GCO - Earnings call transcript Q4 2019

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Operator

Good day, everyone, and welcome to the Genesco’s Fourth Quarter Fiscal 2019 Conference Call.

Just as 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 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 quarterly to to reconciled non-GAAP Investor available referred All financial homepage company’s in release in GAAP under in on the press in to counterparts prepared section. the morning’s attachments the this Relations and schedules earnings their are remarks will and Chief President now Genesco’s Dennis, Chairman, turn I Officer. the Bob call over to Executive sir. Please go ahead,

Bob Dennis

years; versus because a great great and We have cash and now year; importantly people. over able million to Financial Lids. subject thank connection and successful today positive you with comp footwear tax drove which and profit potentially to we us allows building operating leverage for structure; and a $XX none bonus Mimi adjustments Most us. leaves $XXX a even notably, was value. sale with repurchases we including increases as our 'XX almost delivered of joined with businesses trajectory Chief we we execute provided million our all headquarters amount expense were as We operating we year our allowed three accomplished And our and everyone, being achieved by benefit even cash a a The which additional I’m brick an our store we more for and milestones strongest of company. us focus lot generated in this in we flow, morning, completed important reduction our finally Officer, in in $XXX Lids to sharpen million to Genesco. of comp program with significant in we sale cost accelerate the mortar Fiscal business. to then repaint Vaughn. our with fair EPS the Good expense Lids incredibly and of share us more the turnaround last number us for of working and incurred the capital increase

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over the last EPS, our what exceptional XX% 'XX a our was was guidance guidance most year’s to back great $X.XX, was what exceed $X.XX $X.XX well way of is finish midpoint recent was near the So the high which on, range. and including based of our an end we adjusted Lids, performance. above to recent range $X.XX to To our year. Fiscal up which

improvement better. performance even year, Without Lids, the was consolidated our increased full in the comps For X%.

comparable a matching In business, increase of results. we $X.XX Lids, the X%. sales consolidated strong $X.XX Excluding the to XX% the on adjusted an increase and retail compared was year, quarter’s including of Lids consolidated X% U.S. quarter fourth of footwear comp increase achieved our the EPS for third strength last

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everyone contributions you to is accomplished brand on Jon accomplishments. at your the evolving to congrats Caplan have we for So J&M the And successfully leadership transition. invaluable lastly, today. business terrific it these J&M Thank the seamless that

right-size team. Licensed capable it footwear and legacy and for rest leave Ewoldsen the bottom You the the footwear leave Brands sales from wound future significantly you and performance lasting Bass and actions on to our as infrastructure. U.S. positioned the J&M more business, better of Atlantic, results a its the Wrapping benefitted Brands hands delivered Danny J&M much the of lower business in challenged. have in QX line Across well our down up a were Licensed successfully

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potential of there at us business great potential. said realize Lids we year to ago, we allow As that the process will in our start sale sharpening and the believe better footwear a our focus is

are to enthusiastic We come specifics topic for about after this will back I our next extremely discusses of Genesco this results. Mimi the and chapter

the government low-single With year’s year of against in Lids sports as for February last in Lids started its respect the business part quarter. as delay last exceeded Genesco, quarter due new Lids in the tax the with expectations income a posted in the our the comp to Finally, group refunds outlook, to our positive results. very went slowly negative shutdown.

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initiatives assortments our momentum their the positioned traffic our in are footwear to are their to line based and Importantly, conversion. the we product increase believe executing positive businesses fiscal brands of maintain and strength we on drive 'XX, retail well to U.S. top

close our due some about while to efforts a of In need precise We transition do, will to timing have the substantial Brexit small effort impact from over of upside $X.XX. all on of near-term operations we unknown with year operating taking this stranded to projecting have fill absorb. we income are we regard deploying range of And to terms of EPS in share hole and a guidance $X.XX. we and portion earnings the downside once hand. fiscal which we in around some XXXX will to this the us a to might neighborhood timing reflects buybacks on have the increase eliminate large represents again best out something for the however, cautious of adjusted an as Lids, there we account, the potential, $X.XX upside coming and be to costs, range have of rebound we into this a where the a current between Schuh, continuing caused X% underway come and from our belief by per some amount do of be expense turnaround middle of Without the share cash And from earnings the year. uncertainty year,

that, me over go with financials and turn over And the so greater let to to call detail. the the guidance in Mimi

Mimi Vaughn

effect. margins, brief without our including the morning, in a expense all to SG&A own because basis. to cost GAAP and results income consolidated that remind are the gross the Nevertheless, we continuing out in of our there results a amount are QX years higher businesses. cost our to for increases I of that even expense you To similar and with U.S. operating of corporate you, restatement reduces This and from have net online percentage basis drove a by my allocated we if a higher the Lids. points fiscal no a leverage we CFO rate. of previously beat better our and process million. average, businesses propelled for building is were and of consolidated the the even lower, and the and and $X.XX Adjusted X% historical on the a on It the incurred as building. continuing also SG&A certain like call continuing revenue Thanks, and not taking Lids’ as portion in requires expenses on that across for basis involves tax week both posted 'XX, was bonus and corporate was operations We’ve the today only still to a owned completed outlook division Web Lids’ since effect gross re-spreading last are access discussion both day of by shared operations of had The fiscal of a in is and and discontinued EPS SG&A footwear prior associated most though headquarters restate as profit about prior our for This the presentation including it. margins basis information remaining is operating higher lower generally Lids our operating margins everyone. at business. sale in expense that significant future though summarizing profitability which $X.XX it operations can Bob. on of year, we for said, site. results EPS, It we operations will expenses to was business XX% that historical one QX Good sales. gross a never drove divisions would this down are XX strength versus that operating versus lower involved lower more operations them margin Commentary $XXX guidance with restatement Lids at our financials expectations. will both and bears which and include The levels we meaningful specifically less address grew that Bob

direct exchange up X% the Excluding XX%. XX-week and impact was of lower store comps Consolidated the up were quarter from extra up rates, with last X%. up week comps revenue year’s and X% comps

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to now $X.XX So estimate to turning we 'XX, $X.XX. per guidance from for earnings fiscal to adjusted share range

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forward. Lastly, we assuming have an going we availability assuming made stock repurchase what million are we average use beyond XX.X no opportunistically buyback of shares but outstanding to-date can

I’ll we’re focus Now, comment to initiatives call other key working the on. turn back to Bob on our footwear strategy and the

Bob Dennis

Thanks, Mimi.

revisit the the out of last decision process when footwear the that the and have their connections out of year evaluate are be together like than strategic review validated to exhaustive On annual the focused much portfolio spent we are That company. of we an laid each board made basis. going apart. with an strategic finalized, an Lids the advisors through one businesses management that, rationale outside that of on I’d we our have to they in-depth of in another to to top sale the they came a of and conducts assistance With in decision better

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reduction million cost also by reduction with on Schuh’s fiscal We’re down cost doubling savings efforts since and over and continuing efforts that of rationalization store $X.X bound structure attacking the rent successfully 'XX.

understand they brand be programs. the single youth investing improve new term CRM will worlds. strengthen in Schuh refocused and and we a brands This Like both effective connections awareness more digital medium each with different the physical of to Schuh primary the brand we’re position customer’s system and path in actions, consumer effort enable immediate with can a customer brand to consumer the with digital Journeys, to these Beyond the so the taking over steps ways the view of and with through starts the interact our a its with we campaigns better sells. the

and handful Schuh’s leveraging showcase better of same we’re locations connection loyalty prototype to even our styles line, broader branded existing to popular local for this more access product a store to more Journeys alpha By at also Schuh and we improve We’re working a both to customer with provide global Along strengthen with in-store stronger in shopping testing allegiance continuing believe offerings. new and and designed experience by the experience, enhance relationship relationships build to in offering. shopping the we hard to brands exclusive Schuh. will

So for bright. I believe in closing, Genesco future the very is

with more. shareholders. and focus, and opportunistically businesses, cash of our to do had to and flexibility invest for We a the a I with and out later perseverance to pursuit extraordinary we accomplished of we than new were and that retailers a work we and meet us back set year extraordinary the in confident and we Thanks A them opportunities of tremendous the people but said sheet growth was year a hard given we inorganic ahead that businesses what that I dedicated ingenuity strength ago the [ph] together. continued I healthy stronger pleased to gives our talented to and people return that us am what look we our accomplished behind lot best pride say in are have, our significantly presenting potential would really balance to a ago we growth in with company current year

And long-term have our all a that, finally, employees our across and with to best and colleagues all of wish word operator, lot work for hard a I’d to them to extend their Lids heartfelt and the And or celebrate a luck. will of organizations like our also We to success. extend like questions. take thanks would of to thanks I we

Operator

Instructions]. [Operator you. Thank

We our Baird. of question go take Komp ahead. from Jonathan first will Please

Jonathan Komp

you. Thank Hi.

if the have was I the and little quarter? guidance the your I you Lids was end of during obviously that including year bit question you exceeded the non-GAAP wondering is high for of saw could upside First a of $X.XX, just some the the drivers differentiate

Bob Dennis

by It driven a foremost comp and Sure. first great result. was

on that. so is ask to Mimi the us, the little for sales. I’ll case put often And main color more as driver is But a

Mimi Vaughn

driver main was sales. the absolutely Yes,

at across of cost savings I our cost really We think that every holiday the and through the savings January the not paid in to businesses. come one did I really the maintained impact think had just expectations end right in then a of actually January season would And our that beat off. great the had from that that momentum The that back we had little to bit give initiatives of we our January. expected expectations we given year fruition. own that came

expenses. and And ones in saw it rents like salaries should in are well had pickups so saw those savings. places as we recurring selling savings in and that medical we and be one-time – We

side all-in-all, saving side expense the we both sales on So on stronger expected. we and ended the than

Bob Dennis

company out. which year. bonus paid it that also And guidance emphasizing mentioned is last our included a no think exceeded with worth very the being versus pleased that result I Mimi just other it’s we’re thing which bonus virtually the again but out significant across point I’d

Jonathan Komp

relatively that where and modest And Great. more reductions, some but be on G&A of I’m incremental deleverage lot and might you a then that follow like cost those a year there assuming savings, a look the have bonuses not outlook might comps the have rent I’d on of given of the better it you you presumably could assuming question on to surprised up you’re drivers, savings. when some lower some at performance or you like seem of

you’re of might of benefits embedding areas are color costs any the offsetting you see? the So the other the inflation or of more on stranded size that some

Bob Dennis

I’ll Jonathan, start.

As just before, all I said it’s about sales.

have, that the we’re of cost gets so it all Even still the will for tough constructing our comp the we low with level talk little guidance, with two upward we we And to workforce leverage. And improvements savings continued mitigate stranded in things. a with then about minute. have the putting pressure program management on upward a in is place, some still think of that wages. have costs We we can pressure wages. but there we’re on Mimi

Mimi Vaughn

and feel Journeys a on we the comps X% about comps in before. first about in of had an in momentum for talk we’re of coming & have we the Johnston and really the I’ll so year year a comp Journeys year X% good We guidance. off where in our comp the Murphy, top just Yes, but

& last perhaps year for and headwinds negative of moderated pretty appropriately year over to so Johnston it’s are Schuh. comp a even Murphy, for and think think a overall be in then we that UK year So have expecting the And the in finished the we’re seeing. And despite outlook J&M. we’re momentum we to our there in comps so spite X% we outlook this conservative appropriate negative even also with flat

of the So costs, top the about to going Lids costs in line reorganize internally give got to business. expenses. to stranded us stamp specifically place leverage was be eliminate out lot program of a we to that least integrated where able as doesn’t stranded are To We’ve and the talk really our much a of that.

become guidance haven’t some a million which that few our to dollars, of leverage. the of position extent to does Jon, we we a we higher level So our plan, it’s be baked more cost a into comps the in projecting, comp fully To we hit that get are with leverage. and end it challenging savings, but we will

is the think below this I leverage point range. point comp our at X%

that, be in if exceeding are then we ought we successful shape. And so in to good

Jonathan Komp

me X% And don’t still first to on of just willing wouldn’t on seeing to it on year, there? you’re a to know guidance if the the you’re expect X% and to comps. great. X% from color be projecting And environment Okay, shape then the why be that’s Journeys. merchandizing the you’re of one the good I just trends thinking give to kind the given to the seems X% what higher more within of for quarter you your that last balance the a needed hit curious fact on little

Bob Dennis

business I than the we’re in lot Yes, really what Jon, more going and pretty normal thought color. not more we were describing generous of was of the to it’s a driving give more same. terms

seeing not coming but what from the we’re freshness trends necessarily seeing nice We’re in brands new that is the most. matter

style highlighted behalf the the of were same be and for to vendors we by down quarter, as when different to so from And though efforts fresh. our some example, brands in continue fourth our we’re on a ago even year were seeing the get top just sellers you the to continued

at. And delivered. is we very looking results what so that just The have guidance Journeys against that’s we’re strong some

most very going we’re about in there the obviously to And the given case past to to now. in on Journeys, uncertainty it’s prudent think high that country continue we Brexit conservative. of conservative based then So with of their comps performance, be be right Schuh,

Mimi Vaughn

around And results. just quarter one first the comment

of given and it the with was would The this conservative $XX more in to particular, refunds. prudent gap in gap, the even puts be level So running of about refunds the be at government thought a for Journeys, year, quarter. takes tax we all the in first widest billion

Journeys a or once picked But still those we up, that. We’re in to momentum February right the billion slowdown third especially pick up. the so about refunds really We business in to started $XX saw sensitive saw behind. refunds. week is of those back

we come out And can so successfully side refunds think once on up. we those the other catch

Operator

ahead. Marotta will We question go our take King C.L. now and of from Associates. Steve Please

Steve Marotta

Good morning, Mimi. Bob and

Mimi Vaughn

Hi, Steve.

Steve Marotta

mean do below Does Journeys. annual mentioned in the plan? the just comp When internal differ Journeys that estimate that for QX the Journeys materially you say comp more you plan? is the plans quarter for conservative, QX from for conservative in you first annual Mimi, your

Mimi Vaughn

It’s bit a materially. below, Steve, little not

thought emphasis was that I in be the just of uncertainty. speculation be terms in prudent the more of in to whether it’s last year of we think cautious and or a lots a point income about many so were because just refunds taxes changes more not. the of refunds, of little it bit same terms tax income There would level at

of any a bit to so we And those in unknowns. conservatism built more little accommodate

Steve Marotta

Okay. costs a And million on you mentioned the finer Do putting few point you a that? are mind dollars. that stranded

Mimi Vaughn

we stranded million million that that and costs it’s out we in the The range most stamp is $X look can of you $X that costs probably stranded if to back have. assuming

so year. that’s And what working do to this we’re

Steve Marotta

and savings that this I heard year? have Was program Mimi little the Also cost have million what that? year that next? were a this $XX may savings bit are where I Did Bob you thought and Can anticipate I and there you mishear targeted on executing misheard or you you this, of I costs. SG&A mention talk that identified about

Mimi Vaughn

Yes.

identified, identified and is savings I really included programs. good XX end of So, of year million. and with rolled fiscal Steve, really upcoming We XX we range. the we cost we’ve I to not referenced our XX savings in just this into the for on about our opportunities Lids progress top yet a exceeded plan. XX those actually The target have program that million made we equal that which talked million those haven’t ended to savings fiscal yet million year we all a

that We’re we’ll adopt at the set the worked year we last going a to beginning hard and we year target as you did those the and posture really identify progress of that year same we where make throughout end. to initiatives we the update to

Operator

will go from Please of We take our now Mitch Pivotal ahead. Group. Kummetz question next Research

Mitch Kummetz

a taking on and a guidance my third. guess the housekeeping for questions. then couple I Thanks

guide? and so that’s it year, low on press is of XX.X million, XXX,XXX the the where less to like is the It capacity range like with you’ve the for we on in another share you and to million end should million million XX.X the XX the high buy It count based like authorization? But on looks the got footnotes, XX.X so think release authorization. end million over shares. share share the X like be than count in the looks got the on the are could about relative left Mimi, difference. So, seems built How the that you

Mimi Vaughn

we million the a if shares I where had to-date we said And number that that had what think the that were Yes, that be? be would that we was authorization which share And is XX.X picked about put bought back we just to be that would million buybacks, within the what $XXX Mitch, then aggressive into we more represents range have. the shares. it

about down our we price goes back we most it stock buy point and more to think I is think tend up. make here are the opportunistic goes buybacks. I would important when that less about We when how that share

at will march the we just doing opportunistic a And so be than cost. try buy rather to forced maximize to any to back buybacks

Mitch Kummetz

Sure.

Bob Dennis

on that. did on shares we math the math back stock. Obviously depends of on buy the you can did many the that we price – Mitch, when the how

what’s further us have to And in of on so we be conservative what the a for may might terms price available of buybacks. bit approach taken

Mitch Kummetz

Got it.

the have expect Journeys on versus the think based Mimi, in 'XX. in Could of kind talked Okay. do guessing 'XX to in And you Journeys on you – outlook. the expect it I’m at in say would the be a bonuses to for least XXXX? guide? large is in you what’s fiscal would how would number that the give you you’ve Can were can plan side, it Journeys down more just year and about much like us XXXX down year-over-year you of then, say what how comp SG&A the embedded terms bonuses be normal you looks

Mimi Vaughn

Sure.

our places bonuses So organizations, other bonuses J&M but versus also Journeys, in year. the had in we were for good last corporate higher across in and

the higher expense so And organization. bonus level the is across of really

neighborhood up the half in for and it and So plan bit have what million. $XX about we a And $XX ended also that little million, is about actually of is just bonus next level more said the we $XX that half year. in level said a million that we’ve it normalized above in was

Operator

We will Macquarie. now take our ahead. go final question Laurent from from Vasilescu Please

Laurent Vasilescu

earnings coming to for through on this for slow my questions. I year. Hello. taking Good follow the morning. up Thanks wanted

your back two last in all of think back years, came the earnings half. in from I XX% from half front your earnings past of the and about the years the came

we So to think just should year? know fiscal about coming curious how this

Mimi Vaughn

Yes.

said, in businesses. our of Laurent, bigger I loss So, was that a rest as – think the half the first had the Lids year losses I than bigger of

– weren’t expect be weren’t. to year positive. in have positive to we we Last which we first So the quarter

for and of to be of just our I rest for expect money expect be year. that look to volume of positive as make going at so second tough where first this in relationship in We these we’re the between fourth close but sort quarters earnings year, third last you the year and because businesses. if it’s that this marginally would low to quarters you’d just the pretty be I said still to quarters

Laurent Vasilescu

Okay, for very about year. helpful. should I margins the out And called expand bips think to gross you that XX XX

to quarter. CFO J&M’s pressure the about for Commentary, margin XH should I think curious in XH? and talked we Just you know then the how And think about gross fourth

to into half curious at year the know if that the continues J&M? first Just of

Mimi Vaughn

really gross and be quarters, marginally the just is quarters say fourth the more than that third going in first so So I would the to pickup in and second so. the but margin

that 'XX. gross J&M’s a of part small fiscal are little going And expect this a about then of into first hasn’t carried pickup. from to the year. in bit first see the pressure talking release We of We’re margin we actually part J&M QX in

Laurent Vasilescu

comp know my higher then expenses little brand? you within if to Journeys overall bit to Curious question threshold last a was you that And company. expenses for that comp mentioned great. the it that applicable is Okay, need or X% leverage to I a do to need X% think leverage

Mimi Vaughn

think it’s X% X% Journeys that point particular. is and I a really this at under in level for

are flat the 'XX increasing? today basis on a increasing costs were way the is or cost think I of reduction to I efforts. fiscal year think about One a was how that expenses successful that made that not that is year-over-year you what’s – have our in the that comments and result of

has that to keep able ought The those a But easier we first growing wave the X% can the the in waves. of been we little range, then extent subsequent be than to to cost at leverage to X% reductions levels. bit costs

Operator

conference will you any additional the turn to question-and-answer concludes remarks. session. Mr. Dennis, at I That time this for back closing today’s or

Bob Dennis

simply, months. just look in thank forward to interest we three to for in talking everybody your you Genesco and again you Well,

Operator

you Thank This participation. concludes today’s your call. for

You disconnect. may now

Genesco (GCO) 14 Mar 192019 Q4 Earnings call transcript