Genesco Inc. (GCO) said Friday it will close the book on its long history of local, hand-made shoe manufacturing by closing its Nashville Johnston & Murphy plant. The Nashville-based shoe retailer also said it will further cut operating costs by firing 40 employees at its headquarters here. Closure of the shoe plant will mean the idling of 155 of the 170 positions there.
The charges will total $3.5 million to $4 million (13-15 cents a share), while the cuts are expected to yield annual savings of as much as $2.7 million “once they are fully implemented in fiscal year 2004.”
Genesco Chief Executive Ben Harris said demand for its traditional welted shoe “has reached a level at which it can be better satisfied from other sources.” Sales of welted shoes have fallen as consumers have adopted more casual attire.
Six months ago in a conference call with analysts, Harris was pressed to discuss any thoughts he might have about shuttering the plant. He sternly rejected the proposal to close what many sentimentally viewed as the last vestige of the company’s storied past in American-made, hand-made footwear. In an October article for Business Nashville, Genesco Chief Financial Officer Jim Gulmi replied to a question about the plant’s future by saying “EVA is better with the plant than without it.” EVA, or economic value added, is Genesco’s method of measuring each asset and activity by its contribution to overall profitability.
Genesco also said that included in the charges will be one related to asset impairments in underperforming Jarman group stores.
It expects sales of $220 million to $227 million in the fiscal fourth quarter ending Feb. 2, and earnings per share, before the charges, of 55-60 cents.
Genesco shares settled Friday at $24.76, down 62 cents for the day. Their 52-week range is $15.65-$35.