• Fashion trends that affect the sales or product margins of the Company's retail product offerings.

• Changes in buying patterns by significant wholesale customers.

• Bankruptcies and deterioration in the financial condition of wholesale customers, limiting their ability to buy or pay for merchandise offered by the Company.

• Disruptions in product supply or distribution.

• Unfavorable trends in fuel costs, foreign exchange rates, foreign labor and material costs and other factors affecting the cost of products.

• Competition in the Company's markets and changes in the timing of holidays (including tax-free holidays), or in the onset of seasonal weather affecting period-to-period sales comparisons.

• The Company's ability to build, open, staff and support additional retail stores on schedule and at acceptable expense levels and to renew leases in existing stores and to conduct required remodeling or refurbishment on schedule and at acceptable expense levels.

• Deterioration in the performance of individual businesses or of the Company's market value relative to its book value, resulting in impairments of fixed assets or intangible assets or other adverse financial consequences.

• Unexpected changes to the market for the Company's shares.

• Variations from expected pension-related charges caused by conditions in the financial markets.

• The outcome of litigation, investigations and environmental matters involving the Company, including but not limited to the matters discussed in Note 11 to the Condensed Consolidated Financial Statements.

In addition to the risks referenced above, additional risks are highlighted in the Company's Annual Report on Form 10-K for the year ended January 31, 2009. Forward-looking statements reflect the expectations of the Company at the time they are made, and investors should rely on them only as expressions of opinion about what may happen in the future and only at the time they are made. The Company undertakes no obligation to update any forward-looking statement. Although the Company believes it has an appropriate business strategy and the resources necessary for its

operations, predictions about future revenue and margin trends are inherently uncertain and the Company may alter its business strategies to address changing conditions.
Overview
Description of Business
The Company is a leading retailer of branded footwear and of licensed and branded headwear, operating 2,236 retail footwear and headwear stores throughout the United States and, in Puerto Rico and Canada as of May 2, 2009. The Company also designs, sources, markets and distributes footwear under its own Johnston & Murphy brand and under the licensed Dockers® brand to more than 1,025 retail accounts in the United States, including a number of leading department, discount, and specialty stores.
The Company operates five reportable business segments (not including corporate): Journeys Group, comprised of the Journeys, Journeys Kidz and Shi by Journeys retail footwear chains, catalog and e-commerce operations; Underground Station Group, comprised of the Underground Station retail footwear chain and e-commerce operations and the Company's remaining Jarman retail footwear stores; Hat World Group, comprised primarily of the Hat World, Lids, Hat Shack, Hat Zone, Head Quarters, Cap Connection and Lids Locker Room retail headwear stores, e-commerce operations and the Impact Sports team dealer business acquired in November 2008; Johnston & Murphy Group, comprised of Johnston & Murphy retail operations, catalog and e-commerce operations and wholesale distribution; and Licensed Brands, comprised primarily of Dockers® Footwear, sourced and marketed under a license from Levi Strauss & Company.
The Journeys retail footwear stores sell footwear and accessories primarily for 13 to 22 year old men and women. The stores average approximately 1,925 square feet. The Journeys Kidz retail footwear stores sell footwear primarily for younger children, ages five to 12. These stores average approximately 1,425 square feet. Shi by Journeys retail footwear stores sell footwear and accessories to fashion-conscious women in their early 20's to mid 30's. These stores average approximately 2,150 square feet.
The Underground Station retail footwear stores sell footwear and accessories primarily for men and women in the 20 to 35 age group and in the urban market. The Underground Station Group stores average approximately 1,800 square feet. The Company has previously announced its intentions eventually to close the remaining Jarman stores or to convert them into Underground Station stores. The Company also plans to shorten the average lease life of the Underground Station stores, close certain underperforming stores as the opportunity presents itself, and attempt to secure rent relief on other locations while it assesses the future prospects for the chain.
The Hat World Group stores and kiosks sell licensed and branded headwear to men and women primarily in the early-teens to mid-20's age group. The Hat World Group locations average approximately 775 square feet and are primarily in malls, airports, street level stores and factory outlet centers throughout the United States, and in Puerto Rico and Canada. In November 2008, the Company acquired Impact Sports, a team dealer business, as part of the Hat World Group. Johnston & Murphy retail shops sell a broad range of men's footwear, luggage and accessories. Johnston & Murphy introduced a line of women's footwear and accessories in select Johnston & Murphy retail shops in the fall of 2008. Johnston & Murphy shops average approximately 1,450 square feet and are located primarily in better malls nationwide and in airports. Johnston & Murphy shoes are also distributed through the Company's wholesale operations to better

department and independent specialty stores. In addition, the Company sells Johnston & Murphy footwear and accessories in factory stores, averaging approximately 2,350 square feet, located in factory outlet malls, and through a direct-to-consumer catalog and e-commerce operation.
The Company entered into an exclusive license with Levi Strauss & Co. to market men's footwear in the United States under the Dockers® brand name in 1991. Levi Strauss & Co. and the Company have subsequently added additional territories, including Canada and Mexico and in certain other Latin American countries. The Dockers license agreement was renewed November 1, 2006. The Dockers license agreement, as amended, expires on December 31, 2009, with a Company option to renew through December 31, 2012, subject to certain conditions. The Company met the conditions and has given notice of its intent to renew. The Company uses the Dockers name to market casual and dress casual footwear to men aged 30 to 55 through many of the same national retail chains that carry Dockers slacks and sportswear and in department and specialty stores across the country. Strategy
The Company's strategy has been to seek long-term, organic growth by: 1) increasing the Company's store base, 2) increasing retail square footage, 3) improving comparable store sales, 4) increasing operating margin and 5) enhancing the value of its brands. Our future results are subject to various risks, uncertainties and other challenges, including those discussed under the caption "Forward Looking Statements," above and those discussed in Item 1A, Risk Factors in the Company's Annual Report on Form 10-K for the year ended January 31, 2009. Additionally, the pace of the Company's growth and the implementation of its long-term strategic plan may be negatively affected by economic conditions, and the Company has announced that it intends to slow the pace of new store openings and to focus on inventory management and cash flow until economic conditions improve. Generally, the Company attempts to develop strategies to mitigate the risks it views as material, including those discussed in Item 1A, Risk Factors. Among the most important of these factors are those related to consumer demand. Conditions in the external 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 the Company's target customers (particularly customers of Journeys Group, Underground Station Group and Hat World Group) can change rapidly, the Company believes that its ability to react quickly to those changes has been important to its success. Even when the Company succeeds in aligning its merchandise offerings with consumer preferences, those preferences may affect results by, for example, driving sales of products with lower average selling prices. Moreover, economic factors, such as the current recession, may reduce the consumer's disposable income or his or her willingness to purchase discretionary items, and thus may reduce demand for the Company's merchandise, regardless of the Company's skill in detecting and responding to fashion trends. The Company believes its experience and discipline in merchandising and the buying power associated with its relative size in the industry are important to its ability to mitigate risks associated with changing customer preferences and other reductions in consumer demand. Also important to the Company's long-term prospects are the availability and cost of appropriate locations for the Company's retail concepts. The Company is opening stores in airports and on streets in major cities and tourist venues, among other locations, in an effort to broaden its selection of locations for additional stores beyond the malls that have traditionally been the dominant venue for its retail concepts. Summary of Results of Operations
The Company's net sales increased 3.8% during the first quarter of Fiscal 2010 compared to Fiscal 2009. The increase was driven primarily by a 13% increase in Hat World Group sales, a 5%

increase in Journeys Group sales and a 15% increase in Licensed Brands sales, offset by a 16% decrease in Johnston & Murphy Group sales and an 8% decrease in Underground Station Group sales. Gross margin increased as a percentage of net sales during the first quarter of Fiscal 2010, primarily due to margin increases in the Journeys Group, Hat World Group and Underground Station Group offset by margin decreases in Johnston & Murphy Group and Licensed Brands. Selling and administrative expenses decreased as a percentage of net sales during the first quarter of Fiscal 2010, reflecting the comparison to substantial merger-related expenses in the first quarter of last year and decreases in selling and administrative expenses as a percentage of net sales in the Underground Station Group and Hat World Group, offset by increases as a percentage of net sales in the Journeys Group, Johnston & Murphy Group and Licensed Brands. Selling and administrative expenses during the first quarter of Fiscal 2009, included $7.2 million of merger-related expenses. Earnings from operations decreased as a percentage of net sales during the first quarter of Fiscal 2010, primarily due to the gain of $204.1 million in the first quarter last year from the settlement of merger-related litigation and to decreased earnings from operations in the Johnston & Murphy Group partially offset by an increase in earnings from operations in the Hat World Group, Journeys Group and Licensed Brands as well as a smaller loss in the Underground Station Group. Significant Developments
Change in Method of Accounting for Convertible Subordinated Debentures In May 2008, the FASB issued FSP APB 14-1, which requires the issuer of certain convertible debt instruments that may be settled in cash (or other assets) on conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer's nonconvertible debt borrowing rate. The Company adopted FSP APB 14-1 as of February 1, 2009. The value assigned to the debt component is the estimated fair value, as of the issuance date, of a similar debt instrument without the conversion feature, and the difference between the proceeds for the convertible debt and the amount reflected as a debt liability is then recorded as additional paid-in capital. As a result, the debt is effectively recorded at a discount reflecting its below market coupon interest rate. The debt is subsequently accreted to its par value over its expected life, with the rate of interest that reflects the market rate at issuance being reflected in the Condensed Consolidated Statements of Earnings. As a result, the Company has applied FSP APB 14-1 retrospectively to its Condensed Consolidated Financial Statements, as required. The retroactive application of FSP APB 14-1 resulted in the recognition of additional pretax non-cash interest expense for the three months ended May 3, 2008 of $0.7 million. For additional information, see Note 2 to the Condensed Consolidated Financial Statements. Conversion of 4 1/8% Debentures
On April 29, 2009, the Company entered into separate exchange agreements whereby it acquired and retired $56.4 million in aggregate principal amount ($51.3 million fair value) of its Debentures due June 15, 2023 in exchange for the issuance of 3,066,713 shares of its common stock, which include 2,811,575 shares that were reserved for conversion of the Debentures and 255,138 additional inducement shares, and a cash payment of approximately $0.9 million. As a result of the exchange, the Company recognized a loss on the early retirement of debt of $5.1 million reflected on the Condensed Consolidated Statements of Earnings. After the exchange, $29.8 million aggregate principal amount of Debentures remain outstanding. For additional information on the conversion of the 4 1/8% Debentures, see Note 8 to the Condensed Consolidated Financial Statements.

Impact Sports Acquisition
In the fourth quarter of Fiscal 2009, Hat World acquired the assets of Impact Sports, a dealer of branded athletic and team products for college and high school teams, for a purchase price of $5.1 million plus assumed debt of $1.3 million funded from borrowings under the Credit Facility. Terminated Merger Agreement
The Company announced in June 2007 that the boards of directors of both Genesco and The Finish Line, Inc. had unanimously approved a definitive merger agreement under which The Finish Line would acquire all of the outstanding common shares of Genesco at $54.50 per share in cash (the "Proposed Merger"). The Finish Line refused to close the Proposed Merger and litigation ensued. The Proposed Merger and related agreement were terminated in March 2008 in connection with an agreement to settle the litigation with The Finish Line and UBS for a cash payment of $175.0 million to the Company and a 12% equity stake in The Finish Line, which the Company received in the first quarter of Fiscal 2009. The Company distributed the 12% equity stake, or 6,518,971 shares of Class A Common Stock of The Finish Line, Inc., on June 13, 2008, to its common shareholders of record on May 30, 2008, as required by the settlement agreement. During the three months ended May 3, 2008, the Company expensed $7.2 million in merger-related litigation costs.
Restructuring and Other Charges
The Company recorded a pretax charge to earnings of $5.0 million in the first quarter of Fiscal 2010, including $4.5 million in asset impairments, $0.4 million for other legal matters and $0.1 million for lease terminations. The Company recorded a pretax charge to earnings of $2.2 million in the first quarter of Fiscal 2009, including $1.2 million in asset impairments, $0.7 million relating to a litigation settlement and $0.3 million for lease terminations.
Comparable Store Sales
Comparable store sales begin in the fifty-third week of a store's operation. Temporarily closed stores are excluded from the comparable store sales calculation for every full week of the store closing. Expanded stores are excluded from the comparable store sales calculation until the fifty-third week of operation in the expanded format. E-commerce and catalog sales are excluded from comparable store sales calculations.
Results of Operations - First Quarter Fiscal 2010 Compared to Fiscal 2009 The Company's net sales in the first quarter ended May 2, 2009 increased 3.8% to $370.4 million from $356.9 million in the first quarter ended May 3, 2008. Gross margin increased 4.3% to $189.2 million in the first quarter this year from $181.4 million in the same period last year and increased as a percentage of net sales from 50.8% to 51.1%. Selling and administrative expenses in the first quarter this year increased 0.7% from the first quarter last year but decreased as a percentage of net sales from 50.4% to 49.0%. For the first quarter ended May 3, 2008, selling and administrative expenses included $7.2 million of merger-related litigation expenses in connection with the terminated merger with The Finish Line. The Company records buying and merchandising and occupancy costs in selling and administrative expense. Because the Company does not include these costs in cost of sales, the Company's gross margin may not be comparable to other retailers that include these costs in the calculation of gross margin. Explanations of the changes in results of operations are provided by business segment in discussions following these introductory paragraphs.

The loss before income taxes from continuing operations ("pretax
(loss) earnings") for the first quarter ended May 2, 2009 was $(5.3) million compared to pretax earnings of $200.2 million for the first quarter ended May 3, 2008. The pretax loss for the first quarter ended May 2, 2009 included a loss on the early retirement of debt of $5.1 million and restructuring and other charges of $5.0 million, primarily for retail store asset impairments, other legal matters and lease terminations. Pretax earnings for the first quarter ended May 3, 2008 included a gain of $204.1 million from the settlement of merger-related litigation with The Finish Line and UBS and restructuring and other charges of $2.2 million, primarily for retail store asset impairments, other legal matters and lease terminations. The net loss for the first quarter ended May 2, 2009 was $(5.8) million ($0.31 diluted loss per share) compared to net earnings of $129.3 million ($5.14 diluted earnings per share) for the first quarter ended May 3, 2008. The Company recorded an effective income tax rate of (5.3)% in the first quarter this year compared to 35.4% in the same period last year. The variance in the effective tax rate for the first quarter this year compared to the first quarter last year is primarily attributable to the non-deductibility of certain items incurred in connection with the inducement of the conversion of the 4 1/8% Debentures for common stock in the first quarter this year.

Journeys Group

                                          Three Months Ended
                                            May 2,         May 3,            %
                                              2009           2008       Change
                                        (dollars in thousands)
           Net sales                  $    176,847      $ 168,762          4.8 %
           Earnings from operations   $      5,513      $   5,298          4.1 %
           Operating margin                    3.1 %          3.1 %

Net sales from Journeys Group increased 4.8% for the first quarter ended May 2, 2009 compared to the same period last year. The increase reflects primarily a 4% increase in average Journeys stores operated (i.e., the sum of the number of stores open on the first day of the fiscal quarter and the last day of each fiscal month during the quarter divided by four) and a 3% increase in comparable store sales. Comparable store sales were impacted by an increase of 5% in average price per pair of shoes, reflecting changes in product mix, offset by a 1% decrease in footwear unit comparable sales. Unit sales increased 2% during the same period. Journeys Group operated 1,018 stores at the end of the first quarter of Fiscal 2010, including 145 Journeys Kidz stores and 55 Shi by Journeys stores, compared to 985 stores at the end of the first quarter last year, including 123 Journeys Kidz stores and 50 Shi by Journeys stores. Journeys Group earnings from operations for the first quarter ended May 2, 2009 increased 4.1% to $5.5 million compared to $5.3 million for the first quarter ended May 3, 2008. The increase was due to increased net sales as increased gross margin as a percentage of net sales, reflecting changes in product mix and lower costs was offset by increased expenses primarily due to higher bonus accruals.

Underground Station Group

                                        Three Months Ended
                                          May 2,         May 3,            %
                                            2009           2008       Change
                                      (dollars in thousands)
             Net sales              $     26,728       $ 29,004         (7.8 )%
             Loss from operations   $       (450 )     $   (981 )       54.1 %
             Operating margin               (1.7 )%        (3.4 )%

Net sales from the Underground Station Group decreased 7.8% to $26.7 million for the first quarter ended May 2, 2009 from $29.0 million for the same period last year. The decrease reflects a 6% decrease in average Underground Station stores operated (related to the Company's strategy of closing Jarman stores and the planned closing or conversion announced in May 2007 of up to 49 Underground Station Group stores) and a 5% decrease in comparable store sales. The decrease in comparable store sales reflects flat comparable footwear unit sales and a 3% decline in the average price per pair of shoes, partially reflecting a higher percentage of women's and children's products in the mix of products sold. Unit sales decreased 3% during the same period. Underground Station Group operated 177 stores at the end of the first quarter of Fiscal 2010, including 167 Underground Station stores, compared to 190 stores at the end of the first quarter last year, including 175 Underground Station stores.
Underground Station Group loss from operations for the first quarter ended May 2, 2009 improved to $(0.5) million from $(1.0) million in the first quarter ended May 3, 2008. The improvement was primarily due to decreased expenses as a percentage of net sales, reflecting lower bonus accruals.

Hat World Group

                                           Three Months Ended
                                              May 2,        May 3,           %
                                                2009          2008      Change
                                         (dollars in thousands)
            Net sales                  $      98,804      $ 87,737        12.6 %
            Earnings from operations   $       6,524      $  3,725        75.1 %
            Operating margin                     6.6 %         4.2 %

Net sales from Hat World Group increased 12.6% for the first quarter ended May 2, 2009 compared to the same period last year, reflecting primarily a 7% increase in comparable store sales and a 2% increase in average stores operated as well as sales from the newly acquired Impact Sports business. The comparable store sales increase reflected a 2% increase in comparable store units sold, primarily from strength in fashion-oriented Major League Baseball products and branded action headwear. Hat World Group operated 880 stores at the end of the first quarter of Fiscal 2010, including 50 stores in Canada, compared to 868 stores at the end of the first quarter last year, including 38 stores in Canada. Hat World Group earnings from operations for the first quarter ended May 2, 2009 increased 75.1% to $6.5 million compared to $3.7 million for the first quarter ended May 3, 2008. The increase was due to increased net sales, increased gross margin as a percentage of net sales, primarily reflecting increased prices on certain products ahead of price increases from the Company's supplier, and store-related expense leverage from positive comparable store sales.

Johnston & Murphy Group

                                          Three Months Ended
                                             May 2,        May 3,           %
                                               2009          2008      Change
                                        (dollars in thousands)
           Net sales                  $      39,330      $ 46,571       (15.5 )%
           Earnings from operations   $         157      $  3,683       (95.7 )%
           Operating margin                     0.4 %         7.9 %

Johnston & Murphy Group net sales decreased 15.5% to $39.3 million for the first quarter ended May 2, 2009 from $46.6 million for the first quarter ended May 3, 2008, reflecting primarily an 18% decrease in comparable store sales and a 20% decrease in Johnston & Murphy wholesale sales, offset by a 1% increase in average stores operated for Johnston & Murphy retail operations. Unit sales for the Johnston & Murphy wholesale business decreased 15% in the first quarter of Fiscal 2010 and the average price per pair of shoes decreased 5% for the same period. Retail operations accounted for 72.1% of Johnston & Murphy Group segment sales in the first quarter this year, up from 70.7% in the first quarter last year. The average price per pair of shoes for Johnston & Murphy retail operations decreased 5% (9% in the Johnston & Murphy Shops) in the first quarter this year, primarily due to higher markdowns and changes in product mix, and footwear unit comparable sales decreased 16% during the same period. The store count for Johnston & Murphy retail operations at the end of the first quarter of Fiscal 2010 included 161 Johnston & Murphy shops and factory stores compared to 156 Johnston & Murphy shops and factory stores at the end of the first quarter of Fiscal 2009. . . .