GCO - Earnings call transcript Q4 2018

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Operator

Good day everyone and welcome to the Genesco's Fourth Quarter Fiscal 2018 Conference Call.

Just a reminder, today's call is being recorded. Participants on the call expect to make forward-looking statements. These statements reflect the participants' expectations as of today, but actual results could be different. Genesco refers you to this morning's earnings release and to the Company's SEC filings, including in the most recent 10-Q filing, for some of the factors that could cause differences from the expectations reflected in the forward-looking statements made during the call today. refer adjusted to the measures expect call. also to financial certain during Participants measures the to to reconciled non-GAAP Investor available referred All financial homepage Company's in release in GAAP under in on the press to counterparts prepared the morning's attachments this Relations. and schedules their are remarks over I Officer. call Dennis, Chairman, to now will the President Genesco's Bob turn and Executive Chief ahead, sir. go Please

Robert Dennis

Lids, adjusted increased activity you UK, in XXXX. today Mimi the and our guidance thank our brands for for per quarter challenges $X.XX by Vaughn. the last Journeys with licensed Chief $X.XX morning us. promotional with joined in Johnston and compared and Comps comps being flat range $X.XX fiscal Good I'm lower results were of increased Fiscal Officer, the our Financial per Fourth were share line and year our earnings were in with X%. XXXX offset with earnings adjusted share with flat business. Murphy in Tremendous comps year. & by end in of towards difficult in expectations

gap in it to have to in of those us line. reflected The need strength year. to remain very challenging year allowed the bring last our maintain of but year their this have and the they sales results In believe overall, QX. concept While undisputed retail, compelling changes categories improved more our bottom more potential assortments than much sequentially in our was well-positioned do the quarter leaders our to we largely topline, and profit notable gap spite each we the a to closed businesses and

battling the in our boot for cost and discuss in store with were experience and pattern of exceptional Journeys to over once by a major business. biggest again delivered confident fixed heavily QX level, QX's meaningful a nice the momentum. to have momentum brick-and-mortar comp of and e-commerce largely a proper our you its back-to-school in and channel on and have double-digit in initiative dilution built our select the as first will multiyear which structure With continued in remarkable rotation team We the its boost styles QX, a strong both weather fashion a classic the sales Cold was positive been usual reshape would From today. high our improvement was talent the we the building to deliver half and gain improvement the We The up saw gain proceeded businesses. gave a fashion casual we about channel which double-digits. were results the counteract comps launched two through [ph] after and performance Journeys defined divergence year driving direct by both acceleration and driven trends result. of

Our now current across is assortment, balanced performing than our and cycle, more previous brands the expectations. above which fashion diversified is in

franchises trends positioning This spot the fashion footwear. which from us our about momentum the lifestyle have into a and number of have product the at of the into prospect classic house Journeys athletic greater proliferated enthusiastic will we athletic through are lifestyle routine and We sweet of fashion benefited plays year. brands retro as provide the

day-to-day Jim in end he headwinds to believe significant to Journeys left And away And while an so entire Shifting will from we difficult the the Lids, congratulations we Gallione to stepped profit team hands and with leadership year. than Estepa that in for who XXXX, year to at the finish miss team. Mario the incredible Journeys Journeys good greatly last has due several we leadership after fiscal and improvement forever. more don't rest fiscal XXXX recovery will of specific was anticipated

on of sales difficult more Series the to and specific decline comps a a during factors decline given a While portion became confluence gift the what we quarter. a began ago before QX the the the year factors comp the which of ended for These of period. into territory down year with impact the of were discussed positive year sales comp licensed On season. a this, in is World brought have selling in holiday due strong peak notable Cubs win accounted merchandise the substantial To we typically positive NFL start lapping category against top into of they two before.

other of began And in license In these balance losses. all this strong Journeys Lids down the NCAA when don't to know timing that resurgence exact History our sales. our points to trends which fashion cycles the of we headwear the the face negatively headwear specific emerges. absence a a between once trend to continued headwinds. positive Like and currently the the now Notably summer wins e-commerce subject of and finally, over is addition, business type is be will of is businesses, was for driver team now a rebound. new positioned comps due to fashion affected But of strong occur. Lids enjoying

successfully. the stores history a resilience a and decade case to long today half Hat cycle shows Our and and [ph] teams XXs overall of almost through in Lids which ability demonstrating the profit trends store with remains tremendous

demand markdowns. the Schuh Schuh strong territory the are footwear season. after fueled extremely promotional the weak Mimi decision Meanwhile in the QX talk exploring comps we of an up add will by more profitability sales start month which that our after I of UK to discusses we environment by year, than weeks will specifics into and and sale of product as of very holiday time discussed hampered sales the rationale boosted made in results which Black pushed selling release apparel November were last Friday the we positive the strong press throughout gains As to A which call for our you about little Atlantic, in a Lids. for sale announced a across know, the today. ago a few this our

spite categories priced the growth quarter. another J&M full quarter sales all start of for a highlight in had were had in noteworthy to sales casual record product of gross increases no as pressured In meaningful comp consumer in team in activity well. finish and even fourth and of the margins activity Journeys Johnston promotional the January comps leading to congratulations were of year, a J&M the slow Importantly, margin the appetite pressured This like you. footwear driven and results Murphy spite strong both very & year December a Sales way. because so more for other of were increase had as and promotional footwear of expansion. the marks with with consecutive were its eighth by and

brands by degree a has be Lids, trends near-term in and strong UK this quarter the [ph] in and a and businesses fourth addition during of development. our with respect performance at a ended Schuh. fiscal we've Finally, weak commitment and the major thus Journeys athletic a in impeded what which not by divergence touch the headwinds to the the With quarter dress far the current we touch renewed saw in will our overall this given demand of is the for shopping shaped believe that cycle winter licensed limited XXXX private year casual experienced late shoes continue and to visibility although to snowstorm to men's two label our we outlook, big in

weak the with While well Lids generally we timing the is current retail rebound us near-term a combined Journeys growth, year. believe assortment coming the drive continued about product causes to across store cautious of to positioned around be uncertainty traffic

we owned in the range guidance many reflecting a the of see and year. we by we given out and guidance we if in us more for the adjusted current such, entire possibilities. the retail between licensed This projecting a impact the all scenario, close which are something were was per real end best share Lids includes range past earnings with lower top of as As it end the our regard as to range, might the belief middle we where wider variables $X.XX. sports than $X.XX and upper come have as upside to our the of reflects representing This do and environment

positions clear are them head XXXX operating of addition confident a time, with our plan. foundation solid we each on the structure ongoing specific customer leadership in We changes evolution and support will addressing and same businesses of At action fiscal we to consumer begin our purchasing model. are challenges remain spend. there connections growth. These business and behavior future our on and the ahead, Looking capital fortifying the strengthening cost as streamlining to represent that opportunities focus requires to changes our footwear

now let Mimi over turn and greater initiatives later over specific We guidance in call goals call the today, financials for achieve to to will these but the detail. to the go the in discuss me

Mimi Vaughn

you, Thank Bob. morning. Good

detailed you closed challenges spite and & year's allowed QX. CFO information our As the and that commentary We've at strength online us usual, elsewhere gap Johnston we business. in have in posted our began quarter in hold finally of EPS to quarter that last Journeys the year can to website. EPS Murphy year our subsequent it of in this last first The flat QX access in reduced in to each more

a to maintained earnings things week licensed positive Without expense X% brands of in negative had QX expense dilutive of comps. since the generally store QX the XXrd fiscal fell two specific e-commerce impact these pickup flat. was January, Even were in tax consolidated week our that early increased to consolidated pleased netted revenue comp out. we a other other the extra to million. EPS from Due sales and and week of margin February, we extra small and benefit overall $XXX and Schuh us we the period each of leverage was for gross the pressures low higher the of expense. spite in EPS reform in While the in it to XXXX impact with shipping

business revenue week, with the up the small XX%. Excluding and extra were comps was down year rates, last X% Consolidated of comps impact up and sale flat. X% direct comps relatively a of the store exchange

Comps have percent While total of positive nicely store in and the as strength negative to up progress the a for up QX XX% This points fiscal by and sales and products we performed athletic both retail sales. were sales XXX in increase. J&M driving in both Journeys total the XXXX. positive of dimension the XX% almost Journeys in they traffic, footwear business X% very strong acceleration and demonstrating for and size. across in on e-commerce was highlighted year, and by in comps priced execution. boots in-store in pushing quarter double-digits conversion fashion Direct average units assortment were higher increases great ASPs that year-over-year over driven and ticket The a both and well of experienced every was e-commerce basis of XX% the grew from QX. positive retail total to in for QX

conversion, been conversion the too UK select products Fashion robust e-commerce sales traffic better was X% J&M's strong better compelling X% as boots the a Schuh drove of resulted increased XX% was facing overall environment. double-digits positive given its lackluster of Cubs strong than & that both negative but higher athletic plus it higher. store margin in heavily a top Without on did Schuh, traffic leading promotional non-footwear hurt mix a average at XX ASPs than which margins is led in traffic positive Room average and transaction concentration were in for up, negative to Murphy's casual and costs Comp decreased and have basis were NFL. of XX Sales size dollars adjusted were the last year current of traffic, off plus Bob in win year-over-year comp sales. and from at footwear the but conversion brought highly sales gross X%. and higher ticket result and to generated note, comp higher XX%. Price averages e-commerce per down is increases drove a not to higher by While product to of would sales drove sales what Lower were and and On gross of was QX points. positive QX. contributed digital negative basis weighted to by sales, consolidated very but conversions. footwear a positive back World led Johnston from in more issues ticket comp ASPs mall declines comp. comp warehousing This retail shipping usual higher sales assortment the QX a higher up footwear line points Series the described comps. and a positive Locker unit Lids, against store affect QX X% size was on to

benefiting gross measure position up Lids markdowns. has Journeys increases costs of end how [ph] This points bright markdowns clearing basis inventory the taking we points and environment a in and J&M of important was vendor expected meaningfully merchandising the XX costs, sooner ended a markdowns pickup retail about and up product. points, was margin with XX gross consolidated contributed Another this basis it shallow lower this basis leagues extra the XXX points. trends. professional Their systems march. earlier in by up year two required the products and than the gross slightly Gross to margins point spot showed been significantly decreased better have spite was shipping the significant basis improved to level Without and we been been comp the warehousing a points. more the difficult basis in shipping have of were margin down which basis in and would move Lids was would for extra gross At as changeovers at year and XXX consumer from result price Lids' at even practices margin the lower Schuh with of XX results goal with throughout warehousing the margin improvement. lower was and especially IMOs. XXX and a Without Thanks clean year of really to higher markdowns year.

minimum been potential dress, contributed license the These on buyout to of this cycle margins. terminate footwear other sales stimulate capabilities leverage and footwear Finally, shoes and spends drive quarter salaries, XXrd expense and to expense have of of higher decision this weak [ph] percent strong men's, the sites rents, flat QX. and in as very factors points increased roughly IT extra XX.X% the a this traffic with agreement SG&A and spends stores marketing Total lower our much casual remaining omnichannel Without and selling due the were to our our obligations. for brands demand in midst past athletic to sales in cost to Digital the and would expenses well. to week. the basis drove leverage gross XX build also to as royalty licensed

single competitor talked about Lids this wage $XX.X in adjusted income up Adjusted decreased OI from result pressure for a this quarter and and continued X.X%. QX's operating million was Journeys businesses we net have year. wage wage increases and impact the points saw operating XX and We minimum increase. other rate mid basis on and both digit down. Journeys was J&M to were quarter of margin million $XX.X last versus with the

from adjusting XX% to down the again but was X% the foreign not for sheet, Lids' Journeys remaining balance to the rather sales and adjusting Lids XXrd the higher borrowings to new authorizations. down amortization the working during week inventory a to a sales for down had X% with due end capital did $XX we decrease Journeys was were was DC inventory expansion of on the later. project quarter was and increase X% were repurchase and total for We Journeys usual not week. current million now clean. depreciation due of year $XXX the year Turning over it distribution the higher the on than repurchase of on and and inventory extra $XX under center is of product QX We needs X% to timing the a re-buy some million have million. carried year into as sales million for XX%. Capital market shares than U.S. increase the down expenditures inventory $XX quarter exchange. expected

However, spending [indiscernible]. capital in ended we working capital million about up borrowing and with tightened less $XX both year and the

XXXX, range we fiscal guidance to $X.XX $X.XX. adjusted share to per now earnings Turning for from estimate to

range indicated, of because this largely two than Bob wider usual potential As is variables.

that and roughly the pace into comp of earnings year, store been sales whether underlying at last decline traffic will continue out dilutive we range shift flat down to digital and is first stores guidance saw from has X%. The the mall in our to

half the we the for of back anticipate well remain half the spite we The the We is anniversary into rebound. tough have the until fashion as of start for of Lids the timing challenging first easier since second we comps driver in new in a and Lids comparisons. don't yet more a conservative much summer visibility

in more UK from X%. The the expect comps get open range we been our from will we for consolidated new the up for balance flat year be each where including up sales strong will ranging in plan XX malls deal. with and the Schuh our of direct previously For X% stores Journeys down fill-ins to concepts in mostly and to stores to mature X% consolidated Canada. We rent right Concept the haven't Kidz, able to

have store, decrease be the are but openings to average we XXX continue pursue in footage suggested shouldn’t we second will our for square of our on stores for to suggest these selectively. that earning any a plan above store year close to cost row. Some a almost capital, we We opening new openings recent analysis so

productive stores short we close this stores number lease we this portfolio. keep attractive, term as than be may ones saw the you we However, open will is will the we unproductive open a more as our rent The if selectively prune change. from deal that that store with the so far year

with year the expect total XX the improvement basis up in to margin be to XX in divisions. coming most gross in We points

expenses cost basis with base range XX in and comp fixed which the largely store is over to improvement year. meaningful I will savings the last store point low will we de-lever the SG&A discuss expense our a expect With XX

In offset. down in ranges will up that all few Bob will help labor an results double-digits. in complain cents year's savings addition, we operating level to store This from EPS at will percent an be these as or investing little also below which a last margin

are Our guidance last this reform as result this fiscal XXXX XXXX tax as details of the One is XX.X% inclusive the important modeling tax refinement rate benefit estimated week for the out. the to quarterly of reform fiscal XXrd and of subject is in calendar at callout of in year. shift a worked

While biggest volume and one the at which back-to-school beginning largest quarter will in of in is QX. this second the the impacts change August week third quarters the earnings shift all of of the somewhat, of into out help QX hurt and the the

given to callout been year EPS investing We relates distribution at and EPS to still five low a last years have depreciation of neighborhood difficult our We fleet. Capital on to upgrading greater QX million. low of down proportion quarter store be Another in will spend. expect comp the pressure making to we $XX and expenditures in the it in deleverage a have substantially estimate $XX the spend and we on sales from million our investing previous capital facilities. when while amortization plan refresh digital positive

going we This guidance shares outstanding. million can assuming repurchase availability opportunistically stock Lastly, we no buyback, forward. but $XX.X use average are assumes

dilute of and added profitability and we traffic a channels initiatives the of efficiency for we which combat cost the store critical to the to in We that and a should improvement two to are working in cash fiscal tenth inventory must this. have operating cost the XXXX underway turns we Shifting recognize structure year flow reduce stores improve to well. for as help the e-commerce toward turn driving

while last shorter-term. partnering huge annual we priority about $XX or reduction launched is out of this examined key With and year we our cost negotiated several base a take of XXX of part with We've every year renewals initiative a increasing X% achieved give total and $XX update, renewals and expectable to straight cash rents program a This in last our working enhancement have is basis. and expanse reducing keep at landlords often a on program. expense. profit one the reduction line us in million million reductions, carefully Over critical expected risk XXX almost an rent with this. months to will This To achieve rents happening businesses. flexibility our XX% focus to talked in and over a this is renewals for a we this with

headcount which We our credit is reductions contract and opportunities freight into already have fourth like in additional in stores program carrier reaching effect also broad renegotiated This already is includes overall the fees, quarter digital. yielding went made, benefits. we and continued This multiyear a supplies, is card beyond. and and IT in and allow investment to costs opportunities store structure the store benefits effort e-commerce and store network reshape for in start our fees cost and of

the comment to the are on turn working call initiatives key I'll other to Now, we back on. over Bob

Robert Dennis

the providing already broader on to capital going I'm savings plans on to our our to cost as positioning from longer a this of risk much on well builds area Mimi the reduce focus and With businesses update real focus. for work four And our expense and one of reduce year rent the spending, strategic last with our initiatives estate efforts as our and program new other term. key evolve to strengthen

view customers be capabilities value experience to building physical as year. the brands customer's a these continuing able result. must for to We in worlds. the to a to different and our we our customer to Lids improve is gain of enhance a interact better Genesco with this both which to top and Johnston will leading priorities customer in with that is Journeys experience build focus and us the by also better ways maximize To and & major first, this working and believe loyalty Murphy the each understand added all channels single we're customer. they So experience learning improve we the in digital the each the

three-pronged For Journeys approach. the is it

us. the bringing them. the with intent as tracking to in process online First, of which identifies and interactions technology of order with This major net knockdown stores solve approach solutions such the when point and during tackling the we sources customers and are encounter pain all omnichannel the

multiple is and the sources that location external Next Journeys our data single gathering reside preferences, promotional behavioral, and information history, purchases, past and a includes and such from to shipping Journeys. systems lastly, data use consolidating footwear understand increase with it a to of average value will and conversion, Journeys view And this customer combined effectively. and across more view into looking social customers' resolve various build customer and customer other preferences, unified needs, demographic our the transactional, insights of gender internal as order better this and problems solve

assets these robustness For two, driving prior are store I the about critically this to enhancing time. view call, would lot begins capabilities on employees omnichannel our data embark traffic talked our experience to platform to Lids, year. establishing important this with traffic focus environment. aspects them and in-store We've Two on store and stores and our most the enable the working of delivering experience. of our brick-and-mortar which our so we locations. enhance store are customer strategic We as on this experience a Number will important drive to

fortify employees in store a experience lease who We the of fiscal in ensure every differentiated invest position particular continue teams. both In second for with and Journeys investments most manager that millions store focus after are to to our order co-managers in a in leadership compelling XXXX increasing provided we the customers on we year. the lines cross to our store our our our critical

build dedicating store also employees. opportunities our to with conducting resources engagement better and and surveys understand We time are to

motivated new bonus to employees testing and keep programs few be will a we engaged reduce Finally, turnover. store and

capabilities store The our store evolving new we sales floor for discussed store companies. this, concepts current of point-of-sale last be with we results enjoys close three, physical a terms the need. our a platform pleased in in to environment towards select making is is an already is building two design. modification. continue positive on excited And coming manner. fleet display high benefits initiatives we to testing engage year. showcases trends out this with our of merchandise footwear more updated up faster Lids even locations, inspiring stores previously, lighting look year. Meanwhile, This are enters Schuh will directed U.S. new in this across as In POS to them on and offers cleaner the web models our be in them are and very is are the J&M an to an digital majority omnichannel will we will addition and about. mobile assortment quite its reaping potentially product with refresh testing the on such showcase further and launched speeding test. enhancing with technology other Number compelling we assortments year with associates spend the convenient, emphasis embroidery a and a to a opportunity invest our When experiences is they process volume, and mobile of especially XXX our our we initiatives of early bit customers and in customer sell Schuh presence, that may capability. a our high with which and also more customer late more all feel planned that functionality features of our in product profit, test up we want to narrower a and presentations, of orientation, website emphasis gives a plan the year differentiator is added larger and interactive check real as beyond The

attribution. First is off online to line

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together and insight [ph] go groups business areas this significant that trends come fashion image concept The the then to market most demographics to and to market product detect of across trends, of customer to ability area young trends and go younger. interpret versa, real whether advantage. adult is then and in these our spread start the the vice in others teens, markets and is start and group start benefit America then of with to in one to merchant footwear of of a worked our to our whether and spread spread all One or Europe older older source to ability and

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headwear. that unrivalled product for leadership like them. to sports of this on-trend makes Lids So leading its licensed omnichannel topic destination and brand the reiterating and organization Group in fashion go with that far to and Sports would is Lids in-demand retailer merchandize in Lids strong exclusive a close I and place we by of believers very by a behind breadth strategic positioning are on talented

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full focused once Let task year challenges entire you and of me your market on have conclude remarkably by distractions, remained recognizing dedication hand. and the at Genesco talent. again In a external for team the

of and together is accomplished meet them, given that for from and that lot pride a do. continued so all with of focus, what tremendous now presenting year in of the tests we work to and and are the with the hard back perseverance, we our ready extraordinary strength ingenuity I people in us that, And you a have confident ahead potential operator thanks we am behind questions. look take We retail but with businesses will us, our

Operator

with from Erinn And Jaffray. Instructions] [Operator our you. Thank first Piper Murphy question hear we’ll

Unidentified Analyst

being the sort you the piece and smaller I us out NFL sort the of Erinn last Lids, visibility of that into kind of business it morning. start what regarding for trajectory of year-to-date on a secondly timing this Thanks in of a for guys, year-to-date guys I on inflection, Lids, alter it how you potential terms it’s the period, question. can Thanks. before to NFL then becomes a you can just are material more this yet you of – year? trajectory was you those from guess has happening taking it remind with don’t see become but half improvement into Eric trend is historically first, to of know second in the Hi change the from during seeing in And and play have this business? the enough reflection just move when

Robert Dennis

fashion we went Cubs, question. category historical the of the NFL So headwear specifically decline can in let's When a lot the what lack a the your then to go thirdly, Lids, in the evaluate with decline business. on first we of the backwards and on isolate comp driver then

begins the NFL you Superbowl get the And the so, is you're when done. correct, first with quarter into then it and

was factor the So fourth as that quarter. in anywhere is near not a that trajectory as it

XX to fire. an they at years right a all wearing a of prompted and now are XX up, and that dozen We're when overlap. generalize catches looking just something a by sudden had a little probably show event have hard trough in it's or trends, headwear the last some they go over recurred headwear So occasionally they we've and trends come and that

to that more Some and as like figured we of then a fad would got a a part fact looks hot it's them away of for be what actually pump go fashion be and Snapbacks would emerge persisted Snapbacks of in and our really become and permanent store. years that

look when what years just it's little hard lot and just it at We on would bit right happen does to a different So of ways so predictive and generally trough rely of a of in comes it. history now we it along. to like, be but would something a look XX about are that

going in how season. the crystal have on There lot black teams a down, there. the of were some ball. hurt, the of A no things with sort last top we a many lot NFL, were not of with event, players important Specifically lawn of were was players

then. was was it And leaves so upside greater our but lightly, last it for guidance probably in tough given how that some given up the planned room year we how trend

Mimi Vaughn

footwear. the mean, the can the here time is to construction, lead one is, talked can shorter six I of lead product than trend get we've into would of that we in space things is in you I chase other the fad as Yes, being time lead quickly. actually to get a past much appreciate months. The a about into being that able say the that headwear last in and some product that footwear headwear time plus more the

we than been in we've on we come our seen the have the into to assortments like play, able footwear can rapidly Snapback things grow so, side. And more past when really

Operator

Janine Stichter And move onto with Jefferies. next we

Janine Stichter

morning. good Hi,

seems better that on to you wanted comp get an color fourth the some in guidance. saw January, acceleration quarter like there in first the the but acceleration it significant in quarter Journeys, is for trends and guidance Just even got there

falls just how but when quicker So trends really is in acceleration? prepared change right then do are like the sweet it current you are driving lines again? of you and same And than like there are spot, seeing that your along are specific in manage doing seems the seeing current there it on anything come cycle, the kind anything so it trends, trends seems the we past, like go in you. what ultimately is differently business Thank you you the there is expectations your

Robert Dennis

of couple to me general, talk the a In comments. let

both run now As we brands spot right what where really franchises, good all athletic we playing of in script, which the is are Classic more sort said the think that then we long the we and there sweet off of diversification we are a that. about like in get and amongst lifestyle out and Journeys is

same. got the and is respect much last question cycle, call Locker on week with their the answer Foot to pretty same the our to fashion So put

just are, those business is noted they’ve lead Mimi dependent the times pretty what much and largely as lead been. times Our merchandise still are branded on what

more customers. to that we timeline us is that that up being a playing store there the quickly. there to and and our shorten What to jump figure in possibility to just opportunities is we're the pretty ways on little working pattern hard so that quicker out of do range a we allows whatever get against terms Our we're other showing doing diversified And a certainly and whatever to in of defense can. more that spot help vendors are we're believe

you. In the turn guidance Mimi to me general of terms it let

Mimi Vaughn

a year. as important it's - last order very So, look move fashion that year accelerate really that in of to Janine we had back a move our lot large to our to cleared were to assortment in and we we and to bring think result, inventory product rotation. so change shipment the trying Last I could we in a January

you XX% comp quarter at on. going when an so plus easier in look the was the against comparison in quarter, our everything fourth And fourth that given that is

of the fourth part would different We have in fourth in first that business. the like year the moderate to that were There prudent into than were a the we a happened in Journeys they lot of the look that a little quarter because it felt great confidence the that factors were quarter. be lot of things

to And holiday selling the drive we so, are can to, appreciate Journeys that are you able time peak really we able periods during volume.

to tracking seen to in the nicely are have comp X% we XX% moderation that the guidance that half We year. have that think in a that we we X% plus the first of

Robert Dennis

or a months, is very customer don't resource, of nine wearing that's call charts Thankfully a could and use the just did you with what Yes, to effectively. navigation job would predictive work, you have what very you kind anything predictive is, the tough. if challenges that will, regard finish this they think nothing change, navigating painful but you back us. Trends you the for truth when but know. been some this you what the right as And they because a it ask they're through of We and great teenager and topic, us is forensic seemed be fashion would, to about to is go period was they going it, Google this think really last one the on now up in if did six fickle of that was for to they might tell change team it

middle and might challenge that the move of European the think referencing do to are to as exposure, job of positioned said, on going And some touch of what's challenge good the touch predictive so, national we things for I do it the we're this try anybody coast retailer is on a we we fact With to going on call, that that being a is category. a as on. and our so what's our see country footprint the in were the

Operator

move Steve with we'll Marotta to next Associates. CL King on and And

Steven Marotta

incremental the as incremental profitability and other store offline follow year, little the between the And is years? of the profitability historically pertains, new $XX CapEx for tradeoff between future and obviously a quick offline online online, that address Bob profitability reduction items? Mimi. program higher, costs in in refreshes a lower cost at played impact a with and and and online couple sales [indiscernible] million the technology because probability morning bit incremental incremental Good Does make A that this was was could it investment, bit is differential the also few my variable associated openings perhaps questions, up it. greater you guess I that

Robert Dennis

to you guys managed confuse online and Steve, we offline always know enormously You sales. about

is we incremental how are distinction We are an on profitable scale. profitable and The degree. same the online offline to profitable that

It an X% existing in X% and up getting paid profitable of more an don't variable basis you're increment with and mean are stores, you that's fixed cost those can sales, in business. such adding and pick the sales with in get And more your flat of the happens picking you're already you of staff. sales And that very one and because the profitable rent increases then variable online the you incremental increase your just generally shipping because is than a service online expenses the issue. get shift means when costs you're then if our so is it's sales, get doesn't more are is than negative X% on the offline to X% or get an other more packing get absolute you costs. and in store you've possible, and When profitable we so on more you leverage if increase a what the and it's that sense. actually But that we're deleverage online kind is delighted more the because we

so line obviously big looking going but there rent. so area the is And that not at, we all the opportunity item on cost is cost, at one look how table, we're a go everything the line when not to first take is a figure and that to to in in item the get to store of is continue number out

that question. that So up I hope clears

Let me CapEx. Mimi to pass the it on

Mimi Vaughn

of both to Bob store it's Yes, program profitability exactly is and I'm on the e-commerce our and just to up the costs merchandise about about so to improvement add the whole look selling when on XX% but cost rent our question and of outside pile channel, salary at channel as you expense, the base. going the outside expense, store all of said profit channel costs, depreciation, product focused

quarters, really impact where negative we so store of factors. make comps an reshape comps able And to have those be number to world in store negative had a we've to had a for and we've

have with of track, being We rate pressure of labor the progress a to have increases substituting salaries. headwinds time full wage by labor being reverse we've the minimum lot that selling of that optimizing set been aside salaries, but able selling increases salaries a seeing, we've selling using to wage part shopper made lot on for time we've in-store we optimism and don't by

reduction cost be working store structure reshaping we're the our primary really on hard cost cost motivations pieces it’s And so improvement is of store that other one and the will the the And of program on then cost many programs. of the our of structure. focused rent in

years. $XX we you of to also looking just over several when accommodate centers million, look growth businesses major upgrades the the investing to e-commerce So accommodate our have expenditures in our at of and the last capital and distribution all been at

of of and CapEx opening this new comes not comes versus year some stores investments, reducing make of new We're it before. the XX those decrease from we'll number having openings. the year estimating also from so, XX last XX that the be year to store in some And

the spends. represents the neighborhood of in We're store many from heavily our comes on openings. reduction as renovations. third e-commerce is a some So, of still in The of and not that capital overall new investing balance IT

important belief overall we have renovations. in portfolio our almost XXX put to Our for is store our there and it's continue refresh so to dollars

bit play will focus highlight making little we and less that We product, customer refreshing like are fleet. that our overall the things spending trying keeping on a like feel those really to pace the lighting, really like have with elements been and

Operator

we'll to different move Research. maybe Yes, this want on a Mitch about Kummetz Q Pivotal Mitch little ask you I way next in And Kummetz to just to thanks. mix. with start, I want - bit channel question

it's direct. past X were this guys flat So you I plus stores, minus year think comp, XX

the kind if And the plus flat is similar for store kind or ’XX a guide have then performance versus in were happen that a sort like of up. performance the for direct XXXX and comp a of mix? terms X, ‘XX mean impact I then follow what I is of Your you the on with mix margins to are of of to that so looking

Robert Dennis

terms and so terms the our I'll what we stores. stuff need success is year had quoting what this been of rent to to renewals, breakdown in being that structure next a order we've renew let kind Mimi in guidance renewed you mentioned see aggressive but been more of remember, lot but we're in ahead the do a kicks rent your of lot we've than the structure rent rents, year. with now of our new of you We've renegotiations of we've on the you times doing specifically, in give

So the stores to that a we a hammering on we problem even numbers. have rents comp this how make formula large those economic really viable part sure work in with of is

Mimi Vaughn

just were e-commerce so XX%. comps and Mitch X% that's last store right, year were to year, last down compare comps so up Yes, to our

And so rate this year the neighborhood up. XX% year e-comp. we of Last have average on growth average on in it’s seen bumped for

several I somewhat in quarters, what so fixed That past it base about, in get on don't I seen negative so comps anticipating On negative and will traffic, talked we in it's that basis seen pressure store and expense about stores, tune of at that to of the X% over points. convert our have are eight whenever year seven comp store fiscal deleverage. aren’t average, last going deleveraged stores back we've the XX% think be we our quarters, able in or sort high stores, we we we whenever range been that of tend the to XX range. We ‘XX to to

nice The do to able we do really and base. we other are comp that we are fixed side expense is store get, drive positive sales, leverage on to lots of that when able when of convert we see

the at range last X% and at so, low And reflecting is high for year. the end flat, is guidance that this saw trends that about the is our thinking our minus year and of comp end the our range we we've neighborhood in of seen, store

on basis Now as the saw is reduction deleverage. we minus when expect of points that cost at deleverage, positive impact far X% comp, we this points news as year basis will XX program the that see of our a year we last XX

a as And leverage much cost, mentioned, beating rents able work so as we work lower the our stores rate. comp at we're at over we time at reshaping to in down Bob as

leverage where we And in driven we then lower competitor will very we comps fallouts I to rents, from pick-ups situation we able to by rents down, X% a store to and of driven store going positive and by nice a somewhere to at when economics. become year, see comps, be store this it's bring for level between as be so think be ought continue

Operator

We'll move onto with Macquarie. Laurent next Vasilescu

Laurent Vasilescu

morning, taking to for guidance. the comp Good up regarding quarter the question. my thanks follow question I Journeys wanted on first earlier

comp other guidance comp factors tax the or X% is a basis influencing the returns winter storms, stack are two-year think maybe on guidance? I that to some any suggests decelerations, X% recent

Mimi Vaughn

we the been have we tend for for winter factor, that The but very don’t assortment to storms coming feel they certainly the impact and fleeting Yes, a positive the that Journeys I think year. are trend quarter. again for about those that think the

across spring, number as comps of the how part key what assortment of overall see come nice the the what to is when fashion And and measure is to first store so, we the for that comps store far conservatism the you're as traffic rotation. the think see unfolds [indiscernible] seeing out is has of the as and positive it year Journeys Journeys. And it’s store for and look for seen of comps I talked diversified we’ve as we brands the positive in Journeys

Robert Dennis

course just period got the same reiterate storms, earned over pace But be big not the subcategory that. it perplexing we that, very we're I'll sure disruptive driver sure on of us The the now. actually and right business of we're think that ballpark Yes, as the shown complete year. tax the of reaching income that so kind quarter. the the the when a visibility the pace should at refunds because is last tax refunds the of has we are tax for to little not the a of they're winter but credit the end We in business look has hurts been we data generalized

the is time year of of for visibility Journeys way break. the that The spring gets in always kicked other which of timing in this factor the

of out And are a breaks so we spring all board. when school, get the and the balance so are kids over

little a these ricochet then So it’s It's low all around. it’s you a and just tricky have in - that volume quarter first the quarter. variables

and a what So four. volume emphasis quarter. quarters three matters I fact really and expect put two to on in that we is low especially the What it's see would

Operator

on move W. to with Komp Next Baird. we Robert Jonathan will

Jonathan Komp

I profitability a to hoping significant levels. rationale little just I expand to on not surface, Yes, low agree pursue and Bob going hi more just and but in on my updates first behind the process, comps was under and thank back Lids understand one on you. Couple you are and the of the topics the are could very broader the is to give the of is bit sale the essence you pressure

right to right is can you So the more actions? comfort those now give pursue why time

Robert Dennis

Look, we Lids biggest up do got will the the there. think the that a that is in being presence done. have correctly which in in omnichannel run this scale licensed winner, the and none the brick-and-mortar sports business long business is guys regional which be and to a a there of player They’ve retail

those We of the is that's closing, like basis team thing Fans a We’re great, called and a bit think team sign a that on sold seeing we is looks the [ph] think leadership It to got business a already. a some of regional sold. things distressed just stores consolidation are it regional There that great. just come. is got

We as have a reasons is timing, going but good year now wasn’t performance in that. the you of I'm know terrific, the to though think it number why last we leave even at

Operator

will Krasik next onto And Scott Buckingham we Group. with move Research

Scott Krasik

sneak get as you for the I FY just in I a will and it the this occupancy of here. renewal year-over-year but you and us can thanks try when year K, timing not? can just what well and ’XX be because guys, tell then few and what Mimi, should your know phase Hey or in in down the up

Mimi Vaughn

so the takes, stores we've some overall the these rolling new have about opened of expenses the impact occupancy decreases. occupancy closed we're of think then to and way I a and puts think that number in Scott, we with stores, so rents

I occupancy the So that for year than that would that anticipate be fiscal ’XX wouldn't before. different

of be decreases. of For a up – fiscal we've little and impact we rent seen just stores bit haven't opened new ’XX seen all the haven't yet the yet because we these it might full some

percentage ’XX, that backward. but so also rents backwards, as sales, go a see of rent fiscal For dollars actually in we certainly total will believe we just going

Robert Dennis

volume is we thing store tricky rent do rent volume a in higher with high We in low in live a a much box small Scott, store. percent retailing. And than

at store I a Journeys than in store number dollar at million Journeys a I know in XX%. can don't XX% money more make can a up $XXX,XXX make I So

store a I the that close the but more $X might effectively. at XX. rent them of So I'm the ’XX increases up, leveraging million to stales profitable you is store $XXX because more Keep other $X the at add store might million expenses when choose million much all as at was which percentage

spend. too on just a percent, it’s just more said giving that's complicated all. focus fleet. much the I you And simply so as at math just little So I wouldn't well per the the we're on rent total is I’m the managing just I - that focus would how than looking really

Operator

session. time, Bob would And question-and-answer over this to I the remarks. closing to At today's will like conclude or that turn Dennis any for call additional

Robert Dennis

we look you it's for to Well, going. all months day. joining how good in forward on a three and updating thank you Have us

Operator

call. conclude And today's that participation. will you We your thank for

Genesco (GCO) 15 Mar 182018 Q4 Earnings call transcript