currently offer a comprehensive benefits package designed to meet the diverse needs of our employees. This package includes
many benefits dedicated to our employees’ physical and mental health and well-being as well as benefits designed to help
employees build wealth and prepare for the future. We also provide valuable benefits and protections such as domestic partner
benefits, parental leave, paid time for community service, adoption benefits, financial assistance with emergencies, scholarship
opportunities, matching gift contributions and a generous product discount.
Competitive Pay
Our compensation programs are designed to align the compensation of our employees with the Company’s performance and to
provide incentives to attract, retain and motivate employees.
Our compensation philosophy is to motivate and retain our employees by offering what we believe to be competitive salary
packages. To align employee objectives with the Company and ultimately our shareholders, we offer programs that reward long-
term performance. We engage a nationally recognized outside compensation consulting firm to independently evaluate the
effectiveness of our executive compensation programs and to provide benchmarking against our peers within the industry.
Diversity, Equity and Inclusion and Employee Engagement
We are committed to furthering our efforts to cultivate a respectful and inclusive work environment in support of our employees
and our business objectives. We have committed our diversity, equity and inclusion action to four overarching areas – community,
talent, business practices and measurement.
We routinely conduct annual employee engagement surveys with various segments of our population. In 2020, we also conducted
a diversity, equity and inclusion survey. We remain committed to listening to and learning from our employees.
Seasonality
Our business is seasonal with our investment in inventory and accounts receivable normally reaching peaks in the spring and fall
of each year and a significant portion of our net sales and operating income generated during the fourth quarter. Also, the
wholesale backlog is somewhat seasonal, reaching a peak in the spring. We maintain in-stock programs for selected product lines
with anticipated high-volume sales.
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Environmental Matters
Our former manufacturing operations and the sites of those operations as well as the sites of our current operations are subject to
numerous federal, state, and local laws and regulations relating to human health and safety and the environment. These laws and
regulations address and regulate, among other matters, wastewater discharge, air quality and the generation, handling, storage,
treatment, disposal, and transportation of solid and hazardous wastes and releases of hazardous substances into the environment.
In addition, third parties and governmental agencies in some cases have the power under such laws and regulations to require
remediation of environmental conditions and, in the case of governmental agencies, to impose fines and penalties. Several of the
facilities owned by us (currently or in the past) are located in industrial areas and have historically been used for extensive periods
for industrial operations such as tanning, dyeing, and manufacturing. Some of these operations used materials and generated
wastes that would be considered regulated substances under current environmental laws and regulations. We are currently
involved in certain administrative and judicial environmental proceedings relating to our former facilities. See Note 16 to the
Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data".
Available Information
We file reports with the Securities and Exchange Commission (“SEC”), including Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q and other reports from time to time. We are an electronic filer and the SEC maintains an internet site at
http://www.sec.gov that contains the reports, proxy and information statements, and other information filed electronically. Our
website address, which is provided as an inactive textual reference only, is http://www.genesco.com. We make available free of
charge through the website Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and
all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to
the SEC. Copies of the charters of each of our Audit Committee, Compensation Committee, Nominating and Governance
Committee as well as our Corporate Governance Guidelines and Code of Ethics along with position descriptions for our board
of directors (the "Board of Directors" or the "Board") and Board committees are also available free of charge through the website.
The information provided on our website is not part of this Annual Report on Form 10-K and is therefore not incorporated by
reference unless such information is otherwise specifically incorporated elsewhere in this Annual Report on Form 10-K.
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ITEM 1A, RISK FACTORS
Our business is subject to significant risks. You should carefully consider the risks and uncertainties described below and the
other information in this Annual Report on Form 10-K, including our Consolidated Financial Statements and the notes to those
statements. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we
do not presently know about or that we currently consider immaterial may also affect our business operations and financial
performance. If any of the events described below actually occur, our business, financial condition, cash flows or results of
operations could be adversely affected in a material way. This could cause the trading price of our stock to decline, perhaps
significantly, and you may lose part or all of your investment.
Competitive, Demand-Related and Reputational Risks
We are experiencing a material disruption to our business as a result of the COVID-19 pandemic and our sales, supply
chain and financial results have been, and may continue to be materially adversely impacted.
Our business is subject to risks, or public perception of risks, arising from public health and safety crises, including pandemics,
which have impacted, and may in the future impact, our wholesale and retail demand and supply chain. On March 18, 2020, we
closed all of our North American stores and on March 23, 2020, we temporarily closed all our stores in the United Kingdom and
the ROI in response to the COVID-19 pandemic. Our wholesale partner stores also closed or substantially reduced operating
hours in March of 2020. Beginning on May 1, 2020, we began reopening some of our stores based on pertinent state and local
orders, and as of August 1, 2020, we had reopened most of our stores, although some stores, notably in California, Canada, the
U.K. and the ROI, have been subject to further closures for varying periods. The duration of any closures and their impact over
the longer term are uncertain and cannot be predicted at this time. The effects of the COVID-19 pandemic depend on future
developments outside our control such as the spread of the disease and the effectiveness of containment efforts, as well as the
timing and availability of effective medical treatments and the ongoing rollout of vaccines. Even if the COVID-19 pandemic
does not continue for an extended period, our business could be materially adversely affected by several additional factors related
to the COVID-19 pandemic, including the following:
• Reduced consumer demand and customer traffic in malls and shopping centers and reduced demand for our wholesale
products from our retail partners;
• The effects of the COVID-19 pandemic on the global economy, including a recession, or the deterioration of economic
conditions in the markets in which we operate, or an increase in unemployment levels could result in customers having
less disposable income which could lead to reduced sales of our products;
• The effects of the COVID-19 pandemic could further delay inventory production and fulfillment and our release or
•
delivery of new product offerings or require us to make unexpected changes to our offerings;
“Shelter in Place” and other similar mandated or suggested isolation protocols could disrupt not only our brick and
mortar operations but our e-commerce operations as well, particularly if employees are not able to report to work or
perform their work remotely;
• While we are making efforts to both maintain reductions in operating costs and conserve cash, we may not be successful
in doing so;
• We are undertaking discussions with our landlords and other vendors to obtain rent and other relief, but we may not be
successful in these endeavors. As a result, we may be subject to litigation or other claims;
• After the pandemic has subsided, fear of COVID-19, re-occurrence of the outbreak or another pandemic or similar crisis
could cause customers to avoid public places where our stores are located such as malls, outlets, and airports;
• We have been forced to reduce our workforce, and as a result, there may be obstacles and delays in reopening stores
which have remained closed as we may have to hire and train a substantial number of new employees; and
• We may be required to revise certain accounting estimates and judgments such as, but not limited to, those related to the
valuation of goodwill, long-lived assets and deferred tax assets, which could have a material adverse effect on our
financial position and results of operations.
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COVID-19 has also had a significant impact on the countries, including China, from which we and our vendors source products.
We and our vendors rely upon the facilities of third-party manufacturers in other countries to support our business. The outbreak
has resulted in significant governmental measures being implemented to control the spread of the virus, including, among others,
restrictions on manufacturing and the movement of employees in many other countries. As a result of the COVID-19 pandemic
and the measures designed to contain the spread of the virus, our and our vendors’ third-party manufacturers may not have the
materials, capacity, or capability to manufacture our products according to our schedule and specifications. If third-party
manufacturers’ operations are curtailed, we and our vendors may need to seek alternate manufacturing sources, which may be
more expensive. Alternate sources may not be available or may result in delays in shipments to us from our supply chain and
subsequently to our customers, each of which would affect our results of operations. While the disruptions and restrictions on the
ability to travel, quarantines, and temporary closures of the facilities of third-party manufacturers and suppliers, as well as general
limitations on movement are expected to be temporary, the duration of the production and supply chain disruption, and related
financial impact, cannot be estimated at this time. Should the production and distribution disruptions continue for an extended
period of time, the impact on our supply chain could have a material adverse effect on our results of operations and cash flows.
Consumer spending is affected by poor economic conditions and other factors and may significantly harm our business,
affecting our financial condition, liquidity, and results of operations.
The success of our business depends to a significant extent upon the level of consumer spending in general and on our product
categories. A number of factors may affect the level of consumer spending on merchandise that we offer, including, among other
things:
•
general economic and industry conditions, including the risks associated with recessions in the U.S. and Canada, and
the impact of the ongoing COVID-19 pandemic;
• weather conditions;
•
economic conditions in the U.K and the ROI and the uncertainty surrounding, as well as the effects of, the withdrawal
of the U.K. from the European Union (“Brexit”);
energy costs, which affect gasoline and home heating prices;
the level of consumer debt;
pricing of products;
interest rates;
tax rates, refunds and policies;
•
•
•
•
•
• war, terrorism and other hostilities; and
•
consumer confidence in future economic conditions.
Adverse economic conditions and any related decrease in consumer demand for discretionary items could have a material adverse
effect on our business, results of operations and financial condition. The merchandise we sell generally consists of discretionary
items. Reduced consumer confidence and spending may result in reduced demand for discretionary items and may force us to
take inventory markdowns, decreasing sales and making expense leverage difficult to achieve. Demand can also be influenced
by other factors beyond our control.
Moreover, while we believe that our operating cash flows and borrowing capacity under committed lines of credit will be adequate
for our anticipated cash requirements, if the economy were to experience a continued or worsening downturn, if one or more of
our revolving credit banks were to fail to honor its commitments under our credit lines or if we were unable to draw on our credit
lines for any reason, we could be required to modify our operations for decreased cash flow or to seek alternative sources of
liquidity, and such alternative sources might not be available to us. These same factors could impact our wholesale customers,
limiting their ability to buy or pay for merchandise offered by us.
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Failure to protect our reputation could have a material adverse effect on our brand names.
Our success depends in part on the value and strength of the names of our business units. These names are integral to our
businesses as well as to the implementation of our strategies for expanding our businesses. Maintaining, promoting, and
positioning our brands will depend largely on the success of our marketing and merchandising efforts and our ability to provide
high quality merchandise and a consistent, high quality customer experience. Our brands could be adversely affected if we fail
to achieve these objectives or if our public image or reputation were to be tarnished by negative publicity or if adverse information
concerning us is posted on social media platforms or similar mediums. Failure to comply, or accusation of failure to comply, with
ethical, social, health, product, labor, data privacy, and environmental standards could also jeopardize our reputation and
potentially lead to various adverse consumer and employee actions. Any of these events could result in decreased revenue or
otherwise adversely affect our business.
Our business involves a degree of risk related to fashion and other extrinsic demand drivers that are beyond our control.
The majority of our businesses serve a fashion-conscious customer base and depend upon the ability of our buyers and
merchandisers to react to fashion trends, to purchase inventory that reflects such trends, and to manage our inventories
appropriately in view of the potential for sudden changes in fashion, consumer taste, or other drivers of demand. Failure to
execute any of these activities successfully could result in adverse consequences, including lower sales, product margins,
operating income and cash flows.
Our future success also depends on our ability to respond to changing consumer preferences, identify and interpret
consumer trends, and successfully market new products.
The industry in which we operate is subject to rapidly changing consumer preferences. The continued popularity of our footwear
and the development and selection of new lines and styles of footwear with widespread consumer appeal, requires us to accurately
identify and interpret changing consumer trends and preferences, and to effectively respond in a timely manner. Continuing
demand and market acceptance for both existing and new products are uncertain and depend on substantial investment in product
innovation, design and development, an ongoing commitment to product quality and significant and sustained marketing efforts
and expenditures.
In assessing our response to anticipated changing consumer preferences and trends, we frequently must make decisions about
product designs and marketing expenditures months in advance of the time when actual consumer acceptance can be determined.
As a result, we may not be successful in responding to shifting consumer preferences and trends with new products that achieve
market acceptance. If we fail to identify and interpret changing consumer preferences and trends, or are not successful in
responding to these changes with the timely development or sourcing of products that achieve market acceptance, we could
experience excess inventories and higher than normal markdowns, returns, order cancellations or an inability to profitably sell
our products.
Our results may be adversely affected by declines in consumer traffic in malls.
The majority of our stores are located within shopping malls and depend to varying degrees on consumer traffic in the malls to
generate sales. Declines in mall traffic, whether caused by a shift in consumer shopping preferences or by other factors, such as
COVID-19, may negatively impact our ability to maintain or grow our sales in existing stores, which could have an adverse effect
on our financial condition or results of operations.
Our results of operations are subject to seasonal and quarterly fluctuations.
Our business is seasonal, with a significant portion of our net sales and operating income generated during the fourth quarter,
which includes the holiday shopping season. Because of this seasonality, we have limited ability to compensate for shortfalls in
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fourth quarter sales or earnings by changes in our operations or strategies in other quarters. Our quarterly results of operations
also may fluctuate significantly based on such factors as:
the timing of any new store openings and renewals;
the amount of net sales contributed by new and existing stores;
the timing of certain holidays and sales events;
changes in quarter end dates due to the 53-week year;
changes in our merchandise mix;
•
•
•
•
•
• weather conditions that affect consumer spending; and
•
actions of competitors, including promotional activity.
A failure to increase sales at our existing stores, given our high fixed expense cost structure, and in our e-commerce
businesses may adversely affect our stock price and impact our results of operations.
A number of factors have historically affected, and will continue to affect, our comparable sales results and gross margin,
including:
•
•
consumer trends, such as less disposable income due to the impact of economic conditions, tax policies and other factors;
the lack of new fashion trends to drive demand in certain of our businesses and the ability of those businesses to adjust
to fashion changes on a timely basis;
closing of department stores that anchor malls or a significant number of non-anchor mall formats;
competition;
declining mall traffic due to changing customer preferences in the way they shop;
timing of holidays including sales tax holidays and the timing of tax refunds;
general regional and national economic conditions;
inclement weather;
new merchandise introductions and changes in our merchandise mix;
our ability to distribute merchandise efficiently to our stores;
timing and type of sales events, promotional activities or other advertising;
our ability to adapt to changing customer preferences in the ways they digitally shop;
access to allocated product from our vendors;
our ability to execute our business strategy effectively; and
other external events beyond our control, such as COVID-19.
•
•
•
•
•
•
•
•
•
•
•
•
•
Our comparable sales have fluctuated in the past, including the composition of our comparable sales between store and digital,
and we believe such fluctuations may continue. The unpredictability of our comparable sales may cause our revenue and results
of operations to vary from quarter to quarter, and an unanticipated change in revenues or operating income may cause our stock
price to fluctuate significantly.
Changes in the retail industry could have a material adverse effect on our business or financial condition.
In recent years, the retail industry has experienced consolidation, store closures, bankruptcies and other ownership changes. In
the future, retailers in the U.S. and in foreign markets may further consolidate, undergo restructurings or reorganizations, or
realign their affiliations, any of which could decrease the number of stores that carry our products or our licensees’ products or
increase the ownership concentration within the retail industry. Changing shopping patterns, including the rapid expansion of
online retail shopping, have adversely affected customer traffic in mall and outlet centers. We expect competition in the e-
commerce market will continue to intensify. Growth in e-commerce could result in financial difficulties, including store closures,
bankruptcies or liquidations for our brick-and-mortar wholesale customers who fail to compete effectively in the e-commerce
market. We cannot control the success of individual malls, and an increase in store closures by other retailers may lead to mall
bankruptcies, mall vacancies and reduced foot traffic. A continuation or worsening of these trends could cause financial
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difficulties for one or more of our segments, which, in turn, could substantially increase our credit risk and have a material adverse
effect on our results of operations, financial condition and cash flows.
Our future success will be determined, in part, on our ability to manage the impact of the rapidly changing retail environment
and identify and capitalize on retail trends, including technology, enhanced digital capabilities, e-commerce and other process
efficiencies that will better service our customers.
Our business is intensely competitive and increased or new competition could have a material adverse effect on us.
The retail footwear and accessory markets are intensely competitive. We currently compete against a diverse group of retailers,
including other regional and national specialty stores, department and discount stores, small independents and e-commerce
retailers, as well as our own vendors who are increasingly selling direct-to-consumers, which sell products similar to and often
identical to those we sell. Our branded businesses, selling footwear at wholesale, also face intense competition, both from other
branded wholesale vendors and from private label initiatives of their retailer customers. A number of different competitive factors
could have a material adverse effect on our business, including:
•
•
•
•
•
•
increased operational efficiencies of competitors;
competitive pricing strategies;
expansion by existing competitors;
expansion of direct-to-consumer selling by our vendors;
entry by new competitors into markets in which we currently operate; and
adoption by existing retail competitors of innovative store formats or sales methods.
Investments and Infrastructure Risks
We face a number of risks in opening new stores and renewing leases on existing stores.
We may open new stores, both in regional malls, where most of the operational experience of our U.S. businesses lies, and in
other venues including outlet centers, major city street locations, airports and tourist destinations. We cannot offer assurances
that we will be able to open as many stores as we have planned, that any new store will achieve similar operating results to those
of our existing stores or that new stores opened in markets in which we operate will not have a material adverse effect on the
revenues and profitability of our existing stores. In addition to the risks already discussed for existing stores, the success of any
planned expansion will be dependent upon numerous factors, many of which are beyond our control, including the following:
•
•
•
•
•
•
•
•
•
•
our ability to identify suitable markets and individual store sites within those markets;
the competition for suitable store sites;
our ability to negotiate favorable lease terms for new stores and renewals (including rent and other costs) with landlords;
our ability to obtain governmental and other third-party consents, permits and licenses necessary to the operation of our
stores or otherwise;
the ability to build and remodel stores on schedule and at acceptable cost;
the availability of employees to staff new stores and our ability to hire, train, motivate and retain store personnel;
the effect of changes to laws and regulations, including wage, over-time, and employee benefits laws on store expense;
the availability of adequate management and financial resources to manage an increased number of stores;
our ability to adapt our distribution and other operational and management systems to an expanded network of stores;
and
unforeseen events, such as COVID-19, could prevent or delay store openings and impact our liquidity needed for store
openings.
Additionally, the results we expect to achieve during each fiscal quarter are dependent upon opening new stores and renewing
leases on existing stores on schedule. If we fall behind new store openings, we will lose expected sales and earnings between the
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planned opening date and the actual opening and may further complicate the logistics of opening stores, possibly resulting in
additional delays, seasonally inappropriate product assortments, and other undesirable conditions.
Any acquisitions we make or new businesses we launch, as well as any dispositions of assets or businesses, involve a degree
of risk.
Acquisitions have been a component of our growth strategy in recent years, and we expect that we may continue to engage in
acquisitions or launch new businesses to grow our revenues and meet our other strategic objectives. If acquisitions are not
successfully integrated with our business, our ongoing operations could be adversely affected. Additionally, acquisitions or new
businesses may not achieve desired profitability objectives or result in any anticipated successful expansion of the businesses or
concepts, causing lower than expected earnings and cash flow and potentially requiring impairment of goodwill and other
intangibles. Although we review and analyze assets or companies we acquire, such reviews are subject to uncertainties and may
not reveal all potential risks. Additionally, although we attempt to obtain protective contractual provisions, such as
representations, warranties and indemnities, in connection with acquisitions, we cannot offer assurance that we can obtain such
provisions in our acquisitions or that they will fully protect us from unforeseen costs of, or liabilities associated with, the
acquisitions. We may also incur significant costs and diversion of management time and attention in connection with pursuing
possible acquisitions even if the acquisition is not ultimately consummated.
Additionally, we have in the past and may in the future divest assets or businesses. Following any such divestitures, we may
retain or incur liabilities or costs relating to our previous ownership of the assets or business that we sell. Any required payments
on retained liabilities or indemnification obligations with respect to past or future asset or business divestitures could have a
material adverse effect on our business or results of operations. Dispositions may also involve our continued financial
involvement in the divested business, such as through transition services agreements and guarantees. Under these arrangements,
performance by the divested businesses or conditions outside our control could adversely affect our business and results of
operations.
Further, acquisitions and dispositions are often structured such that the purchase price paid or received by us, as applicable, is
subject to post-closing adjustments, whether as a result of net working capital adjustments, contingent payments (i.e., earn-outs)
or otherwise. Any such adjustments could result in a material change in the consideration paid to or received by us, as applicable,
in such transactions.
Goodwill recorded with acquisitions is subject to impairment which could reduce the Company's profitability.
In connection with acquisitions, we record goodwill on our Consolidated Balance Sheets. This asset is not amortized but is
subject to an impairment test at least annually, where we have the option first to assess qualitative factors to determine whether
events and circumstances indicate that it is more likely than not that goodwill is impaired. If after such assessment we conclude
that the asset is impaired, we are required to determine the fair value of the asset using a quantitative impairment test that is based
on projected future cash flows from the acquired business discounted at a rate commensurate with the risk we consider to be
inherent in our current business model. We perform the impairment test annually at the beginning of our fourth quarter, or more
frequently if events or circumstances indicate that the value of the asset might be impaired.
Deterioration in our market value, whether related to our operating performance or to disruptions in the equity markets or
deterioration in the operating performance of the business unit with which goodwill is associated, which could be caused by
events such as, but not limited to, COVID-19, could cause us to recognize the impairment of some or all of the $38.6 million of
goodwill on our Consolidated Balance Sheets at January 30, 2021, resulting in the reduction of net assets and a corresponding
non-cash charge to earnings in the amount of the impairment.
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Technology, Data Security and Privacy Risks
The operation of our business is heavily dependent on our information systems.
We depend on a variety of information technology systems for the efficient functioning of our business (including our multiple
e-commerce websites) and security of information. Much information essential to our business is maintained electronically,
including competitively sensitive information and potentially sensitive personal information about customers and employees.
Despite our preventative efforts, our IT systems and websites may, from time to time be vulnerable to damage or interruption
from events such as difficulties in replacing or integrating the systems of acquired businesses, computer viruses, security breaches
and power outages.
Our insurance policies may not provide coverage for security breaches and similar incidents or may have coverage limits which
may not be adequate to reimburse us for losses caused by security breaches. We also rely on certain hardware and software
vendors, including cloud-service providers, to maintain and periodically upgrade many of these systems so that they can continue
to support our business. The software programs supporting many of our systems are licensed to us by independent software
developers. The inability of our employees and developers or our inability to continue to maintain and upgrade these information
systems and software programs could disrupt or reduce the efficiency of our operations. In addition, costs and potential problems
and interruptions associated with the implementation of new or upgraded systems and technology or with maintenance or
adequate support of existing systems could also disrupt or reduce the efficiency of our operations or leave us vulnerable to security
breaches.
We also rely heavily on our information technology staff. If we cannot meet our staffing needs in this area, we may not be able
to fulfill our technology initiatives or to provide maintenance on existing systems.
We are subject to payment-related risks that could increase our operating costs, expose us to fraud or theft, subject us to
potential liability and potentially disrupt our business.
As a retailer who accepts payments using a variety of methods, including credit and debit cards, installment payment methods,
PayPal, and gift cards, we are subject to rules, regulations, contractual obligations and compliance requirements, including
payment network rules and operating guidelines, data security standards and certification requirements, and rules governing
electronic funds transfers. The regulatory environment related to information security and privacy is increasingly rigorous, with
new and constantly changing requirements applicable to our business, and compliance with those requirements could result in
additional costs or accelerate these costs with additional legal and financial exposure for noncompliance. For certain payment
methods, including credit and debit cards, we pay interchange and other fees, which could increase over time and raise our
operating costs. We rely on third parties to provide payment processing services, including the processing of credit cards, debit
cards, and other forms of electronic payment. If these companies become unable to provide these services to us, or if their
systems are compromised, it could disrupt our business.
The payment methods that we offer also subject us to potential fraud and theft by persons who seek to obtain unauthorized access
to or exploit any weaknesses that may exist in the payment systems. We completed the implementation of Europay, Mastercard
and Visa ("EMV") technology and received certification in Fiscal 2018; however future upgrades to our Company's systems
could expose us to the fraudulent use of credit cards and increased costs, including possible fines and restrictions on our
Company's ability to accept payments by credit or debit cards, if we were not to receive recertification. Because we accept debit
and credit cards for payment, we are also subject to industry data protection standards and protocols, such as the Payment Card
Industry Data Security Standards (“PCI DSS”), issued by the Payment Card Industry Security Standards Council. Additionally,
we have implemented technology in our stores to allow for the acceptance of EMV credit transactions and point-to-point
encryption. Complying with PCI DSS standards and implementing related procedures, technology and information security
measures require significant resources and ongoing attention. However, even if we comply with PCI DSS standards and offer
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EMV and point-to-point encryption technology in our stores, we may be vulnerable to, and unable to detect and appropriately
respond to, data security breaches and data loss, including cybersecurity attacks or other breach of cardholder data.
In addition, the Payment Card Industry (“PCI”) is controlled by a limited number of vendors who have the ability to impose
changes in the PCI’s fee structure and operational requirements on us without negotiation. Such changes in fees and operational
requirements may result in our failure to comply with PCI DSS, and cause us to incur significant unanticipated expenses.
A privacy breach, through a cybersecurity incident or otherwise, or failure to comply with privacy laws could materially
adversely affect our business.
As part of normal operations, we and our third-party vendors and partners, receive and maintain confidential and personally
identifiable information (“PII”) about our customers and employees, and confidential financial, intellectual property, and other
information. We regard the protection of our customer, employee, and company information as critical. The regulatory
environment surrounding information security and privacy is very demanding, with the frequent imposition of new and changing
requirements some of which involve significant costs to implement and significant penalties if not followed properly. Despite
our efforts and technology to secure our computer network and systems, a cybersecurity breach, whether targeted, random, or
inadvertent, and whether at the hands of cyber criminals, hackers, rogue employees or other persons, may occur and could go
undetected for a period of time, resulting in a material disruption of our computer network, a loss of information valuable to our
business, including without limitation customer or employee PII, and/or theft. A similar cybersecurity breach to the computer
networks and systems of our third-party vendors and partners, including those that are cloud-based, over which we have no
control, may occur, and could lead to a material disruption of our computer network and/or the areas of our business that are
dependent on the support, services and other products provided by our third-party vendors and partners. Our computer networks
and our business may be adversely affected by such a breach of our third-party vendors and partners, which could result in a
decrease in our e-commerce sales and/or a loss of information valuable to our business, including, without limitation, PII of
customers or employees. Such a cyber-incident could result in any of the following:
•
•
•
•
•
theft, destruction, loss, misappropriation, or release of confidential financial and other data, intellectual property,
customer awards, or customer or employee information, including PII such as payment card information, email
addresses, passwords, social security numbers, home addresses, or health information;
operational or business delays resulting from the disruption of our e-commerce sites, computer networks or the computer
networks of our third-party vendors and partners and subsequent material clean-up and mitigation costs and activities;
negative publicity resulting in material reputation or brand damage with our customers, vendors, third-party partners or
industry peers;
loss of sales, including those generated through our e-commerce websites; and
governmental penalties, fines and/or enforcement actions, payment and industry penalties and fines and/or class action
and other lawsuits.
Any of the above risks, individually or in aggregation, could materially damage our reputation and result in lost sales,
governmental and payment card industry fines, and/or class action and other lawsuits. Although we carry cybersecurity insurance,
in the event of a cyber-incident, that insurance may not be extensive enough or adequate in scope of coverage or amount to
reimburse us for damages we may incur. Further, a significant breach of federal, state, provincial, local or international privacy
laws could have a material adverse effect on our reputation.
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Operational, Supply Chain and Third-Party Risks
Increased operating costs, including those resulting from potential increases in the minimum wage, could have an adverse
effect on our results.
Increased operating costs, including those resulting from potential increases in the minimum wage or wage increases reflecting
competition in relevant labor markets, store occupancy costs, distribution center costs and other expense items, including
healthcare costs, may reduce our operating margin, and make it more difficult to identify new store locations that we believe will
meet our investment return requirements. In addition, other employment and healthcare law changes may increase the cost of
provided retirement and healthcare benefits expenses. Increases in our overall employment costs could have a material adverse
effect on the Company’s business, results of operations and financial and competitive position.
If we lose key members of management or are unable to attract and retain the talent required for our business, our
operating results could suffer.
Our performance depends largely on the efforts and abilities of members of our management team. Our executives have
substantial experience and expertise in our business and have made significant contributions to our growth and success. The
unexpected future loss of services of one or more key members of our management team could have an adverse effect on our
business. In addition, future performance will depend upon our ability to attract, retain and motivate qualified employees,
including store personnel and field management. If we are unable to do so, our ability to meet our operating goals may be
compromised. Finally, our stores are decentralized, are managed through a network of geographically dispersed management
personnel and historically experience a high degree of turnover. If we are for any reason unable to maintain appropriate controls
on store operations due to turnover or other reasons, including the ability to control losses resulting from inventory and cash
shrinkage, our sales and operating margins may be adversely affected. There can be no assurance that we will be able to attract
and retain the personnel we need in the future.
The loss of, or disruption in, one of our distribution centers and other factors affecting the distribution of merchandise,
including freight cost, could materially adversely affect our business.
Each of our divisions uses a single distribution center to handle all or a significant amount of its merchandise. Most of our
operations’ inventory is shipped directly from suppliers to our operations' distribution centers, where the inventory is then
processed, sorted and shipped to our stores, to our wholesale customers or to our e-commerce customers. We depend on the
orderly operation of this receiving and distribution process, which depends, in turn, on adherence to shipping schedules and
effective management of the distribution centers. Although we believe that our receiving and distribution process is efficient and
well positioned to support our current business and our expansion plans, we cannot offer assurance that we have anticipated all
of the changing demands that our expanding operations, particularly our e-commerce operations, will impose on our receiving
and distribution system, or that events beyond our control, such as disruptions in operations due to fire or other catastrophic
events, labor disagreements or shipping problems (whether in our own or in our third party vendors’ or carriers’ businesses), will
not result in delays in the delivery of merchandise to our stores or to our wholesale customers or e-commerce/retail customers.
In addition, to the extent we need to add capacity to distribution centers by either leasing or building new distribution centers or
adding capacity at existing centers or make changes in our distribution processes to improve efficiency and maximize capacity,
we cannot assure that these changes will not result in unanticipated delays or interruptions in distribution. We depend upon third-
parties for shipment of a significant amount of merchandise. Interruptions in the services provided by third-parties may
occasionally result from damage or destruction to our distribution centers; weather-related events; natural disasters; pandemics;
trade policy changes or restrictions; tariffs or import-related taxes; third-party labor disruptions; shipping capacity constraints;
third-party contract disputes; military conflicts; acts of terrorism; or other factors beyond our control. An interruption in service
by third-parties for any reason could cause temporary disruptions in our business, a loss of sales and profits, and other material
adverse effects.
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Our freight cost is impacted by changes in fuel prices, surcharges and other factors which can affect cost both on inbound freight
from vendors to our distribution centers and outbound freight from our distribution centers to our stores and customers. Increases
in freight costs, including in connection with increased fuel prices, may increase our cost of goods sold and our selling and
administrative expenses.
An increase in the cost or a disruption in the flow of our imported products could adversely affect our business.
Merchandise originally manufactured and imported from overseas makes up a large proportion of our total inventory. A disruption
in the shipping of our imported merchandise or an increase in the cost of those products may significantly decrease our sales and
profits. We may be unable to meet customer demands or pass on price increases to our customers. In addition, if imported
merchandise becomes more expensive or unavailable, the transition to alternative sources may not occur in time to meet demand.
Products from alternative sources may also be of lesser quality or more expensive than those we currently import. Risks associated
with our reliance on imported products include:
•
•
disruptions in the shipping and importation of imported products because of factors such as:
•
•
•
raw material shortages, work stoppages, strikes and political unrest;
problems with oceanic shipping, including shipping container shortages and delays in ports;
increased customs inspections of import shipments or other factors that could result in penalties causing delays in
shipments;
economic crises, natural disasters, pandemics (including COVID-19), international disputes and wars; and
•
increases in the cost of purchasing or shipping foreign merchandise resulting from:
•
•
imposition of additional cargo or safeguard measures;
denial by the United States of “most favored nation” trading status to or the imposition of quotas or other restriction
on imports from a foreign country from which we purchase goods;
changes in import duties, import quotas and other trade sanctions; and
increases in shipping rates.
•
•
A considerable amount of the inventory we sell is imported from China, which has historically been subject to efforts to increase
duty rates or to impose restrictions on imports of certain products.
If we or our suppliers or licensees are unable to source raw materials or finished goods from the countries where we or they wish
to purchase them, either because of a regulatory change or for any other reason, or if the cost of doing so should increase, it could
have a material adverse effect on our sales and earnings.
A small portion of the products we buy abroad is priced in foreign currencies and, therefore, we are affected by fluctuating
currency exchange rates. In the past, we have entered into foreign currency exchange contracts with major financial institutions
to hedge these fluctuations. We may not be able to effectively protect ourselves in the future against currency rate fluctuations.
Even dollar-denominated foreign purchases may be affected by currency fluctuations to reflect appreciation in the local currency
against the dollar in the price of the products that they provide. See Item 7, “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” for more information about our foreign currency exchange rate exposure and any hedging
activities.
Data protection requirements are constantly evolving and these requirements could adversely affect our business and
operating results.
We have access to collect or maintain information about our customers, and the protection of that data is critical to our business.
The regulatory environment surrounding information security and privacy continues to evolve and new laws are increasingly
giving customers the right to control how their personal data is used. One such law is the European Union's General Data
Protection Regulation ("GDPR"). Our failure to comply with the obligations of GDPR and similar U.S. federal and state laws,
including California privacy laws, could in the future result in significant penalties which could have a material adverse effect on
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our business and results of operations. Data protection compliance could also cause us to incur substantial costs, forego a
substantial amount of revenue or be subject to business risk associated with system changes and new business processes.
We are dependent on third-party vendors and licensors for the merchandise we sell.
We do not manufacture the merchandise we sell, and our Licensed Brands business is dependent on third-party licenses.
Accordingly, our product supply is subject to the ability and willingness of third-party suppliers to deliver merchandise we order
on time and in the quantities and of the quality we need. In addition, a material portion of our retail footwear sales consists of
products marketed under brands, belonging to unaffiliated vendors, which have fashion significance to our customers. If those
vendors were to decide not to sell to us or to limit the availability of their products to us, or if they become unable because of
economic conditions, COVID-19, work stoppages, strikes, political unrest, raw materials supply disruptions, or any other reason
to supply us with products, we could be unable to offer our customers the products they wish to buy and could lose their business.
Additionally, manufacturers are required to remain in compliance with certain wage, labor and environment-related laws and
regulations. Delayed compliance or failure to comply with such laws and regulations by our vendors could adversely affect our
ability to obtain products generally or at favorable costs, affecting our overall ability to maintain and manage inventory levels.
The manufacture of our products and our distributing operations are subject to the risks of doing business abroad,
including in China, which could affect our ability to obtain products from foreign suppliers or control the costs of our
products.
While we have taken action to diversify our sourcing base outside of China, since a portion of our products are manufactured in
China, the possibility of adverse changes in trade or political relations with China, political instability, increases in labor costs,
the occurrence of prolonged adverse weather conditions or a natural disaster such as an earthquake or typhoon, or the continuation
of the COVID-19 pandemic or the outbreak of another pandemic disease in China could severely interfere with the manufacturing
and/or shipment of our products and would have a material adverse effect on our operations. Our business operations may be
adversely affected by the current and future political environment in China. Our ability to source products from China may be
adversely affected by changes in Chinese laws and regulations (or the interpretation thereof), including those relating to taxation,
import and export tariffs, raw materials, environmental regulations, land use rights, property and other matters. Under its current
leadership, China’s Communist Party has been pursuing economic reform policies; however, there is no assurance that China’s
government will continue to pursue these policies, or that it will not significantly alter these policies without notice. Policy
changes could adversely affect our interests through, among other factors: changes in laws and regulations, confiscatory taxation,
restrictions on currency conversion, imports or sources of supplies, or the expropriation or nationalization of private enterprises.
In addition, electrical shortages, labor shortages or work stoppages may extend the production time necessary to produce our
orders. There may be circumstances in the future where we may have to incur premium freight charges to expedite the delivery
of product to our customers which could negatively affect our gross profit if we are unable to pass on those charges to our
customers.
Legal, Regulatory, Global and Other External Risks
Establishing and protecting our intellectual property is critical to our business.
Our ability to remain competitive is dependent upon our continued ability to secure and protect trademarks, patents and other
intellectual property rights in the U.S. and internationally for all of our businesses. We rely on a combination of trade secret,
patent, trademark, copyright and other laws, license agreements and other contractual provisions and technical measures to protect
our intellectual property rights; however, some countries do not protect intellectual property rights to the same extent as the U.S.
Our business could be significantly harmed if we are not able to protect our intellectual property, or if a court found us to be
infringing on others’ intellectual property rights. Any future intellectual property lawsuits or threatened lawsuits in which we are
involved, either as a plaintiff or as a defendant, could cost us a significant amount of time and money and distract management’s
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attention from operating our business. If we do not prevail on any intellectual property claims, then we may have to change our
manufacturing processes, products or trade names, any of which could reduce our profitability.
Our business and results of operations are subject to a broad range of uncertainties arising out of world and domestic
events.
Our business and results of operations may experience a material adverse impact due to uncertainties arising out of world and
domestic events, which may impact not only consumer demand, but also our ability to obtain the products we sell, most of which
are produced outside the countries in which we operate. These uncertainties may include a global economic slowdown, changes
in consumer spending or travel, increase in fuel prices, and the economic consequences of pandemics such as the ongoing
COVID-19 pandemic, natural disasters, military action or terrorist activities and increased regulatory and compliance burdens
related to governmental actions in response to a variety of factors, including but not limited to national security and anti-terrorism
concerns and concerns about climate change.
The scope of our non-U.S. operations exposes our performance to risks including foreign, political, legal and economic
conditions and exchange rate fluctuations.
Our performance depends in part on general economic conditions affecting all countries in which we do business, including the
impact of Brexit. Although the U.K. and the European Union (“E.U.”) entered into the E.U.-U.K. Trade and Cooperation
Agreement on December 30, 2020, uncertainty remains about the impact on our business in the U.K. and the ROI, including
impact on tariffs, shipping costs, consumer demand and currency fluctuations.
In addition, across all of our markets, we could be adversely impacted by changes in trade policies, labor, tax or other laws and
regulations, intellectual property rights and supply chain logistics. We are also dependent on foreign manufacturers for the
products we sell, and our inventory is subject to cost and availability of foreign materials and labor. In addition to the other risks
disclosed herein, demand for our product offering in our non-U.S. operations is also subject to local market conditions.
As we expand our international operations, we also increase our exposure to exchange rate fluctuations. Sales from stores outside
the U.S. are denominated in the currency of the country in which these operations or stores are located and changes in foreign
exchange rates affect the translation of the sales and earnings of these businesses into U.S. dollars for financial reporting purposes.
Additionally, inventory purchase agreements may also be denominated in the currency of the country where the vendor resides.
If the U.S. dollar strengthens relative to foreign currencies, our revenues and profits are reduced when converted into U.S. dollars
and our margins may be negatively impacted by the increase in product costs. Although we typically have sought to mitigate the
negative impacts of foreign currency exchange rate fluctuations through price increases and further actions to reduce costs, we
may not be able to fully offset the impact, if at all.
The imposition of tariffs on our products could adversely affect our business.
Tax and trade policies, tariffs and regulations affecting trade between the United States and other countries could have a material
adverse effect on our business, results of operations and liquidity. We source a significant portion of our merchandise from
manufacturers located outside the U.S., including from China. Existing and potential future tariffs on certain imported products
could result in an increase in prices for those products. In addition, tariffs could also increase the costs of our U.S. suppliers,
causing those suppliers to also increase the costs of their products. If we are unable to pass along increased costs to our customers,
our gross margins could be adversely affected. Alternatively, tariffs may cause us to shift production to other countries, resulting
in significant costs and disruption to our business. In addition, further imposition of tariffs by the United States or other countries
could have a significant adverse effect on world trade and the world economy.
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Our ability to source our merchandise profitably or at all could be hurt if new trade restrictions are imposed, existing
trade restrictions become more burdensome or disruptions occur at our suppliers or at the ports.
Trade restrictions, including increased tariffs, safeguards or quotas, on footwear, apparel and accessories could increase the cost
or reduce the supply of merchandise available to us. We source our footwear and accessory products from manufacturers located
in Brazil, Canada, China, Hong Kong, India, Italy, Mexico, Pakistan, Portugal, Peru and Vietnam, and our retail operations sell
primarily branded products from third-parties who source primarily overseas. The investments we are making to develop our
sourcing capabilities may not be successful and may, in turn, have an adverse impact on our financial position and results of
operations.
There are quotas and trade restrictions on certain categories of goods and apparel from China and countries that are not subject
to the World Trade Organization Agreement, which could have a significant impact on our sourcing patterns in the future. In
addition, political uncertainty in the United States may result in significant changes to U.S. trade policies, treaties and tariffs,
including trade policies and tariffs regarding China. These developments, or the perception that any of them could occur, may
have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly
reduce global trade. Any of these factors could depress economic activity, restrict our sourcing from suppliers and have a material
adverse effect on our business, financial condition and results of operations. We cannot predict whether any of the countries in
which our merchandise is currently or may be manufactured in the future will be subject to additional trade restrictions imposed
by the U.S. and foreign governments, nor can we predict the likelihood, type or effect of any such restrictions. Trade restrictions,
including increased tariffs or quotas, embargoes, safeguards and customs restrictions against items we source from foreign
manufacturers could increase the cost, delay shipping or reduce the supply of products available to us or may require us to modify
our current business practices, any of which could hurt our profitability.
We rely on our suppliers to manufacture and ship the products they produce for us in a timely manner. We also rely on the free
flow of goods through open and operational ports worldwide. Labor disputes and other disruptions at various ports or at our
suppliers could increase costs for us and delay our receipt of merchandise, particularly if these disputes result in work slowdowns,
lockouts, strikes or other disruptions.
We are subject to regulatory proceedings and litigation and to regulatory changes that could have an adverse effect on
our financial condition and results of operations.
We are party to certain lawsuits, governmental investigations, and regulatory proceedings, including the proceedings arising out
of alleged environmental contamination relating to historical operations of the Company and various suits involving current
operations as disclosed in Item 3, "Legal Proceedings" and Note 16 to the Consolidated Financial Statements. If these or similar
matters are resolved against us, our results of operations, our cash flows, or our financial condition could be adversely affected.
The costs of defending such lawsuits and responding to such investigations and regulatory proceedings may be substantial and
their potential to distract management from day-to-day business is significant. Moreover, with retail operations in the United
States, Puerto Rico, Canada, the United Kingdom, and the ROI, we are subject to federal, state, provincial, territorial, local and
foreign regulations, which impose costs and risks on our business. Numerous states and municipalities as well as the federal
government of the U.S. are proposing or have implemented changes to minimum wage, overtime, employee leave, employee
benefit requirements and other requirements that will increase costs. Changes in regulations could make compliance more
difficult and costly, and failure to comply with these requirements, including even a seemingly minor infraction, could result in
liability for damages or penalties.
Financial Risks
Our indebtedness is subject to floating interest rates.
Borrowings under our credit facility bear interest at varying rates, some of which are based on LIBOR, and expose us to interest
rate risk. If interest rates were to increase, our debt service obligations on the variable rate indebtedness referred to above would
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increase even if the principal amount borrowed remained the same, and our net income and cash flows will correspondingly
decrease.
In addition, on November 30, 2020, the International Exchange (ICE) Benchmark Association, which administrates LIBOR,
announced that it intends to begin a phase out of LIBOR at the end of 2021, by ceasing (i) entering into new contracts that use
LIBOR as a reference rate by December 31, 2021 and (ii) publication of two LIBOR rates (one-week and two-month) after
December 31, 2021, while the remaining LIBOR rates (overnight, one-month, three-month, six-month and 12-month) will be
retired on June 30, 2023. It is unclear if LIBOR will cease to exist at that time or if new methods of calculating LIBOR will be
established such that it continues to exist after 2023. The expected phase out of LIBOR could cause market volatility or disruption
and may adversely affect our access to the capital markets and cost of funding. Furthermore, while our credit facility contains
provisions providing for alternative rate calculations in the event LIBOR is unavailable, these provisions may be more expensive.
Changes in our effective income tax rate could adversely affect our net earnings.
A number of factors influence our effective income tax rate, including changes in tax law, tax treaties, interpretation of existing
laws, including the Tax Cuts and Jobs Act of 2017 (the "Act"), and our ability to sustain our reporting positions on examination.
Changes in any of those factors could change our effective tax rate, which could adversely affect our net earnings and liquidity.
In addition, our operations outside of the United States may cause greater volatility in our effective tax rate.
We continue to expect the United States Treasury and the Internal Revenue Service to issue regulations and other guidance that
could have a material impact on our effective tax rate in future periods.
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ITEM 1B, UNRESOLVED STAFF COMMENTS
None.
ITEM 2, PROPERTIES
At January 30, 2021, we operated 1,460 retail footwear and accessory stores throughout the United States, Puerto Rico, Canada,
the United Kingdom and the ROI. New shopping center store leases in the United States, Puerto Rico and Canada typically are
for a term of approximately 10 years. New store leases in the United Kingdom and the ROI typically have terms of between 10
and 15 years. We have leases with fixed base rental payments, rental payments based on a percentage of retail sales over
contractual amounts and others with predetermined fixed escalations of the minimum rental payments based on a defined
consumer price index or percentage.
The general location, use and approximate size of our principal properties are set forth below:
Location
Lebanon, TN
Nashville, TN
Bathgate, Scotland
Chapel Hill, TN
Fayetteville, TN
Deans Industrial Estate, Livingston, Scotland
Nashville, TN
Approximate
Area
Square
Feet
Owned/
Leased
Segment
Use
Distribution warehouse
and administrative
offices
Journeys
563,000
Group
Various
Corporate headquarters 306,455
Schuh Group Distribution warehouse 244,644
(1)
Licensed
Brands
Johnston &
Murphy
Group
Distribution warehouse 182,000
Distribution warehouse 178,500
Distribution warehouse
and administrative
offices
106,813
Distribution warehouse
63,000
Schuh Group
Journeys
Group
Owned
Leased
Owned
Owned
Owned
Owned
Owned
(1) We occupy almost 100% of our corporate headquarters building. The lease on the Nashville office expires in April 2022.
On February 10, 2020, we announced plans for our new corporate headquarters in Nashville, Tennessee. We entered into a lease
agreement, which was subsequently amended, for approximately 182,000 square feet of office space which will replace our
current corporate headquarters office lease. The term of the lease is 15 years, with two options to extend for an additional period
of five years each. We believe that all leases of properties that are material to our operations may be renewed, or that alternative
properties are available, on terms not materially less favorable to us than existing leases.
ITEM 3, LEGAL PROCEEDINGS
From time to time, we are subject to legal and/or administrative proceedings incidental to our business. It is the opinion of
management that the outcome of pending legal and/or administrative proceedings will not have a material effect on our financial
position and results of operations.
Further information with respect to this item may be found in Note 16 to the Consolidated Financial Statements included in Item
8, "Financial Statements and Supplementary Data," which is incorporated herein by reference.
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ITEM 4, MINE SAFETY DISCLOSURES
Not applicable.
ITEM 4A, INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The officers of the Company are generally elected at the first meeting of the Board of Directors following the annual meeting of
shareholders and hold office until their successors have been chosen and qualified or until their earlier death, resignation or
removal. The name, age and office of each of the Company’s executive officers and certain information relating to the business
experience of each are set forth below:
Mimi Eckel Vaughn, 54, Board Chair, President and Chief Executive Officer. Ms. Vaughn joined the Company in September
2003 as vice president of strategy and business development. She was named senior vice president, strategy and business
development in October 2006, senior vice president of strategy and shared services in April 2009 and senior vice president -
finance and chief financial officer in February 2015. In May 2019, Ms. Vaughn was named senior vice president and chief
operating officer and continued to serve as senior vice president - finance and chief financial officer until her replacement was
appointed in June 2019. In October 2019, Ms. Vaughn was appointed to become president and a member of the board of directors.
Ms. Vaughn was appointed chief executive officer of the Company on February 2, 2020. In July 2020, Ms. Vaughn was appointed
Board chair of the Company. Prior to joining the Company, Ms. Vaughn was executive vice president of business development
and marketing, and acting chief financial officer from 2000 to 2001, for Link2Gov Corporation in Nashville. From 1993 to 1999,
she was a consultant at McKinsey and Company in Atlanta.
Thomas Allen George, 65, Senior Vice President – Finance and Interim Chief Financial Officer. Mr. George joined the Company
in December 2020 as interim senior vice president of finance and chief financial officer. Mr. George has 40 years of experience,
including 30 years as chief financial officer of public and private companies. Prior to joining Genesco, he was chief financial
officer of Deckers Outdoor Corporation d/b/a Deckers Brands, a global footwear company, for nine years and prior to that was
chief financial officer of Oakley, a global eyewear brand. He has served in this same capacity at companies in the technology
and medical device industries.
Daniel E. Ewoldsen, 51, Senior Vice President. Mr. Ewoldsen is a 17-year Johnston & Murphy veteran. He joined Johnston &
Murphy in 2003 as vice president store operations and was later promoted to vice president store and consumer sales in 2006.
He was named executive vice president, Johnston & Murphy Retail and E-Commerce in 2013, president of Johnston & Murphy
Group in February 2018 and named senior vice president of Genesco in July 2019. Prior to joining Genesco, Mr. Ewoldsen was
with Wilsons Leather from 1996 to 2002 serving in roles with increasing responsibilities, including vice president of stores for
the El Portal division.
Mario Gallione, 60, Senior Vice President. Mr. Gallione is a 43-year veteran of Genesco. He began his career as a Jarman sales
associate in 1977. He was promoted to manager and served in a variety of sales management positions until 1987 when he was
promoted as a merchandiser trainee and rose through the ranks to divisional merchandise manager for Journeys in 1994 and vice
president in 1998. In October 2006, he was named senior vice president, general merchandise manager of Journeys Group. In
2010, he was named chief merchandising officer of Journeys Group. In September 2017, Mr. Gallione was named president of
Journeys and in July 2019, he was named senior vice president of Genesco.
Scott E. Becker, 53, Senior Vice President - General Counsel and Corporate Secretary. In October 2019, Mr. Becker joined the
Company as senior vice president, general counsel, and corporate secretary. Prior to joining the Company, Mr. Becker served in
a variety of roles with increasing responsibility for Nissan Group of North America and Latin America since 2006. Since 2009,
he was a senior vice president with responsibilities for Nissan’s legal, government affairs, finance, strategy and administration.
From 2006 to 2009, he served as Nissan’s general counsel, corporate secretary and vice president, legal and government affairs.
Prior to joining Nissan, Mr. Becker served in various legal roles at Sears Holdings Corporation. Mr. Becker began his legal career
with several Chicago area law firms.
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Parag D. Desai, 46, Senior Vice President of Strategy and Shared Services. Mr. Desai joined the Company in 2014 as senior vice
president of strategy and shared services. Prior to joining the Company, Mr. Desai spent 14 years with McKinsey and Company,
including seven years as a partner. Previously, Mr. Desai also held business development and technology positions at Outpace
Systems and Booz Allen & Hamilton.
Brently G. Baxter, 55, Vice President and Chief Accounting Officer. Mr. Baxter joined the Company in September 2019 as vice
president and chief accounting officer. Mr. Baxter most recently served as group vice president, controller and principal
accounting officer for Sally Beauty Holdings, Inc., a position he held since 2017. From 2014 and 2016, he served as senior vice
president, controller and chief accounting officer for Stein Mart, Inc. From 2006 to 2014, he served as vice president, accounting,
treasury and corporate controller for PetSmart, Inc. From 2003 to 2006, Mr. Baxter served as vice president and controller for
Cracker Barrel Old Country Store, Inc.
Matthew N. Johnson, 56, Vice President and Treasurer. Mr. Johnson joined the Company in 1993 as manager, corporate finance
and was elected assistant treasurer in December 1993. He was elected treasurer in June 1996. He was named vice president
finance in October 2006 and renamed treasurer in April 2011 after a period of service as chief financial officer of one of the
Company's divisions. Prior to joining the Company, Mr. Johnson was a vice president in the corporate and institutional banking
division of The First National Bank of Chicago.
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ITEM 5, MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
PART II
Market Information
Our stock is traded on the New York Stock Exchange under the symbol "GCO".
There were approximately 1,350 common shareholders of record on March 12, 2021.
We have not paid cash dividends to our holders of our Common Stock since 1973. Our ability to pay cash dividends to our
holders of common stock is subject to various restrictions. See Note 11 to the Consolidated Financial Statements included in
Item 8, "Financial Statements and Supplementary Data" for information regarding restrictions on dividends and redemption of
capital stock.
Recent Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
In September 2019, the Board authorized a $100 million share repurchase program, pursuant to which we may repurchase shares
of our common stock, par value $1.00 per share, with an aggregate gross purchase price of up to $100 million. We have $89.7
million remaining as of January 30, 2021 under such share repurchase program. During the three and twelve months ended
January 30, 2021, we did not make any repurchases under this program.
Equity Compensation Plan Information
Refer to Part III, Item 12, "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters" included elsewhere in this report.
ITEM 6, RESERVED
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ITEM 7, MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction
with our Consolidated Financial Statements and related Notes and other financial information appearing elsewhere in this Annual
Report on Form 10-K, and with Part II, Item 7 (“Management’s Discussion and Analysis of Financial Condition and Results of
Operations”) of our Annual Report on Form 10-K for the fiscal year ended February 1, 2020, filed with the SEC on April 1, 2020,
which provides a discussion of our financial condition and results of operations for Fiscal 2020 compared to our Fiscal 2019.
Summary of Results of Operations
Our net sales decreased 18.7% during Fiscal 2021 compared to Fiscal 2020. The sales decrease was driven by the impact from
the COVID-19 pandemic, including as a result of store closures during the year, lower store comparable sales and sales pressure
at Johnston & Murphy, partially offset by digital comparable growth of 74%. Stores were open about 76% of possible days. We
have not disclosed comparable sales for Fiscal 2021 as we believe that overall sales are a more meaningful metric during this
period due to the impact of the COVID-19 pandemic.
Journeys Group sales decreased 16%, Schuh Group sales decreased 18%, Johnston & Murphy Group sales decreased 49%, while
Licensed Brands sales increased 61% due to the acquisition of Togast, during Fiscal 2021 compared to Fiscal 2020. Gross margin
decreased as a percentage of net sales from 48.4% in Fiscal 2020 to 45.0% in Fiscal 2021, reflecting gross margin decreases as a
percentage of net sales in all of our business units, except Journeys Group. The gross margin decrease is primarily due to higher
shipping and warehouse expense in all of our retail divisions, increased inventory reserves at Johnston & Murphy Group,
increased markdowns at Johnston & Murphy retail and closeouts at Johnston & Murphy wholesale and increased promotional
activity at Schuh Group, partially offset by decreased markdowns at Journeys Group. The higher shipping and warehouse expense
is a result of the increased penetration of e-commerce sales. In addition, changes in sales mix among our business units had an
unfavorable impact on gross margin.
Selling and administrative expenses increased as a percentage of net sales from 44.0% in Fiscal 2020 to 45.6% in Fiscal 2021,
reflecting increased expenses as a percentage of net sales in Journeys Group and Johnston & Murphy Group, partially offset by
decreased expenses as a percentage of net sales in Schuh Group, Licensed Brands and Corporate. However, on a dollar basis,
expenses decreased 15.8% in Fiscal 2021 compared to Fiscal 2020 due primarily to reduced occupancy expense, driven by rent
abatements with landlords and government relief programs, as well as reduced selling salaries and bonus and travel expenses,
partially offset by increased marketing expenses.
Operating margin decreased as a percentage of net sales from 3.8% in Fiscal 2020 to (6.0)% in Fiscal 2021, reflecting operating
losses in all of our business units except Journeys Group due to disruptions related to the COVID-19 pandemic including
recognition of non-cash impairment charges of $79.3 million for goodwill, $13.8 million for retail store assets and $5.3 million
for trademarks.
Significant Developments
COVID-19
In March 2020, the World Health Organization categorized the outbreak of COVID-19 as a pandemic. As a result, and in
consideration of the health and well-being of our employees, customers and communities, and in support of efforts to contain the
spread of the virus, we have taken several precautionary measures throughout the year and adjusted our operational needs,
including:
•On March 18, 2020, we temporarily closed our North American retail stores.
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•On March 19, 2020, we initially borrowed $150.0 million under our Credit Facility as a precautionary measure to ensure funds
were available to meet our obligations for a substantial period of time in response to the COVID-19 pandemic that caused public
health officials to recommend precautions that would mitigate the spread of the virus, including “stay-at-home” orders and similar
mandates and warning the public against congregating in heavily populated areas such as malls and shopping centers. We paid
down the $150.0 million on September 10, 2020.
•On March 19, 2020, Schuh entered into an Amendment and Restatement Agreement (the “U.K. A&R Agreement”) with Lloyds
Bank which amended and restated the Amendment and Restatement Agreement dated April 26, 2017. The U.K. A&R Agreement
included only a Facility C revolving credit agreement of £19.0 million, bore interest at LIBOR plus 2.2% per annum and expired
in September 2020. In March 2020, we borrowed £19.0 million as a precautionary measure in response to the COVID-19
pandemic. The U.K. A&R Agreement was replaced with the Facility Letter in October 2020 and the outstanding borrowings in
the amount of £19.0 million were repaid.
•On March 23, 2020, we temporarily closed our stores in the United Kingdom and the ROI.
•On March 26, 2020, we temporarily closed our U.K. e-commerce business. Effective April 3, 2020, our U.K.-based Schuh
business announced that it had reopened its e-commerce operations in compliance with government health and safety practices.
•On March 27, 2020, we announced that we were adjusting our operational needs, including a significant reduction of expense,
capital and planned inventory receipts. As part of these measures, we made the decision to temporarily reduce compensation for
the executive team and select employees and reduced the cash compensation for our Board of Directors. In addition, we
furloughed all of our full-time store employees in North America and our store and distribution center employees in the United
Kingdom. We also furloughed employees and reduced headcount in our corporate offices, call centers and distribution centers.
Across all these actions, this represented a reduction of our workforce by 90%.
•During a portion of the first and second quarters of Fiscal 2021, we extended payment terms with suppliers, managed inventory
by reducing future receipts and reduced planned capital expenditures by over 50%. For new receipts as of August 1, 2020, we
restored contractual payment terms with suppliers.
•On June 5, 2020, we entered into a Second Amendment to our Credit Facility to, among other things, increase the Total
Commitments (as defined in the Credit Facility) for the revolving loans from $275.0 million to $332.5 million, establish a First-
in, Last-out (“FILO”) tranche of indebtedness of $17.5 million, for $350.0 million of total capacity.
•On June 25, 2020, our Board of Directors considered the Company’s financial results to date and that more than 90% of the
Company’s stores were expected to be reopened by June 30, 2020, and decided to restore a portion of the compensation of the
executive team and select employees whose compensation had been reduced on March 27, 2020. In addition, the cash
compensation of our Board of Directors, which had also been reduced on March 27, 2020, was partially restored.
•In October 2020, our Board of Directors restored the remaining portion of the compensation of the executive team and select
employees whose compensation had been reduced on March 27, 2020 as well as the compensation of the Board of Directors.
•On October 9, 2020, Schuh entered into the Facility Letter with Lloyds under the U.K.'s Coronavirus Large Business Interruption
Loan Scheme pursuant to which Lloyds made available a RCF of £19.0 million for the purpose of refinancing Schuh's existing
indebtedness with Lloyds. The RCF expires in October 2023 and bears interest at 2.5% over the Bank of England Base Rate. As
of January 30, 2021, we have not borrowed under the Facility Letter.
•During the fourth quarter of Fiscal 2021, another lockdown in the U.K. and the ROI disrupted the Schuh Group business with
stores closed for 36% of possible days in the fourth quarter. As of January 30, 2021, all but two Schuh stores remained closed.
These stores are expected to remain closed until shortly after Easter, April 4, 2021.
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•In December 2020, the Company returned the compensation to select employees whose compensation had been reduced on
March 27, 2020.
As of March 11, 2021, we were operating in 90% of our locations, including approximately 1,145 Journeys, 160 Johnston &
Murphy and two Schuh locations. All store locations are operating under enhanced measures to ensure the health and safety of
employees and customers, including requiring employees to wear masks, requiring customers in our stores to wear masks,
providing hand sanitizer in multiple locations throughout each store for customer and employee use, enhanced cleaning and
sanitation protocols, reconfigured sales floors to promote physical distancing and modified employee and customer interactions
to limit contact.
As a result of the economic and business impact of the COVID-19 pandemic, we revised certain accounting estimates and
judgments as discussed in Item 8, Note 3, “COVID-19”, to our Consolidated Financial Statements included in this Annual Report
on Form 10-K. Given the ongoing and evolving economic and business impact of the COVID-19 pandemic, we may be required
to further revise certain accounting estimates and judgments such as, but not limited to, those related to the valuation of inventory,
goodwill, long-lived assets and deferred tax assets, which could have a material adverse effect on our financial position and
results of operations.
Since the first quarter of Fiscal 2021, we have withheld certain contractual rent payments generally correlating with time periods
when our stores were closed and/or correlating with sales declines from Fiscal 2020. We continue to recognize rent expense in
accordance with the contractual terms. We have been working with landlords in various markets seeking commercially
reasonable lease concessions given the current environment, and while some agreements have been reached, a number of
negotiations remain ongoing. During Fiscal 2021, we have recognized approximately $34 million in rent savings which included
approximately $28 million of abatements pursuant to rent abatement agreements we have entered into with certain landlords.
On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”),
which among other things, provides employer payroll tax credits for wages paid to employees who are unable to work during the
COVID-19 pandemic and options to defer payroll tax payments. Based on our evaluation of the CARES Act, we qualify for
certain employer payroll tax credits as well as the deferral of payroll and other tax payments in the future, which will be treated
as government subsidies to offset related operating expenses. During Fiscal 2021, qualified payroll tax credits reduced our selling
and administrative expenses by approximately $13.8 million on our Consolidated Statements of Operations. We also deferred
$9.5 million of qualified payroll taxes in the U.S. that will be repaid in equal installments by December 31, 2021 and December
31, 2022. Savings from the government program in the U.K. has also provided property tax relief of approximately $13.3 million
for Fiscal 2021. Additionally, we recorded a tax receivable of $107.2 million in our U.S. federal jurisdiction as a result of a
carryback of our Fiscal 2021 federal tax losses to prior tax periods under the CARES Act. Due to a higher tax rate in prior tax
periods than the current U.S. federal statutory tax rate of 21%, the carryback claim creates a permanent tax benefit of $46.4
million.
We recorded our income tax expense, deferred tax assets and related liabilities based on our best estimates. As part of this process,
we assessed the likelihood of realizing the benefits of our deferred tax assets. During Fiscal 2021, based on available evidence,
we recorded an additional valuation allowance against previously recorded deferred tax assets in our U.K. jurisdiction of $2.6
million and our Irish jurisdiction of $0.2 million. We will continue to monitor the realizability of our deferred tax assets,
particularly in certain foreign jurisdictions where the COVID-19 pandemic has started to create significant net operating losses.
Our ability to recover these deferred tax assets depends on several factors, including our results of operations and our ability to
project future taxable income in those jurisdictions.
The Acquisition of Togast
Effective January 1, 2020, we completed the acquisition of substantially all the assets and the assumption of certain liabilities of
Togast. Togast specializes in the design, sourcing and sale of licensed footwear. We also entered into a new U.S. footwear license
agreement with Levi Strauss & Co. for the license of Levi's® footwear for men, women and children in U.S. concurrently with
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the Togast acquisition. The acquisition expands our portfolio to include footwear licenses for Bass® and FUBU, among others.
Togast operates in our Licensed Brands segment.
Asset Impairment and Other Charges
We recorded a pretax charge to earnings of $18.7 million in Fiscal 2021, including $13.8 million for retail store asset impairments
and $5.3 million for trademark impairment, partially offset by a $(0.4) million gain for the release of an earnout related to the
Togast acquisition which is included in asset impairments and other, net on the Consolidated Statements of Operations for Fiscal
2021.
Postretirement Benefit Liability
In March 2019, our board of directors authorized the termination of the defined benefit pension plan. The termination was
completed in January 2020 with a pension settlement charge of $11.5 million which is included in asset impairments and other,
net on the Consolidated Statements of Operations for Fiscal 2020.
Key Performance Indicators
In assessing the performance of our business, we consider a variety of performance and financial measures. The key performance
indicators we use to evaluate the financial condition and operating performance of our business are comparable sales, net sales,
gross margin, operating income (loss) and operating margin. These key performance indicators should not be considered superior
to, as a substitute for or as an alternative to, and should be considered in conjunction with, the U.S. GAAP financial measures
presented herein. These measures may not be comparable to similarly-titled performance indicators used by other companies.
Comparable Sales
We consider comparable sales to be an important indicator of our current performance, and investors may find it useful as such.
Comparable sales results are important to achieve leveraging of our costs, including occupancy, selling salaries, depreciation, etc.
Comparable sales also have a direct impact on our total net revenue, cash and working capital. We define "comparable sales" as
sales from stores open longer than one year, beginning with the first day a store has comparable sales (which we refer to in this
report as "same store sales"), and sales from websites operated longer than one year and direct mail catalog sales (which we refer
to in this report as "comparable direct sales"). Temporarily closed stores are excluded from the comparable sales calculation if
closed for more than seven days. Expanded stores are excluded from the comparable sales calculation until the first day an
expanded store has comparable prior year sales. Current year foreign exchange rates are applied to both current year and prior
year comparable sales to achieve a consistent basis for comparison. We have not disclosed comparable sales for Fiscal 2021
because we believe that overall sales are a more meaningful metric during this period due to the impact of COVID-19.
Results of Operations—Fiscal 2021 Compared to Fiscal 2020
Our net sales for Fiscal 2021 decreased 18.7% to $1.79 billion from $2.20 billion in Fiscal 2020. The decrease in net sales was
driven by the impact from store closures during the year due to the COVID-19 pandemic, lower store comparable sales and sales
pressure at Johnston & Murphy, partially offset by digital comparable growth of 74%. Stores were open about 76% of possible
days during Fiscal 2021.
Gross margin decreased 24.3% to $804.5 million in Fiscal 2021 from $1.06 billion in Fiscal 2020, and decreased as a percentage
of net sales from 48.4% in Fiscal 2020 to 45.0% in Fiscal 2021, reflecting gross margin decreases as a percentage of net sales in
all of our business units, except Journeys Group. The gross margin decrease is primarily due to higher shipping and warehouse
expense in all of our retail divisions, increased inventory reserves at Johnston & Murphy Group, increased markdowns at Johnston
& Murphy retail and closeouts at Johnston & Murphy wholesale and increased promotional activity at Schuh Group, partially
offset by decreased markdowns at Journeys Group. The higher shipping and warehouse expense is a result of the increased
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penetration of e-commerce sales. In addition, changes in sales mix among our business units had an unfavorable impact on gross
margin.
Selling and administrative expenses increased as a percentage of net sales from 44.0% in Fiscal 2020 to 45.6% in Fiscal 2021,
but decreased 15.8% in total dollars due primarily to reduced occupancy expense, driven by rent abatements with landlords and
government relief programs, as well as reduced selling salaries and bonus and travel expenses, partially offset by increased
marketing expenses. Explanations of the changes in results of operations are provided by business segment in discussions
following these introductory paragraphs.
Earnings (loss) from continuing operations before income taxes (“pretax earnings (loss)”) for Fiscal 2021 was a pretax loss of
$(111.7) million, compared to pretax earnings of $82.4 million for Fiscal 2020. The pretax loss for Fiscal 2021 included a
goodwill impairment charge of $79.3 million and an asset impairment and other charge of $18.7 million for retail store asset
impairments and a trademark impairment, partially offset by a gain for the release of an earnout related to the Togast acquisition.
Pretax earnings for Fiscal 2020 included an asset impairment and other charge of $13.4 million for pension settlement expense
and retail store asset impairments, partially offset by a gain on the sale of the Lids Sports Group headquarters building, a gain on
lease terminations and a gain related to Hurricane Maria.
The net loss for Fiscal 2021 was $(56.4) million, or $(3.97) diluted loss per share compared to net earnings of $61.4 million, or
$3.92 diluted earnings per share for Fiscal 2020. The effective income tax rate was 49.8% for Fiscal 2021 compared to 25.1%
for Fiscal 2020. The effective tax rate for Fiscal 2021 was higher compared to Fiscal 2020 due to initiatives under the CARES
Act and taxes accrued for the U.S. jurisdiction, partially offset by the non-deductibility of the goodwill impairment charge and
our performance in foreign jurisdictions for which no income tax benefit or expense is recorded for Fiscal 2021. See Item 8,
Note 12, "Income Taxes", to our Consolidated Financial Statements included in this Annual Report on Form 10-K for additional
information.
Journeys Group
Net sales
Operating income
Operating margin
$
$
Fiscal Year Ended
2021
2020
%
Change
(dollars in thousands)
1,227,954
76,896
$
$
6.3 %
1,460,253
114,945
7.9 %
(15.9 )%
(33.1 )%
Net sales from Journeys Group decreased 15.9% to $1.23 billion for Fiscal 2021 compared to $1.46 billion for Fiscal 2020,
primarily due to store closures in response to the COVID-19 pandemic and lower store comparable sales, reflecting decreased
store traffic, partially offset by increased digital comparable growth. The store count for Journeys Group was 1,159 stores at the
end of Fiscal 2021, including 233 Journeys Kidz stores, 47 Journeys stores in Canada and 38 Little Burgundy stores in Canada,
compared to 1,171 stores at the end of Fiscal 2020, including 233 Journeys Kidz stores, 46 Journeys stores in Canada and 39
Little Burgundy stores in Canada.
Journeys Group operating income for Fiscal 2021 decreased 33.1% to $76.9 million, compared to $114.9 million for Fiscal 2020.
The decrease in operating income was primarily due to decreased net sales and increased expenses as a percentage of net sales,
reflecting increased occupancy, marketing, depreciation, freight and compensation expenses, partially offset by decreased bonus
expenses and selling salaries. Gross margin for Fiscal 2021 increased slightly as a percentage of net sales, primarily reflecting
decreased markdowns, partially offset by higher shipping and warehouse expense from higher e-commerce sales.
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Schuh Group
Net sales
Operating income (loss)
Operating margin
$
$
Fiscal Year Ended
2021
2020
%
Change
(dollars in thousands)
305,941
(11,602 )
$
$
-3.8 %
373,930
4,659
1.2 %
(18.2 )%
NM
Net sales from the Schuh Group decreased 18.2% to $305.9 million for Fiscal 2021, compared to $373.9 million for Fiscal 2020,
primarily due to store closures in response to the COVID-19 pandemic and lower store comparable sales, partially offset by
increased digital comparable growth and the favorable impact of $4.9 million due to changes in foreign exchange rates. Schuh
Group operated 123 stores at the end of Fiscal 2021 compared to 129 stores at the end of Fiscal 2020.
Schuh Group had an operating loss of $(11.6) million in Fiscal 2021 compared to operating income of $4.7 million for Fiscal
2020. The decrease in earnings this year reflects decreased net sales and decreased gross margin as a percentage of net sales,
reflecting higher shipping and warehouse expense from higher e-commerce sales and increased promotional activity. Schuh
Group’s selling and administrative expenses decreased as a percentage of net sales this year, reflecting decreased occupancy
expense, as a result of savings from the government program in the U.K. providing property tax relief and rent abatement
agreements with our landlords, and decreased selling salaries, partially offset by increased marketing, compensation and credit
card expenses and professional fees. In addition, Schuh Group's operating loss included a favorable impact of $1.1 million for
Fiscal 2021 due to changes in foreign exchange rates.
Johnston & Murphy Group
Net sales
Operating income (loss)
Operating margin
$
$
Fiscal Year Ended
2021
2020
%
Change
(dollars in thousands)
152,941
(47,624 )
$
$
-31.1 %
300,850
17,702
5.9 %
(49.2 )%
NM
Johnston & Murphy Group net sales decreased 49.2% to $152.9 million for Fiscal 2021 from $300.9 million for Fiscal 2020
primarily due to lower store comparable sales, store closures in response to the COVID-19 pandemic and lower wholesale sales,
partially offset by increased digital comparable growth. Retail operations accounted for 77.6% of Johnston & Murphy Group's
sales in Fiscal 2021, up from 75.8% in Fiscal 2020. The store count for Johnston & Murphy retail operations at the end of Fiscal
2021 included 178 Johnston & Murphy shops and factory stores, including eight stores in Canada, compared to 180 Johnston &
Murphy shops and factory stores, including eight stores in Canada, at the end of Fiscal 2020.
The operating loss for Johnston & Murphy Group for Fiscal 2021 was $(47.6) million compared to operating income of $17.7
million in Fiscal 2020. The decrease was primarily due to (i) decreased net sales (ii) decreased gross margin as a percentage of
net sales, reflecting incremental inventory reserves, higher markdowns at retail, closeouts at wholesale and increased shipping
and warehouse expense from higher e-commerce sales and (iii) increased selling and administrative expenses as a percentage of
net sales, reflecting the inability to leverage expenses on lower sales due to the COVID-19 pandemic.
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Licensed Brands
Net sales
Operating loss
Operating margin
Fiscal Year Ended
2021
2020
%
Change
$
$
(dollars in thousands)
99,694
$
(5,430 ) $
-5.4 %
61,859
(698 )
-1.1 %
61.2 %
NM
Licensed Brands’ net sales increased 61.2% to $99.7 million for Fiscal 2021 from $61.9 million for Fiscal 2020, reflecting
increased sales related to the Togast acquisition, partially offset by decreased sales of Dockers footwear.
Licensed Brands’ operating loss increased from $(0.7) million for Fiscal 2020 to $(5.4) million for Fiscal 2021, primarily due to
decreased gross margin as a percentage of net sales as the recently acquired Togast business carried lower margins than the
historic business due to the impact of pre-acquisition royalty and commission cost on legacy Togast product sales and the COVID-
19 pandemic impact. As the legacy Togast products comprise less of the overall sales mix of Licensed Brands, we expect the
gross margin to improve. Licensed Brands’ selling and administrative expenses decreased as a percentage of net sales, reflecting
multiple expense category fluctuations as a result of both acquiring the Togast business, which carries lower expenses as a
percentage of net sales than the historic business, and the impact of the COVID-19 pandemic, including higher bad debt expense
for Fiscal 2021. In addition, we benefitted from actions we took to restructure the Togast business and integrate post acquisition
such as the elimination of a potential $34 million earnout in future years.
Corporate, Interest Expenses and Other Charges
Corporate and other expense for Fiscal 2021 was $119.5 million compared to $53.3 million for Fiscal 2020. Corporate expense
in Fiscal 2021 included non-cash impairment charges of $79.3 million related to goodwill, $13.8 million related to retail store
assets and $5.3 million for trademarks, partially offset by a $(0.4) million gain for the release of an earnout related to the Togast
acquisition. Fiscal 2020 included a $13.4 million charge in asset impairment and other charges, primarily for pension settlement
expense and retail store asset impairments, partially offset by a gain on the sale of the Lids Sports Group headquarters building,
a gain on lease terminations and a gain related to Hurricane Maria. Corporate and other expense, excluding asset impairment
and other charges, decreased 46% reflecting decreased bonus and compensation expenses and decreased professional fees.
Net interest expense increased to $5.1 million in Fiscal 2021 from $1.3 million in Fiscal 2020 primarily due to increased average
borrowings and lower interest rates on short-term investments.
Liquidity and Capital Resources
The impacts of the COVID-19 pandemic have adversely affected our results of operations. In response to the business disruption
caused by the COVID-19 pandemic, we have taken actions described above in the “COVID-19 Update” section of Management’s
Discussion and Analysis of Financial Condition and Results of Operations.
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Working Capital
Our business is seasonal, with our investment in inventory and accounts receivable normally reaching peaks in the spring and
fall of each year. Historically, cash flow from operations has been generated principally in the fourth quarter of each fiscal year.
Cash flow changes:
(dollars in millions)
Net cash provided by operating activities
Net cash provided by (used in) investing activities
Net cash used in financing activities
Effect of foreign exchange rate fluctuations on cash
Increase (decrease) in cash and cash equivalents
Fiscal Year Ended
January 30,
February 1,
2021
157.8 $
(24.0 )
(3.2 )
3.1
133.7 $
2020
117.2 $
53.3
(256.5 )
0.1
(85.9 ) $
$
$
Increase
(Decrease)
40.6
(77.3 )
253.3
3.0
219.6
Reasons for the major variances in cash provided by (used in) the table above are as follows:
Cash provided by operating activities was $40.6 million higher for Fiscal 2021 compared to Fiscal 2020, reflecting primarily the
following factors:
• A $63.1 million increase in cash flow from changes in inventory, net of reserves, reflecting decreased inventory in all
of our business segments for Fiscal 2021;
• A $40.0 million increase in cash flow from changes in accounts payable reflecting changes in buying patterns;
• A $28.9 million increase in cash flow from changes in other assets and liabilities and a $13.1 million increase in cash
flow from changes in other accrued liabilities, both reflecting reduced rent payments since the onset of the COVID-19
pandemic; partially offset by
• A $81.3 million decrease in cash flow from decreased net earnings, net of intangible impairment, discrete income tax
benefits and inventory reserve adjustments.
Cash provided by investing activities was $77.3 million lower for Fiscal 2021 reflecting the receipt of proceeds from the sale of
Lids Sports Group in the prior year, partially offset by the acquisition of Togast in the fourth quarter of Fiscal Year 2020.
Cash used in financing activities was $253.3 million higher in Fiscal 2021 primarily reflecting share repurchases in Fiscal Year
2020.
Sources of Liquidity and Future Capital Needs
We have three principal sources of liquidity: cash flow from operations, cash and cash equivalents on hand and our credit facilities
discussed in Item 8, Note 9, "Long-Term Debt", to our Consolidated Financial Statements included in this Annual Report on
Form 10-K.
On June 5, 2020, we entered into a Second Amendment to our Credit Facility to, among other things, increase the Total
Commitments for the revolving loans from $275.0 million to $332.5 million, establish a FILO tranche of indebtedness of $17.5
million, for $350.0 million total capacity, increase pricing on the revolving loans, modify certain covenant and reporting terms
and pledge additional collateral. As of January 30, 2021, we have borrowed $33.0 million under our Credit Facility.
On October 9, 2020, Schuh entered into a Facility Letter with Lloyds under the U.K.'s Coronavirus Large Business Interruption
Loan Scheme pursuant to which Lloyds made available a RCF of £19.0 million for the purpose of refinancing Schuh's existing
indebtedness with Lloyds. The RCF expires in October 2023. As of January 30, 2021, we have not borrowed under the Schuh
Facility Letter.
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As we manage through the impacts of the COVID-19 pandemic in Fiscal 2022, we have access to our existing cash, as well as
our available credit facilities to meet short-term liquidity needs. We believe that cash on hand, cash provided by operations and
borrowings under our amended Credit Facility and the Schuh Facility Letter will be sufficient to support our near-term liquidity.
Our year end cash benefitted from both lower inventory levels as well as rent payables that will be paid once remaining COVID-
related rent negotiations are fully completed and executed in Fiscal 2022. Additionally, in the fourth quarter of Fiscal 2021, we
implemented tax mechanisms allowed under the 5-year carryback provisions in the CARES Act which we expect will generate
significant cash inflows in Fiscal 2022. In Fiscal 2022, we will need to rebuild our inventories, especially at Journeys Group, in
response to COVID-19.
We were in compliance with all the relevant terms and conditions of the Credit Facility and Facility Letter as of January 30, 2021.
Contractual Obligations
The following table sets forth aggregate contractual obligations as of January 30, 2021.
(in thousands)
Contractual Obligations
Long-Term Debt Obligations
Operating Lease Obligations(1)
Purchase Obligations(2)
Other Long-Term Liabilities
Total Contractual Obligations
Total
32,986 $
800,962
22,753
855
857,556 $
$
$
Current
— $
204,457
22,753
172
227,382 $
Long-Term
32,986
596,505
—
683
630,174
(1) Operating lease obligations excludes $68.8 million for leases signed but not yet commenced.
(2) As a result of the Togast acquisition, we also have a commitment to Samsung C&T America, Inc. (“Samsung”) related to the ultimate sale
and valuation of related inventories owned by Samsung. If the product is sold below Samsung’s cost, we are committed to Samsung for the
difference between the sales price and its cost.
We issue inventory purchase orders in the ordinary course of business, which represent authorizations to purchase that are cancelable by their
terms. We do not consider purchase orders to be firm inventory commitments. If we choose to cancel a purchase order, we may be obligated
to reimburse the vendor for unrecoverable outlays incurred prior to cancellation.
Capital Expenditures
Capital expenditures were $24.1 million and $29.8 million for Fiscal 2021 and 2020, respectively. The $5.7 million decrease in
Fiscal 2021 capital expenditures as compared to Fiscal 2020 is primarily due to decreased store renovations in Fiscal 2021 as
well as decreased capital expenditures as a result of the COVID-19 pandemic.
We expect total capital expenditures for Fiscal 2022 to be approximately $35 million to $40 million of which approximately 74%
is for computer hardware, software and warehouse enhancements for initiatives to drive traffic and omni-channel capabilities.
Planned capital expenditures excludes approximately $16 million, net of tenant allowance, for the new Corporate Headquarters
building which is still in the planning stage. We do not currently have any longer term capital expenditures or other cash
requirements other than as set forth in the contractual obligations table. We also do not currently have any off-balance sheet
arrangements.
Common Stock Repurchases
We did not repurchase any shares during Fiscal 2021. We have $89.7 million remaining as of January 30, 2021 under our current
$100.0 million share repurchase authorization. We repurchased 4,570,015 shares at a cost of $189.4 million during Fiscal 2020.
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Environmental and Other Contingencies
We are subject to certain loss contingencies related to environmental proceedings and other legal matters, including those
disclosed in Item 8, Note 16, "Legal Proceedings and Other Matters", to our Consolidated Financial Statements included in this
Annual Report on Form 10-K.
Financial Market Risk
The following discusses our exposure to financial market risk.
Outstanding Debt – We have $33.0 million of outstanding U.S. revolver borrowings at a weighted average interest rate of 4.05%
as of January 30, 2021. A 100 basis point increase in interest rates would increase annual interest expense by $0.3 million on the
$33.0 million revolver borrowings.
Cash and Cash Equivalents – Our cash and cash equivalent balances are held in our bank accounts and not invested at this time.
We did not have significant exposure to changing interest rates on invested cash at January 30, 2021. As a result, we consider
the interest rate market risk implicit in these investments at January 30, 2021 to be low.
Summary – Based on our overall market interest rate exposure at January 30, 2021, we believe that the effect, if any, of reasonably
possible near-term changes in interest rates on our consolidated financial position, results of operations or cash flows for Fiscal
2022 would not be material.
Accounts Receivable – Our accounts receivable balance at January 30, 2021 is concentrated in our wholesale businesses, which
sell primarily to department stores and independent retailers across the United States. In the wholesale businesses, one customer
accounted for 16%, one customer accounted for 13% and two customers each accounted for 10% of our total trade receivables
balance, while no other customer accounted for more than 7% of our total trade receivables balance as of January 30, 2021. We
monitor the credit quality of our customers and establish an allowance for doubtful accounts based upon factors surrounding
credit risk of specific customers, historical trends and other information, as well as customer specific factors; however, credit risk
is affected by conditions or occurrences within the economy and the retail industry, as well as company-specific information.
Foreign Currency Exchange Risk – We are exposed to translation risk because certain of our foreign operations utilize the local
currency as their functional currency and those financial results must be translated into United States dollars. As currency
exchange rates fluctuate, translation of our financial statements of foreign businesses into United States dollars affects the
comparability of financial results between years. Schuh Group's net sales and operating loss for Fiscal 2021 were positively
impacted by $4.9 million and positively impacted by $1.1 million, respectively, due to the change in foreign exchange rates.
New Accounting Principles
Descriptions of recently issued accounting pronouncements, if any, and the accounting pronouncements adopted by us during
Fiscal 2021 are included in Note 2 to the Consolidated Financial Statements included in Item 8, "Financial Statements and
Supplementary Data".
Critical Accounting Estimates
As a result of the economic and business impact of COVID-19, we may be required to revise certain accounting estimates and
judgments such as, but not limited to, those related to the valuation of inventory, goodwill, long-lived assets and deferred tax
assets, which could have a material adverse effect on our financial position and results of operations.
Inventory Valuation
In our footwear wholesale operations and our Schuh Group segment, cost for inventory that we own is determined using the first-
in, first-out ("FIFO") method. Net realizable value is determined using a system of analysis which evaluates inventory at the
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stock number level based on factors such as inventory turn, average selling price, inventory level, and selling prices reflected in
future orders for footwear wholesale. We provide a valuation allowance when the inventory has not been marked down to net
realizable value based on current selling prices or when the inventory is not turning and is not expected to turn at satisfactory
levels.
In our retail operations, other than the Schuh Group segment, we employ the retail inventory method, applying average cost-to-
retail ratios to the retail value of inventories. Under the retail inventory method, valuing inventory at the lower of cost or market
is achieved as markdowns are taken or accrued as a reduction of the retail value of inventories.
Inherent in the retail inventory method are subjective judgments and estimates, including merchandise mark-on, markups,
markdowns and shrinkage. These judgments and estimates, coupled with the fact that the retail inventory method is an averaging
process, could produce a range of cost figures. To reduce the risk of inaccuracy and to ensure consistent presentation, we employ
the retail inventory method in multiple subclasses of inventory with similar gross margins, and analyze markdown requirements
at the stock number level based on factors such as inventory turn, average selling price and inventory age. In addition, we accrue
markdowns as necessary. These additional markdown accruals reflect all of the above factors as well as current agreements to
return products to vendors and vendor agreements to provide markdown support. In addition to markdown allowances, we
maintain reserves for shrinkage and damaged goods based on historical rates.
Inherent in the analysis of both wholesale and retail inventory valuation are subjective judgments about current market conditions,
fashion trends and overall economic conditions. Failure to make appropriate conclusions regarding these factors may result in an
overstatement or understatement of inventory value. A change of 10% from the recorded amounts for markdowns, shrinkage and
damaged goods would have changed inventory by $1.6 million at January 30, 2021.
Impairment of Long-Lived Assets
We periodically assess the realizability of our long-lived assets, other than goodwill, and evaluate such assets for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Asset
impairment is determined to exist if estimated future cash flows, undiscounted and without interest charges, are less than the
carrying amount. Inherent in the analysis of impairment are subjective judgments about future cash flows. Failure to make
appropriate conclusions regarding these judgments may result in an overstatement or understatement of the value of long-lived
assets.
We annually assess our goodwill and indefinite lived trademarks for impairment and on an interim basis if indicators of
impairment are present. Our annual assessment date of goodwill and indefinite lived trade names is the first day of the fourth
quarter.
In accordance with ASC 350, we have the option first to assess qualitative factors to determine whether events and circumstances
indicate that it is more likely than not that goodwill is impaired. If, after such assessment, we conclude that the asset is not
impaired, no further action is required. However, if we conclude otherwise, we are required to determine the fair value of the
asset using a quantitative impairment test. The quantitative impairment test for goodwill compares the fair value of each reporting
unit with the carrying value of the reporting unit with which the goodwill is associated. If the fair value of the reporting unit is
less than the carrying value of the reporting unit, an impairment charge would be recorded for the amount, if any, in which the
carrying value exceeds the reporting unit's fair value. We estimate fair value using the best information available, and compute
the fair value derived by a combination of the market and income approach. The market approach is based on observed market
data of comparable companies to determine fair value. The income approach utilizes a projection of a reporting unit’s estimated
operating results and cash flows that are discounted using a weighted-average cost of capital that reflects current market
conditions. A key assumption in our fair value estimate is the weighted average cost of capital utilized for discounting our cash
flow projections in our income approach. The projection uses our best estimates of economic and market conditions over the
projected period including growth rates in sales, costs, estimates of future expected changes in operating margins and cash
expenditures. Other significant estimates and assumptions include terminal value growth rates, future estimates of capital
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expenditures and changes in future working capital requirements. For additional information regarding impairment of long-lived
assets, see Item 8, Note 4, "Goodwill and Other Intangible Assets" and Note 5,"Asset Impairments and Other Charges" to our
Consolidated Financial Statements included in this Annual Report on Form 10-K.
Revenue Recognition
In accordance with ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)" ("ASC 606"), revenue shall be
recognized upon satisfaction of all contractual performance obligations and transfer of control to the customer. Revenue is
measured as the amount of consideration we expect to be entitled to in exchange for corresponding goods. The majority of our
sales are single performance obligation arrangements for retail sale transactions for which the transaction price is equivalent to
the stated price of the product, net of any stated discounts applicable at a point in time. Each sales transaction results in an implicit
contract with the customer to deliver a product at the point of sale. Revenue from retail sales is recognized at the point of sale, is
net of estimated returns, and excludes sales and value added taxes. Revenue from catalog and internet sales is recognized at
estimated time of delivery to the customer, is net of estimated returns, and excludes sales and value added taxes. Wholesale
revenue is recorded net of estimated returns and allowances for markdowns, damages and miscellaneous claims when the related
goods have been shipped and legal title has passed to the customer. Actual amounts of markdowns have not differed materially
from estimates. Shipping and handling costs charged to customers are included in net sales. We elected the practical expedient
within ASC 606 related to taxes that are assessed by a governmental authority, which allows for the exclusion of sales and value
added tax from transaction price.
A provision for estimated returns is provided through a reduction of sales and cost of goods sold in the period that the related
sales are recorded. Estimated returns are based on historical returns and claims. Actual returns and claims in any future period
may differ from historical experience. Revenue from gift cards is deferred and recognized upon the redemption of the cards.
These cards have no expiration date. Income from unredeemed cards is recognized in our Consolidated Statements of Operations
within net sales in proportion to the pattern of rights exercised by the customer in future periods. We perform an evaluation of
historical redemption patterns from the date of original issuance to estimate future period redemption activity.
Income Taxes
As part of the process of preparing our Consolidated Financial Statements, we are required to estimate our income taxes in each
of the tax jurisdictions in which we operate. This process involves estimating actual current tax obligations together with assessing
temporary differences resulting from differing treatment of certain items for tax and accounting purposes, such as depreciation
of property and equipment and valuation of inventories. These temporary differences result in deferred tax assets and liabilities,
which are included within our Consolidated Balance Sheets. We then assess the likelihood that our deferred tax assets will be
recovered from future taxable income. Actual results could differ from this assessment if adequate taxable income is not generated
in future periods. To the extent we believe that recovery of an asset is at risk, valuation allowances are established. To the extent
valuation allowances are established or increased in a period, we include an expense within the tax provision in our Consolidated
Statements of Operations. These deferred tax valuation allowances may be released in future years when we consider that it is
more likely than not that some portion or all of the deferred tax assets will be realized. In making such a determination, we will
need to periodically evaluate whether or not all available evidence, such as future taxable income and reversal of temporary
differences, tax planning strategies, and recent results of operations, provides sufficient positive evidence to offset any other
potential negative evidence that may exist at such time. In the event the deferred tax valuation allowance is released, we would
record an income tax benefit for a portion or all of the deferred tax valuation allowance released. At January 30, 2021, we had a
deferred tax valuation allowance of $36.6 million.
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Income tax reserves for uncertain tax positions are determined using the methodology required by the Income Tax Topic of the
Accounting Standards Codification (“Codification”). This methodology requires companies to assess each income tax position
taken using a two-step process. A determination is first made as to whether it is more likely than not that the position will be
sustained, based upon the technical merits, upon examination by the taxing authorities. If the tax position is expected to meet the
more likely than not criteria, the benefit recorded for the tax position equals the largest amount that is greater than 50% likely to
be realized upon ultimate settlement of the respective tax position. Uncertain tax positions require determinations and estimated
liabilities to be made based on provisions of the tax law which may be subject to change or varying interpretation. If our
determinations and estimates prove to be inaccurate, the resulting adjustments could be material to our future financial results.
See Item 8, Note 12, "Income Taxes", to our Consolidated Financial Statements included in this Annual Report on Form 10-K
for additional information related to income taxes.
Leases
We recognize lease assets and corresponding lease liabilities for all operating leases on the Consolidated Balance Sheets as
described under ASU No. 2016-02, “Leases (Topic 842).” We evaluate renewal options and break options at lease inception and
on an ongoing basis, and include renewal options and break options that we are reasonably certain to exercise in our expected
lease terms for calculations of the right-of-use assets and liabilities. Approximately 2% of our leases contain renewal options.
To determine the present value of lease payments not yet paid, we estimate incremental borrowing rates corresponding to the
reasonably certain lease term. As most of our leases do not provide a determinable implicit rate, we estimate our collateralized
incremental borrowing rate based upon a synthetic credit rating and yield curve analysis at the lease commencement or
modification date in determining the present value of lease payments. For lease payments in foreign currencies, the incremental
borrowing rate is adjusted to be reflective of the risk associated with the respective currency. See Item 8, Note 10, "Leases", to
our Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information related to leases.
ITEM 7A, QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We incorporate by reference the information regarding market risk appearing under the heading “Financial Market Risk” in
Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations."
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ITEM 8, FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets, January 30, 2021 and February 1, 2020
Consolidated Statements of Operations, each of the three fiscal years ended 2021, 2020 and 2019
Consolidated Statements of Comprehensive Income, each of the three fiscal years ended 2021, 2020 and 2019
Consolidated Statements of Cash Flows, each of the three fiscal years ended 2021, 2020 and 2019
Consolidated Statements of Equity, each of the three fiscal years ended 2021, 2020 and 2019
Notes to Consolidated Financial Statements
Page
42
43
45
46
47
48
49
50
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Genesco Inc.
Opinion on Internal Control over Financial Reporting
We have audited Genesco Inc. and Subsidiaries’ internal control over financial reporting as of January 30, 2021, based on criteria
established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (the COSO criteria). In our opinion, Genesco Inc. and Subsidiaries (the Company) maintained,
in all material respects, effective internal control over financial reporting as of January 30, 2021, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of Genesco Inc. and Subsidiaries as of January 30, 2021 and February 1, 2020, the
related consolidated statements of operations, comprehensive income, cash flows, and equity for each of the three fiscal years in
the period ended January 30, 2021, and the related notes and financial statement schedule listed in the Index at Item 15, and our
report dated March 31, 2021 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Nashville, Tennessee
March 31, 2021
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Genesco Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Genesco Inc. (the Company) as of January 30, 2021 and
February 1, 2020, the related consolidated statements of operations, comprehensive income, cash flows and equity for each of
the three fiscal years in the period ended January 30, 2021, and the related notes and financial statement schedule listed in the
Index at Item 15 (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company at January 30, 2021 and February 1, 2020,
and the results of its operations and its cash flows for each of the three fiscal years in the period ended January 30, 2021, in
conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of January 30, 2021, based on criteria established in Internal
Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework) and our report dated March 31, 2021 expressed an unqualified opinion thereon.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Suc h
procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective or
complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate
opinions on the critical audit matter or on the account or disclosures to which they relate.
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Description of the
Matter
Valuation of Schuh Group Indefinite Lived Trademark
At January 30, 2021 the Company had $23.1 million recorded for the indefinite lived trademark
associated with the Schuh Group reporting unit. As discussed in Notes 1, 3, and 4 to the consolidated
financial statements, the Company assesses indefinite lived trademarks for impairment on an annual
basis, or on an interim basis if indicators of impairment are present. If the carrying amount exceeds the
estimated fair value, an impairment loss would be recorded in the amount equal to the excess.
Auditing the Company’s quantitative indefinite lived trademark impairment test was complex and highly
judgmental due to the subjective nature of the significant assumptions used in the determination of
estimated fair value for the Schuh Group trademark. For example, the fair value estimate was sensitive
to significant assumptions, including revenue projections, royalty rate, and discount rate, which are
affected by expected future market or economic conditions and industry and company-specific
qualitative factors.
How We Addressed the
Matter in Our Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls
over the Company’s trademark impairment evaluation process. For example, we tested controls over the
Company’s review of the significant assumptions used in the trademark valuation as well as the
Company’s review of the reasonableness of the data used in this valuation.
To test the estimated fair value of the Schuh Group trademark, we performed audit procedures that
included, among others, testing the significant assumptions discussed above, testing the underlying data
used by the Company in its analyses by comparing to historical and other industry data, as well as
validating certain assertions with data internal to the Company and from other sources. We compared the
significant assumptions used by the Company to current industry and economic trends while also
considering changes to the Company’s business model, customer base and product mix. We assessed the
historical accuracy of the Company’s revenue projections by comparing the Company’s past projections
to actual performance. We also performed sensitivity analyses to evaluate the impact that changes in the
significant assumptions would have on the fair value of the Schuh Group trademark. Finally, we involved
a valuation specialist to assist in our evaluation of the Company's model, valuation methodology and
significant assumptions, including assisting in evaluating the Company’s discount rate and royalty rate.
/s/ Ernst & Young LLP
We have served as the Company's auditor since 2001.
Nashville, Tennessee
March 31, 2021
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Genesco Inc.
and Subsidiaries
Consolidated Balance Sheets
In Thousands, except share amounts
Assets
Current Assets:
Cash and cash equivalents
Accounts receivable, net of allowances of $5,015 at January 30, 2021 and $2,940 at
February 1, 2020
Inventories
Prepaids and other current assets
Total current assets
Property and equipment, net
Operating lease right of use asset
Goodwill
Other intangibles
Deferred income taxes
Other noncurrent assets
Total Assets
Liabilities and Equity
Current Liabilities:
Accounts payable
Current portion - operating lease liability
Other accrued liabilities
Total current liabilities
Long-term debt
Long-term operating lease liability
Other long-term liabilities
Total liabilities
Commitments and contingent liabilities
Equity
Non-redeemable preferred stock
Common equity:
Common stock, $1 par value:
Authorized: 80,000,000 shares
Issued common stock
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury shares, at cost (488,464 shares)
Total equity
Total Liabilities and Equity
As of Fiscal Year End
January 30,
2021 February 1, 2020
$
215,091 $
81,418
$
$
31,410
290,966
130,128
667,595
207,842
621,727
38,550
30,929
—
20,725
1,587,368 $
150,437 $
173,505
78,991
402,933
32,986
527,549
57,141
1,020,609
29,195
365,269
32,301
508,183
238,320
735,044
122,184
36,364
19,475
20,908
1,680,478
135,784
142,695
83,456
361,935
14,393
647,949
36,858
1,061,135
1,009
1,009
15,438
282,308
320,920
(35,059 )
(17,857 )
566,759
1,587,368 $
15,186
274,101
378,572
(31,668 )
(17,857 )
619,343
1,680,478
$
The accompanying Notes are an integral part of these Consolidated Financial Statements.
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Genesco Inc.
and Subsidiaries
Consolidated Statements of Operations
In Thousands, except per share amounts
Net sales
Cost of sales
Gross margin
Selling and administrative expenses
Goodwill impairment
Asset impairments and other, net
Operating income (loss)
Loss on early retirement of debt
Other components of net periodic benefit income
Interest expense (net of interest income of $0.3 million, $2.1 million and
$0.8 million for Fiscal 2021, 2020 and 2019, respectively)
Earnings (loss) from continuing operations before income taxes
Income tax expense (benefit)
Earnings (loss) from continuing operations
Loss from discontinued operations, net of tax of $0.2 million, $0.1
million and $27.5 million for Fiscal 2021, 2020 and 2019, respectively
Net Earnings (Loss)
Basic earnings (loss) per common share:
Continuing operations
Discontinued operations
Net earnings (loss)
Diluted earnings (loss) per common share:
Continuing operations
Discontinued operations
Net earnings (loss)
Weighted average shares outstanding:
Basic
Diluted
$
$
$
$
$
$
Fiscal Year
2021
2020
1,786,530 $
982,063
804,467
813,775
79,259
18,682
(107,249 )
—
(670 )
5,090
(111,669 )
(55,641 )
(56,028 )
2,197,066 $
1,133,951
1,063,115
966,423
—
13,374
83,318
—
(395 )
1,278
82,435
20,678
61,757
2019
2,188,553
1,141,497
1,047,056
962,076
—
3,163
81,817
597
(380 )
3,341
78,259
27,035
51,224
(401 )
(56,429 ) $
(373 )
61,384 $
(103,154 )
(51,930 )
(3.94 ) $
(0.03 )
(3.97 ) $
3.97 $
(0.02 )
3.95 $
(3.94 ) $
(0.03 )
(3.97 ) $
3.94 $
(0.02 )
3.92 $
2.65
(5.33 )
(2.68 )
2.63
(5.29 )
(2.66 )
14,216
14,216
15,544
15,671
19,351
19,495
The accompanying Notes are an integral part of these Consolidated Financial Statements.
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Genesco Inc.
and Subsidiaries
Consolidated Statements of Comprehensive Income
In Thousands, except as noted
Net earnings (loss)
Other comprehensive income (loss):
Pension liability adjustment net of tax of $2.1 million and $0.0
million for 2020 and 2019, respectively
Postretirement liability adjustment net of tax of $0.1 million, $1.0
million and $1.6 million for 2021, 2020 and 2019, respectively
Foreign currency translation adjustments
Total other comprehensive income (loss)
Comprehensive Income (Loss)
Fiscal Year
2021
(56,429 ) $
2020
61,384 $
2019
(51,930 )
$
—
6,035
123
314
(3,705 )
(3,391 )
(59,820 ) $
(2,697 )
2,930
6,268
67,652 $
4,077
(12,944 )
(8,744 )
(60,674 )
$
The accompanying Notes are an integral part of these Consolidated Financial Statement.
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Genesco Inc.
and Subsidiaries
Consolidated Statements of Cash Flows
In Thousands
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)
Adjustments to reconcile net earnings (loss) to net cash provided by operating
activities:
Fiscal Year
2021
2020
2019
$
(56,429 ) $
61,384 $
(51,930 )
Depreciation and amortization
Deferred income taxes
Impairment of intangible assets
Impairment of long-lived assets
Restricted stock expense
Provision for discontinued operations
Loss on sale of business
Loss on pension plan termination
Other
Changes in working capital and other assets and liabilities, net of
acquisitions/dispositions:
Accounts receivable
Inventories
Prepaids and other current assets
Accounts payable
Other accrued liabilities
Other assets and liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
Other investing activities
Acquisitions, net of cash acquired
Proceeds from (payments for) sale of businesses
Proceeds from asset sales
Net cash provided by (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt
Borrowings under revolving credit facility
Payments on revolving credit facility
Shares repurchased related to share repurchase plan
Restricted shares withheld for taxes
Change in overdraft balances
Additions to deferred financing costs
Other
Net cash used in financing activities
Effect of foreign exchange rate fluctuations on cash
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental information:
Interest paid
Income taxes paid
Cash paid for amounts included in measurement of operating lease liabilities
Operating leased assets obtained in exchange for new operating lease liabilities
46,499
39,142
84,519
13,871
8,460
345
—
—
3,916
(4,159 )
76,525
(97,842 )
29,631
(7,732 )
20,995
157,741
(24,130 )
—
—
—
110
(24,020 )
—
221,310
(205,327 )
—
(1,223 )
(16,573 )
(1,350 )
(1 )
(3,164 )
3,116
133,673
81,418
215,091 $
4,386 $
7,685
142,908
38,731
49,574
660
269
2,827
10,077
425
86
11,510
568
656
1,930
16,228
(10,333 )
(20,787 )
(7,904 )
117,170
(29,767 )
171
(33,524 )
98,677
17,751
53,308
(9,133 )
93,328
(135,403 )
(190,384 )
(2,355 )
(12,557 )
(7 )
—
(256,511 )
96
(85,937 )
167,355
81,418 $
3,005 $
4,899
188,247
80,078
76,939
272
5,736
5,823
13,437
743
126,321
—
2,460
6,312
2,684
(9,116 )
43,028
20,713
(6,279 )
237,143
(57,230 )
1,505
—
(1,088 )
310
(56,503 )
(1,650 )
284,473
(299,606 )
(44,935 )
(2,853 )
15,494
(359 )
(3,322 )
(52,758 )
(464 )
127,418
39,937
167,355
3,338
12,451
—
—
$
$
The accompanying Notes are an integral part of these Consolidated Financial Statements.
48
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Balance February 3, 2018
Cumulative adjustment from
ASC 606, net of tax
Net loss
Other comprehensive loss
Employee and non-employee
restricted stock
Restricted stock issuance
Restricted shares withheld for taxes
Shares repurchased
Other
Noncontrolling interest – loss
Balance February 2, 2019
Cumulative adjustment from
ASC 842, net of tax
Net earnings
Other comprehensive income
Employee and non-employee restricted stock
Restricted stock issuance
Restricted shares withheld for taxes
Shares repurchased
Other
Balance February 1, 2020
Net loss
Other comprehensive loss
Employee and non-employee restricted stock
Restricted stock issuance
Restricted shares withheld for taxes
Other
Balance January 30, 2021
Genesco Inc.
and Subsidiaries
Consolidated Statements of Equity
In Thousands
Non-
Redeemable
Preferred
Retained
Earnings
Stock
1,052 $ 20,392 $ 250,877 $ 603,902 $
Additional
Paid-In
Capital
Stock
Common
$
Accumulated
Other
Comprehensive
Treasury
Loss
Shares
(29,192 ) $ (17,857 ) $
Redeemable
Total
Equity
1,530 $ 830,704
Non
Controlling
Interest
Non-
—
—
—
—
—
—
—
4,413
— (51,930 )
—
—
—
—
(8,744 )
—
—
—
—
4,413
— (51,930 )
(8,744 )
—
—
—
—
—
8
—
—
13,437
—
(390 )
70
(2,853 )
— (44,977 )
—
144
—
—
1,060 19,591 264,138 508,555
—
390
(70 )
(968 )
(153 )
—
—
—
—
—
—
—
—
(51 )
—
—
—
—
285
(56 )
(4,570 )
(64 )
(4,208 )
—
— 61,384
—
—
—
10,077
—
(285 )
(2,355 )
56
— (184,804 )
—
115
1,009 15,186 274,101 378,572
— (56,429 )
—
—
—
8,460
—
(467 )
(1,223 )
65
—
149
1,009 $ 15,438 $ 282,308 $ 320,920 $
—
—
—
467
(65 )
(150 )
—
—
—
—
—
$
—
—
—
—
—
—
—
—
—
—
—
—
(37,936 ) (17,857 )
— 13,437
—
—
—
(2,853 )
— (45,945 )
(1 )
—
(1,530 )
(1,530 )
— 737,551
—
—
6,268
—
—
—
—
—
—
—
—
—
—
—
—
—
(31,668 ) (17,857 )
—
—
—
—
—
—
(35,059 ) $ (17,857 ) $
—
(3,391 )
—
—
—
—
(4,208 )
—
— 61,384
—
6,268
— 10,077
—
—
(2,355 )
—
— (189,374 )
—
—
— 619,343
— (56,429 )
(3,391 )
—
8,460
—
—
—
(1,223 )
—
—
(1 )
— $ 566,759
The accompanying Notes are an integral part of these Consolidated Financial Statements.
49
Table of Contents
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Note 1
Summary of Significant Accounting Policies
Nature of Operations
Genesco Inc. and its subsidiaries (collectively the "Company", "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 and the ROI; through catalogs and e-commerce websites including the following: journeys.com, journeyskidz.com,
journeys.ca, schuh.co.uk, schuh.ie, schuh.eu, johnstonmurphy.com and littleburgundyshoes.com and at wholesale, primarily
under our Johnston & Murphy brand, the licensed Dockers® brand, the licensed Levi's® brand, the licensed G.H. Bass® brand
and other brands that we license for footwear. At January 30, 2021, we operated 1,460 retail stores in the U.S., Puerto Rico,
Canada, the United Kingdom and the ROI.
Effective January 1, 2020, we completed the acquisition of Togast, which specializes in the design, sourcing and sale of licensed
footwear. We also entered into a new U.S. footwear license agreement with Levi Strauss & Co. for the license of Levi's® footwear
for men, women, and children in the U.S. The acquisition expands our portfolio to include footwear licenses for G.H. Bass ® and
FUBU, among others. Togast operates in our Licensed Brands segment. On February 2, 2019, we completed the sale of our Lids
Sports Group business. As a result, we reported the operating results of this business in loss from discontinued operations, net in
our Consolidated Statements of Operations for Fiscal 2019. The cash flows related to discontinued operations have not been
segregated and are included in our Consolidated Statements of Cash Flows for Fiscal 2019. Unless otherwise noted, discussion
within these notes to our consolidated financial statements relates to continuing operations. See Note 18 for additional information
related to discontinued operations.
During Fiscal 2021, 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) Licensed Brands, comprised of the licensed Dockers, Levi's, and Bass brands, as well as other brands we license for footwear.
Principles of Consolidation
All subsidiaries are consolidated in our Consolidated Financial Statements. All significant intercompany transactions and
accounts have been eliminated.
Fiscal Year
Our fiscal year ends on the Saturday closest to January 31. As a result, Fiscal 2021, 2020 and 2019 were all 52-week years with
364 days. Fiscal 2021 ended on January 30, 2021, Fiscal 2020 ended on February 1, 2020 and Fiscal 2019 ended on February 2,
2019.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
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Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Note 1
Summary of Significant Accounting Policies, Continued
Cash and Cash Equivalents
Our foreign subsidiaries held cash of approximately $21.8 million and $8.9 million as of January 30, 2021 and February 1, 2020,
respectively, which is included in cash and cash equivalents on the Consolidated Balance Sheets. Our strategic plan does not
require the repatriation of foreign cash in order to fund our operations in the U.S., and it is our current intention to indefinitely
reinvest our foreign cash and cash equivalents outside of the U.S. If we were to repatriate foreign cash to the U.S., we would be
required to accrue and pay U.S. taxes in accordance with applicable U.S. tax rules and regulations as a result of the repatriation.
There were no cash equivalents at January 30, 2021 and there were $59.6 million of cash equivalents at February 1, 2020. Our
$59.6 million of cash equivalents at the previous year end was 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. The majority of payments due from banks for domestic customer credit card
transactions process within 24 - 48 hours and are accordingly classified as cash and cash equivalents in our Consolidated Balance
Sheets.
At January 30, 2021 and February 1, 2020, outstanding checks drawn on zero-balance accounts at certain domestic banks
exceeded book cash balances at those banks by approximately $0.5 million and $17.1 million, respectively. These amounts are
included in accounts payable in our Consolidated Balance Sheets.
Concentration of Credit Risk and Allowances on Accounts Receivable
Our wholesale businesses sell primarily to independent retailers and department stores across the United States. Receivables
arising from these sales are not collateralized. Customer credit risk is affected by conditions or occurrences within the economy
and the retail industry as well as by customer specific factors. In the wholesale businesses, one customer accounted for 16%, one
customer accounted for 13% and two customers each accounted for 10% of our total trade receivables balance, while no other
customer accounted for more than 7% of our total trade receivables balance as of January 30, 2021.
We establish an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical
trends and other information, as well as customer specific factors. We also establish allowances for sales returns, customer
deductions and co-op advertising based on specific circumstances, historical trends and projected probable outcomes.
Inventory Valuation
In our footwear wholesale operations and our Schuh Group segment, cost for inventory that we own is determined using the first-
in, first-out ("FIFO") method. Net realizable value is determined using a system of analysis which evaluates inventory at the
stock number level based on factors such as inventory turn, average selling price, inventory level, and selling prices reflected in
future orders for footwear wholesale. We provide a valuation allowance when the inventory has not been marked down to net
realizable value based on current selling prices or when the inventory is not turning and is not expected to turn at satisfactory
levels.
In our retail operations, other than the Schuh Group segment, we employ the retail inventory method, applying average cost-to-
retail ratios to the retail value of inventories. Under the retail inventory method, valuing inventory at the lower of cost or market
is achieved as markdowns are taken or accrued as a reduction of the retail value of inventories.
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Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Note 1
Summary of Significant Accounting Policies, Continued
Inherent in the retail inventory method are subjective judgments and estimates, including merchandise mark-on, markups,
markdowns and shrinkage. These judgments and estimates, coupled with the fact that the retail inventory method is an averaging
process, could produce a range of cost figures. To reduce the risk of inaccuracy and to ensure consistent presentation, we employ
the retail inventory method in multiple subclasses of inventory with similar gross margins, and analyze markdown requirements
at the stock number level based on factors such as inventory turn, average selling price and inventory age. In addition, we accrue
markdowns as necessary. These additional markdown accruals reflect all of the above factors as well as current agreements to
return products to vendors and vendor agreements to provide markdown support. In addition to markdown allowances, we
maintain reserves for shrinkage and damaged goods based on historical rates.
Inherent in the analysis of both wholesale and retail inventory valuation are subjective judgments about current market conditions,
fashion trends and overall economic conditions. Failure to make appropriate conclusions regarding these factors may result in an
overstatement or understatement of inventory value.
Property and Equipment
Property and equipment are recorded at cost and depreciated or amortized over the estimated useful life of related assets.
Depreciation and amortization expense are computed principally by the straight-line method over the following estimated useful
lives:
Buildings and building equipment
Computer hardware, software and equipment
Furniture and fixtures
20-45 years
3-10 years
10 years
Depreciation expense related to property and equipment was approximately $45.6 million, $49.4 million and $52.1 million for
Fiscal 2021, 2020 and 2019, respectively.
Leases
We recognize lease assets and corresponding lease liabilities for all operating leases on the Consolidated Balance Sheets as
described under ASC 842. We evaluate renewal options and break options at lease inception and on an ongoing basis and include
renewal options and break options that we are reasonably certain to exercise in our expected lease terms for calculations of the
right-of-use assets and liabilities. Approximately 2% of our leases contain renewal options. To determine the present value of
lease payments not yet paid, we estimate incremental borrowing rates corresponding to the reasonably certain lease term. As
most of our leases do not provide a determinable implicit rate, we estimate our collateralized incremental borrowing rate based
upon a synthetic credit rating and yield curve analysis at the lease commencement or modification date in determining the present
value of lease payments. For lease payments in foreign currencies, the incremental borrowing rate is adjusted to be reflective of
the risk associated with the respective currency. Operating lease assets represent our right to use an underlying asset and are
based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives,
and impairment, if any, of operating lease assets. We test right-of-use assets for impairment in the same manner as long-lived
assets.
Net lease costs are included within selling and administrative expenses on the Consolidated Statements of Operations.
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Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Note 1
Summary of Significant Accounting Policies, Continued
Asset Retirement Obligations
An asset retirement obligation represents a legal obligation associated with the retirement of a tangible long-lived asset that is
incurred upon the acquisition, construction, development, or normal operation of that long-lived asset. Our asset retirement
obligations are primarily associated with leasehold improvements that we are contractually obligated to remove at the end of a
lease to comply with the lease agreement. We recognize asset retirement obligations at the inception of a lease with such
conditions if a reasonable estimate of fair value can be made. Asset retirement obligations are recorded in other long-term
liabilities in our Consolidated Balance Sheets and are subsequently adjusted for changes in estimated asset retirement obligations.
The associated estimated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset and
depreciated over its useful life.
Our Consolidated Balance Sheets include asset retirement obligations related to leases of $11.5 million and $11.1 million as of
January 30, 2021 and February 1, 2020, respectively.
Impairment of Long-Lived Assets
We periodically assess the realizability of our long-lived assets, other than goodwill, and evaluate such assets for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Asset
impairment is determined to exist if estimated future cash flows, undiscounted and without interest charges, are less than the
carrying amount. Inherent in the analysis of impairment are subjective judgments about future cash flows. Failure to make
appropriate conclusions regarding these judgments may result in an overstatement or understatement of the value of long-lived
assets.
We annually assess our goodwill and indefinite lived trade names for impairment and on an interim basis if indicators of
impairment are present. Our annual assessment date of goodwill and indefinite lived trade names is the first day of the fourth
quarter.
In accordance with ASC 350, we have the option first to assess qualitative factors to determine whether events and circumstances
indicate that it is more likely than not that goodwill is impaired. If, after such assessment, we conclude that the asset is not
impaired, no further action is required. However, if we conclude otherwise, we are required to determine the fair value of the
asset using a quantitative impairment test. The quantitative impairment test for goodwill compares the fair value of each reporting
unit with the carrying value of the reporting unit with which the goodwill is associated. If the fair value of the reporting unit is
less than the carrying value of the reporting unit, an impairment charge would be recorded for the amount, if any, in which the
carrying value exceeds the reporting unit's fair value. We estimate fair value using the best information available, and compute
the fair value derived by a combination of the market and income approach. The market approach is based on observed market
data of comparable companies to determine fair value. The income approach utilizes a projection of a reporting unit’s estimated
operating results and cash flows that are discounted using a weighted-average cost of capital that reflects current market
conditions. A key assumption in our fair value estimate is the weighted average cost of capital utilized for discounting our cash
flow projections in our income approach. The projection uses our best estimates of economic and market conditions over the
projected period including growth rates in sales, costs, estimates of future expected changes in operating margins and cash
expenditures. Other significant estimates and assumptions include terminal value growth rates, future estimates of capital
expenditures and changes in future working capital requirements.
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Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Note 1
Summary of Significant Accounting Policies, Continued
Fair Value
The Fair Value Measurements and Disclosures Topic of the Codification defines fair value, establishes a framework for measuring
fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements.
This Topic defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price)
in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on
the measurement date. It also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs
and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may
be used to measure fair value:
Level 1 - Quoted prices in active markets for identical assets or liabilities.
Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in
markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially
the full term of the assets or liabilities.
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the
assets or liabilities.
A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant
to the fair value measurement.
Revenue Recognition
Revenue is recognized upon satisfaction of all contractual performance obligations and transfer of control to the customer.
Revenue is measured as the amount of consideration we expect to be entitled to in exchange for corresponding goods. The
majority of our sales are single performance obligation arrangements for retail sale transactions for which the transaction price
is equivalent to the stated price of the product, net of any stated discounts applicable at a point in time. Each sales transaction
results in an implicit contract with the customer to deliver a product at the point of sale. Revenue from retail sales is recognized
at the point of sale, is net of estimated returns, and excludes sales and value added taxes. Revenue from catalog and internet sales
is recognized at estimated time of delivery to the customer, is net of estimated returns, and excludes sales and value added taxes.
Wholesale revenue is recorded net of estimated returns and allowances for markdowns, damages and miscellaneous claims when
the related goods have been shipped and legal title has passed to the customer. Actual amounts of markdowns have not differed
materially from estimates. Shipping and handling costs charged to customers are included in net sales. We exclude sales and
value added tax collected on behalf of third parties from transaction price.
A provision for estimated returns is provided through a reduction of sales and cost of goods sold in the period that the related
sales are recorded. Estimated returns are based on historical returns and claims. Actual returns and claims in any future period
may differ from historical experience. Revenue from gift cards is deferred and recognized upon the redemption of the cards.
These cards have no expiration date. Income from unredeemed cards is recognized on the Consolidated Statements of Operations
within net sales in proportion to the pattern of rights exercised by the customer in future periods. We perform an evaluation of
historical redemption patterns from the date of original issuance to estimate future period redemption activity.
54
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Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Note 1
Summary of Significant Accounting Policies, Continued
Our Consolidated Balance Sheets include an accrued liability for gift cards of $5.0 million in each of the years ended January 30,
2021 and February 1, 2020. Gift card breakage recognized as revenue was $0.8 million, $1.0 million and $0.8 million for Fiscal
2021, 2020 and 2019, respectively. During Fiscal 2021, we recognized $3.0 million of gift card redemptions and gift card
breakage revenue that were included in the gift card liability as of February 1, 2020.
Cost of Sales
For our retail operations, the cost of sales includes actual product cost, the cost of transportation to our warehouses from suppliers,
the cost of transportation from our warehouses to the stores and the cost of transportation from our warehouses to the customer.
Additionally, the cost of our distribution facilities allocated to our retail operations is included in cost of sales.
For our wholesale operations, the cost of sales includes the actual product cost and the cost of transportation to the Company’s
warehouses from suppliers.
Selling and Administrative Expenses
Selling and administrative expenses include all operating costs excluding (i) those related to the transportation of products from
the supplier to the warehouse, (ii) for our retail operations, those related to the transportation of products from the warehouse to
the store and from the warehouse to the customer and (iii) costs of our distribution facilities which are allocated to our retail
operations. Wholesale costs of distribution are included in selling and administrative expenses on our Consolidated Statements
of Operations in the amounts of $10.1 million, $5.6 million and $5.6 million for Fiscal 2021, 2020 and 2019, respectively.
We record buying, merchandising and occupancy costs in selling and administrative expense. Because we do not include these
costs in cost of sales, our gross margin may not be comparable to other retailers that include these costs in the calculation of gross
margin. Retail occupancy costs recorded in selling and administrative expense were $269.8 million, $334.4 million and $334.3
million for Fiscal 2021, 2020 and 2019, respectively.
Shipping and Handling Costs
Shipping and handling costs related to inventory purchased from suppliers are included in the cost of inventory and are charged
to cost of sales in the period that the inventory is sold. All other shipping and handling costs are charged to cost of sales in the
period incurred except for wholesale costs of distribution and shipping costs for product shipped from stores, which are included
in selling and administrative expenses in our Consolidated Statements of Operations.
Advertising Costs
Advertising costs are predominantly expensed as incurred. Advertising costs were $80.1 million, $72.3 million and $68.3 million
for Fiscal 2021, 2020 and 2019, respectively.
Consideration to Resellers
In our wholesale businesses, we do not have any written buy-down programs with retailers, but we have provided certain retailers
with markdown allowances for obsolete and slow-moving products that are in the retailer’s inventory. We estimate these
allowances and provide for them as reductions to revenues at the time revenues are recorded. Markdowns are negotiated with
retailers and changes are made to the estimates as agreements are reached. Actual amounts for markdowns have not differed
materially from estimates.
55
Table of Contents
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Note 1
Summary of Significant Accounting Policies, Continued
Cooperative Advertising
Cooperative advertising funds are made available to most of our wholesale footwear customers. In order for retailers to receive
reimbursement under such programs, the retailer must meet specified advertising guidelines and provide appropriate
documentation of expenses to be reimbursed. Our cooperative advertising agreements require that wholesale customers present
documentation or other evidence of specific advertisements or display materials used for our products by submitting the actua l
print advertisements presented in catalogs, newspaper inserts or other advertising circulars, or by permitting physical inspection
of displays. Additionally, our cooperative advertising agreements require that the amount of reimbursement requested for such
advertising or materials be supported by invoices or other evidence of the actual costs incurred by the retailer.
Vendor Allowances
From time to time, we negotiate allowances from our vendors for markdowns taken or expected to be taken. These markdowns
are typically negotiated on specific merchandise and for specific amounts. These specific allowances are recognized as a
reduction in cost of sales in the period in which the markdowns are taken. Markdown allowances not attached to specific
inventory on hand or already sold are applied to concurrent or future purchases from each respective vendor.
We receive support from some of our vendors in the form of reimbursements for cooperative advertising and catalog costs for
the launch and promotion of certain products. The reimbursements are agreed upon with vendors and represent specific,
incremental, identifiable costs incurred by us to sell the vendor’s specific products. Such costs and the related reimbursements
are accumulated and monitored on an individual vendor basis, pursuant to the respective cooperative advertising agreements with
vendors. Such cooperative advertising reimbursements are recorded as a reduction of selling and administrative expenses in the
same period in which the associated expense is incurred. If the amount of cash consideration received exceeds the costs being
reimbursed, such excess amount would be recorded as a reduction of cost of sales.
Vendor reimbursements of cooperative advertising costs recognized as a reduction of selling and administrative expenses were
$5.7 million, $8.0 million and $7.8 million for Fiscal 2021, 2020 and 2019, respectively. During Fiscal 2021, 2020 and 2019,
our vendor reimbursements of cooperative advertising received were not in excess of the costs incurred.
Foreign Currency Translation
The functional currency of our foreign operations is the applicable local currency. The translation of the applicable foreign
currency into U.S. dollars is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date.
Income and expense accounts are translated at monthly average exchange rates. The unearned gains and losses resulting from
such translation are included as a separate component of accumulated other comprehensive loss within shareholders' equity.
Gains and losses from certain foreign currency transactions were not material for Fiscal 2021, 2020 or 2019.
Commitments
As a result of the Togast acquisition, we also have a commitment to Samsung C&T America, Inc. (“Samsung”) related to the
ultimate sale and valuation of related inventories owned by Samsung. If the product is sold below Samsung’s cost, we are
committed to Samsung for the difference between the sales price and its cost. At January 30, 2021, the related inventory owned
by Samsung had a historical cost of $22.8 million. As of January 30, 2021, we believe that we have appropriately accounted for
any differences between the fair value of the Samsung inventory and Samsung’s historical cost.
56
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Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Note 2
New Accounting Pronouncements
New Accounting Pronouncements Recently Adopted
We adopted ASU 2016-02, " Leases (Topic 842)", ("ASC 842"), as of February 3, 2019, using the optional transition method
provided by ASU 2018-11, "Leases (Topic 842): Targeted Improvements". The optional transition approach provides a method
for recording existing leases at adoption by allowing a cumulative effect adjustment to the opening balance of retained earnings
in the period of adoption, as opposed to the modified or full retrospective transition methods that require restating prior
comparative periods. Additionally, we elected the “package of practical expedients”, which permits us to not reassess under the
new standard its prior conclusions about lease identification, lease classification and initial direct costs. We also elected the
practical expedient to not separate lease and non-lease components for our store and equipment leases.
Adoption of the new standard resulted in the recording of additional net operating lease right of use assets and operating lease
liabilities of $795.6 million and $855.3 million, respectively, as of February 3, 2019. The operating lease right of use asset is
inclusive of the impairments recorded upon adoption for store operating lease right of use assets, which totaled $4.8 million and
resulted in a decrease to retained earnings of $4.2 million, net of tax. Right of use assets are recorded based upon the present
value of the remaining operating lease payments, discounted using an incremental borrowing rate based on the initial lease term,
adjusted for deferred rent, including tenant allowances from landlords. ASC 842 did not materially impact net earnings or
liquidity and did not have an impact on covenant compliance under our current debt agreements. Financial results for reporting
periods beginning after February 3, 2019 are presented in accordance with ASC 842, while prior periods will continue to be
reported in accordance with our historical accounting for leases under ASC 840: "Leases (Topic 840)" and therefore have not
been adjusted to conform to Topic 842. For additional information regarding leases, see Note 10.
In August 2018, the FASB issued ASU 2018-15, "Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):
Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract", (ASU
2018-15"). The standard requires that issuers follow the internal-use software guidance in ASC 350-40 to determine which costs
to capitalize as assets or expense as incurred. The ASC 350-40 guidance requires that certain costs incurred during the application
development stage be capitalized and other costs incurred during the preliminary project and post-implementation stages be
expensed as they are incurred. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019. We adopted this
standard effective August 4, 2019 and elected to apply the prospective transition approach with no material impact on our
Consolidated Financial Statements. We did not capitalize any material implementation costs incurred in a cloud computing
arrangement service contract during Fiscal 2021 or Fiscal 2020.
We adopted ASC 606 in the first quarter of Fiscal 2019 using the modified retrospective method by recognizing the cumulative
effect of $4.4 million as an adjustment to the opening balance of retained earnings at February 4, 2018. The adoption of this
standard did not have a material impact on our Consolidated Financial Statements and related disclosures.
In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments", which requires entities to use a forward-looking approach based on expected losses to estimate
credit losses on certain types of financial instruments, including trade receivables. The FASB has subsequently issued updates to
the standard to provide additional clarification on specific topics. We adopted ASU No. 2016-13 in the first quarter of Fiscal
2021. This guidance did not have a material impact on our Consolidated Financial Statements.
57
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Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Note 2
New Accounting Pronouncements, Continued
New Accounting Pronouncements Not Yet Adopted
In December 2019, the FASB issued ASU No. 2019-12, “Simplifying the Accounting for Income Taxes”. This guidance aims to
simplify the accounting for income taxes by removing certain exceptions to the general principles within the current guidance
and by clarifying and amending the current guidance. The guidance is effective for annual reporting periods, and interim periods
within those years, beginning after December 15, 2020. We do not expect the guidance to have a material impact on our
Consolidated Financial Statements.
Note 3
COVID-19
In March 2020, the World Health Organization categorized the outbreak of COVID-19 as a pandemic. To help control the spread
of the virus and protect the health and safety of our employees and customers, we began temporarily closing or modifying
operating models and hours of our retail stores in North America, the United Kingdom and the ROI both in response to
governmental requirements including “stay-at-home” orders and similar mandates and voluntarily, beyond the requirements of
local government authorities, during Fiscal 2021.
Changes made in our operations, including temporary closures, combined with reduced customer traffic due to concerns over
COVID-19, resulted in material reductions in revenues and operating income during Fiscal 2021. This prompted us to update our
impairment analyses of our retail store portfolios and related lease right-of-use assets. For certain lower-performing stores, we
compared the carrying value of store assets to undiscounted cash flows with updated assumptions on near-term profitability. As
a result, we recorded an incremental $11.0 million asset impairment charge within asset impairments and other, net on our
Consolidated Statements of Operations during Fiscal 2021.
We evaluated our goodwill and indefinite-lived intangible assets for indicators of impairment at the end of the first three quarters
of this year and our annual assessment of impairment on the first day of our fourth quarter for Fiscal 2021. During the first
quarter, such evaluation caused us to determine that, when considering the impact of the COVID-19 pandemic, indicators of
impairment existed relating to the goodwill associated with Schuh Group and certain other trademarks. Therefore, we updated
the goodwill impairment analysis for Schuh Group, and as a result, recorded a goodwill impairment charge of $79.3 million
during the quarter ended May 2, 2020. In addition, we updated our impairment analysis for other intangible assets and, as a
result, recorded a trademark impairment charge of $5.3 million during the quarter ended May 2, 2020.
We evaluated our remaining assets, particularly accounts receivable and inventory. Our wholesale businesses sell primarily to
independent retailers and department stores across the United States. Receivables arising from these sales are not collateralized.
Customer credit risk is affected by conditions or occurrences within the economy and the retail industry, such as the COVID-19
pandemic, as well as by customer specific factors. We establish an allowance for doubtful accounts based upon factors
surrounding the credit risk of specific customers, historical trends and other information.
We also record reserves for obsolete and slow-moving inventory and for estimated shrinkage between physical inventory counts.
We recorded incremental inventory reserve provisions as a result of excess inventory due to the impact of the COVID-19
pandemic on retail traffic and demand for certain products. Depending on the pace of reopening our stores as well as future
customer behavior, among other factors, we may incur additional inventory reserve provisions.
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Note 3
COVID-19, Continued
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Since the first quarter of Fiscal 2021, we have withheld certain contractual rent payments generally correlating with time periods
when our stores were closed and/or correlating with sales declines from Fiscal 2020. We continue to recognize rent expense in
accordance with the contractual terms. We have been working with landlords in various markets seeking commercially
reasonable lease concessions given the current environment, and while some agreements have been reached, a number of
negotiations remain ongoing. In cases where the agreements do not result in a substantial increase in the rights of the lessor or
the obligation of the lessee such that the total cash flows of the modified lease are substantially the same or less than the total
cash flows of the existing lease, we have not reevaluated the contract terms. For these lease agreements, we have recognized a
reduction in variable rent expense in the period that the concession was granted.
On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”),
which among other things, provides employer payroll tax credits for wages paid to employees who are unable to work during the
COVID-19 pandemic and options to defer payroll tax payments. Based on our evaluation of the CARES Act, we qualify for
certain employer payroll tax credits as well as the deferral of payroll and other tax payments in the future, which will be treated
as government subsidies to offset related operating expenses. During Fiscal 2021, qualified payroll tax credits reduced our selling
and administrative expenses by approximately $13.8 million on our Consolidated Statements of Operations. We also deferred
$9.5 million of qualified payroll taxes in the U.S. that will be repaid in equal installments by December 31, 2021 and December
31, 2022. Savings from the government program in the U.K. has also provided property tax relief of approximately $13.3 million
in Fiscal 2021. Additionally, we recorded a tax receivable of $107.2 million in our U.S. federal jurisdiction as a result of a
carryback of our Fiscal 2021 federal tax losses to prior tax periods under the CARES Act. Due to a higher tax rate in prior tax
periods than the current U.S. federal statutory tax rate of 21%, the carryback claim creates a permanent tax benefit of $46.4
million.
We recorded our income tax expense, deferred tax assets and related liabilities based on our best estimates. As part of this process,
we assessed the likelihood of realizing the benefits of our deferred tax assets. During Fiscal 2021, based on available evidence,
we recorded an additional valuation allowance against previously recorded deferred tax assets in our U.K. jurisdiction of $2.6
million and our Irish jurisdiction of $0.2 million. We will continue to monitor the realizability of our deferred tax assets,
particularly in certain foreign jurisdictions where the COVID-19 pandemic has started to create significant net operating losses.
Our ability to recover these deferred tax assets depends on several factors, including our results of operations and our ability to
project future taxable income in those jurisdictions.
The COVID-19 pandemic remains a rapidly evolving situation. The continuation of the COVID-19 pandemic, its economic
impact and actions taken in response thereto may result in prolonged or recurring periods of store closures and modified operating
schedules and may result in changes in customer behaviors, including a potential reduction in consumer discretionary spending
in our stores. These may lead to increased asset recovery and valuation risks, such as impairment of our store and other assets
and an inability to realize deferred tax assets due to sustaining losses in certain jurisdictions. The uncertainties in the global
economy have and are likely to continue to impact the financial viability of our suppliers, and other business partners, which may
interrupt our supply chain, limit our ability to collect receivables and require other changes to our operations. These and other
factors have and will continue to adversely impact our net revenues, gross margins, operating income and earnings per share
financial measures.
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Note 4
Goodwill and Other Intangible Assets
Goodwill
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Effective January 1, 2020, we completed the acquisition of substantially all of the assets, and assumption of certain liabilities, of
Togast for an aggregate base purchase price of $33.5 million, which was paid in full in cash at the closing. Togast specializes in
the design, sourcing and sale of licensed footwear. We also entered into a new U.S. footwear license agreement with Levi Strauss
& Co. for the license of Levi's® footwear for men, women, and children in the U.S. The Togast purchase includes footwear
licenses for Bass® and FUBU, among others. Togast operates within the Licensed Brands segment.
The changes in the carrying amount of goodwill by segment were as follows:
(In thousands)
Balance, February 1, 2020
Change in opening balance sheet
Impairment
Effect of foreign currency exchange rates
Balance, January 30, 2021
Schuh
Group
84,069 $
—
(79,259 )
(4,810 )
— $
Journeys
Group
9,730 $
—
—
352
10,082 $
$
$
Licensed
Brands
Group
28,385 $
83
—
—
28,468 $
Total
Goodwill
122,184
83
(79,259 )
(4,458 )
38,550
During the first quarter of Fiscal 2021, we identified qualitative indicators of impairment, including a significant decline in our
stock price and market capitalization resulting from the COVID-19 pandemic, since the last consideration of indicators of
impairment in the fourth quarter of Fiscal 2020 for our Schuh Group reporting unit. When indicators of impairment are present
on an interim basis, we must assess whether it is “more likely than not” (i.e., a greater than 50% chance) that an impairment has
occurred. In our Fiscal 2020 annual evaluation of goodwill, we determined the Schuh Group reporting unit was valued at
approximately $8.2 million in excess of its carrying value. Due to the identified indicators of impairment in the first quarter of
Fiscal 2021, we determined that it was “more likely than not” that an impairment had occurred and performed a full valuation of
our Schuh Group reporting. Based upon the results of these analyses, we concluded the goodwill attributed to Schuh Group was
fully impaired. As a result, we recorded an impairment charge of $79.3 million in the first quarter of Fiscal 2021.
Goodwill Valuation (Schuh Group)
We estimated the fair value of our Schuh reporting unit in the first quarter of Fiscal 2021 using a discounted cash flow method
(income approach) weighted 50% and a guideline public company method (market approach) weighted 50%. The key
assumptions used under the income approach include the following:
• Future cash flow assumptions - Our projections for the Schuh reporting unit were based on organic growth and were
derived from historical experience and assumptions regarding future growth and profitability trends, including
considerations for the impact from the outbreak of the COVID-19 pandemic. Our analysis incorporated an assumed
period of cash flows of seven years with a terminal value.
• Discount rate - The discount rate was based on an estimated weighted average cost of capital (“WACC”) for the reporting
unit. The components of WACC are the cost of equity and the cost of debt, each of which requires judgment by
management to estimate. We developed our cost of equity estimate based on perceived risks and predictability of future
cash flows. The WACC used to estimate the fair values of the Schuh reporting unit was 16%.
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Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Note 4
Goodwill and Other Intangible Assets, Continued
The guideline company method involves analyzing transaction and financial data of publicly traded companies to develop
multiples, which are adjusted to account for differences in growth prospects and risk profiles of the reporting unit and comparable
companies.
Other Intangible Assets
Trademark Valuation
In addition, as a result of the factors noted above, we evaluated the fair value of our trademarks during the first quarter of Fiscal
2021. The fair value of trademarks was determined based on the royalty savings approach. This analysis indicated trademark
impairment in our Journeys Group and Johnston & Murphy Group. As a result, we recorded a trademark impairment of $5.3
million in the first quarter of Fiscal 2021. This charge is included in asset impairment and other, net in the accompanying
Consolidated Statements of Operations.
Key assumptions included in the estimation of the fair value for trademarks include the following:
• Future cash flow assumptions - Future cash flow assumptions include retail sales from our retail store operations and
ecommerce retail sales. Sales were based on organic growth and were derived from historical experience and
assumptions regarding future growth, including considerations for the impact of the ongoing COVID-19 pandemic. Our
analysis incorporated an assumed period of cash flows of five years with a terminal value.
• Royalty rate - The royalty rate used to estimate the fair values of our reporting units’ trademarks was 1%.
• Discount rate - The discount rate was based on an estimated WACC for each business. The components of WACC are
the cost of equity and the cost of debt, each of which requires judgment by management to estimate. The WACC used
to estimate the fair values of our reporting units’ trademarks was approximately 15%.
Other intangibles by major classes were as follows:
(In thousands)
Gross other intangibles
Accumulated amortization
Other Intangibles, net
Trademarks(1)
Jan. 30,
Customer Lists(2)
Other(3)
Total
Feb. 1,
Feb. 1,
2021
2020
Jan. 30,
Feb. 1,
2020
2021
400 $ 767 $ 33,460 $ 38,352
$ 26,443 $ 31,023 $ 6,617 $ 6,562 $
— — (2,131 ) (1,509 )
(479 ) (2,531 ) (1,988 )
(400 )
$ 26,443 $ 31,023 $ 4,486 $ 5,053 $ — $ 288 $ 30,929 $ 36,364
Jan. 30,
Jan. 30,
2020
2021
2021
2020
Feb. 1,
(1) Includes a $23.1 million trademark at January 30, 2021 related to Schuh Group and $3.4 million related to Journeys Group.
(2) Includes $5.1 million for the Togast acquisition.
(3) Backlog for Togast.
The amortization of intangibles was $0.9 million and $0.2 million for Fiscal 2021 and Fiscal 2020, respectively, and less than
$0.1 million for Fiscal 2019. Currently, amortization of intangibles is expected to be $0.6 million for each of the next five years.
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Note 5
Asset Impairments and Other Charges
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Asset impairment charges are reflected as a reduction of the net carrying value of property and equipment, and in asset impairment
and other, net in the accompanying Consolidated Statements of Operations.
We recorded a pretax charge to earnings of $18.7 million in Fiscal 2021, including $13.8 million for retail store asset impairments
and $5.3 million for a trademark impairment, partially offset by a $(0.4) million gain for the release of an earnout related to the
Togast acquisition.
We recorded a pretax charge to earnings of $13.4 million in Fiscal 2020, including $11.5 million pension settlement expense and
$3.1 million for retail store asset impairments, partially offset by a $(0.6) million gain on the sale of the Lids Sports Group
headquarters building, a $(0.4) million gain for lease terminations and a $(0.2) million gain related to Hurricane Maria.
We recorded a pretax charge to earnings of $3.2 million in Fiscal 2019, including $4.2 million for retail store asset
impairments, $0.3 million for legal and other matters and $0.1 for hurricane losses, partially offset by a $(1.4) million gain
related to Hurricane Maria.
Note 6
Inventories
(In thousands)
Wholesale finished goods
Retail merchandise
Total Inventories
Note 7
Property and Equipment and Other Current Accrued Liabilities
January 30,
2021
27,851 $
263,115
290,966 $
February 1,
2020
34,271
330,998
365,269
$
$
(In thousands)
Land
Buildings and building equipment
Computer hardware, software and equipment
Furniture and fixtures
Construction in progress
Improvements to leased property
Property and equipment, at cost
Accumulated depreciation
Total Property and Equipment, net
(In thousands)
Accrued employee compensation
Accrued other taxes
Accrued income taxes
Provision for discontinued operations
Other accrued liabilities
Total Other Current Accrued Liabilities
January 30, 2021 February 1, 2020
7,360
$
63,493
140,503
128,542
9,593
342,592
692,083
(453,763 )
238,320
7,451 $
74,617
138,516
127,635
14,422
334,267
696,908
(489,066 )
207,842 $
$
January 30, 2021
11,025 $
15,578
674
527
51,187
78,991 $
February 1, 2020
31,579
11,583
190
495
39,609
83,456
$
$
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Note 8
Fair Value
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
The carrying amounts and fair values of our financial instruments at January 30, 2021 and February 1, 2020 are:
(In thousands)
U.S. Revolver Borrowings
January 30, 2021
February 1, 2020
Carrying
Amount
$
32,986 $
Fair
Value
33,612 $
Carrying
Amount
14,393 $
Fair
Value
14,056
Debt fair values were determined using a discounted cash flow analysis based on current market interest rates for similar types
of financial instruments and would be classified in Level 2 as defined in Note 1.
Carrying amounts reported on our Consolidated Balance Sheets for cash, cash equivalents, receivables and accounts payable
approximate fair value due to the short-term maturity of these instruments.
As of January 30, 2021, we have $13.2 million of long-lived assets held and used which were measured using Level 3 inputs
within the fair value hierarchy. We used a discounted cash flow model to estimate the fair value of these long-lived assets.
Discount rate and growth rate assumptions are derived from current economic conditions, expectations of management and
projected trends of current operating results. As a result, we have determined that the majority of the inputs used to value our
long-lived assets held and used are unobservable inputs that fall within Level 3 of the fair value hierarchy.
Note 9
Long-Term Debt
Credit Facility
On June 5, 2020, we entered into a Second Amendment (the “Second Amendment”) to our Fourth Amended and Restated Credit
Agreement dated as of January 31, 2018 between us and the lenders party thereto and Bank of America, N.A. as agent (as
amended, the “Credit Facility” or the “Credit Agreement”), to, among other things, increase the Total Commitments (as defined
in the Credit Facility) for the revolving loans from $275.0 million to $332.5 million, establish a first-in, last-out (“FILO”) tranche
of indebtedness of $17.5 million, for $350.0 million of total capacity, increase pricing on the revolving loans and modify certain
covenant and reporting terms. The Credit Facility continues to be secured by certain assets of the Company and certain
subsidiaries of the Company, including accounts receivable, inventory, payment intangibles, and deposit accounts and specifically
excludes equity interests, equipment, and most leasehold interests. The Second Amendment to our Credit Facility added a security
interest in certain intellectual property. The Second Amendment also provides for the borrowing base expansion to include real
estate as those assets are added as collateral. In addition, the Second Amendment adds customary real estate covenants to the
Credit Facility. The current outstanding long-term debt balance of $33.0 million bears interest at an average rate of 4.05% and
matures January 31, 2023.
Deferred financing costs incurred of $1.1 million related to the amended Credit Facility were capitalized and are being amortized
over the remaining term of the agreement. The remaining balance of deferred financing costs incurred related to the Credit
Facility are being amortized over the remaining term of the agreement. These costs are included in other non-current assets on
the Consolidated Balance Sheets. In connection with an amendment to the Credit Facility in Fiscal 2019, deferred financing
costs of $0.6 million were written off. Those costs are included in loss on early retirement of debt on the Consolidated Statements
of Operations in Fiscal 2019.
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Note 9
Long-Term Debt, Continued
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
The Credit Facility is a revolving credit facility in the aggregate principal amount of $332.5 million, including (i) for the Company
and other borrowers formed in the U.S., a $70.0 million sublimit for the issuance of letters of credit and a domestic swingline
subfacility of up to $45.0 million, (ii) for GCO Canada ULC, a revolving credit subfacility in an amount not to exceed $70.0
million, which includes a $5.0 million sublimit for the issuance of letters of credit and a swingline subfacility of up to $5.0
million, and (iii) for Genesco (UK) Limited, a revolving credit subfacility in an aggregate amount not to exceed $100.0 million,
which includes a $10.0 million sublimit for the issuance of letters of credit and a swingline subfacility of up to $10.0 million.
Any swingline loans and any letters of credit and borrowings under the Canadian and U.K. subfacilities will reduce the availability
under the Credit Facility on a dollar for dollar basis. We have the option, from time to time, to increase the availability under the
Credit Facility by an aggregate amount of up to $200.0 million subject to, among other things, the receipt of commitments for
the increased amount. In connection with this increased facility, the Canadian revolving credit subfacility may be increased by
no more than $15.0 million and the UK revolving credit subfacility may be increased by no more than $100.0 million. The
aggregate amount of the loans made and letters of credit issued under the Credit Facility are limited to the lesser of the facility
amount ($332.5 million or, if increased as described above, up to $532.5 million) or the "Borrowing Base", as defined in the
Credit Agreement.
We are required to pay a commitment fee on the actual daily unused portions of the Credit Facility at a rate of 0.25% per annum.
The Credit Facility also permits us to incur senior debt in an amount up to the greater of $500.0 million or an amount that would
not cause our ratio of consolidated total indebtedness to consolidated EBITDA to exceed 5.0:1.0 provided that certain terms and
conditions are met.
In addition, the Credit Facility contains certain covenants that, among other things, restrict additional indebtedness, liens and
encumbrances, loans and investments, acquisitions, dividends and other restricted payments, transactions with affiliates, asset
dispositions, mergers and consolidations, prepayments or material amendments to certain material documents and other matters
customarily restricted in such agreements.
The Credit Facility does not require us to comply with any financial covenants unless Excess Availability, as defined in the Credit
Agreement, is less than the greater of $22.5 million or 10% of the Loan Cap. If and during such time as Excess Availability is
less than the greater of $22.5 million or 10% of the Loan Cap, the Credit Facility requires us to meet a minimum fixed charge
coverage ratio. Excess Availability was $147.1 million at January 30, 2021.
The Credit Facility contains customary events of default, which if any of them occurs, would permit or require the principal of
and interest on the Credit Facility to be declared due and payable as applicable.
We were in compliance with all the relevant terms and conditions of the Credit Facility as of January 30, 2021.
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Note 9
Long-Term Debt, Continued
U.K. Credit Agreement
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
On October 9, 2020, Schuh entered into a facility letter (the "Facility Letter") with Lloyds Bank (“Lloyds”) under the U.K.'s
Coronavirus Large Business Interruption Loan Scheme pursuant to which Lloyds made available a revolving capital facility (the
"RCF") of £19.0 million for the purpose of refinancing Schuh's existing indebtedness with Lloyds. The RCF expires in October
2023 and bears interest at 2.5% over the Bank of England Base Rate. The Facility Letter includes certain financial covenants
tested against Schuh, which take effect in the second quarter of Fiscal 2022. Following certain customary events of default
outlined in the Facility Letter, payment of outstanding amounts due under the RCF may be accelerated or the commitments may
be terminated. The RCF is secured by charges over all of the assets of Schuh, and Schuh's subsidiary, Schuh (ROI) Limited.
Pursuant to a Guarantee in favor of Lloyds in its capacity as security trustee, Genesco Inc. has guaranteed the obligations of
Schuh under the Facility Letter and certain existing ancillary facilities on an unsecured basis.
We were in compliance with all the relevant terms and conditions of the Facility Letter as of January 30, 2021.
(In thousands)
U.S. Revolver borrowings
U.K. revolver borrowings
Total long-term debt
Current portion
Total Noncurrent Portion of Long-Term Debt
January 30,
2021
32,986 $
—
32,986
—
32,986 $
$
$
February 1,
2020
14,393
—
14,393
—
14,393
The revolver borrowings outstanding under the Credit Facility at January 30, 2021 included $17.5 million U.S. revolver
borrowings and $15.5 million (£11.3 million) related to Genesco (UK) Limited. We had outstanding letters of credit of $9.8
million under the Credit Facility at January 30, 2021. These letters of credit support lease and insurance indemnifications.
Note 10
Leases
We lease our office space and all of our retail store locations, transportation equipment and other equipment under various
noncancelable operating leases. The leases have varying terms and expire at various dates through 2034. The store leases in the
United States, Puerto Rico and Canada typically have initial terms of approximately 10 years. The store leases in the United
Kingdom and the ROI typically have initial terms of between 10 and 15 years. Our lease portfolio includes leases with fixed
base rental payments, rental payments based on a percentage of retail sales over contractual amounts and others with
predetermined fixed escalations of the minimum rentals based on a defined consumer price index or percentage. Generally, most
of the leases require us to pay taxes, insurance, maintenance costs and contingent rentals based on sales. We evaluate renewal
options and break options at lease inception and on an ongoing basis, and include renewal options and break options that we are
reasonably certain to exercise in our expected lease terms for calculations of our right-of-use assets and liabilities. Approximately
2% of our leases contain renewal options. Our lease agreements do not contain any material residual value guarantees or material
restrictive covenants.
The lease on our Nashville office expires in April 2022. On February 10, 2020, we announced plans for our new corporate
headquarters in Nashville, Tennessee. We entered into a lease agreement, which was subsequently amended, for approximately
182,000 square feet of office space which will replace our current corporate headquarters office lease. The term of the lease is 15
years, with two options to extend for an additional period of five years each.
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Table of Contents
Note 10
Leases, Continued
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Under ASC 842, for store, office and equipment leases beginning in Fiscal 2020 and later, we have elected to not separate fixed
lease components and non-lease components. Accordingly, we include fixed rental payments, common area maintenance costs,
promotional advertising costs and other fixed costs in our measurement of lease liabilities.
Our leases do not provide an implicit rate, so the incremental borrowing rate, based on the information available at
commencement or modification date, is used in determining the present value of lease payments. The incremental borrowing
rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease
payments on a collateralized basis over the term of a lease within a particular currency environment. For operating leases that
commenced prior to the date of adoption of the new lease accounting guidance, we used the incremental borrowing rate that
corresponded to the initial lease term as of the date of adoption.
Net lease costs are included within selling and administrative expenses on the Consolidated Statements of Operations. The table
below presents the components of lease cost for operating leases for the years ended January 30, 2021 and February 1, 2020.
(In thousands)
Operating lease cost
Variable lease cost
Less: Sublease income
Net Lease Cost
Fiscal 2021
160,973 $
9,562
(165 )
170,370 $
Fiscal 2020
184,428
12,176
(307 )
196,297
$
$
Prior to the adoption of ASC 842 as of February 3, 2019 (our Fiscal 2020), rent expense was calculated in accordance with ASC
840, “Leases”. Total rent expense was $202.6 million for Fiscal 2019. Total contingent rent was not material for Fiscal 2019.
The following table reconciles the maturities of undiscounted cash flows to our operating lease liabilities recorded on the
Consolidated Balance Sheets at January 30, 2021:
Fiscal Years
2022
2023
2024
2025
2026
Thereafter
Total undiscounted future minimum lease payments
Less: Amounts representing interest
Total Present Value of Operating Lease Liabilities
(In thousands)
204,457
159,030
132,869
105,026
85,379
114,201
800,962
(99,908 )
701,054
$
$
Our weighted-average remaining lease term and weighted-average discount rate for operating leases as of January 30, 2021 and
February 1, 2020 are:
Weighted-average remaining lease term (years)
Weighted-average discount rate
January 30,
2021
February 1,
2020
5.5 years
5.1%
6.2 years
5.2%
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Note 10
Leases, Continued
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
As of January 30, 2021, we have additional operating leases that have not yet commenced with estimated right of use liabilities
of $68.8 million, primarily related to the new headquarters building lease. These leases will commence between 2021 and 2022
with lease terms of 8 to 15 years, with the 15 year lease being for the new headquarters building.
Beginning in March 2020, we suspended rent payments under the leases for our temporarily closed stores and initiated discussions
with landlords to obtain lease concessions. We have considered the FASB’s recent guidance regarding lease concessions as a
result of the effects of the COVID-19 pandemic and have elected to account for lease concessions related to the effects of the
COVID-19 pandemic consistent with how those concessions would be accounted for under Topic 842 and Topic 840 as though
enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations
for the concessions explicitly exist in the contract). Also, in accordance with the FASB’s guidance, we apply this election for
concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in our obligations or in
the rights of the landlord. We continued to recognize contractual rent expense while lease concessions are under negotiation with
the respective landlord. The rent concessions are recognized in the period when the amendment is executed. COVID-19 related
lease concessions decreased our contractual rent expense by approximately $34 million during Fiscal 2021. As of January 30,
2021, we had an accrued liability for unpaid rent related to the closed stores of $26.9 million. We continue to negotiate lease
concessions with our landlords.
Note 11
Equity
Non-Redeemable Preferred Stock
Class
Employees’ Subordinated Convertible
Preferred
Stated Value of Issued Shares
Employees’ Preferred Stock Purchase
Accounts
Total Non-Redeemable Preferred
Stock
Subordinated Serial Preferred Stock:
Number of Shares
Amounts in Thousands
Shares
Authorized
2021
2020
2019
2021
2020
2019
5,000,000 34,425 34,440 36,147 $ 1,033 $ 1,033 $ 1,084
1,033 1,033 1,084
(24 )
(24 )
(24 )
$ 1,009 $ 1,009 $ 1,060
Our charter permits the Board of Directors to issue Subordinated Serial Preferred Stock (3,000,000 shares, in aggregate, are
authorized) in as many series, each with as many shares and such rights and preferences as the board may designate. We have
shares authorized for $2.30 Series 1, $4.75 Series 3, $4.75 Series 4, Series 6 and $1.50 Subordinated Cumulative Preferred stocks
in amounts of 64,368 shares, 40,449 shares, 53,764 shares, 800,000 shares and 5,000,000 shares, respectively. All of these
preferred stocks were mandatorily redeemed by us in Fiscal 2014. As a result, there are no outstanding shares for any preferred
issues of stock other than Employees' Subordinated Convertible Preferred stock shown in the table above.
Employees’ Subordinated Convertible Preferred Stock:
Stated and liquidation values are 88 times the average quarterly per share dividend paid on common stock for the previous eight
quarters (if any), but in no event less than $30 per share. Each share of this issue of preferred stock is convertible into one share
of common stock and has one vote per share.
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Table of Contents
Note 11
Equity, Continued
Common Stock:
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Common stock-$1 par value. Authorized: 80,000,000 shares; issued: January 30, 2021 – 15,438,338 shares; February 1, 2020 –
15,185,670 shares. There were 488,464 shares held in treasury at January 30, 2021 and February 1, 2020. Each outstanding share
is entitled to one vote. At January 30, 2021, common shares were reserved as follows: 34,425 shares for conversion of preferred
stock and 1,261,501 shares for the 2020 Genesco Inc. Equity Incentive Plan (the "2020 Plan").
For the year ended January 30, 2021, 428,362 shares of common stock were issued as restricted shares as part of the Second
Amended and Restated 2009 Genesco Inc. Equity Incentive Plan (the “2009 Plan”); 38,723 shares were issued to directors in
exchange for their services; 64,382 shares were withheld for taxes on restricted stock vested in Fiscal 2021; 150,050 shares of
restricted stock were forfeited in Fiscal 2021; and 15 shares were issued in miscellaneous conversions of Employees’
Subordinated Convertible Preferred Stock. We did not repurchase any shares of common stock in Fiscal 2021. We have $89.7
million remaining under our current $100.0 million share repurchase authorization.
For the year ended February 1, 2020, 270,173 shares of common stock were issued as restricted shares as part of the 2009 Plan;
25,368 shares were issued to directors in exchange for their services; 55,598 shares were withheld for taxes on restricted stock
vested in Fiscal 2020; 77,013 shares of restricted stock were forfeited in Fiscal 2020; and 1,707 shares were issued in
miscellaneous conversions of Employees’ Subordinated Convertible Preferred Stock. In addition, the Company repurchased and
retired 4,570,015 shares of common stock at an average weighted market price of $41.44 for a total of $189.4 million
For the year ended February 2, 2019, 353,633 shares of common stock were issued as restricted shares as part of the 2009 Plan;
36,421 shares were issued to directors in exchange for their services; 69,762 shares were withheld for taxes on restricted stock
vested in Fiscal 2019; 153,646 shares of restricted stock were forfeited in Fiscal 2019; and 524 shares were issued in
miscellaneous conversions of Employees’ Subordinated Convertible Preferred Stock. In addition, the Company repurchased and
retired 968,375 shares of common stock at an average weighted market price of $47.45 for a total of $45.9 million.
Restrictions on Dividends and Redemptions of Capital Stock:
Our charter provides that no dividends may be paid and no shares of capital stock acquired for value if there are dividend or
redemption arrearages on any senior or equally ranked stock. Exchanges of subordinated serial preferred stock for common stock
or other stock junior to such exchanged stock are permitted.
Note 12
Income Taxes
On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted in the United States. The Act includes a number of
changes to existing U.S. tax laws that impact us including the reduction of the U.S. corporate income tax rate from 35% to 21%
for tax years beginning after December 31, 2017. The Act also provides for a one-time transition tax on indefinitely reinvested
foreign earnings and the acceleration of depreciation for certain assets placed into service after September 27, 2017, as well as
prospective changes beginning in 2018, including the elimination of certain domestic deductions and credits and additional
limitations on the deductibility of executive compensation. While we consider our accounting for the Act to be complete, we
continue to evaluate new guidance and legislation as it is issued.
68
Table of Contents
Note 12
Income Taxes, Continued
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
The components of earnings from continuing operations before income taxes is comprised of the following:
(In thousands)
United States
Foreign
$
2021
(3,123 ) $
(108,546 )
2020
83,871 $
(1,436 )
2019
84,807
(6,548 )
Total Earnings (Loss) from Continuing Operations before Income
Taxes
$
(111,669 ) $
82,435 $
78,259
Income tax expense from continuing operations is comprised of the following:
(In thousands)
Current
U.S. federal
International
State
Total Current Income Tax Expense (Benefit)
Deferred
U.S. federal
International
State
$
Total Deferred Income Tax Expense
Total Income Tax Expense (Benefit) – Continuing Operations
$
2021
2020
2019
(106,397 ) $
1,391
10,223
(94,783 )
48,511
2,773
(12,142 )
39,142
(55,641 ) $
16,313 $
322
3,383
20,018
(463 )
1,145
(22 )
660
20,678 $
13,657
1,649
4,029
19,335
3,632
2,594
1,474
7,700
27,035
Reconciliation of the United States federal statutory rate to our effective tax rate from continuing operations is as follows:
U. S. federal statutory rate of tax
State taxes (net of federal tax benefit)
Foreign rate differential
Change in valuation allowance
Credits
Permanent items
Uncertain federal, state and foreign tax positions
Transition tax
CARES Act
Outside Basis Difference - IRC Section 165(g) 3
Goodwill Impairment
Other
Effective Tax Rate
2021
21.00 %
1.35
(0.25 )
(10.70 )
0.44
(0.66 )
—
—
41.53
10.34
(13.50 )
0.28
49.83 %
2020
21.00 %
3.62
(2.21 )
3.64
(0.93 )
1.72
(2.01 )
—
—
—
—
0.25
25.08 %
2019
21.00 %
5.67
(2.56 )
11.51
(2.65 )
2.27
(1.68 )
2.23
—
—
—
(1.24 )
34.55 %
69
Table of Contents
Note 12
Income Taxes, Continued
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
The Fiscal 2021 effective tax rate reflects the favorable impact of the CARES Act, enacted on March 27, 2020. Due to the net
operating loss provisions of the CARES Act, we realized a $46.4 million tax benefit in Fiscal 2021. A change to our international
operations that took effect in January 2021 resulted in an additional $12.8 million tax benefit in Fiscal 2021. These tax benefits
were offset partially by an increase in the valuation allowance in foreign jurisdictions and a non-deductible goodwill impairment
charge.
We are subject to a tax on global intangible low-tax income (“GILTI”). GILTI taxes foreign income in excess of deemed return
on tangible assets of a foreign corporation and we elected to treat this tax as a period cost. Because of tax losses in foreign
jurisdictions, there was no liability for GILTI in any period.
Deferred tax assets and liabilities are comprised of the following:
(In thousands)
Pensions
Lease obligation
Book over tax depreciation
Expense accruals
Uniform capitalization costs
Provisions for discontinued operations and restructurings
Inventory valuation
Tax net operating loss and credit carryforwards
Allowances for bad debts and notes
Deferred compensation and restricted stock
Identified intangibles
Other
Gross deferred tax assets
Deferred tax asset valuation allowance
Deferred tax asset net of valuation allowance
Identified intangibles
Prepaids
Right of use asset
Tax over book depreciation
Other
Gross deferred tax liabilities
Net Deferred Tax Assets (Liabilities)
January 30,
2021
229 $
175,113
13,528
10,388
4,886
650
2,242
39,829
888
2,945
1,586
34
252,318
(36,561 )
215,757
(4,677 )
(1,765 )
(163,674 )
(64,009 )
(1,120 )
(235,245 )
(19,488 ) $
$
$
February 1,
2020
332
188,590
4,558
7,386
7,292
674
810
11,972
181
3,344
—
144
225,283
(23,333 )
201,950
(3,616 )
(1,929 )
(176,930 )
—
—
(182,475 )
19,475
We have an income tax receivable of $108.6 million included in prepaids and other current assets on the Consolidated Balance
Sheets as of January 30, 2021.
The deferred tax balances have been classified in our Consolidated Balance Sheets as follows:
Net non-current asset
Net non-current liability
Net Deferred Tax Assets
$
$
2021
- $
(19,488 )
(19,488 ) $
2020
19,475
-
19,475
70
Table of Contents
Note 12
Income Taxes, Continued
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
As of January 30, 2021 and February 1, 2020, we had state net operating loss carryforwards of $22.4 million and $3.4 million,
respectively. We provided a valuation allowance against these attributes of $3.2 million as of January 30, 2021 and February 1,
2020. The attributes expire in fiscal years 2022 through 2039.
As of January 30, 2021 and February 1, 2020, we had state tax credits of $0.5 million and $0.6 million, respectively. These
credits expire in fiscal years 2022 through 2026.
As of January 30, 2021 and February 1, 2020, we had foreign net operating loss carryforwards of $57.6 million and $29.5 million,
respectively, which have a carryforward period at least 18 years.
As of January 30, 2021, we have provided a total valuation allowance of approximately $36.6 million on deferred tax assets
associated primarily with foreign and state net operating losses for which management has determined it is more likely than not
that the deferred tax assets will not be realized. The $13.3 million net increase in valuation allowance during Fiscal 2021 from
the $23.3 million provided for as of February 1, 2020 relates primarily to foreign tax attributes. Management believes that it is
more likely than not that the remaining deferred tax assets will be fully realized.
As of January 30, 2021, no deferred taxes have been provided on the accumulated undistributed earnings of our foreign operations
beyond the amounts recorded for deemed repatriation of such earnings, as required in the Act. An actual repatriation of earnings
from our foreign operations could still be subject to additional foreign withholding and U.S. state taxes. Based upon evaluation
of our foreign operations, undistributed earnings are intended to remain permanently reinvested to finance anticipated future
growth and expansion, and accordingly, deferred taxes have not been provided. If undistributed earnings of our foreign operations
were not considered permanently reinvested as of January 30, 2021, an immaterial amount of additional deferred taxes would
have been provided.
The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for Fiscal 2021, 2020 and 2019.
(In thousands)
Unrecognized Tax Benefit – Beginning of Period
Gross Increases (Decreases) – Tax Positions in a Current Period
Settlements
Lapse of Statutes of Limitations
Unrecognized Tax Benefit – End of Period
$
$
2021
178 $
—
—
—
178 $
2020
1,835 $
178
(931 )
(904 )
178 $
2019
3,701
(638 )
—
(1,228 )
1,835
The amount of unrecognized tax benefits as of January 30, 2021, February 1, 2020 and February 2, 2019 which would impact
the annual effective rate if recognized were $0.2 million, $0.2 million and $0.6 million, respectively. The amount of unrecognized
tax benefits may change during the next twelve months but we do not believe the change, if any, will be material to our
consolidated financial position or results of operations.
We recognize interest expense and penalties related to the above unrecognized tax benefits within income tax expense on the
Consolidated Statements of Operations and it was not material for Fiscal 2021, 2020 or 2019.
We file income tax returns in federal and in many state and local jurisdictions as well as foreign jurisdictions. With few exceptions,
our state and local income tax returns for fiscal years ended January 31, 2018 and beyond remain subject to examination. In
addition, we have subsidiaries in various foreign jurisdictions that have statutes of limitation generally ranging from two to six
years. Our US federal income tax returns for fiscal years ended January 31, 2018 and beyond remain subject to examination.
71
Table of Contents
Note 13
Other Postretirement Benefit Plans
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
We provide health care benefits for early retirees that meet certain age and years of service criteria and life insurance benefits for
certain retirees. Under the health care plan, early retirees are eligible for benefits until age 65. Employees who met certain
requirements are eligible for life insurance benefits. We accrue such benefits during the period in which the employee renders
service.
Obligations and Funded Status
The measurement date of the assets and liabilities for postretirement medical and life insurance plans is the month-end date that
is closest to our fiscal year end.
Change in Benefit Obligation
(In thousands)
Benefit obligation at beginning of year
Service cost
Interest cost
Plan participants’ contributions
Asset transfer
Benefits paid
Actuarial (gain) loss
Benefit Obligation at End of Year
Funded Status at End of Year
Amounts recognized in the Consolidated Balance Sheets consist of:
(In thousands)
Current liabilities
Noncurrent liabilities
Net Amount Recognized
Amounts recognized in accumulated other comprehensive income consist of:
(In thousands)
Prior service cost
Net loss (gain)
Total Recognized in Accumulated Other Comprehensive Loss
Other Benefits
2021
7,025 $
89
124
134
—
(550 )
(1,216 )
5,606 $
(5,606 ) $
2020
4,525
89
151
111
—
(591 )
2,740
7,025
(7,025 )
Other Benefits
2021
(708 ) $
(4,898 )
(5,606 ) $
2020
(603 )
(6,422 )
(7,025 )
Other Benefits
2021
(322 ) $
1,040
718 $
2020
(1,244 )
2,384
1,140
$
$
$
$
$
$
$
72
Table of Contents
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Note 13
Other Postretirement Benefit Plans, Continued
Components of Net Periodic Benefit Cost
Net Periodic Benefit Cost
(In thousands)
Service cost
Interest cost
Amortization:
Prior service cost
Losses
Net amortization
Other components of net periodic benefit cost
Net Periodic Benefit Cost - Ongoing Operations
Net Periodic Benefit Cost - Discontinued
Operations
Reconciliation of Accumulated Other Comprehensive Income
Other Benefits
2021
89 $
2020
89 $
124
151
(921 )
128
(793 )
(669 ) $
(580 ) $
(921 )
22
(899 )
(748 ) $
(659 ) $
2019
409
214
(231 )
37
(194 )
20
429
— $
— $
(877 )
$
$
$
$
(In thousands)
Net (gain) loss
Amortization of prior service cost
Amortization of net actuarial loss
Total Recognized in Other Comprehensive Income
Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income
Weighted-average assumptions used to determine benefit obligations
Discount rate
Rate of compensation increase
Other Benefits
2021
(1,216 )
921
(128 )
(423 )
(1,003 )
$
$
$
Other Benefits
2021
1.49 %
NA
2020
2.21 %
NA
For Fiscal 2021 and 2020, the discount rate was based on a yield curve of high-quality corporate bonds with cash flows matching
our planned expected benefit payments.
Weighted-average assumptions used to determine net periodic benefit costs
Discount rate
Expected long-term rate of return on plan assets
Rate of compensation increase
Other Benefits
2021
1.49 %
NA
NA
2020
3.48 %
NA
NA
2019
3.67 %
NA
NA
73
Table of Contents
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Note 13
Other Postretirement Benefit Plans, Continued
Assumed health care cost trend rates
Health care cost trend rate assumed for next year
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
Year that the rate reaches the ultimate trend rate
Estimated Future Benefit Payments
2021
6.25 %
5.75 %
2023
2020
7.25 %
6.25 %
2024
Expected benefit payments for other postretirement benefits, paid from the employee benefit trust, are as follows:
Estimated future payments
2021
2022
2023
2024
2025
2026 – 2030
Section 401(k) Savings Plan
$
Other
Benefits
($ in millions)
0.7
0.6
0.6
0.5
0.5
2.0
We have a Section 401(k) Savings Plan available to all employees, including retail employees who have completed 500 hours of
service within the first six months of employment, and are age 18 or older.
Since January 1, 2005, we have matched 100% of each employee’s contribution of up to 3% of salary and 50% of the next 2%
of salary. In addition, for those employees hired before December 31, 2004, who were eligible for our cash balance retirement
plan before it was frozen, we annually make an additional contribution of 2 1/2 % of salary to each employee’s account.
Participants are immediately vested in their contributions and our matching contribution plus actual earnings thereon. Our
contribution expense for the matching program was approximately $2.9 million for Fiscal 2021, $5.3 million for Fiscal 2020 and
$5.6 million for Fiscal 2019. As a result of the COVID-19 pandemic, we suspended our match of employee contributions as of
May 1, 2020. The match was reinstated on January 1, 2021.
Note 14
Earnings Per Share
Basic earnings per share excludes dilution and is computed by dividing income available to common shareholders by the weighted
average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could
occur if securities to issue common stock were exercised or converted to common stock.
74
Table of Contents
Note 14
Earnings Per Share, Continued
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Weighted-average number of shares used for earnings per share is as follows:
(Shares in thousands)
Weighted-average number of shares - basic
Common stock equivalents
Weighted-average number of shares - diluted
Fiscal Year
2021
14,216
—
14,216
2020
15,544
127
15,671
2019
19,351
144
19,495
Common stock equivalents are excluded in Fiscal 2021 due to the loss from continuing operations.
Note 15
Share-Based Compensation Plans
We have share-based compensation covering certain members of management and non-employee directors. The fair value of
employee restricted stock is determined based on the closing price of our stock on the date of grant. Forfeitures for restricted
stock are recognized as they occur.
Stock and Cash Incentive Plans
Under the 2020 Plan, which became effective June 25, 2020, we may grant options, restricted shares, performance awards and
other stock-based awards to our key employees, non-employee directors and consultants for up to 1.8 million shares of common
stock. The 2020 Plan replaced our Second Amended and Restated 2009 Equity Incentive Plan (the “2009 Plan”). There will be
no future awards under the 2009 Plan. Under both plans, the exercise price of each option equals the market price of our stock
on the date of grant, and an option’s maximum term is 10 years. Options granted under the plan primarily vest 25% per year over
four years. Restricted share grants deplete the shares available for future grants at a ratio of 2.0 shares per restricted share grant.
In addition, we established the 2020 Restricted Cash Incentive Program (the “Program”) in Fiscal 2021 to attract and retain
executive officers and key employees. Total cash of $2.7 million was granted in June 2020 under this Program. Cash granted
under the Program will primarily vest 25% per year over four years. Only employees that were employed as of the grant date
were eligible for the Program. The compensation paid under the Program is taxable and subject to applicable tax withholding
requirements. Compensation expense recognized in selling and administrative expenses in the accompanying Consolidated
Statements of Operations, for this cash grant was $0.4 million for Fiscal 2021.
On February 5, 2020, our new chief executive officer was issued a one-time grant of stock options under the 2009 Plan of 26,620
shares with a grant date fair value of $500,000. The fair value of the one-time stock option is recognized as compensation expense
ratably over the vesting period. We estimated the fair value of the stock option award as of the date of the grant by applying
a Black-Scholes pricing valuation model. The application of this valuation model involves assumptions that are judgmental and
highly sensitive in the determination of compensation expense. The key assumptions used in determining the fair value of the
stock option award granted during Fiscal 2021 were expected price volatility of 45.0%, a risk-free rate of 1.52% and a weighted
average term of 6.25 years. This resulted in a fair value of $18.78 per share for this one-time stock option.
We recognized $0.1 million of stock option related share-based compensation in Fiscal 2021 in selling and administrative
expenses in the accompanying Consolidated Statements of Operations. As of January 30, 2021, there was $0.4 million of
unrecognized compensation expense related to these stock options under the 2009 Plan. For Fiscal 2020 and 2019, we did not
recognize any stock option related share-based compensation for our stock incentive plans as all such amounts were fully
recognized in earlier periods. We did not capitalize any share-based compensation expense.
75
Table of Contents
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Note 15
Share-Based Compensation Plans, Continued
Restricted Stock Incentive Plans
Director Restricted Stock
The 2020 Plan permits grants to non-employee directors on such terms as the Board of Directors may approve. Restricted stock
awards were made to independent directors on the date of the annual meeting of shareholders in each of Fiscal 2021, 2020 and
2019. The shares granted in each award vested on the earlier of the first anniversary of the grant date and the date of the next
annual meeting of shareholders, subject to the director's continued service through that date. For awards made prior to Fiscal
2021, the director is restricted from selling, transferring, pledging or assigning the shares for three years from the grant date
unless he or she earlier leaves the board.
The grants for Fiscal 2021, 2020 and 2019 were valued at $91,375 for each year, per director, with the exception of two new
directors with a grant valued at $106,605 each in Fiscal 2019, based on the average closing price of the stock for the first five
trading days of the month in which they were granted and vested on the first anniversary of the grant date. In addition, we issued
1,338 shares to a newly elected director in Fiscal 2021. For Fiscal 2021, 2020 and 2019, we issued 28,266 shares, 14,455 shares
and 22,042 shares, respectively, of director restricted stock.
In addition, the 2009 Plan permitted an outside director to elect irrevocably to receive all or a specified portion of his annual
retainers for board membership and any committee chairmanship for the following fiscal year in a number of shares of restricted
stock (the "Retainer Stock"). Shares of the Retainer Stock were granted as of the first business day of the fiscal year as to which
the election was effective, subject to forfeiture to the extent not earned upon the outside director's ceasing to serve as a director
or committee chairman during such fiscal year. Once the shares were earned, the director is restricted from selling, transferring,
pledging or assigning the shares for an additional three years. The 2020 Plan does not permit the issuance of retainer stock. For
Fiscal 2021, 2020 and 2019, we issued 10,457 shares, 10,913 shares and 14,379 shares, respectively, of Retainer Stock. Director
retainer fees were reduced during Fiscal 2021 primarily related to the COVID-19 pandemic. In connection with the fee reduction,
2,965 shares of Retainer Stock were forfeited during Fiscal 2021.
We recognized $0.9 million, $1.3 million and $1.3 million of director restricted stock related share-based compensation in Fiscal
2021, 2020 and 2019 in selling and administrative expenses in the accompanying Consolidated Statements of Operations.
Employee Restricted Stock
Under the 2009 Plan, we issued 427,741 shares, 269,816 shares and 352,060 shares of employee restricted stock in Fiscal 2021,
2020 and 2019, respectively. Shares of employee restricted stock issued in Fiscal 2021, 2020 and 2019 primarily vest 25% per
year over four years, provided that on such date the grantee has remained continuously employed by the Company since the date
of grant. In addition, we issued 621, 1,800 and 4,388 restricted stock units in Fiscal 2021, 2020 and 2019, respectively, to certain
employees at no cost that vest over three years. The fair value of employee restricted stock is charged against income as
compensation expense over the vesting period. Compensation expense recognized in selling and administrative expenses in the
accompanying Consolidated Statements of Operations for these shares was $7.4 million, $8.8 million and $12.1 million for Fiscal
2021, 2020 and 2019, respectively, and is inclusive of discontinued operations of $2.0 million in Fiscal 2019.
76
Table of Contents
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Note 15
Share-Based Compensation Plans, Continued
A summary of the status of our nonvested shares of our employee restricted stock as of January 30, 2021 is presented
below:
Nonvested Restricted Shares
Nonvested at February 3, 2018
Granted
Vested
Withheld for federal taxes
Forfeited
Nonvested at February 2, 2019
Granted
Vested
Withheld for federal taxes
Forfeited
Nonvested at February 1, 2020
Granted
Vested
Withheld for federal taxes
Forfeited
Nonvested at January 30, 2021
Weighted-
Average
Grant-Date
Fair Value
48.37
40.90
54.12
54.26
42.66
42.99
42.48
47.56
46.51
42.19
41.46
19.62
50.35
50.29
36.62
27.98
Shares
640,080 $
352,060
(177,394 )
(69,762 )
(153,646 )
591,338
269,816
(138,765 )
(55,598 )
(77,013 )
589,778
427,741
(139,962 )
(64,382 )
(147,085 )
666,090 $
As of January 30, 2021, we had $14.5 million of total unrecognized compensation expense related to nonvested share-based
compensation arrangements for restricted stock discussed above. That cost is expected to be recognized over a weighted average
period of 1.77 years.
Note 16
Legal Proceedings
Environmental Matters
New York State Environmental Matters
In August 1997, the New York State Department of Environmental Conservation (“NYSDEC”) and the Company entered into a
consent order whereby we assumed responsibility for conducting a remedial investigation and feasibility study and implementing
an interim remedial measure with regard to the site of a knitting mill operated by a former subsidiary of ours from 1965 to 1969.
The United States Environmental Protection Agency (“EPA”), which assumed primary regulatory responsibility for the site from
NYSDEC, issued a Record of Decision in September 2007. The Record of Decision specified a remedy of a combination of
groundwater extraction and treatment and in-situ chemical oxidation.
In September 2015, the EPA adopted an amendment to the Record of Decision eliminating the separate ground-water extraction
and treatment systems and the use of in-situ oxidation from the remedy adopted in the Record of Decision. The amendment
provides for the continued operation and maintenance of the existing wellhead treatment systems on wells operated by the Village
77
Table of Contents
Note 16
Legal Proceedings, Continued
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
of Garden City, New York (the "Village"). It also requires us to perform certain ongoing monitoring, operation and maintenance
activities and to reimburse EPA's future oversight cost, involving future costs to us estimated to be between $1.7 million and $2.0
million, and to reimburse EPA for approximately $1.25 million of interim oversight costs. On August 15, 2016, the Court entered
a Consent Judgment implementing the remedy provided for by the amendment.
The Village additionally asserted that we are liable for the costs associated with enhanced treatment required by the impact of the
groundwater plume from the site on two public water supply wells, including historical total costs ranging from approximately
$1.8 million to in excess of $2.5 million, and future operation and maintenance costs which the Village estimated at $126,400
annually while the enhanced treatment continues. On December 14, 2007, the Village filed a complaint (the "Village Lawsuit")
against us and the owner of the property under the Resource Conservation and Recovery Act (“RCRA”), the Safe Drinking Water
Act, and the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) as well as a number of
state law theories in the U.S. District Court for the Eastern District of New York, seeking an injunction requiring the defendants
to remediate contamination from the site and to establish their liability for future costs that may be incurred in connection with
it.
In June 2016 we reached an agreement with the Village providing for the Village to continue to operate and maintain the well
head treatment systems in accordance with the Record of Decision and to release its claims against us asserted in the Village
Lawsuit in exchange for a lump-sum payment of $10.0 million by us. On August 25, 2016, the Village Lawsuit was dismissed
with prejudice. The cost of the settlement with the Village and the estimated costs associated with our compliance with the
Consent Judgment were covered by our existing provision for the site. The settlement with the Village did not have, and we
expect that the Consent Judgment will not have, a material effect on our financial condition or results of operations.
In April 2015, we received from EPA a Notice of Potential Liability and Demand for Costs (the "Notice") pursuant to CERCLA
regarding the site in Gloversville, New York of a former leather tannery operated by us and by other, unrelated parties. The
Notice demanded payment of approximately $2.2 million of response costs claimed by EPA to have been incurred to conduct
assessments and removal activities at the site. In February 2017, we entered into a settlement agreement with EPA resolving their
claim for past response costs in exchange for a payment by us of $1.5 million which was paid in May 2017. Our environmental
insurance carrier has reimbursed us for 75% of the settlement amount, subject to a $500,000 self-insured retention. We do not
expect any additional cost related to the matter.
Whitehall Environmental Matters
We have performed sampling and analysis of soil, sediments, surface water, groundwater and waste management areas at our
former Volunteer Leather Company facility in Whitehall, Michigan.
In October 2010, we entered into a Consent Decree with the Michigan Department of Natural Resources and Environment
providing for implementation of a remedial Work Plan for the facility site designed to bring the site into compliance with
applicable regulatory standards. The Work Plan's implementation is substantially complete and we expect, based on our present
understanding of the condition of the site, that our future obligations with respect to the site will be limited to periodic monitoring
and that future costs related to the site should not have a material effect on our financial condition or results of operations.
78
Table of Contents
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Note 16
Legal Proceedings, Continued
Accrual for Environmental Contingencies
Related to all outstanding environmental contingencies, we had accrued $1.5 million as of January 30, 2021, $1.5 million as of
February 1, 2020 and $1.8 million as of February 2, 2019. All such provisions reflect our estimates of the most likely cost
(undiscounted, including both current and noncurrent portions) of resolving the contingencies, based on facts and circumstances
as of the time they were made. There is no assurance that relevant facts and circumstances will not change, necessitating future
changes to the provisions. Such contingent liabilities are included in the liability arising from provision for discontinued
operations on the accompanying Consolidated Balance Sheets because it relates to former facilities operated by us. We have made
pretax accruals for certain of these contingencies, including approximately $0.3 million in Fiscal 2021, $0.4 million in Fiscal
2020 and $0.7 million in Fiscal 2019. These charges are included in loss from discontinued operations, net in the Consolidated
Statements of Operations and represent changes in estimates.
In addition to the matters specifically described in this Note, we are a party to other legal and regulatory proceedings and claims
arising in the ordinary course of our business. While management does not believe that our liability with respect to any of these
other matters is likely to have a material effect on our financial statements, legal proceedings are subject to inherent uncertainties
and unfavorable rulings could have a material adverse impact on our financial statements.
Note 17
Business Segment Information
The accounting policies of the segments are the same as those described in the summary of significant accounting policies.
Our reportable segments are based on management's organization of the segments in order to make operating decisions and assess
performance along types of products sold. Journeys Group and Schuh Group sell primarily branded products from other
companies while Johnston & Murphy Group and Licensed Brands sell primarily our owned and licensed brands.
Corporate assets include cash, domestic prepaid rent expense, prepaid income taxes, pension asset, deferred income taxes,
deferred note expense on revolver debt and corporate fixed assets, including the former Lids Sports Group headquarters building
in Fiscal 2019, and miscellaneous investments. We do not allocate certain costs to each segment in order to make decisions and
assess performance. These costs include corporate overhead, bank fees, interest expense, interest income, goodwill impairment,
asset impairment charges and other, including a pension settlement charge, major litigation and major lease terminations.
79
Table of Contents
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Note 17
Business Segment Information, Continued
Fiscal 2021
(In thousands)
Sales
Intercompany sales
Net sales to external customers
Segment operating income (loss)
Goodwill impairment(1)
Asset impairments and other(2)
Operating income (loss)
Other components of net periodic benefit income
Interest expense
Interest income
Earnings (loss) from continuing operations
before income taxes
Total assets(3)
Depreciation and amortization
Capital expenditures
Johnston
&
Murphy
Licensed
Corporate
Journeys
Schuh
Group
Group
Group
Brands
$ 1,227,954 $ 305,941 $ 152,941 $ 101,287 $
(1,593 )
—
$ 1,227,954 $ 305,941 $ 152,941 $ 99,694 $
$
—
—
—
—
—
—
76,896 $ (11,602 ) $ (47,624 ) $ (5,430 ) $ (21,548 ) $
(79,259 )
—
(18,682 )
—
(5,430 ) (119,489 )
76,896 (11,602 ) (47,624 )
670
—
(5,342 )
—
252
—
—
—
—
—
—
—
—
—
—
—
—
& Other Consolidated
— $ 1,788,123
—
(1,593 )
— $ 1,786,530
(9,308 )
(79,259 )
(18,682 )
(107,249 )
670
(5,342 )
252
76,896 $ (11,602 ) $ (47,624 ) $ (5,430 ) $ (123,909 ) $
(111,669 )
$
$ 767,535 $ 232,681 $ 159,027 $ 58,320 $ 369,805 $ 1,587,368
46,499
24,130
29,326
16,188
8,885
2,794
1,484
728
1,317
356
5,487
4,064
(1) Goodwill impairment of $79.3 million is related to Schuh Group.
(2) Asset Impairments and other includes a $13.8 million charge for retail store asset impairments, of which $7.0 million is in
the Johnston & Murphy Group, $4.1 million is in the Journeys Group and $2.7 million is in the Schuh Group, and a $5.3
million charge for trademark impairment, partially offset by a $(0.4) million gain for the release of an earnout related to the
Togast acquisition.
(3) Of our $829.6 million of long-lived assets, $140.9 million and $35.1 million relate to long-lived assets in the United Kingdom
and Canada, respectively.
80
Table of Contents
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Note 17
Business Segment Information, Continued
Fiscal 2020
(In thousands)
Sales
Intercompany sales
Net sales to external customers
Segment operating income (loss)
Asset impairments and other(1)
Operating income
Other components of net periodic benefit
income
Interest expense
Interest income
Earnings from continuing operations
before income taxes
Total assets(2)
Depreciation and amortization
Capital expenditures
Journeys
Group
Schuh
Group
Licensed
Corporate
Group
Brands
Johnston
& Murphy
$ 1,460,253 $ 373,930 $ 300,850 $ 61,859 $
—
$ 1,460,253 $ 373,930 $ 300,850 $ 61,859 $
$ 114,945 $
—
—
—
114,945
4,659 $
—
4,659
17,702 $
—
17,702
& Other Consolidated
174 $ 2,197,066
—
—
174 $ 2,197,066
96,692
(13,374 )
83,318
(698 ) $ (39,916 ) $
(13,374 )
(53,290 )
—
(698 )
—
—
—
—
—
—
—
—
—
—
—
—
395
(3,339 )
2,061
395
(3,339 )
2,061
4,659 $
$ 114,945 $
82,435
$ 908,312 $ 363,205 $ 197,670 $ 63,385 $ 147,906 $ 1,680,478
49,574
29,767
29,122 11,466
4,890
17,920
(698 ) $ (54,173 ) $
2,235
989
6,091
5,540
660
428
17,702 $
(1) Asset Impairments and other includes an $11.5 million pension settlement expense and a $3.1 million charge for retail store
asset impairments, of which $1.2 million is in the Johnston & Murphy Group, $1.2 million is in the Schuh Group and $0.7
million is in the Journeys Group, partially offset by a $(0.6) million gain on the sale of the Lids Sports Group headquarters
building, a $(0.4) million gain for lease terminations and a $(0.2) million gain related to Hurricane Maria.
(2) Of our $973.4 million of long-lived assets, $174.4 million and $46.2 million relate to long-lived assets in the United Kingdom
and Canada, respectively.
81
Table of Contents
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Note 17
Business Segment Information, Continued
Fiscal 2019
(In thousands)
Sales
Intercompany sales
Net sales to external customers
Segment operating income (loss)
Asset impairments and other(1)
Operating income
Loss on early retirement of debt
Other components of net periodic benefit
income
Interest expense
Interest income
Earnings from continuing operations
before income taxes
Total assets(2)
Depreciation and amortization(3)
Capital expenditures(4)
Johnston
& Murphy
Licensed
Corporate
Journeys
Group
Schuh
Group
—
—
Group
Brands
$ 1,419,993 $ 382,591 $ 313,134 $ 72,576 $
(12 )
$ 1,419,993 $ 382,591 $ 313,134 $ 72,564 $
$ 100,799 $
—
100,799
—
20,385 $
—
20,385
—
3,765 $
—
3,765
—
—
(488 )
—
& Other Consolidated
271 $ 2,188,565
—
(12 )
271 $ 2,188,553
84,980
(3,163 )
81,817
(597 )
(488 ) $ (39,481 ) $
(3,163 )
(42,644 )
(597 )
—
—
—
—
—
—
—
—
—
—
—
—
—
380
(4,115 )
774
380
(4,115 )
774
3,765 $
78,259
$ 100,799 $
$ 425,842 $ 211,983 $ 128,525 $ 24,004 $ 390,727 $ 1,181,081
52,161
41,780
28,121 14,193
7,226
26,114
(488 ) $ (46,202 ) $
2,693
1,752
6,517
6,526
637
162
20,385 $
(1) Asset Impairments and other includes a $4.2 million charge for retail store asset impairments, of which $2.4 million is in the
Schuh Group, $1.6 million is in the Journeys Group and $0.2 million is in the Johnston & Murphy Group, a $0.3 million
charge for legal and other matters and a $0.1 million charge for hurricane losses, partially offset by a $(1.4) million gain
related to Hurricane Maria.
(2) Of our $277.4 million of long-lived assets, $44.6 million and $12.8 million relate to long-lived assets in the United Kingdom
and Canada, respectively.
(3) Excludes $24.8 million of depreciation and amortization related to Lids Sports Group. This amount is included in
depreciation and amortization in our Consolidated Statements of Cash Flows as we did not segregate cash flows related to
discontinued operations.
(4) Excludes $15.4 million of capital expenditures related to Lids Sports Group. This amount is included in capital expenditures
in our Consolidated Statements of Cash Flows as we did not segregate cash flows related to discontinued operations.
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Table of Contents
Note 18
Discontinued Operations
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
On December 14, 2018, we entered into a definitive agreement for the sale of Lids Sports Group to FanzzLids Holdings, LLC
(the "Purchaser"), a holding company controlled and operated by affiliates of Ames Watson Capital, LLC. The sale was
completed on February 2, 2019 for $93.8 million cash which consisted of a sales price of $100.0 million and working capital
adjustments of $6.2 million. We provided various transition services to the Purchaser for a period of up to six months under a
separate agreement after the closing.
During the fourth quarter of Fiscal 2019, we recorded a loss on the sale of Lids Sports Group of $98.3 million, net of tax, on the
sale of these assets, representing the sales price less the value of the Lids Sports Group assets sold and other miscellaneous
charges, including divestiture transaction costs, offset by a tax benefit on the loss. Included in the loss on the sale is a $48.7
million write-off of trademarks. The tax benefit associated with discontinued operations differs from the effective rate due to the
mix of earnings and loss in the various jurisdictions, the impact of permanent items and other factors.
As a result of the sale, we met the requirements of ASC 360 to report the results of Lids Sports Group as discontinued operations.
We have presented operating results of Lids Sports Group and the loss on the sale of Lids Sports Group in loss from discontinued
operations, net in our Consolidated Statements of Operations for Fiscal 2019. Certain corporate overhead costs and other
allocated costs previously allocated to the Lids Sports Group business for segment reporting purposes did not qualify for
classification within discontinued operations and have been reallocated to continuing operations whereas bank fees and certain
legal fees related to the Lids Sports Group business segment previously excluded from segment earnings were reclassified to
discontinued operations. The costs of the Lids Sports Group headquarters building, which was not included in the sale, was
reclassified to corporate and other in segment earnings. In addition, the third quarter Fiscal 2019 trademark impairment charge
of $5.7 million related to the Lids Sports Group business segment, that was previously excluded from the calculation of segment
earnings, was reclassified to discontinued operations.
As part of the Lids Sports Group sales transaction, the Purchaser has agreed to indemnify and hold us harmless in connection
with continuing obligations and any guarantees of ours in place as of February 2, 2019 in respect of post-closing or assumed
liabilities or obligations of the Lids Sports Group business. The Purchaser has agreed to use commercially reasonable efforts to
have any guarantees by, or continuing obligations of, the Company released. However, we are contingently liable in the event of
a breach by the Purchaser of any such obligation to a third-party. In addition, we are a guarantor for 20 Lids Sports Group leases
with lease expirations through November of 2025 and estimated maximum future payments totaling $14.1 million as of January
30, 2021. We do not believe the fair value of the guarantees is material to our Consolidated Financial Statements.
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Table of Contents
Note 18
Discontinued Operations, Continued
Genesco Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
Components of amounts reflected in loss from discontinued operations, net of tax on the Consolidated Statements of Operations
for the year ended February 2, 2019 is as follows (in thousands):
Net sales
Cost of sales
Selling and administrative expenses
Goodwill and trademark impairment
Asset impairments and other, net
Loss on sale of Lids Sports Group
Other components of net periodic benefit cost
Provision for discontinued operations(1)
Loss from discontinued operations before taxes
Income tax benefit
Loss from discontinued operations, net of tax
Fiscal Year
2019
723,125
348,038
370,480
5,736
2,394
(126,321 )
(23 )
(743 )
(130,610 )
(27,456 )
(103,154 )
$
$
(1) Expenses primarily for anticipated costs of environmental remedial alternatives related to former facilities operated by us
(see Note 16).
The cash flows related to discontinued operations have not been segregated and are included in our Consolidated Statements of
Cash Flows. The following table summarizes depreciation and amortization, capital expenditures and the significant operating
noncash items from discontinued operations for Fiscal 2019:
(In thousands)
Depreciation and amortization
Capital expenditures
Impairment of intangible assets
Impairment of long-lived assets
$
Fiscal Year
2019
24,778
15,450
5,736
1,670
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Table of Contents
ITEM 9, CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A, CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures.
We have established disclosure controls and procedures to ensure that material information relating to us, including our
consolidated subsidiaries, is made known to the officers who certify our financial reports and to other members of senior
management and Board of Directors.
Based on their evaluation as of January 30, 2021, the principal executive officer and principal financial officer of the Company
have concluded that our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), were effective to ensure that the information required to be disclosed
by us in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported, within
the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including
the principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely
decisions regarding required disclosure.
Management’s annual report on internal control over financial reporting.
Management of the Company is responsible for establishing and maintaining effective internal control over financial reporting
as defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore,
even those systems determined to be effective can provide only reasonable assurance with respect to financial statement
preparation and presentation.
Management assessed the effectiveness of our internal control over financial reporting as of January 30, 2021. In making this
assessment, management used the criteria set forth in Internal Control – Integrated Framework (2013) drafted by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management believes that, as of
January 30, 2021, our internal control over financial reporting was effective based on those criteria.
Ernst & Young LLP, the independent registered public accounting firm who also audited our Consolidated Financial Statements,
has issued an attestation report on the Company’s effectiveness of internal control over financial reporting which is include d
herein. The report by Ernst & Young LLP is included in Item 8.
Changes in internal control over financial reporting.
There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have
materially affected or are reasonable likely to materially affect our internal control over financial reporting.
ITEM 9B, OTHER INFORMATION
Not applicable.
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Table of Contents
PART III
ITEM 10, DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Certain information required by this item is incorporated herein by reference to the sections entitled “Election of Directors,”
“Corporate Governance” and “Delinquent Section 16(a) Reports” in our definitive proxy statement for our annual meeting of
shareholders to be held June 24, 2021, to be filed with the Securities and Exchange Commission. Pursuant to General Instruction
G(3), certain information concerning our executive officers appears under Part I, Item 4A, “Executive Officers of the Registrant”
in this report.
We have a code of ethics (the “Code of Ethics”) that applies to all of our directors, officers (including our chief executive officer,
chief financial officer and chief accounting officer) and employees. We have made the Code of Ethics available and intend to
post any legally required amendments to, or waivers of, such Code of Ethics on our website at http://www.genesco.com. Our
website address is provided as an inactive textual reference only. The information provided on our website is not a part of this
report, and therefore is not incorporated herein by reference.
ITEM 11, EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by reference to the sections entitled “Director Compensation,”
“Compensation Committee Report” and “Executive Compensation” in our definitive proxy statement for our annual meeting of
shareholders to be held June 24, 2021, to be filed with the Securities and Exchange Commission.
ITEM 12, SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Certain information required by this item is incorporated herein by reference to the section entitled “Security Ownership of
Officers, Directors and Principal Shareholders” in our definitive proxy statement for our annual meeting of shareholders to be
held June 24, 2021, to be filed with the Securities and Exchange Commission.
The following table provides certain information as of January 30, 2021 with respect to our equity compensation plans:
EQUITY COMPENSATION PLAN INFORMATION*
(a)
Number of
securities to
be issued
upon exercise of
outstanding
options,
warrants and
rights(1)
621 $
—
621 $
Plan Category
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders
Total
(1) Restricted stock units issued to certain employees at no cost.
(b)
Weighted-average
exercise price of
outstanding
options, warrants
and rights
(c)
Number of
securities
remaining available
for future issuance
under equity
compensation
plans (excluding
securities reflected
in column (a)) (2)
1,261,501
—
1,261,501
—
—
—
(2) Such shares may be issued as restricted shares or other forms of stock-based compensation pursuant to our stock incentive
plans.
* For additional information concerning our equity compensation plans, see the discussion in Note 15 Share-Based
Compensation Plans.
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Table of Contents
ITEM 13, CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item is incorporated herein by reference to the section entitled “Election of Directors” in our
definitive proxy statement for our annual meeting of shareholders to be held June 24, 2021, to be filed with the Securities and
Exchange Commission.
ITEM 14, PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this item is incorporated herein by reference to the section entitled “Audit Matters” in our definitive
proxy statement for our annual meeting of shareholders to be held June 24, 2021, to be filed with the Securities and Exchange
Commission.
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Table of Contents
PART IV
ITEM 15, EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Financial Statements
The following consolidated financial statements of Genesco Inc. and Subsidiaries are filed as part of this report under
Item 8, Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets, January 30, 2021 and February 1, 2020
Consolidated Statements of Operations, each of the three fiscal years ended 2021, 2020 and 2019
Consolidated Statements of Comprehensive Income, each of the three fiscal years ended 2021, 2020 and 2019
Consolidated Statements of Cash Flows, each of the three fiscal years ended 2021, 2020 and 2019
Consolidated Statements of Equity, each of the three fiscal years ended 2021, 2020 and 2019
Notes to Consolidated Financial Statements
Financial Statement Schedules
Schedule 2 — Valuation and Qualifying Accounts, each of the three fiscal years ended 2021, 2020 and 2019
All other schedules are omitted because the required information is either not applicable or is presented in the financial
statements or related notes. These schedules begin on page 94.
Exhibits
(2)
a.
b.
c.
a.
b.
a.
b.
a.
(3)
(4)
(10)
Purchase Agreement dated December 14, 2018, among Hat World, Inc., GCO Canada Inc., Flagg
Bros. of Puerto Rico, Inc., Hat World Corporation, Hat World Services Co., Inc., LSG Guam, Inc.,
Genesco Inc., Fanzzlids Holding, LLC, Fanatics, Inc. and Fanzz Holding, Inc. Incorporated by
reference to Exhibit 2.1 to the current report on Form 8-K file December 14, 2018 (File No. 1-
3083).*
Asset Purchase Agreement dated December 18, 2019, by and among Genesco Brands NY, LLC,
Togast LLC, Togast Direct, LLC, TGB Design, LLC, Quanzhou TGB Footwear Co. Ltd and
Anthony LoConte. Incorporated by reference to Exhibit 2.1 to the current report on Form 8-K filed
December 18, 2019 (File No. 1-3083).
Amendment to Asset Purchase Agreement dated September 30, 2020, by and among Genesco
Brands NY, LLC, Togast LLC, Togast Direct, LLC, TGB Design, LLC, Quanzhou TGB Footwear
Co. Ltd and Anthony LoConte.
Amended and Restated Bylaws of Genesco Inc. Incorporated by reference to Exhibit 99.2 to the
current report on Form 8-K filed November 12, 2015 (File No. 1-3083).
Restated Charter of Genesco Inc., as amended. Incorporated by reference to Exhibit 1 to the
Genesco Inc. Registration Statement on Form 8-A/A filed with the SEC on May 1, 2003 (File No.1-
3083).
Form of Certificate for the Common Stock. Incorporated by reference to Exhibit 3 to the Genesco
Inc. Registration Statement on Form 8-A/A filed with the SEC on May 1, 2003 (File No.1-3083).
Description of Securities. Incorporated by reference to Exhibit (4)b to the Company’s Annual
Report on Form 10-K for the fiscal year ended February 1, 2020. (File No. 1-3083).
Cooperation Agreement dated April 24, 2018, among Genesco Inc., Legion Partners Asset
Management, LLC, 4010 Capital, LLC and each of the persons listed on the signature page thereto.
Incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed April 25, 2018
(File No. 1-3083).
88
Table of Contents
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.
o.
p.
q.
r.
s.
t.
Fourth Amended and Restated Credit Agreement, dated as of January 31, 2018, by and among
Genesco Inc., certain subsidiaries of Genesco Inc. party thereto, as other Other Domestic Borrowers,
GCO Canada Inc., Genesco (UK) Limited, the Lenders party thereto and Bank of America, N.A., as
Agent. Incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed February
3, 2018.
First Amendment to Fourth Amended and Restated Credit Agreement, dated as of February 1, 2019,
by and among Genesco Inc., certain subsidiaries of Genesco Inc. party thereto, as other Other
Domestic Borrowers, GCO Canada Inc., Genesco (UK) Limited, the Lender party thereto and Bank
of America, N.A., as Agent. Incorporated by reference to Exhibit 10.1 to the current report on Form
8-K filed February 5, 2019 (File No. 1-3083).
Second Amendment to Fourth Amended and Restated Credit Agreement, dated as of June 5, 2020,
by and among Genesco Inc., certain subsidiaries of Genesco Inc. party thereto, as other Other
Domestic Borrowers, GCO Canada Inc., Genesco (UK) Limited, the Lender party thereto and Bank
of America, N.A., as Agent. Incorporated by reference to Exhibit 10.1 to the current report on Form
8-K filed June 9, 2020. (File No. 1-3083).
Amendment and Restatement Agreement, dated March 19, 2020, between Schuh Limited, as Parent,
and others as Borrowers and Guarantors and Lloyds Bank PLC, as Arranger, Agent and Security
Trustee. Incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed March 24,
2020 (File No. 1-3083).
Form of Split-Dollar Insurance Agreement with Executive Officers. Incorporated by reference to
Exhibit (10)a to the Company’s Annual Report on Form 10-K for the fiscal year ended February 1,
1997 (File No.1-3083).
Genesco Inc. 2005 Equity Incentive Plan Amended and Restated as of October 24, 2007.
Incorporated by reference to Exhibit (10)d to the Company’s Annual Report on Form 10-K for the
fiscal year ended February 2, 2008 (File No.1-3083).
Genesco Inc. Second Amended and Restated 2009 Equity Incentive Plan. Incorporated by reference
to Exhibit 10.1 to the Company’s current report on Form 8-K, filed June 28, 2016 (File No. 1-3083)
Genesco Inc. Third Amended and Restated EVA Incentive Compensation Plan. Incorporated by
reference to Exhibit (10)h to the Company’s Annual Report on Form 10-K for the fiscal year ended
February 1, 2020. (File No. 1-3083).
Genesco Inc. 2020 Equity Incentive Pan. Incorporated by reference to Appendix A to Genesco Inc.’s
Definitive Proxy Statement on Schedule 14A, filed May 15, 2020. (File No. 1-3083).
Form of Incentive Stock Option Agreement. Incorporated by reference to Exhibit (10)c to the
Company’s Quarterly Report on Form 10-Q for the quarter ended October 29, 2005 (File No.1-
3083).
Form of Non-Qualified Stock Option Agreement. Incorporated by reference to Exhibit (10)d to the
Company’s Quarterly Report on Form 10-Q for the quarter ended October 29, 2005 (File No.1-
3083).
Form of Restricted Share Award Agreement for Executive Officers. Incorporated by reference to
Exhibit (10)e to the Company’s Quarterly Report on Form 10-Q for the quarter ended October 29,
2005 (File No.1-3083).
Form of Restricted Share Award Agreement for Officers and Employees. Incorporated by reference
to Exhibit (10)f to the Company’s Quarterly Report on Form 10-Q for the quarter ended October 29,
2005 (File No.1-3083).
Form of Restricted Share Award Agreement. Incorporated by reference to Exhibit (10)a to the
Company’s Quarterly Report on Form 10-Q for the quarter ended August 1, 2009 (File No. 1-3083).
Form of Indemnification Agreement For Directors. Incorporated by reference to Exhibit (10)m to
the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 1993 (File No.1-
3083).
Form of Non-Executive Director Indemnification Agreement. Incorporated by reference to Exhibit
(10.1) to the current report on Form 8-K filed November 3, 2008 (File No. 1-3083).
Form of Officer Indemnification Agreement. Incorporated by reference to Exhibit (10.2) to the
Company’s Quarterly Report on Form 10-Q for the quarter ended November 1, 2008 (File No.1-
3083).
Form of Employment Protection Agreement between the Company and certain executive officers
dated as of February 26, 1997. Incorporated by reference to Exhibit (10)p to the Company’s Annual
Report on Form 10-K for the fiscal year ended February 1, 1997 (File No.1-3083).
First Amendment to Form of Employment Protection Agreement. Incorporated by reference to
Exhibit (10)s to the Company’s Annual Report on Form 10-K for the fiscal year ended January 30,
2010 (File No.1-3083).
89
Table of Contents
u.
v.
w.
x.
y.
z.
aa.
bb.
cc.
Form of Employment Protection Agreement between the Company and certain executive officers
dated as of October 30, 2019. Incorporated by reference to Exhibit 10.1 to the current report on
Form 8-K filed October 31, 2019 (File No. 1-3083).
Genesco Inc. Deferred Income Plan dated as of July 1, 2000. Incorporated by reference to Exhibit
(10)p to the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2005.
Amended and Restated Deferred Income Plan dated August 22, 2007. Incorporated by reference to
Exhibit (10)r to the Company’s Annual Report on Form 10-K for the fiscal year ended February 2,
2008 (File No.1-3083).
The Schuh Group Limited 2015 Management Bonus Scheme. Incorporated by reference to Exhibit
(10)a to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 30, 2011 (File
No.1-3083).
Jon Caplan Consulting Agreement dated February 1, 2019. Incorporated by reference to Exhibit (10)
aa to the Company's Annual Report on Form 10-K for the fiscal year ended February 2, 2019 (File
No. 1-3083).
Basic Form of Exchange Agreement (Restricted Stock). Incorporated by reference to Exhibit 10.1 to
the current report on Form 8-K filed April 29, 2009 (File No. 1-3083).
Basic Form of Exchange Agreement (Unrestricted Stock). Incorporated by reference to Exhibit 10.2
to the current report on Form 8-K filed April 29, 2009 (File No. 1-3083).
Form of Conversion Agreement. Incorporated by reference to Exhibit 10.1 to the current report on
Form 8-K filed November 2, 2009 (File No. 1-3083).
Form of Conversion Agreement. Incorporated by reference to Exhibit 10.1 to the current report on
Form 8-K filed November 6, 2009 (File No. 1-3083).
Transition Agreement, dated as of October 31, 2019, by and between the Company and Robert J.
Dennis. Incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed November
4, 2019 (File No. 1-3083).
dd. Terms and Conditions to Trademark License Agreement dated December 17, 2019, between Levi
ee.
ff.
Strauss & Co. and Genesco Inc.* Incorporated by reference to Exhibit (10)bb to the Company’s
Annual Report on Form 10-K for the fiscal year ended February 1, 2020. (File No. 1-3083).
Schedule to Trademark License Agreement (Levi’s® Brand) dated December 17, 2019, between
Levi Strauss & Co. and Genesco Inc.* Incorporated by reference to Exhibit (10)cc to the Company’s
Annual Report on Form 10-K for the fiscal year ended February 1, 2020. (File No. 1-3083).
Schedule to Trademark License Agreement (Dockers® Brand) dated December 17, 2019, between
Levi Strauss & Co. and Genesco Inc.* Incorporated by reference to Exhibit (10)dd to the Company’s
Annual Report on Form 10-K for the fiscal year ended February 1, 2020. (File No. 1-3083).
hh.
gg. Amendment No. 1 to Trademark License Agreement, dated December 17, 2019, between Levi
Strauss & Co. and Genesco Inc.* Incorporated by reference to Exhibit (10)ee to the Company’s
Annual Report on Form 10-K for the fiscal year ended February 1, 2020. (File No. 1-3083).
Facility Letter, dated October 9, 2020, between Schuh Limited and Lloyds Bank plc. Incorporated
by reference to Exhibit 10.1 to the current report on Form 8-K filed October 14, 2020. (File No. 1-
3083).
Subsidiaries of the Company
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm included on page
92.
Power of Attorney
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
Inline XBRL Instance Document (The instance document does not appear in the Interactive Data
File because its XBRL tags are embedded within the Inline XBRL document.)
Inline XBRL Taxonomy Extension Schema Document
Inline XBRL Taxonomy Extension Calculation Linkbase Document
Inline XBRL Taxonomy Extension Definition Linkbase Document
Inline XBRL Taxonomy Extension Label Linkbase Document
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
90
(21)
(23)
(24)
(31.1)
(31.2)
(32.1)
(32.2)
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104
Table of Contents
Exhibits (10)f through (10)o, (10)s through (10)x and (10)cc are Management Contracts or Compensatory Plans or
Arrangements required to be filed as Exhibits to this Annual Report on Form 10-K.
* Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment.
A copy of any of the above described exhibits will be furnished to the shareholders upon written request, addressed to
Director, Corporate Relations, Genesco Inc., Genesco Park, Room 498, P.O. Box 731, Nashville, Tennessee 37202-0731,
accompanied by a check in the amount of $15.00 payable to Genesco Inc.
ITEM 16, FORM 10-K SUMMARY
None.
91
Table of Contents
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
(1) Registration statement (Form S-8 No. 333-08463) of Genesco Inc.,
(2) Registration statement (Form S-8 No. 333-104908) of Genesco Inc.,
(3) Registration statement (Form S-8 No. 333-40249) of Genesco Inc.,
(4) Registration statement (Form S-8 No. 333-128201) of Genesco Inc.,
(5) Registration statement (Form S-8 No. 333-160339) of Genesco Inc.,
(6) Registration statement (Form S-8 No. 333-180463) of Genesco Inc.,
(7) Registration statement (Form S-8 No. 333-218670) of Genesco Inc., and
(8) Registration statement (Form S-8 No. 333-248715) of Genesco Inc.,
of our reports dated March 31, 2021, with respect to the consolidated financial statements of Genesco Inc. and Subsidiaries
and the effectiveness of internal control over financial reporting of Genesco Inc. and Subsidiaries and included in this
Annual Report (Form 10-K) of Genesco Inc. for the year ended January 30, 2021.
/s/ Ernst & Young LLP
Nashville, Tennessee
March 31, 2021
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Table of Contents
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
GENESCO INC.
By:
/s/Thomas A. George
Thomas A. George
Senior Vice President – Finance and
Interim Chief Financial Officer
Date: March 31, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities indicated on the 16th day of March, 2021.
/s/Mimi Eckel Vaughn
Mimi Eckel Vaughn
/s/Thomas A. George
Thomas A. George
/s/Brently G. Baxter
Brently G. Baxter
Directors:
Joanna Barsh*
Matthew C. Diamond*
Marty G. Dickens *
John F. Lambros*
*By
/s/Scott E. Becker
Scott E. Becker
Attorney-In-Fact
Board Chair, President, Chief Executive Officer
(Principal Executive Officer)
Senior Vice President – Finance and
Interim Chief Financial Officer
(Principal Financial Officer)
Vice President and Chief Accounting Officer
(Principal Accounting Officer)
Thurgood Marshall, Jr. *
Kathleen Mason*
Kevin P. McDermott*
93
Table of Contents
Genesco Inc.
and Subsidiaries
Financial Statement Schedule
January 30, 2021
94
Table of Contents
Genesco Inc.
and Subsidiaries
Valuation and Qualifying Accounts
Schedule 2
Year Ended January 30, 2021
(In thousands)
Allowances deducted from assets in the balance sheet:
Accounts Receivable Allowances
Markdown Allowance (1)
Year Ended February 1, 2020
(In thousands)
Allowances deducted from assets in the balance sheet:
Accounts Receivable Allowances
Markdown Allowance (1)
Year Ended February 2, 2019
Beginning
Balance
Charged
to Profit
and Loss
Additions
(Reductions)
Ending
Balance
$
$
2,940 $
5,559 $
2,606 $
11,080 $
(531 ) $
(1,688 ) $
5,015
14,951
Beginning
Balance
Charged
to Profit
and Loss Reductions
Ending
Balance
$
$
2,894 $
7,019 $
133 $
1,579 $
(87 ) $
(3,039 ) $
2,940
5,559
(In thousands)
Allowances deducted from assets in the balance sheet:
Accounts Receivable Allowances
Markdown Allowance (1)
Beginning
Balance
Charged
to Profit
and Loss Reductions
Ending
Balance
$
$
4,593 $
6,498 $
40 $
4,297 $
(1,739 ) $
(3,776 ) $
2,894
7,019
(1) Reflects adjustment of merchandise inventories to realizable value. Charged to Profit and Loss column represents increases
to the allowance and the Reductions column represents decreases to the allowance based on quarterly assessments of the
allowance.
95
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended January 30, 2021
☐
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
(State or other jurisdiction of
incorporation or organization)
Genesco Park,
Nashville,
1415 Murfreesboro Pike
Tennessee
(Address of principal executive offices)
62-0211340
(I.R.S. Employer
Identification No.)
37217-2895
(Zip Code)
Registrant’s telephone number, including area code: (615) 367-7000
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $1.00 par value
Trading Symbol
GCO
Name of Exchange
on which Registered
New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act:
Employees’ Subordinated Convertible Preferred Stock
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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 reports) 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
Non-accelerated filer
☐
☐
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes ☐ No ☒
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s mo st recently completed second fiscal
quarter - $233,000,000. The market value calculation was determined using a per share price of $15.55, the price at which the common stock was last sold on
the New York Stock Exchange on July 31, 2020, the last business day of the registrant’s most recently completed second fiscal quarter. For purposes of this
calculation, shares of common stock held by nonaffiliates excludes only those shares beneficially owned by officers, directors, and shareholders owning 10% or
more of the outstanding common stock (and, in each case, their immediate family members and affiliates).
Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date: As of May 1, 2021, 14,955,924
shares of the registrant’s common stock were outstanding.
Documents Incorporated by Reference
None.
EXPLANATORY NOTE
This Amendment No. 1 on Form 10-K/A (this “Form 10-K/A”) amends our Annual Report on Form 10-K for the fiscal year ended January 30, 2021 (“Fiscal
2021”), originally filed with the Securities and Exchange Commission (the “SEC”), on March 31, 2021 (the “Original Filing”). We are filing this Form 10-K/A
to include the information required by Part III and not included in the Original Filing. This Form 10-K/A amends the Original Filing to include the information
required by Part III of the Original Filing because we have not filed, and will not file, a definitive proxy statement within 120 days after the end of our Fiscal
2021. As required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), this Form 10-K/A amends Item 15 of Part IV
of the Original Filing to include new certifications by our principal executive officer and principal financial officer under Section 302 of the Sarbanes-Oxley Act
of 2002. Because no financial statements are contained within this Amendment, we are not including certifications pursuant to Section 906 of The Sarbanes-
Oxley Act of 2002.
In addition, we made certain revisions to the cover page, including the deletion of the reference to our proxy statement and inclusion of updated outstanding share
information.
Except as described above, no other changes have been made to the Original Filing. The Original Filing continues to speak as of the date of the Original Filing,
and we have not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the Original Filing. This Form
10-K/A does not amend, update or change any other items or disclosure in the Original Report or reflect events that occurred after the date of the Original Report.
Accordingly, this Form 10-K/A should be read in conjunction with our filings with the SEC subsequent to the date of the Original Filing.
Table of Contents
TABLE OF CONTENTS
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11.
Item 12.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14.
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Principal Accounting Fees and Services
Item 15.
Exhibits and Financial Statement Schedules
PART IV
Page
86
86
86
87
87
88
Table of Contents
PART III
ITEM 10, DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Board of Directors
The Board currently has eleven directors. Each director has been elected to hold office until the next annual meeting of
shareholders or special meeting in lieu of such annual meeting or until his or her successor has been duly elected and qualified,
or until his or her earlier death, resignation or removal. Mr. Marty G. Dickens and Ms. Kathleen Mason, who currently serve on
the Board, will not be standing for re-election at the 2021 annual meeting of shareholders of the Company, and, therefore, the
size of the Board will decrease from eleven to nine directors, with nine directors to be elected at such meeting.
There are no family relationships among any of our directors or executive officers. With the exception of Mimi E. Vaughn, all of
the directors are independent of management. The following table sets forth the names, ages and certain other information for
each of our current directors:
Name
Joanna Barsh(1)
Matthew C. Diamond(2)
Marty G. Dickens(3)
John F. Lambros(4)
Thurgood Marshall, Jr.(5)
Angel R. Martinez(6)
Kathleen Mason(7)
Kevin P. McDermott(8)
Mary E. Meixelsperger(9)
Gregory A. Sandfort(10)
Mimi E. Vaughn
Age Principal Occupation
68
52
73
55
64
66
72
67
60
66
55
Independent Consultant; Senior Partner Emeritus, McKinsey & Company
Former Chief Executive Officer, Defy Media, LLC
Retired President, AT&T-Tennessee
President of GCA-U.S.
Retired Partner, Morgan, Lewis & Bockius LLP
Retired Chief Executive Officer and Chairman of the Board of Directors, Deckers Brands
Former President and Chief Executive Officer, Tuesday Morning Corporation
Former Partner, KPMG LLP; Former Chief Audit Executive, Pinnacle Financial Partners, Inc.
Chief Financial Officer, Valvoline Inc.
Former Chief Executive Officer and Director, Tractor Supply Company
President and Chief Executive Officer, Chair of the Board, Genesco
(1) Ms. Barsh serves as the chairperson of the Company’s compensation committee and as a member of the nominating and
governance committee.
(2) Mr. Diamond serves as the lead independent director of the Board, as chairperson of the Company’s nominating and governance
committee and as a member of the compensation committee.
(3) Mr. Dickens serves as a member of the Company’s audit committee and nominating and governance committee.
(4) Mr. Lambros serves as a member of the Company’s compensation committee.
(5) Mr. Marshall serves as a member of the Company’s compensation committee.
(6) Mr. Martinez serves as a member of the Company’s nominating and governance committee.
(7) Ms. Mason serves as a member of the Company’s audit committee.
(8) Mr. McDermott serves as the chairperson of the Company’s audit committee.
(9) Ms. Meixelsperger serves as a member of the Company’s audit committee.
(10) Mr. Sandfort serves as a member of the Company’s compensation committee.
JOANNA BARSH, 68, Independent Consultant; Senior Partner Emeritus, McKinsey & Company. Ms. Barsh joined
Genesco’s Board in 2013. She became a senior partner emeritus of McKinsey & Company, a global management consulting firm,
in March 2013, after more than 30 years with that firm, where she had been a senior partner since 1994. She is the author of
several books and an expert on leadership development, growth strategy, organization effectiveness and performance
transformation. Ms. Barsh has counseled over 100 companies, organizations and governments around the world in the retail,
consumer products, direct selling, private equity, and media sectors on strategic and operational issues. She is a strong advocate
for women, serving on New York City’s Commission on Women’s Issues for over a decade and leading ground-breaking research
for The Wall Street Journal’s Women in Econ Task Force and for the U.S. Chamber of Commerce. She is also a member of former
Secretary Clinton’s International Council of Women Business Leaders, co-chairing its Leadership Working Group. The Board
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believes that Ms. Barsh’s expertise gained through more than three decades of helping management teams and boards identify
market opportunities, chart and implement strategies, identify and execute business transformations and navigate industry
transitions, as well as her extensive research on advancing women and people of color in the workplace, provide valuable insight
to Genesco’s Board and management.
MATTHEW C. DIAMOND, 52, Former Chief Executive Officer, Defy Media, LLC. Mr. Diamond has been an operator,
investor, and entrepreneur in digital media and retail for over 25 years and is a pioneer in digital commerce and media. He co-
founded Alloy, Inc. (formerly Nasdaq: ALOY) in 1996, a privately-held marketing and media company focusing on the youth
demographic through television, film, and digital media, which merged with Break Media in October 2013 to form Defy Media.
From 2010 to 2013, he led the successful sale of over eight Alloy businesses to a combination of strategic and private equity
buyers. He served as chief executive officer of Defy Media, LLC from October 2013 until November 2018. Mr. Diamond was a
director of Alloy since its founding, and was named its chairman and chief executive officer in 1999. Mr. Diamond was
instrumental in the establishment of Alloy’s multi-discipline marketing unit, Alloy Media + Marketing, and led key expansions,
including Alloy Entertainment, the youth media behemoth, which was sold to Warner Bros. Television Group; Channel One, the
award-winning premiere television news network for teens; and Alloy Education, a leader in student recruitment solutions for
higher education. Mr. Diamond has presided over some of the largest youth brands of the last quarter century including, Delia’s,
Alloy, CCS, Smosh, Honest Trailers, “Gossip Girl,” “Sisterhood of the Traveling Pants,” “Vampire Diaries,” “Pretty Little Liars,”
and Channel One Media. He also served as board member during the early stages of Rent the Runway and GoNoodle. Mr.
Diamond continues to work with multiple leading edge companies and brands seeking to reach consumers through all aspects of
digital and social media. He has been a director of Genesco since 2001. The Board considers Mr. Diamond’s experience in youth
branding and marketing and insights into navigating and leveraging demographic trends (including as it relates to a key
demographic of the Company’s Journeys business), and his knowledge of social media, digital media and commerce, omni-
channel and direct retail and marketing, strategic planning and his senior management experience to be important contributors to
the effectiveness of Genesco’s Board.
MARTY G. DICKENS, 73, Retired President, AT&T-Tennessee. Mr. Dickens, who joined Genesco’s board in 2003, retired
from AT&T-Tennessee in 2007, after serving as its president for nine years. He held a number of positions with BellSouth/AT&T
Corp. and its predecessors and affiliates since 1999, following more than six years as an executive vice president with BellSouth
International. Mr. Dickens is also lead director of Pinnacle Financial Partners, Inc. (Nasdaq: PNFP), chairman of the board of
Harpeth Companies, a privately-held investment banking, consulting, and ventures company, and a director of a number of
charitable and community organizations. The board believes that Mr. Dickens’ experience in various positions with BellSouth
and AT&T, including his international experience, and his extensive involvement in the Company’s headquarters community,
Nashville, Tennessee, are beneficial to the board and to the Company.
JOHN F. LAMBROS, 55, President of GCA-U.S. Mr. Lambros is president of GCA-U.S., a global investment bank, serving
as the head of its digital media banking practice. He serves as a member of its board of directors and executive committee and
serves as a member of the board of directors of GCA Corporation, its parent company (TYO: 2174). Mr. Lambros has been an
active advisor to and operator in the digital media and emerging technology markets. As an investment banker, Mr. Lambros has
led more than 250 public and private market financings, merger and acquisition transactions, recapitalizations, joint ventures and
senior and subordinated debt financings. From 2000 to 2003, he was senior vice president of business development for Into
Networks, a broadband technology company. From 1993 to 2000, Mr. Lambros was a banker at Morgan Stanley & Co., where
he served as a vice president and member of the global communications group focused on advising emerging telecommunications,
media and technology clients. The Board considers Mr. Lambros’ experience in corporate finance, digital media, emerging
technology sectors, as well as his experience with strategic portfolio reviews, M&A, transaction matters and capital markets to
be beneficial to Genesco’s Board.
THURGOOD MARSHALL, JR., 64, Retired Partner, Morgan, Lewis & Bockius LLP. Mr. Marshall, who joined Genesco’s
Board in 2012, was a partner in the Washington, D.C. office of the law firm of Morgan, Lewis & Bockius LLP until his retirement
in September 2019. He also serves on the board of CoreCivic Inc. (NYSE: CXW), a publicly-traded, full-service corrections
management and real estate solutions provider. He is a former board member of the Ethics Compliance and Certification Institute,
the United States Postal Service and the Ford Foundation. Mr. Marshall works at the intersection of law, business, politics and
policy. He has practiced law, held senior government appointments, and he serves on an array of corporate and non-profit boards.
Mr. Marshall’s professional background includes service in all three branches of the federal government and in the private sector.
Prior to joining a predecessor of Morgan, Lewis & Bockius LLP as a partner in 2001, he served in roles including Assistant to
the President and Cabinet Secretary from 1997 to 2001, co-chair of the White House Olympic Task Force in connection with the
2002 Winter Olympics, director of legislative affairs and deputy counsel to the Vice President, counsel to the Senate Judiciary
Committee, the Committee on Commerce, Science & Transportation, and the Governmental Affairs Committee, and as a judicial
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clerk to the Honorable Barrington D. Parker of the U.S. District Court for the District of Columbia. The Board believes that
Mr. Marshall’s extensive experience in government service, insight into regulatory affairs, and his expertise in corporate
governance and oversight, ethics and risk management and stakeholder relations gained through service as a director in for-
profit, non-profit, and public sectors, bring unique and valuable perspective to Genesco.
ANGEL R. MARTINEZ, 66, Retired Chief Executive Officer and Chairman of the Board of Directors, Deckers Brands. Mr.
Martinez served as chief executive officer and president of Deckers Brands (formerly known as Deckers Outdoor Corporation)
(NYSE: DECK), a footwear designer and distributor whose brands include UGG, Teva, Sanuk, Hoka One One and Koolaburra,
from April 2005 until his retirement in June 2016, as executive chairman of the board from 2008 until June 2016, and as non-
executive chairman of the board from June 2016 until September 2017. Prior to joining Deckers, Mr. Martinez was co-founder
of Keen LLC, an outdoor footwear manufacturer, and served as its president, chief executive officer and vice chairman from April
2003 to March 2005. Prior thereto, he served as executive vice president and chief marketing officer of Reebok International Ltd.
and as chief executive officer and president of The Rockport Company, a subsidiary of Reebok International Ltd. He currently
serves on the board of directors and is a member of the audit committee of Korn Ferry (NYSE: KFY) and served on the board of
directors and as a member of the compensation committee of Tupperware Brands Corporation (NYSE: TUP) from 1998 to 2020.
The Board believes that Mr. Martinez’s 40 years of experience in the retail footwear industry and his operational and strategic
knowledge, including his expertise in capital allocation, navigating and leading industry transitions and business transformation,
and human capital management, gained through his experience as a leader and board member of other publicly-traded companies
brings valuable insight to the Board and the Company.
KATHLEEN MASON, 72, Former President and Chief Executive Officer, Tuesday Morning Corporation. Ms. Mason, who
joined Genesco’s board in 1996, served as president and chief executive officer of Tuesday Morning Corporation, an operator of
first-quality discount and closeout home furnishing and gift stores, from 2000 until June 2012. She was president and chief
merchandising officer of Filene’s Basement, Inc. in 1999. She was president of the HomeGoods division of The TJX Companies,
Inc., an apparel and home fashion retailer, from 1997 to 1999. She was employed by Cherry & Webb, a women’s apparel specialty
chain, from 1987 until 1992, as executive vice president, then, until 1997, as chairman, president and chief executive officer. Her
previous business experience includes senior management positions with retailers May Company, The Limited Inc. and the
Mervyn’s Stores division of Dayton-Hudson Corp. (now Target Corporation). Ms. Mason has also served as a director of other
national retailers. Ms. Mason’s senior executive and board experience with other national retail companies provide her with a
valuable perspective on a number of issues directly relevant to the Company’s business.
KEVIN P. McDERMOTT, 67, Former Partner, KPMG LLP and Former Chief Audit Executive, Pinnacle Financial Partners,
Inc. Mr. McDermott retired as a partner of the international accounting firm KPMG LLP in 2013, after having been associated
with the firm for 33 years in various capacities, including audit engagement partner, SEC reviewing partner, professional practice
partner, and audit partner in the firm’s Office of General Counsel. He is also a licensed Certified Public Accountant in Tennessee
and New York. From March 2019 to March 2020, Mr. McDermott was chief audit executive for Pinnacle Financial Partners, Inc.
(Nasdaq: PNFP). He is also currently a member of the board of directors and chair of the audit committee of Daktronics, Inc.
(Nasdaq: DAKT), a publicly-traded provider of electronic scoreboards and display systems, and has served as the Lead
Independent Director of Daktronics, Inc. since June 2020. He has also served on the boards of several community, arts and
religious organizations. Mr. McDermott joined Genesco’s Board in 2016. The Board considers Mr. McDermott’s broad exposure
to many businesses and his expertise in oversight and knowledge of accounting, auditing, and internal control over financial
reporting by publicly-traded companies gained in his career to be valuable to the Board and to the Company.
MARY E. MEIXELSPERGER, 60, Chief Financial Officer, Valvoline Inc. Mary E. Meixelsperger is chief financial officer
of Valvoline Inc. (NYSE: VVV) and has served in that role since June 2016. Valvoline is a leading provider of automotive services
and marketer and supplier of premium branded lubricants worldwide. Valvoline operates more than 1,500 quick-lube locations
in North America. Prior to joining Valvoline, Ms. Meixelsperger was senior vice president and chief financial officer of DSW
Inc. (NYSE: DSW), now operating as Designer Brands Inc. (NYSE: DBI), one of North America's largest designers, producers
and retailers of footwear and accessories, from April 2014 to June 2016, and held the roles of chief financial officer, controller
and treasurer at Shopko Stores from 2006 to 2014. Ms. Meixelsperger also serves as a director of a wholly-owned subsidiary of
Valvoline Inc. and served as a director of Valvoline Cummins Private Ltd., a joint venture between Valvoline Inc. and Cummins
India from 2017 to 2020. She also serves as Vice Chairman of the board of United Way of the Bluegrass. Ms. Meixelsperger has
over thirty years of experience in various aspects of finance, accounting, risk management, business development, strategic
planning, and information technology. The Board believes that Ms. Meixelsperger’s decades of experience as a chief financial
officer, her expertise and knowledge of accounting, auditing, and internal control over financial reporting by publicly-traded
companies, and her experience with omni-channel strategy and the specialty footwear retail industry is valuable to the Board and
to the Company.
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GREGORY A. SANDFORT, 66, Former Chief Executive Officer and Director, Tractor Supply Company. Gregory A.
Sandfort served as chief executive officer of Tractor Supply Company (Nasdaq: TSCO) from May 2016 to January 2020 and as
a member of the board of directors of Tractor Supply from February 2013 to May 2020. Following his retirement, he served as
strategic advisor and consultant to Tractor Supply from January to August 2020. Mr. Sandfort served as president and chief
executive officer of Tractor Supply from December 2012 to May 2016 and as president and chief operating officer of Tractor
Supply from February 2012. Mr. Sandfort also previously served in the roles of president and chief merchandising officer and
executive vice president - chief merchandising officer of Tractor Supply. Mr. Sandfort served as president and chief operating
officer at Michaels Stores, Inc. from March 2006 to August 2007 and as executive vice president - general merchandise manager
at Michaels Stores, Inc. from January 2004 to February 2006. Mr. Sandfort has also served as a director of WD-40 Company
(Nasdaq: WDFC) since 2011 and as Lead Independent Director of WD-40 Company since October 2020. He was also formerly
a director of Kirkland’s, Inc. (Nasdaq: KIRK). With over 40 years of experience in the retail industry, Mr. Sandfort brings a wealth
of knowledge regarding all facets of Genesco’s industry and retail, including merchandising, marketing, brand management,
operations, strategic planning, human resource management and logistics. The Board considers his broad-based experience in the
retail industry, his expertise in capital allocation and his understanding of customer dynamics and shifting consumer preferences
and ability to leverage such understanding to successfully lead business transformations to be valuable to the Board and to the
Company.
MIMI E. VAUGHN, 55, President and Chief Executive Officer, Chair of the Board, Genesco. Ms. Vaughn joined the
Company in September 2003 as vice president of strategy and business development. She was named senior vice president,
strategy and business development in October 2006, senior vice president of strategy and shared services in April 2009 and senior
vice president - finance and chief financial officer in February 2015. In May 2019, Ms. Vaughn was named senior vice president
and chief operating officer and continued to serve as senior vice president-finance and chief financial officer until her successor
was appointed in June 2019. In October 2019, Ms. Vaughn was appointed to become president and chief executive officer of the
Company on February 2, 2020 and was appointed as a director effective October 30, 2019. Prior to joining the Company,
Ms. Vaughn was executive vice president of business development and marketing, and acting chief financial officer from 2000
to 2001, for Link2Gov Corporation in Nashville. From 1993 to 1999, she was a consultant at McKinsey & Company in Atlanta.
Executive Officers
Pursuant to General Instruction G(3), certain information concerning our executive officers appears under Part I, Item 4A,
“Executive Officers of the Registrant” in this report.
Audit Committee
Members: Kevin P. McDermott (chairperson), Marty G. Dickens, Kathleen Mason and Mary E. Meixelsperger
The Company has a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the
Exchange Act. The audit committee is currently composed of four independent directors (as defined under the applicable rules of
the NYSE and SEC) and operates under a written charter adopted by the Board, a current copy of which is available on the
Company’s website, www.genesco.com. The audit committee assists the Board in monitoring (i) the processes used by the
Company to produce financial statements, (ii) the effectiveness of the Company’s internal controls over financial reporting,
(iii) the effectiveness of the Company’s systems of internal accounting and financial controls, (iv) the Company’s compliance
with legal and regulatory requirements, (v) the independence of the Company’s registered public accounting firm and (vi) the
performance of the Company’s internal audit function and independent registered public accountants. The audit committee met
12 times in Fiscal 2021.
The Board has determined that Messrs. McDermott and Dickens and Mses. Mason and Meixelsperger each qualifies as an “audit
committee financial expert,” as defined in Item 407(d) of Regulation S-K under the Exchange Act, and is “independent,” as
defined by the NYSE rules and Rule 10A-3 under the Exchange Act.
Code of Ethics
We have a code of ethics (the “Code of Ethics”) that applies to all of our directors, officers (including our chief executive officer,
chief financial officer and chief accounting officer) and employees. We have made the Code of Ethics available and intend to
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post any legally required amendments to, or waivers of, such Code of Ethics on our website at http://www.genesco.com. Our
website address is provided as an inactive textual reference only. The information provided on our website is not a part of this
report, and therefore is not incorporated herein by reference.
Legal Proceedings
The Company is not aware of any legal proceedings related to any directors or director nominees that are required to be disclosed
under Item 401(f) of Regulation S-K under the Exchange Act, except that, in November 2018, after Mr. Diamond’s resignation
as chief executive officer, Defy Media, LLC made an assignment for the benefit of creditors under California law.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires the Company’s directors, certain officers and persons who own more than 10% of a
registered class of the Company’s equity securities, to file reports of securities ownership and changes in such ownership with
the SEC. Certain officers, directors and greater than 10% stockholders also are required by SEC rules to furnish the Company
with copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of Forms 3, 4 and 5 and any amendments thereto furnished to the Company and written
representations made to the Company, the Company believes that all Section 16(a) filing requirements were timely met during
Fiscal 2021.
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ITEM 11, EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Philosophy
Genesco’s compensation programs are intended to attract and retain employees with skills necessary to enable
the Company to achieve its financial and strategic objectives and to motivate them through the use of appropriate
incentives tied to the Company’s performance and market value to achieve those objectives. The Company recognizes
that the goals of employee attraction, retention and motivation must be balanced against the necessity of controlling
compensation expense, with the ultimate objective of building shareholder value. With respect to senior management
(executive officers and heads of the Company’s operating units and staff departments, including the principal executive
officer, the principal financial officer and the additional officers listed in the Summary Compensation Table which
follows this discussion, who are referred to in this discussion as the “named executive officers”), the compensation
committee of the Board (the “compensation committee” or, in this “Compensation Discussion and Analysis” section,
the “committee”) has the responsibility to design a compensation program and set levels of compensation that attempt
to achieve the optimal balance between employee attraction, retention and motivation, on the one hand, and control
of compensation expense, on the other.
This Compensation Discussion and Analysis describes our executive compensation programs for Fiscal 2021
named executive officers who were:
- Mimi E. Vaughn, chair of the Board, president and chief executive officer;
- Thomas A. George, senior vice president – finance and interim chief financial officer;
- Melvin G. Tucker, former senior vice president – finance and chief financial officer;
- Parag D. Desai, senior vice president – chief strategy and digital officer;
- Mario Gallione, senior vice president of the Company and president, Journeys Group; and
- Scott E. Becker, senior vice president, corporate secretary and general counsel.
Mr. Tucker resigned as an officer and employee of the Company effective November 27, 2020, to pursue
opportunities outside of the Company, and Mr. George began employment with the Company as a financial advisor
on November 30, 2020. Effective December 14, 2020, Mr. George was named senior vice president – finance and
interim chief financial officer.
1. Compensation Mix. Genesco’s compensation programs for its senior management are designed to incorporate
a significant element of pay for performance.
The Company generally targets base salaries at or below the median of its peer group, while providing upside
potential through performance-based compensation, comprised of a combination of annual cash incentives (which
incorporate a multi-year banking mechanism) linked to operating results and stock-based compensation.
The graphs below illustrate, for the chief executive officer and for the other named executive officers as a group,
the components of target total direct compensation (defined as base salary, target annual cash incentive award, and the
grant date market value, of restricted shares and stock options granted under the Company’s equity incentive plan) for
Fiscal 2021:
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Chief Executive Officer
22%
Base Salary (22%)
55%
23%
Target annual incentive award (23%)
Grant date value of restricted stock
and options (55%)
Other Named Executive Officers (as a Group)
37%
40%
Base Salary (40%)
23%
Target annual incentive award (23%)
Grant date value of restricted stock
(37%)
In light of the COVID-19 pandemic, our named executive officers (other than Mr. George) agreed to forgo all or
a portion of their base salary in Fiscal 2021. As a result, our chief executive officer received only 71.8% of her base
salary and the other named executive officers as a group received 78.5% of their collective base salaries during Fiscal
2021. Although Company performance exceeded expectations in light of the pandemic, no amounts were awarded to
the chief executive officer or the other named executive officers under the Company’s annual incentive plan. In
recognition of their hard work and success in managing through the pandemic, the committee did make token
discretionary bonus awards to certain of the named executive officers for Fiscal 2021 in the amounts reflected under
the heading “Bonus” in the Summary Compensation Table. Consequently, the total compensation actually earned for
the year was approximately 79% of targeted total direct compensation for the chief executive officer and
approximately 71% for the other named executive officers as a group other than Mr. Tucker and Mr. George.
At the annual meeting of shareholders in 2020, the compensation of the named executive officers of the Company
was submitted for a non-binding, advisory “say on pay” vote by shareholders. Approximately 95% of the votes cast,
representing approximately 76% of outstanding shares eligible to vote, were voted in favor of the compensation paid
to the named executive officers. The committee considered these results in its review of the Company’s compensation
philosophy in connection with its approval of named executive officer compensation for Fiscal 2022 and determined
that neither the compensation philosophy nor its implementation should be changed in response to the “say on pay”
vote. The committee expects to continue to consider shareholder views on compensation philosophy and
implementation as expressed in the most recent “say on pay” vote when setting compensation.
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2. Compensation Committee Process. In seeking to balance employee attraction and retention with appropriate
management of compensation expense, the committee looks primarily to market data. It retains an independent
compensation consultant to work directly with the committee in gathering and analyzing data. The committee and its
consultant also solicit input from the chief executive officer on subjective considerations such as an individual
executive’s performance and aspects of his or her role in the Company that might affect the relevance of market
comparisons and perceptions of internal equity that the chief executive officer believes should be taken into account
in individual cases of the Company’s other executives. On the basis of the market data, management input, and the
consultant’s knowledge of trends and developments in compensation design, the consultant annually presents analyses
and observations regarding the material elements of senior management direct compensation for the committee’s
consideration. The final compensation decisions rest with the committee.
In May 2018, the Company engaged F.W. Cook as its independent compensation consultant, and F.W. Cook’s
analysis was used by the committee to make decisions about target total direct compensation levels for Fiscal 2021.
Total fees paid by the Company to F.W. Cook represent a minimal portion of the firm’s total revenues, and as a result
of this and other factors, the committee believes that no conflict of interest existed or exists in its role as compensation
consultant to the committee.
In recent years, the committee has approached its analysis of senior management compensation from the
perspective of total direct compensation (consisting of base salary, the annual incentive plan, including the multi-year
banking aspects discussed herein, and long-term, stock-based incentives). To assess the competitiveness of the
Company’s executive compensation in its decision-making process for Fiscal 2021, the committee considered
(i) functional and pay-rank based proxy statement data from a committee-approved peer group of public companies
(listed below) which was developed with input from the committee’s consultant and (ii) data reported in published
surveys from companies in the retail industry with annual revenues similar to the Company’s. For its analysis of
compensation levels established for Fiscal 2021, the committee referenced the following 18-company peer group:
Abercrombie & Fitch Co.; Ascena Retail Group, Inc.; The Buckle, Inc.; Caleres, Inc.; The Cato Corporation; Chico’s
FAS Inc.; The Children’s Place, Inc.; Deckers Outdoor Corporation; Designer Brands Inc.; Express, Inc.; G-
III Apparel Group, Ltd.; Shoe Carnival, Inc.; Skechers USA, Inc; Steve Madden, Ltd.; Tailored Brands, Inc.; Urban
Outfitters, Inc.; Wolverine World Wide, Inc.; and Zumiez Inc.
3. Elements of Direct Compensation. Total direct compensation to the Company’s senior management consists
of annual base salary, annual incentive bonuses (which includes a multi-year “banking” feature) and long-term
incentives in the form of stock-based awards. The committee generally seeks to pay base salaries at or below the
market median, using the bonus to provide the potential for above-median cash compensation for superior performance
against annual performance objectives that reward creation of shareholder value. Additionally, as noted, certain
features of the bonus plan are intended to encourage a longer-term focus, as is the long-term incentive element of the
compensation program. The long-term incentive element is stock-based, intended to further align management’s
interests with those of the shareholders. The committee also considers targeted total cash levels (base salary plus the
target bonus) and total direct compensation (target total cash plus the grant date value of long-term incentives) in
relation to the peer group companies and the survey data.
A. Base Salary. The Company pays base salaries to its employees in order to provide a level of assured
compensation reflecting the employment market of the employee’s skills and the demands of his or her position. The
following table sets forth the base salary increases approved by the committee for each named executive officer. In
light of COVID-19, Ms. Vaughn agreed to forego her base salary temporarily from April 2020 until June 30, 2020,
and the other named executive officers (other than Mr. George) agreed to reduce their base salaries temporarily by
50% to 100% during that same time period. On June 25, 2020, the Board considered the Company’s then-current
financial results and the fact that more than 90% of the Company’s stores were expected to be reopened by June 30,
2020, and approved a partial restoration of the base salaries of the officers of the Company who elected to reduce their
base salaries beginning in April 2020. On October 29, 2020, the Board approved the full reinstatement of salaries for
certain officers of the Company who elected to reduce their base salaries beginning in April 2020 to their pre-reduction
levels, effective October 1, 2020. The amount of base salary actually paid to each named executive officer as a result
of their foregoing a portion of their base salary is reflected under the “Salary” heading in the Summary Compensation
Table.
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Named Executive Officer
Mimi E. Vaughn
Thomas A. George
Melvin G. Tucker
Parag D. Desai
Mario Gallione
Scott E. Becker
Fiscal 2020
Fiscal 2021
$ 650,000 (1) $ 850,000
$
-0-
$ 500,000 (2)
$ 435,000 (3) $ 435,000
$ 405,500
$ 405,500
$ 482,040 (4)
$ 463,500
$ 420,000
$ 420,000
Fiscal 2021
Base Salary
Increase $
$200,000
N/A
-0-
-0-
$18,540
-0-
Fiscal 2021
Base Salary
Increase %
31%
N/A
-0-
-0-
4%
-0-
(1) Ms. Vaughn was promoted from the role of chief financial officer to chief operating officer effective May 1,
2019, and her annual base salary was increased to $650,000 in connection with her new role. Effective February
2, 2020, Ms. Vaughn was promoted to president and chief executive officer, and her annual base salary was
increased to $850,000.
(2) Mr. George was hired as a financial advisor of the Company on November 30, 2020, and he was promoted to
senior vice president – finance and interim chief financial officer, effective December 14, 2020. Mr. George’s
annual base salary for Fiscal 2021 was $500,000, which was prorated based on the number of days worked in
Fiscal 2021.
(3) Mr. Tucker resigned as senior vice president – finance and chief financial officer, effective November 27, 2020.
(4) Mr. Gallione’s base salary was increased in recognition of his positive impact on and contributions to the
Company and the Journeys division and in an effort to align it more closely with external benchmarks.
B. Annual Incentive Compensation.
(i) Overview. Executive officers (other than the chief executive officer and Mr. George) participate in the
Company’s EVA Plan, which is designed to reward increasing earnings in an amount sufficient to provide a return on
capital greater than the Company’s cost of capital. The committee has historically recommended that the Board award
the chief executive officer’s annual bonus on the same basis as if the chief executive officer were a Corporate Total
business unit participant in the EVA Plan, and the committee did so again in Fiscal 2021, and has voted to do so with
respect to Fiscal 2022. The EVA Plan also incorporates a provision making a portion of each participant’s award
contingent on the achievement of individual strategic goals to provide an incentive for strategic and operational
objectives that may not be immediately reflected in the annual financial performance of the participant’s business unit.
The compensation committee annually sets target bonus levels based on the Company’s peer group and survey
comparisons of target bonuses as a percentage of base salary and target total cash compensation. The chief executive
officer also provides input to the committee on target bonus levels for positions other than his or her own.
(ii) Bonus Targets. The following table sets forth target bonuses as a percentage of base salary for the named
executive officers for Fiscal 2021:
Named Executive Officer
Mimi E. Vaughn
Thomas A. George(1)
Melvin G. Tucker(2)
Parag D. Desai
Mario Gallione
Scott E. Becker
Target Bonus
as a Percentage
of Base Salary
105 %
N/A
75 %
75 %
75 %
62 %
(1) Mr. George did not participate in the EVA Plan in Fiscal 2021.
(2) Mr. Tucker resigned on November 27, 2020, and no amounts were earned by him under the EVA Plan for Fiscal
2021.
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The named executive officers’ target bonuses as a percentage of base salary were unchanged from Fiscal 2020,
except for Ms. Vaughn whose target bonus increased from 80% to 105% of her base salary effective February 2, 2020,
in connection with her promotion to president and chief executive officer.
(iii) Award Components. The named executive officers participating in the Fiscal 2021 EVA Plan were eligible to
receive a fraction or multiple of their target awards based on the factors described below. Bonuses earned can be
negative, offsetting or entirely eliminating “banked” amounts carried over from prior years and, subject to the
limitations described below, offsetting awards in future years. Presidents of the Company’s operating divisions were
eligible to earn cash awards equal to the sum of (a) 75% of their bonus targets multiplied by a factor determined by
changes in Economic Value Added (“EVA”) (the “EVA change factor”) for their respective business units for the year,
and (b) 25% of the targets multiplied by (i) the EVA change factor for their respective business units for the year and
(ii) the percentage of achievement of individual strategic goals (discussed in greater detail below) agreed upon by the
participant and the chief executive officer during the first quarter of the fiscal year. Heads of corporate staff
departments were eligible to receive cash awards equal to the sum of (a) 75% of their bonus targets multiplied by the
EVA change factor for the Company as a whole and (b) 25% of their bonus targets multiplied by the EVA change
factor for the Company as a whole and the product multiplied by their percentage of achievement of their individual
performance goals. Each participant’s business unit allocation is assigned by the chief executive officer, who also
determines the weighting of the various business unit components for participants with responsibility for multiple
units, and approved by the committee. Among the named executive officers participating in the EVA Plan in Fiscal
2021, Mr. Tucker, Mr. Desai and Mr. Becker were assigned to the Corporate Total business unit; and Mr. Gallione was
assigned 100% to the Journeys Group business unit. As noted above, while Ms. Vaughn is not a participant in the EVA
Plan, the committee has historically awarded the chief executive officer’s bonus on the same basis as if the chief
executive officer were assigned 100% to the Corporate Total business unit. Mr. George is also not a participant in the
EVA Plan and is entitled only to the compensation reflected below under the heading “Arrangement with Mr. George.”
See “Bonus Calculation Factors,” below, for additional information on the performance factors for each primary
business unit and for the Company as a whole for Fiscal 2021.
(iv) EVA Calculations. EVA for Fiscal 2021 was determined by subtracting from a business unit’s net operating
profit after taxes (“NOPAT”) a charge of 10% of the average net assets (total assets minus non-interest bearing
liabilities) employed to generate the profit. The 10% capital charge represented the Company’s estimate of its weighted
average cost of debt and equity capital. The EVA Plan is designed to encourage efficient use of assets, since profit
improvement that is less than 10% of the incremental net assets employed reduces the participant’s bonus. Incentive
awards are determined by the amount of actual EVA change during the year relative to EVA change targets for the
year.
NOPAT and net assets employed for EVA Plan purposes are not necessarily the same as the corresponding
accounting measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”) for
financial reporting purposes. The Company’s NOPAT for purposes of the EVA Plan in Fiscal 2021 was calculated
by (a) adjusting reported earnings from operations upward by the following amounts:
•
•
•
•
•
$79.3 million in the “Goodwill impairment” line on the Consolidated Statements of Operations for Fiscal
2021;
$18.7 million in the “Asset impairments and other, net” line on the Consolidated Statements of Operations
for Fiscal 2021;
$0.8 million for tax credits;
$2.4 million in a large capital projects adjustment related to a distribution expansion at Journeys; and
$1.3 million of other adjustments;
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and (b) adjusting the resulting figure downward by the following amounts:
•
•
•
•
•
$13.9 million related to retail store asset impairments;
$10.5 million related to the difference between recorded bonus expense under GAAP and a one-time target
bonus;
$2.5 million in purchase price adjustments related to the Togast acquisition;
$0.7 million in a large capital projects adjustment related to a new distribution center at Schuh; and
taxes at a 28% rate for the Company’s operations other than Schuh and at an 18% rate for Schuh’s
operations.
(v) Bonus Calculation Factors. The following table shows for each of the Company’s primary business units in
Fiscal 2021: (a) the amount of EVA improvement required to earn a target bonus award, (b) the incremental EVA
change required to earn each additional whole-number multiple of the target, (c) the actual EVA for the business unit,
and (d) the multiple of the target bonus actually earned. Fractional multiples are earned for incremental changes less
than the full improvement interval shown in column (b). Negative bonuses accrue to the extent that shortfalls from the
target improvement (column (a)) exceed the interval shown in column (b). See the discussion under the heading
“Bonus Bank” below for the consequences of a negative bonus. As discussed above, a named executive officer with
responsibilities for more than one business unit receives incentive compensation reflecting the weighted average EVA
changes in all the relevant business units.
(a)
FY 2021
Target EVA
Improvement
($)
(b)
FY 2021
Incremental
Improvement
Interval
($)
(c)
(d)
FY 2021
EVA Change
($)
FY 2021 Bonus
Multiple
(1,450,000)
8,599,000
(97,557,000 )
(10.18 )
(6,040,000)
7,065,000
(26,811,000 )
(1.94 )
(680,000)
1,508,000
(46,258,000 )
(29.22 )
3,433,000
1,945,000
(15,102,000 )
(8.53 )
1,230,000
888,000
(10,426,000 )
(12.13 )
Business Unit
Corporate Total
Journeys Group
Johnston &
Murphy
Group
Schuh Group
Licensed
Brands
Each business unit’s target for EVA improvement (shown in column (a), above) is determined in advance by
allocating the Company’s total expected EVA improvement among all its business units. The Company calculates the
amount of EVA improvement which it believes is “expected” by the market from the amount by which its current
market value exceeds the capitalized value of current EVA plus invested capital — in other words, the amount of value
associated with the Company’s future growth. Target EVA improvement is the amount of improvement required to
give investors a cost of capital return on this future growth value, and thus on the market value of their investment.
The incremental improvement interval (shown in column (b), above), is both the amount of additional EVA
improvement above the amount in column (a) that is required to earn a bonus of two times the participant’s target and
also the amount of shortfall from the column (a) target that will result in a zero bonus. The calibration of the intervals
shown in column (b) reflects an effort to give the business units appropriate shares of above-target EVA improvement
for a given bonus pool based primarily on unit size with adjustments designed to achieve a similar likelihood of multi-
year zero bonuses among all units.
(vi) Individual Strategic Objectives. As noted above, the payment of a portion of each participant’s annual
incentive award for EVA improvement is contingent on his or her achievement of individual strategic goals agreed
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upon in advance with the participant’s supervisor. Not achieving all individual strategic goals for a given fiscal year
can reduce an EVA Plan award that is otherwise payable, but performance meeting or exceeding these strategic goals
cannot serve to increase the amount of any such award. Individual strategic goals for the named executive officers
typically involve initiatives that the executive officers consider important to the long-term prospects of the
participants’ business units, but that may not be adequately rewarded by the portion of the bonus calculated on current
financial performance. Examples include retail divisions’ opening a targeted number of new retail stores on schedule,
shared services’ implementation of an infrastructure improvement or execution of a planned disposition of a business
unit, or a business unit’s launch of a new retail concept or product line. No individual strategic goal was material to
any named executive officer’s compensation or to any component of it in Fiscal 2021. The participant’s supervisor,
generally in consultation with the participant, determines whether and to what extent the participant’s individual
strategic goals have been met. Certain strategic goals are quantitative, allowing an objective determination of the
extent to which they are achieved, while others are more qualitative in nature, requiring a subjective determination of
achievement. The EVA Plan permits full credit for strategic goals if they have been at least 95% achieved.
No portion of the award for achievement of individual strategic goals is ordinarily to be paid unless some portion
of the applicable award for operating results is earned, although the EVA Plan authorizes the committee to consider
exceptions for extraordinary strategic successes upon the recommendation of the chief executive officer. No
exceptions of this nature have ever been made.
(vii) Bonus Bank. The EVA Plan includes a “bonus bank” feature. Awards for EVA results in excess of target are
uncapped and “negative awards” for results less than target are possible. Any award in excess of three times the target
bonus and any negative award is credited to the participant’s account in the bonus bank, and positive bank balances
are payable in future years only subject to performance in those years. For Fiscal 2021, a participant will receive a
payout equal to (i) the current year’s award, up to three times the target, plus (ii) one-third of any amount in excess of
three times the target in the current year, and (iii) the installments of banked awards from previous years, if any, that
are payable in the current year. Positive bank balances from each year are paid out in three equal annual installments,
subject to current-year performance in each of the three subsequent years. If the current year’s award is negative, any
positive balance in the participant’s bank is applied against it, reducing or entirely eliminating the positive balance,
depending upon the magnitude of the negative award for the current year.
Any positive balance is forfeited if the participant is terminated for “cause” (as defined in the EVA Plan). If the
participant voluntarily resigns from employment by the Company, any positive bank balance does not become payable
until the end of the fifth fiscal year following the participant’s resignation and is subject to reduction or elimination in
the meantime based upon the performance of the business unit or units to which the participant was assigned when he
or she resigned.
If the participant’s bonus bank balance from prior years is negative, 50% of any positive award in excess of two
times the target in a subsequent year will be applied toward “repaying” the negative balance and 50% will be paid out
to the participant (up to the generally applicable limit of three times the target plus one-third of any amount in excess
of three times the target in the current year). Any negative balance from a single year will be canceled to the extent
not repaid after three subsequent years. The committee believes that the “bonus bank” feature of the EVA Plan offers
improved incentives for management to focus on building long-term value in the Company, and that the provisions
that leave positive bank balances at risk for five years following voluntary resignation aid the retention of key
employees. Including Fiscal 2021 accruals, bonus bank balances for the named executive officers are as follows:
(9,085,650)
Mimi E. Vaughn
N/A
Thomas A. George
N/A
Melvin G. Tucker (1)
(3,095,993)
Parag D. Desai
(701,368)
Mario Gallione
Scott E. Becker
(2,646,800)
(1) Mr.Tucker resigned from the Company effective November 27, 2020 and, as a result, is no longer a
participant in the EVA Plan.
$
$
$
$
Bonuses reported in column (g) of the Summary Compensation Table below are bonuses actually payable for the
years indicated, reflecting, where applicable, reductions of amounts otherwise payable by the recapture of previously
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accrued negative balances pursuant to the “banking” feature of the EVA Plan and positive bank balances held back in
prior years that became payable for the year indicated because of performance in that year.
(viii) Discretionary Bonus. In light of the Company’s performance during the pandemic, the named executive
officers’ willingness to work without or at substantially reduced base salaries and their contributions to the Company
during the pandemic, the committee authorized a token one-time bonus to each of the named executive officers (other
than Mr. George and Mr. Tucker) as set forth under the “Bonus” heading in the Summary Compensation Table for
Fiscal 2021.
(ix) Compensation Recoupment Policy. The Board has adopted a Compensation Recoupment Policy providing
that the committee may in its sole discretion require reimbursement of any cash or equity-based award paid or payable
to a current or former executive officer of the Company based partially or entirely upon the attainment of objective
performance criteria (“incentive compensation”) in certain circumstances. The committee may require reimbursement
from an executive officer who received incentive compensation based on erroneous financial data if the Company is
required to restate its financial statements due to material noncompliance with financial reporting requirements under
the federal securities laws or if the committee determines that any action by the executive officer or an employee under
his or her direct supervision constituted noncompliance with the Company’s Code of Business Conduct and Ethics to
the material detriment of the Company. Unless the committee determines that the executive officer engaged in
misconduct that caused or contributed to a required restatement of financial statements or that the violation of the
Code of Business Conduct and Ethics was committed by the executive officer or by an employee under his or her
direct supervision with the actual or constructive knowledge of the executive officer, the committee may recover only
to the extent of any positive bonus bank balance credited to the executive officer under the EVA Plan. If the committee
so determines, it may pursue recovery from the executive officer in its discretion, in accordance with applicable law.
(x) Anti-Hedging Policy. The Company has a policy prohibiting a director or officer from, directly or indirectly,
engaging in any hedging transaction that reduces or limits the director’s or officer’s economic risk with respect to his
or her ownership interests in the Company. Prohibited transactions include the purchase by a director or officer of
financial instruments including prepaid variable forward contracts, equity swaps, collars, puts, calls or other derivative
securities that are designed to hedge or offset a decrease in the market value of the Company’s stock.
C. Stock-Based Compensation. Grants of restricted stock and stock options to executive officers and other key
employees of the Company including the named executive officers are intended to provide them with an incentive to
make decisions that are in the long-term best interests of the Company and to balance the shorter-term annual cash
incentive component of executive compensation. Stock-based compensation is also intended to align the financial
interests of management with those of the Company’s shareholders, since the value of a share of restricted stock and
stock options is dependent upon the Company’s performance and the recognition of that performance in the market
for the Company’s stock. The committee authorized a one-time grant of non-qualified stock options to Ms. Vaughn in
February 2020 in connection with her promotion to president and chief executive officer. Ms. Vaughn’s stock option
vests in four equal annual installments. The aggregate grant date value of options and restricted stock granted in
February and June 2020, respectively, to Ms. Vaughn represented 2.1 times her base salary. The grant date value of
restricted stock granted to the other named executive officers in June 2020 represented 1.25 times base salary for Mr.
Tucker, Mr. Desai and Mr. Gallione and 1.05 times base salary for Mr. Becker. Mr. George was not granted any stock-
based incentive awards in Fiscal 2021.
Stock-based incentive awards in the form of restricted stock are typically granted to executive officers and other
key employees once annually. The committee does not attempt to time stock-based incentive grants in relation to the
Company’s release of material information. Since 2009, annual incentive grants have been awarded in June. The
committee has also occasionally made grants to newly-hired key employees at its next meeting after their employment
commenced.
Since 2008, except for the one-time option grant to Ms. Vaughn discussed above, the committee has awarded
equity compensation in the form of restricted stock. The restricted stock is subject to forfeiture upon termination of
the grantee’s employment prior to vesting, which occurs in four equal annual increments with respect to all currently
outstanding grants to executive officers.
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The committee, with input and peer group data provided by F.W. Cook for Fiscal 2021, has considered the addition
of performance vesting conditions to restricted stock awards. It has concluded that the EVA Plan, with its potential for
positive and negative effects on compensation based on performance and the multi-year effects of its banking features,
adequately addresses the compensation policy goals that would be served by incorporating such conditions in equity
grants and that the combination of such conditions with the relatively high performance sensitivity of the EVA Plan
might result in a compensation system with inappropriately high levels of performance leverage. The committee
believes that the policy goals underlying performance conditions in equity awards are served more efficiently through
the cash awards under the EVA Plan than through equity grants, which involve both a charge to earnings and permanent
equity dilution, given that a higher number of shares with performance conditions would presumably be necessary to
achieve market comparable compensation targets. The committee intends, however, to continue to consider
performance conditions and their effect on the overall balance of incentives in the context of future equity grants.
4. Other Compensation.
A. Change of Control Arrangements, Severance Plan, Transition Agreement and Arrangement with Mr. George.
(i) Change of Control Arrangements and Severance Plan. All the named executive officers currently employed
by the Company (except Mr. George) are parties to employment protection agreements, which become effective only
in the event of a change of control (as defined in the agreements). Each agreement provides for employment by the
Company for a term of up to three years following a change of control. In the event that the executive’s employment
is terminated under certain circumstances during the contractual employment period after a change of control, the
executive is entitled to a lump sum payment and the continuation of certain benefits, as described below under the
heading “Change of Control Arrangements and Severance Plan.”
Additionally, awards made by the Company under the Company’s equity incentive plans become immediately
vested and exercisable upon a “change of control” (as defined in the plans), provided that, awards made by the
Company under the Second Amended and Restated 2009 Equity Incentive Plan (the “2009 Equity Incentive Plan”)
and the 2020 Equity Incentive Plan become immediately vested and exercisable upon a “change of control” unless the
award is assumed by the acquirer or new rights meeting certain conditions are substituted therefor.
The Company maintains a Severance Plan for monthly-paid salaried employees to provide for certain benefits to
covered employees (including the named executive officers) in the event of a Company-initiated separation from the
Company other than for cause (as defined in the Severance Plan). Under the terms of the Severance Plan, an eligible
employee is entitled to one week of base salary at the termination date multiplied by each year of service with the
Company with a maximum of 24 weeks and a minimum of two weeks. The Severance Plan is discussed in further
detail under the heading “Change of Control Arrangements and Severance Plan.”
The Company believes that reasonable severance and change of control benefits are necessary in order to recruit
and retain effective senior managers. These severance benefits reflect the fact that it may be difficult for such
executives to find comparable employment within a short period of time, and are a product of a recruiting environment
within our industry that has historically been competitive. The Company also believes that a change of control
arrangement will provide an executive security that will likely reduce the reluctance of an executive to pursue a change
of control transaction that could be in the best interests of shareholders.
(ii) Transition Agreement. In connection with Mr. Dennis’s decision to retire as chief executive officer of the
Company as of February 1, 2020 (the “Effective Time”), Mr. Dennis and the Company entered into a Transition
Agreement (the “Transition Agreement”) whereby, following the Effective Time and until June 30, 2020 (the
“Transition Period”), Mr. Dennis remained employed by the Company as executive chairman of the Company’s board
of directors and provided certain transition services to the Company. In exchange for such services (and conditioned
upon Mr. Dennis’ execution of a general release of claims against the Company), pursuant to the Transition Agreement:
(i) Mr. Dennis was entitled to receive a monthly salary of $10,000 per month, up to a maximum of $50,000 during the
Transition Period; (ii) the Company reimbursed Mr. Dennis for all reasonable, documented expenses of types
authorized by the Company and incurred by him during the Transition Period in the performance of his duties under
the Transition Agreement; (iii) the Company provided employee and fringe benefits to Mr. Dennis during the
Transition Period under all employee benefits plans and programs which were made available to the Company’s
executive officers and in which Mr. Dennis participated prior to the Effective Time and remained eligible following
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the Effective Time; and (iv) in the event of a Change in Control (as defined in the 2009 Equity Incentive Plan) prior
to the Effective Time or Mr. Dennis’ earlier termination under conditions specified in the Transition Agreement, any
acquiror would not have been able to assume Mr. Dennis’s outstanding restricted stock awards, and such awards would
have been subject to the accelerated vesting provisions applicable to unassumed awards set forth in Section 13.1 of
the 2009 Equity Incentive Plan. Additionally, Mr. Dennis was not entitled to receive any awards after the Effective
Time under any of the Company’s equity incentive plans, and all awards previously granted to Mr. Dennis continued
to vest in accordance with their terms during the Transition Period. Like the other directors, Mr. Dennis agreed to
forego his monthly salary from April 2020 through the end of the Transition Period.
(iii) Arrangement with Mr. George. In connection with Mr. George’s appointment as senior vice president –
finance and interim chief financial officer of the Company effective December 14, 2020, Mr. George is entitled to
receive, subject to pro ration for Fiscal 2021, an annual base salary of $500,000 and a discretionary cash bonus of up
to $625,000 (with a minimum guarantee of $125,000 (the “Guaranteed Payment”)) for service through the filing of
the Company’s annual report on Form 10-K for Fiscal 2022, subject to Company performance consistent with EVA
Plan targets and individual performance objectives. If Mr. George’s employment is involuntarily terminated without
cause prior to the filing of the Fiscal 2022 Form 10-K, he is entitled to payment of a pro rata portion of the Guaranteed
Payment based on the number of days employed.
B. Defined Contribution and Deferred Income Plans.
(i) Defined Contribution Plan. The Company also offers to all employees (including the named executive
officers) a voluntary defined contribution plan (the “401(k) Plan”) designed to comply with Section 401(k) of the
Internal Revenue Code. Participants in the 401(k) Plan (including all the named executive officers) may defer a
percentage of their qualifying pre-tax compensation for each year. Beginning with calendar year 2006, the Company
has made a matching contribution equal to 100% of deferrals up to 3% of compensation (limited to $250,000) plus
50% of the next 2% of compensation (similarly limited) deferred. The Company suspended this matching contribution
effective May 15, 2020, but it was reinstated on January 1, 2021. Matching contribution amounts for each named
executive officer for Fiscal 2021 are included in column (i) of the “Summary Compensation Table,” below. Deferrals
and matching contributions to the defined contribution plan may be invested in any of a number of mutual fund
investments and in a guaranteed income option. Participants may also self-direct their investments, subject to certain
restrictions.
(ii) Deferred Income Plan. The named executive officers, in addition to other eligible employees, may participate
in the Genesco Inc. Amended and Restated Deferred Income Plan (the “Deferred Income Plan”). Under the Deferred
Income Plan, the participant may elect to defer up to 15% of base salary and 100% of bonus payouts. Deferrals in the
plan are not matched by the Company. The Deferred Income Plan is discussed in further detail under the heading
“Nonqualified Deferred Compensation,” below.
(iii) STEP Up Plan. Named executive officers who were participants in the Company’s Retirement Plan as of
January 1, 2005 receive a “Step Up” contribution as part of their taxable compensation as highly-compensated
employees. The Company pays 2.5% of annual earnings (up to the Social Security taxable wage base) plus 4% of
earnings above the taxable wage base to employees who are eligible to receive the Step Up contribution. The
contributions for Ms. Vaughn and Mr. Gallione for Fiscal 2021 are included in column (i) of the “Summary
Compensation Table,” below.
C. Perquisites. The Company provides named executive officers with perquisites and other personal benefits that
the Company and the committee believe are reasonable and consistent with its overall compensation program to better
enable the Company to attract and retain superior employees for key positions. All employees, including named
executive officers, are entitled to a discount on merchandise sold by the Company equal to 40% off the suggested
retail price. Additionally, currently employed named executive officers are provided with life insurance that has a
death benefit equal to their base salary up to $500,000. This life insurance benefit began in Fiscal 2022 for Mr. George.
5. Tax Considerations.
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Tax Deductibility of Compensation. The committee reviews and considers the deductibility of executive
compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), which provides
that the Company may not deduct compensation of more than $1,000,000 that is paid to certain individuals. Prior to
the effective date of the Tax Cuts and Jobs Act of 2017, certain compensation that constituted “qualified performance-
based compensation” within the meaning of Section 162(m) of the Code was not counted toward the $1,000,000 cap
on deductible compensation. The Tax Cuts and Jobs Act of 2017 removed the exemption for “qualified performance-
based compensation” generally with respect to grants of compensation made after November 2, 2017. The committee
believes it is in the best interests of the Company to continue to follow the approach to executive compensation
described in this Annual Report on Form 10-K under the heading “Executive Compensation — Compensation
Discussion and Analysis,” regardless of federal income tax deductibility. Though in years prior to the Company’s 2018
fiscal year the committee adopted features of the EVA Plan which allowed the performance-based aspects of its annual
incentive compensation to constitute “qualified performance-based compensation,” and therefore remain fully
deductible, the committee anticipates granting essentially the same proportions of “performance-based” compensation
and other compensation in its overall mix of targeted total compensation as before the adoption of the Tax Cuts and
Jobs Act of 2017. The committee has determined that the Company will not necessarily seek to limit executive
compensation to amounts deductible under Section 162(m) of the Code if it believes such limitation is not in the best
interest of the Company’s shareholders. While considering the tax implications of its compensation decisions, the
committee believes its primary focus should be to attract, retain, and motivate executives, and align the executives’
interest with those of the Company’s shareholders.
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COMPENSATION COMMITTEE REPORT
Ms. Barsh and Messrs. Diamond, Lambros and Marshall served as members of the compensation committee
during Fiscal 2021. The compensation committee of the Company has reviewed and discussed the Compensation
Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and
discussions, the compensation committee recommended to the Board that the Compensation Discussion and Analysis
be included in this Annual Report on Form 10-K.
By the Committee:
Joanna Barsh, Chairperson
Matthew C. Diamond
John F. Lambros
Thurgood Marshall, Jr.
The foregoing report of the compensation committee shall not be deemed incorporated by reference by any
general statement incorporating by reference this Annual Report on Form 10-K into any filing under the Securities
Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise be deemed filed under such acts.
Compensation Committee Interlocks and Insider Participation
During Fiscal 2021, no member of the compensation committee had at any time been an officer or employee of
the Company or any of its subsidiaries. In addition, there are no relationships among the Company’s executive officers,
members of the compensation committee or entities whose executives serve on the Board or the compensation
committee that require disclosure under applicable SEC regulations.
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SUMMARY COMPENSATION TABLE
The table below summarizes the total compensation earned by each of the named executive officers for Fiscal
2021, Fiscal 2020 and Fiscal 2019.
Mimi E. Vaughn(2) ...........................................
Chair of the Board, President and
Chief Executive Officer
Fiscal
Year
(b)
2021
2020
2019
Salary
($)
(c)(1)
Bonus
($)
(d)
Stock
Awards
($)
(e)(9)
Option
Awards
($)
(f)(10)
609,875
602,734
460,925
50,000(7)
-0-
-0-
1,596,519
998,450
704,298
500,000
-0-
-0-
Non-Equity
Incentive Plan
Compensation
($)
(g)(11)
-0-
1,150,563
698,302
Thomas A. George(3) .......................................
2021
85,318
-0-
-0-
-0-
-0-
Senior Vice President-Finance and
Interim Chief Financial Officer
Melvin G. Tucker(4) .........................................
2021
Former Senior Vice President-Finance and 2020
248,759
262,812
-0-
-0-
-0-
521,994
-0-
-0-
-0-
477,994
Chief Financial Officer
Parag D. Desai ................................................
Senior Vice President – Chief Strategy and
Digital Officer
Mario Gallione(5) .............................................
Senior Vice President and
President of the Journeys Group
2021
2020
2019
2021
2020
290,947
405,500
344,793
50,000(7)
75,000(8)
-0-
347,407
463,500
50,000(7)
-0-
488,381
486,651
444,665
580,595
556,318
Scott E. Becker(6) ............................................
2021
353,850
25,000(7)
424,891
Senior Vice President, Corporate
Secretary and General Counsel
-0-
-0-
-0-
-0-
-0-
-0-
-0-
734,462
522,360
-0-
747,394
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
(h)(12)
-0-
1,663
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
7,929
All Other
Compensation
($)
(i)(13)
Total
($)
(j)
40,403
51,796
51,473
2,796,797
2,805,206
1,914,998
1,667
86,985
12,163
72,805
260,922
1,335,605
19,703
27,127
25,596
33,085
52,930
849,031
1,728,740
1,337,414
1,011,087
1,828,071
-0-
-0-
14,560
818,301
(1) The amounts in column (c) include salary voluntarily deferred in the Defined Contribution Plan and the Deferred
Income Plan described under the heading “Other Compensation — Defined Contribution and Deferred Income
Plans” in the “Compensation Discussion and Analysis” section, above, in the following amounts:
Name
Mimi E. Vaughn
Thomas A. George
Melvin G. Tucker
Parag D. Desai
Mario Gallione
Scott E. Becker
Fiscal 2021
17,812
2,500
23,825
6,083
12,320
17,623
Amount Deferred ($)
Fiscal 2020
Fiscal 2019
16,982
N/A
6,625
12,011
24,203
N/A
23,431
N/A
N/A
18,550
N/A
N/A
(2) Ms. Vaughn was appointed president and chief executive officer on February 2, 2020.
(3) Mr. George began employment with the Company as a financial advisor on November 30, 2020. Effective
December 14, 2020, Mr. George was named senior vice president – finance and interim chief financial officer.
See “Change of Control Arrangements, Severance Plan, Transition Agreement and Arrangement with Mr.
George” above for a description of Mr. George’s compensation arrangement with the Company. Mr. George did
not participate in the EVA Plan in Fiscal 2021.
(4) Mr. Tucker began employment with the Company as senior vice president – finance and chief financial officer
on June 24, 2019 and resigned from the Company, effective November 27, 2020.
(5) Mr. Gallione was not an executive officer of the Company prior to Fiscal 2020.
(6) Mr. Becker joined the Company on October 23, 2019 and was not a named executive officer of the Company
prior to Fiscal 2021.
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(7) Ms. Vaughn and Messrs. Desai, Gallione and Becker were awarded a one-time discretionary bonus in connection
with their service to the Company during the COVID-19 pandemic and their willingness to forego all or a portion
of their base salaries.
(8) Mr. Desai was awarded a one-time bonus in connection with the Togast acquisition.
(9) The amounts in column (e) represent the aggregate grant date fair value of restricted stock awards, calculated in
accordance with ASC Topic 718 “Compensation — Stock Compensation” (“ASC 718”) by multiplying the
closing price of the Company’s common stock on the NYSE on the grant date by the number of shares granted.
(10) Reflects the aggregate grant date fair value of the option award, calculated in accordance with ASC 718. For a
description of the assumptions used by the Company in valuing this award for Fiscal 2021, please see Note 15
to the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K
for the fiscal year ended January 30, 2021, filed with the SEC on March 31, 2021.
(11) The amounts in column (g) are cash awards under the Company’s EVA Plan, discussed in greater detail under
the heading “Elements of Direct Compensation — Annual Incentive Compensation” in the “Compensation
Discussion and Analysis” section, above. They include amounts voluntarily deferred by the named executive
officers in the Company’s 401(k) Plan and Deferred Income Plan, discussed under the heading “Other
Compensation — Defined Contribution and Deferred Income Plans” in the “Compensation Discussion and
Analysis” section, above. Of the amounts reported in column (g), the named executive officers elected to defer
the following amounts in the 401(k) Plan and/or the Deferred Income Plan:
Name
Mimi E. Vaughn
Thomas A. George
Melvin G. Tucker
Parag D. Desai
Mario Gallione
Scott E. Becker
Fiscal 2021
-0-
N/A
N/A
-0-
-0-
-0-
Amount Deferred ($)
Fiscal 2020
9,022
N/A
N/A
13,418
N/A
N/A
Fiscal 2019
8,124
N/A
N/A
7,292
N/A
N/A
Pursuant to the Company’s EVA Plan, for Fiscal 2021, 50% of any positive awards earned in excess of two
times the target award during the next three fiscal years will be applied to repay the negative award and not
paid out. See “Compensation Discussion and Analysis — Elements of Direct Compensation — Annual
Incentive Compensation — Bonus Bank.” The following named executive officers accrued a negative award
with respect to Fiscal 2021 in the amounts set forth below:
Mimi E. Vaughn
Thomas A. George
Melvin G. Tucker(1)
Parag D. Desai
Mario Gallione
Scott E. Becker
(1) Mr. Tucker resigned from the Company effective November 27, 2020 and, as a result, is no
longer a participant in the EVA Plan.
(9,085,650)
N/A
N/A
(3,095,993)
(701,368)
(2,646,800)
$
$
$
$
Bonuses reported in column (g) of the Summary Compensation Table are bonuses actually payable for the years
indicated, reflecting, where applicable, reductions of amounts otherwise payable by the recapture of previously
accrued negative balances pursuant to the “banking” feature of the EVA Plan and positive bank balances held
back in prior years that became payable for the year indicated because of performance in that year. For Fiscal
2021, because bonuses were negative, no amounts were applied to negative bank balances.
For each of the named executive officers, no amounts attributable to prior-year positive “bank” balances became
payable based on Fiscal 2021 performance.
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(12) The amounts in column (h) are the aggregate increase, if any, in the actuarial present value of the named
executive officers’ benefits under the Genesco Retirement Plan, which was a noncontributory, qualified pension
plan terminated effective June 30, 2019, determined using interest rate and mortality assumptions consistent
with those used in the Company’s financial statements. No named executive officer had earnings or loss on
nonqualified deferred compensation under the Company’s Deferred Income Plan described under the heading
“Other Compensation — Defined Contribution and Deferred Income Plans” in the “Compensation Discussion
and Analysis” section, above, that exceed 120% of the applicable federal long-term interest rate. Negative
changes in the actuarial value of the Genesco Retirement Plan benefits are not reflected in column (h).
(13) The amounts in column (i) for Fiscal 2021 include the following amounts:
Name
Mimi E. Vaughn
Thomas A. George
Melvin G. Tucker
Parag D. Desai
Mario Gallione
Scott E. Becker
Matching
Contributions
(13-a)
($)
12,067
1,667
3,625
11,400
4,767
4,900
Life Insurance
Premiums
(13-b)
($)
Gross-Ups
(13-c)
($)
1,880
N/A
N/A
1,276
1,276
N/A
Personal
Benefits
(13-d)
($)
26,283
N/A
8,464
6,944
26,926
9,559
Total All
Other Compensation
($)
40,403
1,667
12,163
19,703
33,085
14,560
173
N/A
74
83
116
101
(13-a) Matching contributions paid under the Company’s 401(k) plan to each of the named executive officers.
(13-b) Life insurance premium paid by the Company for the benefit of the named executive officers with a death
benefit equal to their base salary up to $500,000.
(13-c) “Gross-up” payments to cover federal tax liability for Fiscal 2021.
(13-d) Includes (i) for each named executive officer, (a) an employee discount on merchandise sold by the
Company that is available to all employees and (b) the Company’s contribution to the named executive officer’s
health and dental benefits, as applicable; (ii) a $3,500 medical stipend for each of Ms. Vaughn, Mr. Gallione and
Mr. Desai; and (iii) payments of $13,017 to each of Mr. Gallione and Ms. Vaughn pursuant to the STEP Up Plan
as described under the heading “Other Compensation — Defined Contribution and Deferred Income Plans” in
the “Compensation Discussion and Analysis” section above.
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GRANTS OF PLAN BASED AWARDS FOR FISCAL 2021
The following table shows, for each of the named executive officers, information regarding his or her target award
under the Company’s EVA Plan for Fiscal 2021 and grants of restricted stock and stock options under the 2009 Equity
Incentive Plan for Fiscal 2021.
Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards
Threshold
($)
(c)
$
Target
($)
(d)(1)
892,500
Maximum
($)
(e)
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)
(f)(2)
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
(g)
—
Exercise
or Base
Price of
Option
Awards
($/Sh)
(h)
— —
Grant Date
Fair Value
of Stock
and Option
Awards
(i)
—
—
—
— 81,372
— — $ 1,596,519
—
$
—
$
—
500,000 (4)
—
326,250
—
—
—
—
— —
—
26,620 $41.41 $ 500,000
—
— —
—
— —
— — $
— —
—
$
—
$
—
$
—
361,530
—
304,125
—
260,000
— 26,704
—
— — $ 523,932
—
— —
— 29,592
—
— — $ 580,595
—
— —
— 24,892
—
— — $ 488,381
—
— —
—
—
— 21,656
— — $ 424,891
Name
(a)
Mimi E. Vaughn
Thomas A. George
Melvin G. Tucker(5)
Mario Gallione
Parag D. Desai
Scott E. Becker
Grant Date
(b)
N/A
June 24,
2020
February 5,
2020(3)
N/A
—
N/A
June 24,
2020
N/A
June 24,
2020
N/A
June 24,
2020
N/A
June 24,
2020
(1) Columns (c), (d) and (e) relate to the Company’s EVA Plan, except with respect to Mr. George. As discussed in
detail under the heading “Annual Incentive Compensation” in the “Compensation Discussion and Analysis,”
potential awards are uncapped (although any award in excess of three and one-third times the target is
mandatorily deferred and at risk for future performance) and negative awards that may be offset against positive
bonus bank balances deferred from past years and from future positive awards are possible. Consequently, no
“threshold” (column (c)) or “maximum” (column (e)) is applicable.
(2) Column (f) reflects awards of restricted stock under the 2009 Equity Incentive Plan, the grant date fair values of
which were calculated in accordance with ASC 718 by multiplying the closing price of the Company’s common
stock on the NYSE on the grant date by the number of shares granted.
(3) Ms. Vaughn was granted a stock option award in connection with her appointment as president and chief
executive officer, which vests in four equal installments on each of February 5, 2021, 2022, 2023 and 2024.
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(4)
In connection with Mr. George’s appointment as senior vice president – finance and interim chief financial
officer of the Company effective December 14, 2020, Mr. George is entitled to receive a discretionary cash
bonus of up to $625,000 (with a Guaranteed Payment of $125,000) for service through the filing of the
Company’s annual report on Form 10-K for Fiscal 2022, subject to Company performance targets consistent
with the EVA Plan.
(5) Mr. Tucker resigned and forfeited his restricted stock award and non-equity incentive stock award, effective
November 27, 2020.
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OUTSTANDING EQUITY AWARDS AT FISCAL 2021 YEAR-END
The following table shows, for each named executive officer, certain information concerning vested and unvested
equity awards outstanding at January 30, 2021. The awards include restricted stock and stock options, as described
under the heading “Stock-Based Compensation” in the “Compensation Discussion and Analysis,” above.
Option Awards
Stock Awards
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
(b)(2)
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
(c)
Option
Exercise Price
($)
(d)
Option
Expiration
Date
(e)
Number of
Shares or
Units of Stock
That Have
Not Vested
(#)
(f)(3)
Market Value
of Shares or
Units of Stock
That Have
Not Vested
($)
(g)
Name
(a)
Mimi E. Vaughn(1)
6,655
19,965
$41.41
02/05/2030
111,839
4,340,472
Thomas A. George(4)
Melvin G. Tucker(5)
Parag D. Desai
Mario Gallione
Scott E. Becker
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-0-
-0-
-0-
-0-
41,512
1,611,081
46,981
1,823,333
21,656
840,469
(1) Ms. Vaughn’s stock option award vests in four equal installments on each of February 5, 2021, 2022, 2023
and 2024.
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(2) The shares of restricted stock vest on the following schedule:
Name
Mimi E. Vaughn
Grant Date
6/21/2017
6/27/2018
6/26/2019
6/24/2020
Restricted Shares
Outstanding
4,229
8,610
17,628
81,372
Thomas A. George(1)
N/A
N/A
Melvin G. Tucker(2)
Parag D. Desai
Mario Gallione
N/A
6/21/2017
6/27/2018
6/26/2019
6//24/2020
6/21/2017
6/27/2018
6/26/2019
6/24/2020
N/A
2,592
5,436
8,592
24,892
1,729
5,838
9,822
29,592
Scott E. Becker
6/24/2020
21,656
Vesting Increments
4,229 on 6/28/2021
4,305 on 6/28/2021
4,305 on 6/28/2022
5,876 on 6/28/2021
5,876 on 6/28/2022
5,876 on 6/28/2023
20,343 on 6/28/2021
20,343 on 6/28/2022
20,343 on 6/28/2023
20,343 on 6/28/2024
N/A
N/A
2,592 on 6/28/2021
2,718 on 6/28/2021
2,718 on 6/28/2022
2,864 on 6/28/2021
2,864 on 6/28/2022
2,864 on 6/28/2023
6,223 on 6/28/2021
6,223 on 6/28/2022
6,223 on 6/28/2023
6,223 on 6/28/2024
1,729 on 6/21/2021
2,919 on 6/28/2021
2,919 on 6/28/2022
3,274 on 6/28/2021
3,274 on 6/28/2022
3,274 on 6/28/2023
7,398 on 6/28/2021
7,398 on 6/28/2022
7,398 on 6/28/2023
7,398 on 6/28/2024
5,414 on 6/28/2021
5,414 on 6/28/2022
5,414 on 6/28/2023
5,414 on 6/28/2024
(1) Mr. George did not receive an equity award in Fiscal 2021.
(2) Mr. Tucker’s restricted stock awards were forfeited upon his resignation, effective November 27, 2020.
(3) Market value is calculated based on the closing price of the Company’s common stock on the NYSE on
January 29, 2021 ($38.81), the last trading day prior to the end of Fiscal 2021.
(4) Mr. George did not receive an equity award in Fiscal 2021.
(5) Mr. Tucker’s restricted stock awards were forfeited upon his resignation, effective November 27, 2020.
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OPTION EXERCISES AND STOCK VESTED IN FISCAL 2021
The following table shows, for each named executive officer, certain information about his or her shares of
restricted stock that vested during Fiscal 2021:
Name
Mimi E. Vaughn
Thomas A. George
Melvin G. Tucker
Parag D. Desai
Mario Gallione
Scott E. Becker
Stock Awards
Number of
Shares
Acquired on
Vesting
(#) (1)
17,212
-0-
3,072
9,891
9,066
-0-
Value Realized
on Vesting
($) (2)
323,413
-0-
57,723
185,852
170,350
-0-
(1) Amounts reflect gross shares vested which excludes shares withheld for taxes.
(2) Amounts reflect the product of the closing price of the Company’s common stock on the NYSE on the last
trading day before the vesting date ($18.79) multiplied by the number of shares vested.
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NON-QUALIFIED DEFERRED COMPENSATION
The following table shows, for each named executive officer, his or her contributions to and investment earnings
on balances in the Company’s Deferred Income Plan, described under the heading “Deferred Income Plan” in the
“Defined Compensation and Deferred Income Plans” section of the “Compensation Discussion and Analysis,” above.
Earnings on plan balances are from investments selected by the participants, which may not include Company
securities.
Name
(a)
Mimi E. Vaughn
Thomas A. George
Melvin G. Tucker
Parag D. Desai
Mario Gallione
Scott E. Becker
Executive
Contributions in
Last FY
($)
(b)(1)
Registrant
Contributions
in Last FY
($)
(c)
Aggregate
Earnings in
Last FY
($)
(d)(2)
Aggregate
Withdrawals/
Distributions
($)
(e)
-0-
N/A
-0-
-0-
-0-
-0-
-0-
N/A
-0-
-0-
-0-
-0-
4,831
N/A
-0-
-0-
5,519
-0-
-0-
N/A
-0-
-0-
-0-
-0-
Aggregate
Balance at Last
FYE
($)
(f)(3)
120,599
N/A
-0-
-0-
30,861
-0-
(1) All amounts reported in column (b) are included in the salary reported for each named executive officer in
column (c) of the Summary Compensation Table for Fiscal 2021.
(2) Because no named executive officer’s deferred compensation earnings for Fiscal 2021 constituted above-market
interest under the disclosure requirements applicable to the Summary Compensation Table, above, none of the
amounts reported in column (d) are reflected in column (h) of the Summary Compensation Table.
(3) The amount reported in column (f) includes, for each named executive officer, the following amount reported
as compensation in the Summary Compensation Table for each of the three fiscal years in the Summary
Compensation Table.
Mimi E. Vaughn
Thomas A. George
Melvin G. Tucker
Parag D. Desai
Mario Gallione
Scott E. Becker
Fiscal 2021
-0-
-0-
-0-
-0-
-0-
-0-
Fiscal 2020
-0-
N/A
-0-
-0-
-0-
-0-
Fiscal 2019
-0-
N/A
N/A
-0-
N/A
-0-
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CHANGE OF CONTROL ARRANGEMENTS
AND SEVERANCE PLAN
All the currently employed named executive officers (except for Mr. George) are parties to employment protection
agreements (collectively, the “Employment Protection Agreements”). The agreements become effective only in the
event of a Change of Control, which is defined as occurring when (i) any person (as defined in Section 3(a)(9) of the
Exchange Act, and as used in Sections 13(d) and 14(d) thereof), excluding the Company, any majority owned
subsidiary of the Company (a “Subsidiary”) and any employee benefit plan sponsored or maintained by the Company
or any Subsidiary (including any trustee of such plan acting as trustee), but including a “group” as defined in
Section 13(d)(3) of the Exchange Act (a “Person”), becomes the beneficial owner of shares of the Company having at
least 20% of the total number of votes that may be cast for the election of directors of the Company (the “Voting
Shares”); provided, however, that such an event will not constitute a Change of Control if the acquiring Person has
entered into an agreement with the Company approved by the Board which materially restricts the right of such Person
to direct or influence the management or policies of the Company; (ii) the shareholders of the Company approve any
merger or other business combination of the Company, sale of the Company’s assets or combination of the foregoing
transactions (a “Transaction”) other than a Transaction involving only the Company and one or more of its
Subsidiaries, or a Transaction immediately following which the shareholders of the Company immediately prior to
the Transaction (excluding for this purpose any shareholder of the Company who also owns directly or indirectly more
than 10% of the shares of the other company involved in the Transaction) continue to have a majority of the voting
power in the resulting entity; or (iii) within any 24-month period beginning on or after the date of the agreements, the
persons who were directors of the Company immediately before the beginning of such period (the “Incumbent
Directors”) cease (for any reason other than death) to constitute at least a majority of the Board or of the board of
directors of any successor to the Company, provided that any director who was not a director as of the date of the
applicable Employment Protection Agreement will be deemed to be an Incumbent Director if such director was elected
to the Board by, or on the recommendation of or with the approval of, at least two-thirds of the members of the Board
who then qualified as Incumbent Directors either actually or by prior operation of Section 2(a) of the agreements.
Each Employment Protection Agreement provides for employment by the Company for a term of three years following
a Change of Control. The executive is to exercise authority and perform duties commensurate with his or her authority
and duties existing during the 90 days immediately prior to the Change of Control. He or she is also to receive
compensation (including incentive compensation and benefits) during the term in an amount not less than that which
he or she was receiving immediately prior to the Change of Control.
If the executive’s employment is terminated by death or Disability (as defined in the agreements) determined in
accordance with the Employment Protection Agreements during the term of the agreement, he or she, or his or her
legal representative (as applicable), is entitled to receive from the Company, in a lump sum in cash within 30 days
from the date of termination (except for payments due to the executive under any employee benefit plan), his or her
accrued but unpaid base salary, all amounts owing to him or her under any applicable employee benefit plans, and a
bonus equal to the average of the two most recent annual bonuses received by the executive (excluding any year in
which no bonus was paid), prorated for the number of days in the current fiscal year that the executive was employed.
A deceased executive’s family is also entitled to receive benefits at least equal to the most favorable level of benefits
available to surviving families of executives of the Company under provisions of benefit plans relating to family death
benefits that were in effect at any time during the 90 days prior to the Change of Control. If the executive is terminated
for Cause (as defined in the Employment Protection Agreements) or quits voluntarily (other than on account of Good
Reason (as defined in the Employment Protection Agreements)) during the employment period, he or she is entitled
to receive from the Company, in a lump sum in cash within 30 days from the date of termination (except for payments
due to the executive under any employee benefit plan), the same compensation payable in case of termination by death
or disability, except that the prorated bonus would not be payable.
As defined in the Employment Protection Agreements, “Cause” means (i) an act or actions of dishonesty or gross
misconduct on the executive’s part which result or are intended to result in material damage to the Company’s business
or reputation or (ii) repeated material violations by the executive of his or her obligations under the agreement which
violations are demonstrably willful and deliberate on the executive’s part. “Good Reason” is defined to include (i) a
good faith determination by the executive that the Company has taken (without his or her consent) action that
materially changes his or her authority or responsibilities or materially reduces his or her ability to carry out such
responsibilities; (ii) the Company’s failure to comply with provisions of the agreement involving the executive’s
compensation, annual bonuses, incentive and savings plans, retirement programs, benefit plans, expenses, vacations
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and fringe benefits and working conditions; (iii) the Company’s requiring the executive to be employed at a location
more than 50 miles further from his or her principal residence than the location at which the executive worked
immediately before the agreement became effective; and (iv) the Company’s failure subject to certain exceptions to
require a successor to assume and agree to perform under the agreement.
If the executive’s employment is actually or constructively terminated by the Company without Cause, or if the
executive terminates his or her employment for Good Reason during the term of the agreement, the executive will be
entitled to receive from the Company, in a lump sum in cash within 15 days from the date of termination, his or her
base salary through the termination date, and a severance allowance equal to two times (i) his or her annual base salary,
plus (ii) the average of his or her two most recent annual bonuses received by the executive (excluding any year in
which no bonus was paid), plus (iii) the present value of the annual cost to the Company of obtaining coverage
equivalent to the coverage provided by the Company prior to the Change of Control under any welfare benefit plans
(including medical, dental, disability, group life and accidental death insurance) plus the annualized value of fringe
benefits provided to the executive prior to the Change of Control, plus, in the case of Employment Protection
Agreements entered into prior to Fiscal 2020, reimbursement for any excise tax owed thereon and for taxes payable
by reason of the reimbursement. Amounts payable under the Employment Protection Agreements are to be reduced
by any amount received under the general severance plan described below.
All restricted stock and stock options granted by the Company under the Company’s equity incentive plan
generally become immediately vested upon a Change of Control as defined in the applicable equity incentive plan,
provided that, awards made by the Company under the 2009 Equity Incentive Plan and the Genesco Inc. 2020 Equity
Incentive Plan become immediately vested and exercisable upon a Change of Control unless the compensation
committee determines in good faith prior to the Change of Control that such equity award will be honored or assumed,
or new rights substituted therefor (an “Alternative Award”), by a participant’s employer immediately following a
Change of Control provided that the Alternative Award is (i) based on stock that is traded on an established securities
market, (ii) provides the participant with rights and entitlements substantially equivalent to or better than the existing
award, including vesting schedule, (iii) has substantially equivalent value to the existing award and (iv) has terms and
conditions which provide that if a participant’s employment is involuntarily terminated without cause, or if a
participant terminates employment for good reason, such equity award will be deemed immediately vested and
exercisable and/or all restrictions shall lapse, and shall be settled for a payment for each share of stock subject to the
Alternative Award in cash, in immediately transferable, publicly traded securities, or a combination thereof, in an
amount equal to the fair market value of such stock on the date of the participant’s termination or the excess of the
fair market value of such stock on the date of participant’s termination over the corresponding exercise or base price.
Summary of Potential Payments Upon a Change of Control
The following table shows for each of the named executive officers, assuming that a Change of Control, followed
by immediate involuntary termination of his or her employment (other than for Cause) or by a voluntary termination
by the named executive officer for Good Reason, occurred on January 30, 2021, the estimated amounts payable with
respect to (a) salary, (b) bonus, (c) the value, based on the closing price of the Company’s stock on the NYSE on
January 29, 2021 (the last trading day of the fiscal year) of all previously unvested restricted stock and stock options
subject to accelerated vesting, (d) the estimated value of the payment related to benefits provided under the
Employment Protection Agreement, (e) the non-qualified deferred compensation (which would be paid upon
termination for any reason regardless of whether a Change of Control has occurred, under the terms of the Deferred
Income Plan), (f) for named executive officers who entered into Employment Protection Agreements prior to Fiscal
2020, the gross-up related to excise taxes that would have been reimbursable to the named executive officer (assuming
a 37.0% marginal federal income tax rate), and (g) the total of items (a) through (f). The actual awards and amounts
payable can only be determined at the time of each named executive officer’s termination of employment.
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Name
Mimi E. Vaughn
Thomas A. George(5)
Melvin G. Tucker(6)
Parag D. Desai
Mario Gallione
Scott E. Becker
Deferred
Compensation
Payout
(e)
($)
Accelerated
Stock-Based
Compensation
(c)(2)
($)
Bonus
(b)(1)
($)
Cash
Severance
(a)
($)
Estimated
Benefits Value
(d)(3)
($)
1,700,000 2,773,296 5,373,594 208,220 120,599 4,323,104 14,498,813
-0-
-0-
78,125
-0-
-0-
-0-
-0- 1,452,131 5,219,416
-0- 4,661,196
-0- 1,846,835
-0-
-0-
-0-
-0-
811,000 1,256,822 1,611,081
88,382
964,080 1,720,500 1,823,333 122,422
-0- 840,469 166,366
840,000
Tax Gross-Up
(f)(4)
($)
78,125
-0-
30,861
-0-
-0-
-0-
Total
(g)
($)
(1) Two times the average of the last two annual bonuses earned by the named executive officer.
(2) The value, based on the closing price of the Company’s common stock on the NYSE on January 29, 2021, of the
previously unvested restricted stock and stock options that would have vested on an accelerated basis upon the
Change of Control.
(3) Includes the present value, calculated using the annual federal short-term rate as determined under
Section 1274(d) of the Internal Revenue Code of (a) the annual cost to the Company of obtaining coverage under
the welfare benefit plans discussed above and (b) the annualized value of fringe benefits provided to the named
executive officer immediately prior to January 30, 2021.
(4) Employment Protection Agreements entered into prior to Fiscal 2020 provide for the reimbursement of the excise
tax payable on the Change of Control payment plus income taxes payable on the reimbursement. Beginning in
Fiscal 2020, this provision was eliminated from the form of Employment Protection Agreement.
(5) See “Change of Control Arrangements, Severance Plan, Transition Agreement and Arrangement with Mr.
George” above for a description of Mr. George’s compensation arrangement with the Company. If Mr. George’s
employment is involuntarily terminated without cause prior to the filing of the Fiscal 2022 Form 10-K, he is
entitled to payment of a pro rata portion of the Guaranteed Payment based on the number of days employed.
(6) Mr. Tucker resigned from the Company, effective November 27, 2020.
The following table shows, for each of the named executive officers, assuming that a Change of Control, followed
by immediate termination of his or her employment because of death or disability, occurred on January 30, 2021, the
estimated amounts payable with respect to (a) salary, (b) bonus, (c) the value, based on the closing price of the
Company’s common stock on the NYSE on January 29, 2021 (the last trading day of the fiscal year), of all previously
unvested restricted stock and stock options subject to accelerated vesting, (d) non-qualified deferred compensation,
and (e) the total of items (a) through (d):
Name
Mimi E. Vaughn
Thomas A. George
Melvin G. Tucker(4)
Parag D. Desai
Mario Gallione
Scott E. Becker
Cash
Severance
(a)(1)
($)
-0-
-0-
-0-
-0-
-0-
-0-
Accelerated
Stock-Based
Compensation
(c)(3)
($)
Bonus
(b)(2)
($)
924,432 5,373,594
-0-
78,125
-0-
-0-
628,411 1,611,081
860,250 1,823,333
840,469
-0-
Toal
(e)
($)
Deferred
Compensation
Payout
(d)
($)
120,599 6,418,625
-0-
78,125
-0-
-0-
-0- 2,239,492
30,861 2,714,444
-0- 840,469
(1) Accrued and unpaid salary of the named executive officers at January 30, 2021.
(2) The average of the last two annual bonuses earned by the named executive officer.
(3) The value, based on the closing price of the Company’s common stock on the NYSE on January 29, 2021, of the
previously unvested restricted stock and stock options that would have vested on an accelerated basis upon the
Change of Control.
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(4) Mr. Tucker resigned from the Company, effective November 27, 2020.
The following table shows, for each of the named executive officers, assuming a Change of Control, followed by
an immediate voluntary termination (other than for Good Reason) or termination for Cause of his or her employment,
occurred on January 30, 2021, the estimated amounts payable with respect to (a) salary, (b) the value, based on the
closing price of the Company’s stock on the NYSE on January 29, 2021 (the last trading day of the fiscal year), of all
previously unvested restricted stock and stock options subject to accelerated vesting, (c) non-qualified deferred
compensation, and (d) the total of items (a) through (c):
Name
Mimi E. Vaughn
Thomas A. George
Melvin G. Tucker(3)
Parag D. Desai
Mario Gallione
Scott E. Becker
Cash
Severance
(a)(1)
($)
-0-
-0-
-0-
-0-
-0-
-0-
Total
(d)
($)
Accelerated
Stock-Based
Compensation
(b)(2)
($)
5,373,594
-0-
-0-
1,611,081
1,823,333
840,469
Deferred
Compensation
Payout
(c)
($)
120,599 5,494,193
-0-
-0-
-0-
-0-
-0- 1,611,081
30,861 1,854,194
-0- 840,469
(1) Accrued and unpaid salary of the named executive officers at January 30, 2021.
(2) The value, based on the closing price of the Company’s common stock on the NYSE on January 29, 2021, of the
previously unvested restricted stock and stock options that would have vested on an accelerated basis upon the
Change of Control.
(3) Mr. Tucker resigned from the Company, effective November 27, 2020.
General Severance Plan. The Company maintains a severance plan for monthly-paid salaried employees to
provide for certain benefits in the event of a Company-initiated separation from the Company other than for Cause
(as defined in the plan). Under the terms of the plan, an eligible employee is entitled to one week of his or her base
salary at the termination date multiplied by each year of service with the Company with a maximum of 24 weeks and
a minimum of two weeks. If their employment had been terminated without Cause as of January 30, 2021, the named
executive officers would have been entitled to the following severance payments under the plan, which reduce any
payments due under the Employment Protection Agreements described above: Ms. Vaughn — $277,885;
Mr. George — $19,231; Mr. Tucker — $0; Mr. Desai — $46,791; Mr. Gallione — $222,480; and Mr. Becker —
$16,154.
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CEO PAY RATIO
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item
402(u) of Regulation S-K, the Company is providing the following information about the relationship of the median
annual total compensation of all its employees and the annual total compensation of Mimi E. Vaughn, its chief
executive officer for Fiscal 2021 (the “CEO”). The ratio reported below represents a reasonable estimate, calculated
in a manner consistent with Item 402(u) of Regulation S-K.
For Fiscal 2021, the annual total compensation of the Company’s median employee was $4,188. The Company’s
median employee was a part-time, hourly-paid employee in one of its retail stores. As reported in the Summary
Compensation Table, the annual total compensation of the CEO was $2,796,797.
Based on this information, the ratio of the annual total compensation of the CEO to the median employee was
668 to 1 (the “CEO Pay Ratio”).
In calculating the CEO Pay Ratio, the Company first identified all active employees as of November 1, 2019, a
date within three months of the end of Fiscal 2020. Including all full-time, part-time, seasonal and temporary
employees, as required by SEC rules, the Company had 19,633 U.S. and 5,558 non-U.S. employees on that date. The
Company did not exclude any employees whether pursuant to the de minimis exemption for foreign employees or any
other permitted exclusion.
To identify its median employee, the Company initially used total taxable compensation based on 2019 W-2
income for U.S. employees and the equivalent for non-U.S. employees. We continued to use our 2019 data because
the median employee identified is still employed by the Company and there have not been significant changes in our
employee population or employee compensation arrangements in Fiscal 2021 that we believe would significantly
impact the pay ratio disclosure.
In identifying the median employee, the Company did not annualize compensation for any employees who were
employed for less than the full fiscal year. For employees not paid in U.S. dollars, the Company converted their pay
into U.S. dollars using the average of month-end exchange rates for the twelve months ended December 31, 2019. The
Company then determined the median employee’s total compensation, including any perquisites and other benefits, in
the same manner that it determines the total compensation of the named executive officers for purposes of the
Summary Compensation Table disclosed in this Annual Report on Form 10-K.
Pay ratios reported by the Company’s peers may not be directly comparable to the Company’s because of
differences in the composition of each company’s workforce, as well as the assumptions, methodologies, adjustments
and estimates used in calculating the pay ratio, as permitted by SEC rules.
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Cash and Equity-Based Compensation
DIRECTOR COMPENSATION
For Fiscal 2021, directors were entitled to an annual cash retainer of $87,500. In light of COVID-19, the Board elected to
temporarily forego their cash compensation (or stock in lieu of cash compensation) in support of the Company’s cost-cutting
initiatives beginning in April 2020. On June 25, 2020, the Board considered the Company’s then-current financial results and the
fact that more than 90% of the Company’s stores were expected to be reopened by June 30, 2020, and the Board approved a
partial restoration of the cash compensation (or stock in lieu of cash compensation) to the Board. On October 29, 2020, the Board
approved the full reinstatement of cash compensation (or stock in lieu of cash compensation) to the Board effective October 1,
2020.
In addition to their retainer as directors, the chairpersons of the Board committees received the following additional annual
retainers beginning in Fiscal 2021: audit committee, $15,000; compensation committee, $10,000; and nominating and governance
committee, $20,000. The Company also reimburses directors for their reasonable out-of-pocket expenses incurred in attending
Board and committee meetings. Directors who are full-time Company employees do not receive any extra compensation for
serving as directors.
The following table shows, for each director of the Company who was a member of the Board during Fiscal 2021 and who
is not also a named executive officer, information about the director’s compensation in Fiscal 2021. Mr. Martinez, Ms.
Meixelsperger and Mr. Sandfort were not members of the Board during Fiscal 2021.
Name
(a)
Joanna Barsh
James W. Bradford(3)
Robert J. Dennis(4)
Matthew C. Diamond
Marty G. Dickens
John F. Lambros
Thurgood Marshall, Jr.
Kathleen Mason
Kevin P. McDermott
Fees
Earned or
Paid in
Cash
($)
(b)(1)
4,875
12,396
22,424
5,375
4,375
29,167
60,156
33,906
22,422
Stock
Awards
($)
(c)(2)
166,375
All Other
Compensation
($)
(g)
-0-
-0-
-0-
-0-
59,500
174,515
158,370
25,000
87,650
123,637
150,838
-0-
-0-
-0-
-0-
-0-
-0-
Total
($)
(h)
171,250
12,396
81,924
179,890
162,745
54,167
147,806
157,543
173,260
(1) Cash fees include annual director’s retainer and, where applicable, committee chair fees, reduced for Ms. Barsh,
Mr. Diamond, Mr. Dickens, Ms. Mason and Mr. McDermott by the amount of fees voluntarily exchanged for retainer stock,
all as described below.
(2) The amounts in column (c) represent the aggregate grant date fair value of restricted stock amounts, calculated by
multiplying the closing price of the Company’s common stock on the NYSE on the grant date by the number of shares
granted. On June 25, 2020, the Board granted shares of restricted stock with a value (at the average closing price of the
stock on the NYSE for the thirty-day period prior to the determination of the number of shares to be granted) of $91,375
to each of the non-employee directors (other than Mr. Lambros) pursuant to the 2009 Equity Incentive Plan. On November
5, 2020, the Board granted shares of restricted stock with a value of $25,000 (based on the closing price of the stock of
$18.68 on November 4, 2020) to Mr. Lambros pursuant to the 2020 Equity Incentive Plan. All the shares granted to directors
in Fiscal 2021 vest on the earlier of the 2021 Annual Meeting and the first anniversary of the grant date, subject to continued
service on the Board. Also includes for Ms. Barsh, Mr. Diamond, Mr. Dickens, Ms. Mason and Mr. McDermott the
compensation cost computed under FAS 123 related to restricted stock received in voluntary exchange for a portion of their
cash compensation. At January 30, 2021, directors who were not also named executive officers had the following restricted
stock awards outstanding:
32
Table of Contents
Name
Joanna Barsh
James W. Bradford(1)
Robert J. Dennis(2)
Matthew C. Diamond
Marty G. Dickens
John F. Lambros
Thurgood Marshall, Jr.
Kathleen Mason
Kevin P. McDermott
Restricted
Shares
Outstanding
15,870
-0-
-0-
16,717
15,695
1,338
8,686
9,489
13,737
(1) Mr. Bradford retired from the Board on June 25, 2020.
(2) Mr. Dennis retired from the Board on June 25, 2020.
(3)
Mr. Bradford retired from the Board on June 25, 2020.
(4)
Mr. Dennis retired as president and chief executive officer of the Company effective as of the end of Fiscal 2020. Following
his retirement and through June 25, 2020, Mr. Dennis remained employed by the Company as executive chairman of the
Company’s board of directors and was entitled to a monthly salary of $10,000 per month, up to a maximum of $50,000
during such period. However, in light of the COVID-19 pandemic, Mr. Dennis agreed to forego his monthly salary from
April 2020 through June 2020. Pursuant to the terms of his Transition Agreement, the Company also provided certain
employee and fringe benefits to Mr. Dennis, the value of which are included as Fees Earned or Paid in Cash. See “Change
of Control Arrangements, Severance Plan, Transition Agreement and Arrangement with Mr. George” above for a
description of Mr. Dennis’s Transition Agreement. Following his retirement as a director in June 2020, Mr. Dennis
continued to provide certain consulting services to the Company through January 2021.
33
Table of Contents
ITEM 12, SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
SECURITY OWNERSHIP OF OFFICERS, DIRECTORS AND PRINCIPAL SHAREHOLDERS
Principal Shareholders
The following table sets forth the ownership, according to the most recent filings of Schedules 13G and 13D and amendments
thereto, as applicable, by the beneficial owners, which, as of the record date for this meeting, own beneficially more than 5% of
the Company’s common stock. Percentages are calculated based on 14,955,924 outstanding shares as of May 1, 2021. None of
such persons owns any equity securities of the Company other than common stock.
Name and Address
of Beneficial Owner
BlackRock, Inc. (1)
55 East 52nd Street
New York, New York 10055
FMR LLC (2)
245 Summer Street
Boston, Massachusetts 02210
The Vanguard Group (3)
100 Vanguard Boulevard
Malvern, Pennsylvania 19355
Dimensional Fund Advisors LP (4)
Building One, 6300 Bee Cave Road
Austin, Texas 78746
Legion (and certain of its affiliates) (5)
12121 Wilshire Blvd, Suite 1240
Los Angeles, California 90025
Amount and
Nature of
Beneficial
Ownership
2,296,603
Percent of
Class
15.4
1,391,171
9.3
1,248,828
8.4
981,977
6.6
888,680
5.9
(1) Based upon a Schedule 13G/A filed January 26, 2021, showing sole voting power with respect to 2,268,547 shares and sole dispositive power with respect
to 2,296,603 shares.
(2) Based upon a Schedule 13G filed February 8, 2021, showing sole voting power with respect to 107,732 shares and sole dispositive power with respect to
1,391,171 shares.
(3) Based upon a Schedule 13G/A filed February 10, 2021, showing shared voting power with respect to 16,862 shares, sole dispositive power with respect to
1,219,601 shares, and shared dispositive power with respect to 29,227 shares.
(4) Based upon a Schedule 13G/A filed February 12, 2021, showing sole voting power with respect to 934,465 shares and sole dispositive power with respect
to 981,977 shares.
(5) Based upon a Schedule 13D dated April 12, 2021, as amended April 22, 2021, with respect to Legion Partners, LLC showing shared voting power with
respect to 888,680 shares and shared dispositive power with respect to 888,680 shares; with respect to Legion Partners, L.P. I showing shared voting power
with respect to 841,197 shares and shared dispositive power with respect to 841,197 shares; with respect to Legion Partners, L.P. II showing shared voting
power with respect to 47,383 shares, and shared dispositive power with respect to 47,383 shares; with respect to Legion Partners, LLC showing shared
voting power with respect to 888,580 shares and shared dispositive power with respect to 888,580 shares; with respect to Legion Partners Asset
Management, LLC showing shared voting power with respect to 888,580 shares and shared dispositive power with respect to 888,580 shares; with respect
to Legion Partners Holdings, LLC showing shared voting power with respect to 888,680 shares and shared dispositive power with respect to 888,680
shares; with respect to Christopher S. Kiper showing shared voting power with respect to 888,680 shares and shared dispositive power with respect to
888,680 shares; with respect to Raymond T. White showing shared voting power with respect to 888,680 shares and shared dispositive power with respect
to 888,680 shares.
Ownership of Directors and Management
The following table sets forth information as of May 1, 2021, regarding the beneficial ownership of the Company’s common
stock by each of the Company’s directors, the persons required to be named in the Company’s summary compensation table
appearing elsewhere in the proxy statement and the directors and executive officers as a group. None of such persons owns any
equity securities of the Company other than common stock.
34
Table of Contents
Name of Beneficial Owner
Joanna Barsh
Matthew C. Diamond
Marty G. Dickens
John Lambros
Thurgood Marshall, Jr.
Angel R. Martinez
Kathleen Mason
Kevin P. McDermott
Mary E. Meixelsperger
Gregory A. Sandfort
Mimi E. Vaughn
Thomas A. George
Melvin G. Tucker
Parag D. Desai
Mario Gallione
Scott E. Becker
Current Directors and Executive Officers as a Group (18 Persons)
Amount and Nature
of Beneficial Ownership (1)(2)
27,435
51,726
23,807
1,338
14,277
-0-
46,642
22,396
-0-
-0-
195,227
-0-
-0-
63,643
61,210
21,656
563,260
(3)
(1) Each director and officer owns less than 1% of the outstanding shares of the Company’s common stock, other than Mimi E.
Vaughn, who owns approximately 1.3% of the Company’s common stock based on 14,955,924 outstanding shares as of
May 1, 2021.
(2) Shares are shown as beneficially owned if the person named in the table has or shares the power to vote or direct the voting
of, or the power to dispose of, or direct the disposition of, such shares, which includes shares of restricted stock that remain
subject to forfeiture. See “Director Compensation” and “Executive Compensation — Summary Compensation Table,”
below.
(3) Constitutes approximately 3.8% of the outstanding shares of the Company’s common stock based on 14,955,924 outstanding
shares as of May 1, 2021.
Director and Executive Officer Ownership Guidelines
The nominating and governance committee of the Company’s Board has adopted share ownership guidelines for directors
and executive officers, including the named executive officers. The guidelines require that named executive officers hold at least
the number of shares specified below:
Chief Executive Officer
Chief Operating Officer (if applicable)
Chief Financial Officer
Senior Vice Presidents-Operations
Other Senior Vice Presidents
60,000 shares
30,000 shares
20,000 shares
20,000 shares
15,000 shares
The guidelines allow covered executives up to five years from their appointment dates to comply with the guidelines. All
executive officers complied with the guidelines through Fiscal 2021. Restricted stock grants may be used to satisfy the guidelines,
consistent with the intent that such awards align executive officers’ interests with those of shareholders.
The guidelines require that non-employee directors hold a number of shares equal to three times their annual cash retainer.
Directors are expected to achieve that ownership within five years of the director’s election to the Board. All non-
employee directors have complied with these guidelines.
35
Table of Contents
Anti-Hedging Policy for Directors and Officers
The Board has adopted a policy prohibiting hedging against future declines in the market value of the Company’s securities by
directors and officers of the Company. This policy prohibits directors and officers from directly or indirectly engaging in any
hedging transaction that eliminates or limits economic risk with respect to the director’s or officer’s interest in the Company’s
securities, including any compensation awards the value of which are derived from, referenced to or based on the value or market
price of the Company’s securities. The policy reflects the Board’s judgment that hedging transactions decrease alignment between
the interests of the officers and directors and those of the shareholders, undermining the objectives underlying stock-based
compensation and the share ownership policy for officers and directors.
EQUITY COMPENSATION PLAN INFORMATION*
The following table provides certain information as of January 30, 2021 with respect to our equity compensation plans:
(a)
Number of
securities to
be issued
upon exercise of
outstanding
options,
warrants and
(b)
Weighted-average
exercise price of
outstanding
options, warrants
rights(1)
and rights
621 $
—
621 $
—
—
—
(c)
Number of
securities
remaining available
for future issuance
under equity
compensation
plans (excluding
securities reflected
in column (a)) (2)
1,261,501
—
1,261,501
Plan Category
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders
Total
(3) Restricted stock units issued to certain employees at no cost.
(4) Such shares may be issued as restricted shares or other forms of stock-based compensation pursuant to our stock incentive
plans.
* For additional information concerning our equity compensation plans, see the discussion in Note 15 to the Company’s
Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended January
30, 2021, filed with the SEC on March 31, 2021.
36
Table of Contents
ITEM 13, CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Certain Relationships and Related Transactions
The Company is not aware of any related-party transactions since the beginning of the last fiscal year between the Company
and any of its directors, executive officers, 5% shareholders or their family members that are required to be disclosed under
Item 404 of Regulation S-K (“Item 404”) under the Exchange Act.
Each year, the Company requires its directors and executive officers to complete a comprehensive questionnaire, one of the
purposes of which is to disclose any related-party transactions with the Company, including any potential Item 404 transactions.
The Board of the Company has adopted a written policy, which provides that any transaction between the Company and any
of its directors, nominees for director, executive officers, or significant shareholders or affiliates thereof, must be in the best
interest of the Company and must be approved and ratified by the audit committee or, in certain circumstances, the Board. Any
member of the audit committee or the Board, if necessary, will recuse himself or herself and abstain from voting on the approval
or ratification of the related party transaction. The Company does not have a history of engaging in related party transactions
with its directors or executive officers or their respective related persons or affiliates.
Director Independence
The Board has determined that Ms. Barsh, Mr. Diamond, Mr. Dickens, Mr. Marshall, Mr. Martinez, Ms. Mason,
Mr. McDermott, Ms. Meixelsperger, Mr. Lambros and Mr. Sandfort are independent under applicable SEC and NYSE rules. No
arrangement or understanding exists between any director or executive officer of the Company and any other person pursuant to
which any of them were selected as a director or executive officer.
37
Table of Contents
ITEM 14, PRINCIPAL ACCOUNTING FEES AND SERVICES
Fee Information
The following table sets forth summary information regarding fees for services by Ernst & Young LLP, the Company’s
independent registered public accounting firm during Fiscal 2021 and Fiscal 2020.
Audit Fees
Audit-Related Fees
Tax Fees — Total
Tax compliance
Tax planning and advice
All Other Fees
Audit Fees
$
Fiscal 2021
Fiscal 2020
1,058,900 $ 1,401,785
-0-
528,319
339,535
188,784
5,200
-0-
494,374
288,155
206,219
2,340
Audit fees include fees paid by the Company to Ernst & Young in connection with annual audits of the Company’s
consolidated financial statements, internal controls over financial reporting, and their review of the Company’s interim financial
statements. Audit fees also include fees for services performed by the independent registered public accounting firm that are
closely related to the audit and in many cases could be provided only by the Company’s independent registered public accounting
firm.
Audit-Related Fees
There were no audit-related fees in Fiscal 2021 or Fiscal 2020.
Tax Fees
Tax fees include fees paid by the Company primarily for compliance services and also for planning and advice for Fiscal
2021 and Fiscal 2020.
All Other Fees
In both Fiscal 2021 and Fiscal 2020, the Company paid other fees to Ernst & Young LLP for access to an online accounting
and auditing information resource.
Pre-Approval Policy
The audit committee has adopted a policy pursuant to which it pre-approves all services to be provided by the Company’s
independent registered public accounting firm and a maximum fee for such services. As permitted by the policy, the committee
has delegated authority to its chairperson to pre-approve services the fees for which do not exceed $100,000, subject to the
requirement that the chairperson report any such pre-approval to the audit committee at its next meeting.
All fees paid to the Company’s independent registered public accounting firm in Fiscal 2021 were pre-approved in accordance
with the policy.
38
PART IV
ITEM 15, EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Financial Statements
Information in response to this Item was previously included in Item 8 of Part II of our Annual Report on Form 10-K, filed with
the SEC on March 31, 2021.
Financial Statement Schedules
All schedules are omitted because they are not applicable, not required or because the required information is included in the
consolidated financial statements or notes thereto included in Item 8 of Part II of our Annual Report on Form 10-K, filed with
the SEC on March 31, 2021.
Exhibits
The exhibits required to be filed as part of this Form 10-K/A and exhibits incorporated herein by reference to other documents
are listed as follows:
(2)
a.
(3)
(4)
(10)
b.
c.
a.
b.
a.
b.
a.
b.
c.
d.
Purchase Agreement dated December 14, 2018, among Hat World, Inc., GCO Canada Inc., Flagg
Bros. of Puerto Rico, Inc., Hat World Corporation, Hat World Services Co., Inc., LSG Guam, Inc.,
Genesco Inc., Fanzzlids Holding, LLC, Fanatics, Inc. and Fanzz Holding, Inc. Incorporated by
reference to Exhibit 2.1 to the current report on Form 8-K file December 14, 2018 (File No. 1-3083).*
Asset Purchase Agreement dated December 18, 2019, by and among Genesco Brands NY, LLC,
Togast LLC, Togast Direct, LLC, TGB Design, LLC, Quanzhou TGB Footwear Co. Ltd and Anthony
LoConte. Incorporated by reference to Exhibit 2.1 to the current report on Form 8-K filed December
18, 2019 (File No. 1-3083).
Amendment to Asset Purchase Agreement dated September 30, 2020, by and among Genesco Brands
NY, LLC, Togast LLC, Togast Direct, LLC, TGB Design, LLC, Quanzhou TGB Footwear Co. Ltd
and Anthony LoConte.
Amended and Restated Bylaws of Genesco Inc. Incorporated by reference to Exhibit 99.2 to the
current report on Form 8-K filed November 12, 2015 (File No. 1-3083).
Restated Charter of Genesco Inc., as amended. Incorporated by reference to Exhibit 1 to the Genesco
Inc. Registration Statement on Form 8-A/A filed with the SEC on May 1, 2003 (File No.1-3083).
Form of Certificate for the Common Stock. Incorporated by reference to Exhibit 3 to the Genesco Inc.
Registration Statement on Form 8-A/A filed with the SEC on May 1, 2003 (File No.1-3083).
Description of Securities. Incorporated by reference to Exhibit (4)b to the Company’s Annual Report
on Form 10-K for the fiscal year ended February 1, 2020. (File No. 1-3083).
Cooperation Agreement dated April 24, 2018, among Genesco Inc., Legion Partners Asset
Management, LLC, 4010 Capital, LLC and each of the persons listed on the signature page thereto.
Incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed April 25, 2018 (File
No. 1-3083).
Fourth Amended and Restated Credit Agreement, dated as of January 31, 2018, by and among
Genesco Inc., certain subsidiaries of Genesco Inc. party thereto, as other Other Domestic Borrowers,
GCO Canada Inc., Genesco (UK) Limited, the Lenders party thereto and Bank of America, N.A., as
Agent. Incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed February 3,
2018.
First Amendment to Fourth Amended and Restated Credit Agreement, dated as of February 1, 2019,
by and among Genesco Inc., certain subsidiaries of Genesco Inc. party thereto, as other Other
Domestic Borrowers, GCO Canada Inc., Genesco (UK) Limited, the Lender party thereto and Bank
of America, N.A., as Agent. Incorporated by reference to Exhibit 10.1 to the current report on Form
8-K filed February 5, 2019 (File No. 1-3083).
Second Amendment to Fourth Amended and Restated Credit Agreement, dated as of June 5, 2020, by
and among Genesco Inc., certain subsidiaries of Genesco Inc. party thereto, as other Other Domestic
Borrowers, GCO Canada Inc., Genesco (UK) Limited, the Lender party thereto and Bank of America,
N.A., as Agent. Incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed June
9, 2020. (File No. 1-3083).
39
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.
o.
p.
q.
r.
s.
t.
u.
v.
w.
x.
y.
z.
aa.
Amendment and Restatement Agreement, dated March 19, 2020, between Schuh Limited, as Parent,
and others as Borrowers and Guarantors and Lloyds Bank PLC, as Arranger, Agent and Security
Trustee. Incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed March 24,
2020 (File No. 1-3083).
Form of Split-Dollar Insurance Agreement with Executive Officers. Incorporated by reference to
Exhibit (10)a to the Company’s Annual Report on Form 10-K for the fiscal year ended February 1,
1997 (File No.1-3083).
Genesco Inc. 2005 Equity Incentive Plan Amended and Restated as of October 24, 2007. Incorporated
by reference to Exhibit (10)d to the Company’s Annual Report on Form 10-K for the fiscal year ended
February 2, 2008 (File No.1-3083).
Genesco Inc. Second Amended and Restated 2009 Equity Incentive Plan. Incorporated by reference
to Exhibit 10.1 to the Company’s current report on Form 8-K, filed June 28, 2016 (File No. 1-3083)
Genesco Inc. Third Amended and Restated EVA Incentive Compensation Plan. Incorporated by
reference to Exhibit (10)h to the Company’s Annual Report on Form 10-K for the fiscal year ended
February 1, 2020. (File No. 1-3083).
Genesco Inc. 2020 Equity Incentive Pan. Incorporated by reference to Appendix A to Genesco Inc.’s
Definitive Proxy Statement on Schedule 14A, filed May 15, 2020. (File No. 1-3083).
Form of Incentive Stock Option Agreement. Incorporated by reference to Exhibit (10)c to the
Company’s Quarterly Report on Form 10-Q for the quarter ended October 29, 2005 (File No.1-3083).
Form of Non-Qualified Stock Option Agreement. Incorporated by reference to Exhibit (10)d to the
Company’s Quarterly Report on Form 10-Q for the quarter ended October 29, 2005 (File No.1-3083).
Form of Restricted Share Award Agreement for Executive Officers. Incorporated by reference to
Exhibit (10)e to the Company’s Quarterly Report on Form 10-Q for the quarter ended October 29,
2005 (File No.1-3083).
Form of Restricted Share Award Agreement for Officers and Employees. Incorporated by reference to
Exhibit (10)f to the Company’s Quarterly Report on Form 10-Q for the quarter ended October 29,
2005 (File No.1-3083).
Form of Restricted Share Award Agreement. Incorporated by reference to Exhibit (10)a to the
Company’s Quarterly Report on Form 10-Q for the quarter ended August 1, 2009 (File No. 1-3083).
Form of Indemnification Agreement For Directors. Incorporated by reference to Exhibit (10)m to the
Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 1993 (File No.1-3083).
Form of Non-Executive Director Indemnification Agreement. Incorporated by reference to Exhibit
(10.1) to the current report on Form 8-K filed November 3, 2008 (File No. 1-3083).
Form of Officer Indemnification Agreement. Incorporated by reference to Exhibit (10.2) to the
Company’s Quarterly Report on Form 10-Q for the quarter ended November 1, 2008 (File No.1-3083).
Form of Employment Protection Agreement between the Company and certain executive officers
dated as of February 26, 1997. Incorporated by reference to Exhibit (10)p to the Company’s Annual
Report on Form 10-K for the fiscal year ended February 1, 1997 (File No.1-3083).
First Amendment to Form of Employment Protection Agreement. Incorporated by reference to Exhibit
(10)s to the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2010 (File
No.1-3083).
Form of Employment Protection Agreement between the Company and certain executive officers
dated as of October 30, 2019. Incorporated by reference to Exhibit 10.1 to the current report on Form
8-K filed October 31, 2019 (File No. 1-3083).
Genesco Inc. Deferred Income Plan dated as of July 1, 2000. Incorporated by reference to Exhibit
(10)p to the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2005.
Amended and Restated Deferred Income Plan dated August 22, 2007. Incorporated by reference to
Exhibit (10)r to the Company’s Annual Report on Form 10-K for the fiscal year ended February 2,
2008 (File No.1-3083).
The Schuh Group Limited 2015 Management Bonus Scheme. Incorporated by reference to Exhibit
(10)a to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 30, 2011 (File
No.1-3083).
Jon Caplan Consulting Agreement dated February 1, 2019. Incorporated by reference to Exhibit (10)
aa to the Company's Annual Report on Form 10-K for the fiscal year ended February 2, 2019 (File
No. 1-3083).
Basic Form of Exchange Agreement (Restricted Stock). Incorporated by reference to Exhibit 10.1 to
the current report on Form 8-K filed April 29, 2009 (File No. 1-3083).
Basic Form of Exchange Agreement (Unrestricted Stock). Incorporated by reference to Exhibit 10.2
to the current report on Form 8-K filed April 29, 2009 (File No. 1-3083).
Form of Conversion Agreement. Incorporated by reference to Exhibit 10.1 to the current report on
Form 8-K filed November 2, 2009 (File No. 1-3083).
40
bb.
cc.
Form of Conversion Agreement. Incorporated by reference to Exhibit 10.1 to the current report on
Form 8-K filed November 6, 2009 (File No. 1-3083).
Transition Agreement, dated as of October 31, 2019, by and between the Company and Robert J.
Dennis. Incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed November
4, 2019 (File No. 1-3083).
ee.
dd. Terms and Conditions to Trademark License Agreement dated December 17, 2019, between Levi
Strauss & Co. and Genesco Inc.* Incorporated by reference to Exhibit (10)bb to the Company’s
Annual Report on Form 10-K for the fiscal year ended February 1, 2020. (File No. 1-3083).
Schedule to Trademark License Agreement (Levi’s® Brand) dated December 17, 2019, between Levi
Strauss & Co. and Genesco Inc.* Incorporated by reference to Exhibit (10)cc to the Company’s Annual
Report on Form 10-K for the fiscal year ended February 1, 2020. (File No. 1-3083).
Schedule to Trademark License Agreement (Dockers® Brand) dated December 17, 2019, between
Levi Strauss & Co. and Genesco Inc.* Incorporated by reference to Exhibit (10)dd to the Company’s
Annual Report on Form 10-K for the fiscal year ended February 1, 2020. (File No. 1-3083).
ff.
hh.
gg. Amendment No. 1 to Trademark License Agreement, dated December 17, 2019, between Levi Strauss
& Co. and Genesco Inc.* Incorporated by reference to Exhibit (10)ee to the Company’s Annual Report
on Form 10-K for the fiscal year ended February 1, 2020. (File No. 1-3083).
Facility Letter, dated October 9, 2020, between Schuh Limited and Lloyds Bank plc. Incorporated by
reference to Exhibit 10.1 to the current report on Form 8-K filed October 14, 2020. (File No. 1-3083).
Subsidiaries of the Company (incorporated by reference to Exhibit 21 to Form 10-K filed March 31,
2021).
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm. (incorporated by
reference to Exhibit 23 to Form 10-K filed March 31, 2021).
Power of Attorney (incorporated by reference to Exhibit 24 to Form 10-K filed March 31, 2021).
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 (incorporated by reference to Exhibit 31.1 to Form 10-K filed March 31, 2021).
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(incorporated by reference to Exhibit 31.2 to Form 10-K filed March 31, 2021).
Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 (incorporated by reference to Exhibit 32.1 to Form
10-K filed March 31, 2021).
Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 (incorporated by reference to Exhibit 32.2 to Form
10-K filed March 31, 2021).
Inline XBRL Instance Document (The instance document does not appear in the Interactive Data File
because its XBRL tags are embedded within the Inline XBRL document.)
Inline XBRL Taxonomy Extension Schema Document
Inline XBRL Taxonomy Extension Calculation Linkbase Document
Inline XBRL Taxonomy Extension Definition Linkbase Document
Inline XBRL Taxonomy Extension Label Linkbase Document
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
(21)
(23)
(24)
(31.1)
(31.2)
(31.3)
(31.4)
(32.1)
(32.2)
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104
Exhibits (10)f through (10)o, (10)s through (10)x and (10)cc are Management Contracts or Compensatory Plans or Arrangements
required to be filed as Exhibits to this Annual Report on Form 10-K.
* Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment.
A copy of any of the above described exhibits will be furnished to the shareholders upon written request, addressed to
Director, Corporate Relations, Genesco Inc., Genesco Park, Room 498, P.O. Box 731, Nashville, Tennessee 37202-0731,
accompanied by a check in the amount of $15.00 payable to Genesco Inc.
41
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
GENESCO INC.
By:
/s/Thomas A. George
Thomas A. George
Senior Vice President – Finance and
Interim Chief Financial Officer
Date: May 27, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities indicated on the 27th day of May, 2021.
/s/Mimi Eckel Vaughn
Mimi Eckel Vaughn
/s/Thomas A. George
Thomas A. George
/s/Brently G. Baxter
Brently G. Baxter
Directors:
Joanna Barsh*
Matthew C. Diamond*
Marty G. Dickens *
John F. Lambros*
Thurgood Marshall, Jr. *
/s/ Angel R. Martinez
Angel R. Martinez
*By
/s/Scott E. Becker
Scott E. Becker
Board Chair, President, Chief Executive Officer
(Principal Executive Officer)
Senior Vice President – Finance and
Interim Chief Financial Officer
(Principal Financial Officer)
Vice President and Chief Accounting Officer
(Principal Accounting Officer)
Kathleen Mason*
Kevin P. McDermott*
/s/ Mary E. Meixelsperger
Mary E. Meixelsperger
/s/ Gregory A. Sandfort
Gregory A. Sandfort
42
43