Release Date: September 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Genesco Inc (GCO, Financial) delivered top and bottom line results ahead of expectations for the second quarter.
- Journeys' digital business saw high single-digit growth, contributing positively to overall performance.
- The company successfully optimized its store footprint and reduced costs, improving profitability.
- Journeys' product assortment resonated well, driving strong sequential sales improvement and positive comps in July and August.
- Genesco Inc (GCO) has a solid record of managing well through adverse economic and fashion cycles, evolving with customer preferences.
Negative Points
- Johnston & Murphy faced pressure due to robust multiyear comparisons and a softening men's premium non-athletic footwear market.
- Schuh experienced a tough summer season with higher cost of living impacting consumer purchases and increased promotional activity affecting gross margins.
- Overall adjusted gross margin was down 90 basis points compared to last year, with specific declines in Journeys and Schuh divisions.
- The consumer remains selective about purchases, impacting non-peak shopping periods and leading to cautious outlooks for Schuh and J&M.
- Genesco Inc (GCO) expects fiscal 2025 total sales to decrease 1% to 2%, with adjusted gross margin rates down 10 to 20 basis points for the year.
Q & A Highlights
Q: Tom, if I heard you correctly, I think you said you are expecting a low single digit comp. Was that a consolidated comp? And if so, what kind of a Journeys comp is embedded in that?
A: Mitch, that is a consolidated comp and relative to Journeys, Journeys is low single digits as well. (Thomas George, CFO)
Q: Are you assuming that comp stays positive in September and October or does that kind of single-digit journeys assume that you kind of go negative for the balance of the quarter?
A: We expect that we will continue to see positive comps because we do have that product that will drive and that combination of consumer demand and having great product to serve the consumer will continue into September and October, but we also then think the consumer just pulls back and gets interested in other things. (Mimi Vaughn, CEO)
Q: Do you feel like you've got enough newness on the boot side to maintain this momentum, or do you just think that like what you're doing on the athletic piece really just sort of carries forward into holiday, as well to drive the positive comp and 4Q that Tom referenced in the outlet?
A: We are seeing some green shoots across some boot brands. And so if that comes and gets some traction, then that'll be additive to where we are. But it's really looking through the assortment today and saying what's going to resonate in the fourth quarter and we do believe that we have the product to back up the comps that we are expecting for holiday. (Mimi Vaughn, CEO)
Q: Can you elaborate on the opportunity to better serve the teen girl consumer? How much of that is again like further tweaking the assortment versus maybe doing a better job marketing to that consumer and then from an assortment standpoint, obviously there are lead times. So how quickly can you make adjustments in order to better serve that consumer?
A: It's a complete picture of starting with product, adding marketing, having a great store environment, getting out there on social, speaking to that customer, letting her know that we are the place when she thinks about coming and buying her fashion footwear. (Mimi Vaughn, CEO)
Q: You talked about a refresh starting in 3Q. Is that going to be complete before the holiday season really kicks in and then as far as the updated concept is concerned and can you just remind us like what's really different there versus the current box?
A: The refresh that we're talking about starting in Q3 will touch all of our stores, and it's going to be a lot with visuals. It's going to be a lot with how we merchandise within the stores. We started a little bit of that, but this will be a rollout across the entire footprint. (Mimi Vaughn, CEO)
Q: Anything else how you're thinking with the marketing for J&M and just -- the brands in your company?
A: We have been pleased with the results of our new brand marketing campaign for Johnston & Murphy and it speaks to the progress that we've made and reinventing the brand and evolving with the consumer. (Mimi Vaughn, CEO)
Q: What would you say is a great trend that we should be looking forward to for the back-to-school season right now?
A: The theme of the day is diversification and great interest. And I said it to Mitch, but what is exciting right now is that the customer is really enthusiastic about footwear. (Mimi Vaughn, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
