GCO - Earnings call transcript Q2 2021

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Operator

Good day, everyone, and welcome to the Genesco Second Quarter Fiscal 2021 Conference Call.

Just a reminder, today's call is being recorded. I will now turn the call over to David Slater, Vice President of FP&A and Investor Relations. Thank you. Please, go ahead.

David Slater

thank fiscal joining XXXX and our to everyone, quarter second results. morning, you us for discuss Good With me and on our Chief Board the Officer. call today President Financial Chief are and Executive Officer; Mel our Chair, Tucker, Mimi Vaughn, forward-looking Participants to statements. on expect the call make reflect expectations as could different. but results of the participants' statements today, be These actual the that you refers including earnings some most cause XX-K recent morning's the the in the filings of the expectations for COVID-XX call and made the Genesco release this impact factors, from differences forward-looking including today. and could during to filings, company's of XX-Q reflected SEC the statements to expect also the call. adjusted refer Participants financial measures during to certain All the quarterly earnings to release Investor morning's non-GAAP remarks, press the to counterparts company's prepared Relations in in to the are their available schedules homepage this financial and reconciled under on measures, and referred section. in GAAP the attachments is results I our website. want summarizing presentation to our remind a everyone, accessible on posted have that we healthy. We hope you’re all and staying safe

it to Now, initiatives. to to we're on select discuss the highlight I'd progress turn the strategic quarter, making like over Mimi

Mimi Vaughn

us Thanks, joining Thank morning, everyone. you for Dave. Good today.

incredibly effort we our team we’ve through ingenuity As the resilience more has I tremendous want The of organization challenging situation. employees. our to new challenges executed throughout past executed navigate pandemic. begin the has myriad the fluid acknowledging shown in environments a proud during as several Genesco how by this of brought during retail one I'm months, of tackled great on history, extremely by this the and from

in that open operate the when the positive the with pandemic, strategic its expenses which with QX speed was digits months XX Journeys sales in was about its where undertaking customers. point and events our until positioning safety in by operating digital remain strong a with Across experience more offset by out return costs locations double following steady in resurgence decisive to and how for brick-and-mortar up of them and income traffic respect at to a momentum our XXX% impact combination take by more material reopening. the and reopen a back-to-school total as the this America hasn't pleased open. home. advantage, drop reopening for business to stores and at Atlantic, these and didn't XX% decrease customers to our customer J&M locations economy. are of But began by the term. return notable of increase first experiencing even when early in of reopening a store our on government a began the the The on the very first-to-market people its to of higher excellence priority, quarter. businesses is at local positive all the the reopening first by of country With often cost-cutting though Mid-June rapidly from and our Journeys we But then under North more necessary the on the the in of confident more Journeys gross comped revenue and where airport after had local was across improvement season protocols a are growth. quarter, in near-term of reopening our the Johnston after moment, the consecutive the in The sales, July, were shop very governments business bringing initial handful a as we yet opened new quickly revenue, impacted our from promotional coming quarter. cautious The stores, were Overall, operational the as strength, in-store store government stimulus, to longer almost go led in the hasn't headwinds pressure activity a authorities. now, we're permitted warranted positive of we we allowing of the a we recently, learning from number to to we England turning but restricted company increased total XX%, at in in dynamics businesses, a inventory Across Schuh. reserves anticipated and with gate, posted to stores higher opened demand opened stores traffic, students down & have with back the an and time to and day that. margin UK was volume, quarters the and and the second partially begin way positive comp the nicely street and the ensure be The into much right operations and position towards as detail materialized, fleet all outbreak, of significant places, e-commerce. were getting us phase. the and likely each shopping. reopenings. our about staff stores, business our actions on would performance unprecedented permitted early that impact to added Schuh. teams XX% demonstrated benefited huge unfolded. a virus from of to from of executional In Thanks the currently negative start, yet our end days actively to experienced online. mid-May, highest volatility with remained of our health store stores, I'll and openings, as the quarter momentum we Murphy Our opened as year continued J&M Regardless is good of our from The of describe reopened fluid enthusiastically stores recent reconfigure us pent-up and quarter, require with to engage position

a ability swung ago bottom share reduction QX, with to in line by however, in a the from to impact On profits were, increase mitigate portion store small encouraged we and our our initiatives, coming of per versus year benefited performance We the loss sales improved a to savings our revenue. in a of at loss adjusted cost $X.XX. meaningful a top e-commerce profits. over considerably the profit from While

was Our volume. grows, And positive to channel, we're our accretive, made in position, with driving leveraging I'm is cash this line reduce in further e-comm with each to net the and this details the organization's prior during operated to to generation incremental quarter. stretch. profits, we investments welcome but will fixed We've as the and additional the drive Mel the is during generate was sale always profitable Equally and e-commerce pandemic. goal and with a pleased ability trying the costs sales channel which cash nicely we've cash profitability. through encouraging of take the on preservation focus inventories our entire you and so

strongly, excited of choice the positioned price looking for detail. our teen accessible shop. and fashion in customer anxious product with the right at more businesses became So points to Comfort at Journeys well and a women which was other now each comfortable included more kids. fits with resonated sandals fashion top a athletic offering, pandemic, of and the spring/summer assortment On range product, casual especially of the Journeys' of bill. and Journeys' that,

double-digit July, tripled volume, the sales healthy the traffic as our stores in quarter, June, to in intent up drove sales, comps by store new resale showed Journeys' North the year-over-year opening Journeys double While in purchase COVID and even of almost America, open money stores. the somewhat as the high and virus, in full-priced in strength down up levels store two for spiked. Then, with which first began was transaction positive number cases to conversion their digits traffic higher footwear. The months fade consumer, robust double-digits quarter, affected team as of stimulus to in less pockets stores of size we a drove for plus e-commerce the early total

Like bump Arizona July this California, quarter underway. as steadily strong reopened, sales starting results to year-over-year quarter and big down or conversion plus well Year adults, New sandals summer. a weather U.K. similar store is in to And we the volumes than in did stores sales learning usually initially teens which later, the positioning states June. and accessible to and the robust home, across mid-July, levels. from pushed higher less in were to Florida, consumers not since for XX% little we the and footwear good less pandemic, not weekly more slower students Journeys' as in Traffic quarter Texas, store sales young the trend back-to-school the store this double-digit progressed. school demand the economy. and July, quick country. month. of traffic as its stores gets comps selling May before of store was experienced lockdown. the like Schuh's for comps real to negative even size First of sales traffic then beginning was Around in territory accelerate Journeys', and year, the into fashion in XX% opened they see than and shop we post see second market With with representing typically as almost half last meaningful late selling offset see in and much Journeys, were begin U.K. improving Journeys comfortable, over falloff reopening a transaction a for boosted With along negative Schuh aided

working quarter. in through social e-commerce canceled. headwinds were quarter and course capabilities with a It COVID reasons activity and sales tripling or XX% portion advanced its lost than and competition. the many a older our successful the a after display. down as the capturing to cases consumer. digital an on In less trends albeit helped its product fewer the Murphy volume for that little improving, Journeys' Schuh's Johnston U.K. Results of match that. performing with reversed promotional challenging customers was almost The the sales, store buy in by events and with better over addition, most throughout with casual July spike performance home been businesses, have initially traffic, J&M postponed for most the were very Schuh's gatherings Store from to full of and & heavy was had

historically a not J&M quarantine in seen sales, as e-commerce gains of and businesses. used pronounced teen been we've our larger as enjoys the during have While penetration

M its in inventory given cost business, reserves. significant addition we've headcount J& in to results, So has on action taken and where the greatest a the been quarter

down difficult made decision also underwriting. was J&M was track, the brand to wind start-up which We a

this different quarter. the our very current our QX most year. And season impacts important to significantly has now back-to-school holiday, Turning Back-to-school, after performance. been

estimate middle Some surveys the X/X and of school students to virtually high more will of U.S. broad-based only BTS elementary, up that start. school to attend

and this, Beyond some a follow online in-person will hybrid model.

later couple going year Labor Journeys. schools start has up back of is those dates this Day in students For X for are to person, and delaying several This weeks. week for implications many a

the is to of shift shopping first The BTS later.

versus the gone through the what accessories The to what BTS apparel the virtually second of be for will and who initially. so is learning will due Journeys' peak is and to appetite typically in changed and August, for half already at last home a shift. students footwear, extent the We've the meaningful last saw drop sales we of July in first week traffic year

and we quarter. for to respond. limited sales which we've happens all is QX weeks We've strong be improvement going in remains extending Journeys BTS the performance season, for service the if and as At this a more usual of nicely August, with and Schuh's this in head and delayed go-to comps season know gap quarter J&M, however, is we BTS ready build X also service some into assortment whenever to trend place September and for catalyst And e-com arrives. Back-to-school longer, traffic the in we virtual will believe as significantly is by learners stores is what virus seen shift ease. the footwear, half started selling for how back September a result. left as as done, the to results customers to in but to governments prolonged, Visibility this and we further dependent into fall potentially typically a period finally expect with an be When state the the shifted store exceptional then We local trends. third in of have the back continuation weeks person. excellent seen have, fill to has where U.K. states in several seen the and starts the and in-person. BTS the would last continue positive said are we in better QX comparisons in switch students seen the expect much federal, potential part with year. and as on the in

approaching a remainder we're some fiscal made inventory. cautiously, small we've amount progress negotiations, of as a it rent such, the the recent larger to-date reflect booked relates to cost already we've The our as in and expenses As well especially number of 'XX reductions with both our landlords. as independent of

stores omnichannel engage progress making and initiatives I'll conversations of our possible. fiscal relief, rent need our for discuss rent of gears, who and going in on up balance outlined landlord for to constructive flexible beginning we to appropriate closed we're the understand wherever the more We at order speeding both with in continue digital Shifting stores while structures year, partners, strategic our keep the forward were several open. we're and which

we accelerate in a to experienced The while to the one e-commerce X the we business is, period to going doubled opportunities. again years, closed further stores last aim over our the demand. grow forward. first growth shorter growth direct-to-consumer. during accelerate our pandemic, e-com digital business unprecedented And biggest double When Digital of is

the volume quarter history. second highest quarter was in Our company digital

last customers. XX% are Progress customers as relationships capabilities new engage retain loyalty four has completed greater purchasing. as such customer second picking or to The campaigns initially campaigns e-commerce online to digital consumer videos us we've at thanks and what brokering welcome we started to initially in but implementation achieve to levels. drive the accuracy, pay prepping installments we our designed grew e-commerce we're build platforms, cost we volumes will volumes, and module frequency three by Importantly, value. we've new made helped our to to system, along visiting to on and pandemic Journeys be CRM DC in to to is through June, Schuh's the measure customer another able helping files with our achieved the were welcome increasing its average size upgraded number and work aimed in adjust purchases sites content aid which In much by of with shopping to as are we for websites channel. web to deeper its at customer initiative, success shoe new introducing earlier our These distribution explosive services mobile, centers. the with our insights in and larger meet new on of over CRM how build these did digital. inventory strengthen QX near year's We've demand, the new year campaigns CRM to induce and invest during order bespoke also periods. for attracting with will term, customers our Schuh, record help planned customers to and investments continue for the a well. anticipate holiday We the in launched and e-com to to promising even peak number locating conversion driving personalized our higher new handle way. are our Journeys' Not only sales and we to also the results. additional of record complete records order critical already just the have had purchases as Schuh inventory delivering additional which providing advancing We've made

plan as stores on American been between physical long maximize a the year, a making Lastly, throughout in BOPIS, initial of the relationship we in launch have third had North pillar, time digital, pilot capability our progress to a and the the we we've U.K. for

XX% concepts and strength adults, strategic This time a pandemic which is further. now asset positioning. a us Our served advantages leverage strategic minute capability, of stores that this to for over true young The them our were right, especially in on our teens which competitive was we've concepts are evident Touching built and for of the need who for of and fashion their QX. and allows represent can of edited edgy more business. than its branded choices. appreciates that's young a trend them, They Journeys trusting also salespeople assortment The teen our is customer, right validate fashionable the to seeking interacting Journeys customer product they to. relate our like value people and advice with

pandemic. to more than in its sandals sneakers summer it’s back-to-school during consumer house confidence since both needs a customers' secures will brands, the the does again or Schuh back has not buy their share. connection Thanks and distribution brand. the of coveted, its more All us that kids boots positioning fair limited and continue serves customers, Journeys' trends brand for strengthens with and to come and its increased hot only strong otherwise, right this tomorrow, Journeys keeps unparalleled its moat the is when will back-to-school with just that’s coming has these winter, from the capture Journeys Journeys, in customers to As the which teens, more to gives discerns And, one again. be the teen product, and compelling that around with our today Journeys' positioning. of as to which relationship continually shop, Schuh year-round, out course, coming than which customer, back

proliferating as success the with as pivoting as the a mix strictly lifestyle brands brand a offering equity. our brand. being great rich offers toward and product Our over casual decade, Levi's known shoe deep, have categories licensed dress significant a evolving and J&M other has J&M along brand, last more both achieved and company, histories it from away

efforts, and away embraced styles is transition total. and accelerating of more team in response accelerated of represented the customers only accessories, last and footwear the J&M's style, casual a true quality I'm we've XX% sales unprecedented have the future the teams diversity proud casual product, focused to Casual sales its seasons. business XX% Work-from-home rapidly through an they our dressier have shoes worked back-to-school. newer including apparel all supporting and advance have Fiscal to has initiatives product. holds and community in as of J&M impacted on the athletic XXXX back ready to from our to they've Not faced. many J&M so of by While responded even for trend of donations and but the challenges of other. its in hardships they focus heritage is to our year year, another, only get like get and no one to need students how for assortment

don't we conditions will rest see these While the back-to-school through. by our of been how uncertainty. play normalize, believe yet shine and strengths our businesses we will extraordinary of know the year XXXX the impacted this competitive out, market And and has fiscal as back-to-work we conditions performance

I'm take over many turn and opportunities that, from we're of will the on financials. to a the standpoint into with advantage insight weather other I'll emerge we liquidity to the strong Importantly, Mel And call side. give well-positioned storm, to the performance confident more and our to

Mel Tucker

and morning, Mimi, good you, Thank everyone.

SG&A store Schuh, J&M margin down and sales, Turning revenue. pressured at closures offset partially robust second digital quarter. for that from was higher e-commerce reduced sales, Gross strong in in cost line by to Even inventory promotional at the activity the disciplined with and overall expense from revenue with management results reserves decline was costs by opening shipping results. store

$X.XX adjusted improved share, million revenue operations per quarter's $X the from loss earnings million $X.XX adjusted from last While continuing to drop levels, per continuing of year's compared or earnings last was share. or and $XX operations in from

$XX cash million. quarter of $XX ending a for operations $XXX quarter, the million total. was in of down $X generated activities position and $XXX $XX borrowings on $XX cash. second net $X the for second borrowings the And million million other with $XXX We million plus million we of million, entered spent quarter, million while million projects, capital with in from generated cash For during paid

had that as we we quarter, to have the During of outstanding extended negotiations a invoices payables our of pandemic, but landlords. with large active majority in paid rent are vendor been reaction we some also the in

business the cash on remain to As environment continues preservation. focused evolve, we

multiple worst-case through even should potential And are liquidity scenario, We adequate modeling our the navigate have in scenarios. way choppy to actively our waters. we

the and store was operating compared quarter. a possible down a Turning XX% for to driven to lower quarter. was to of specifics XX%, by XXX% last million, impressive the back-to-school closed E-commerce second delivered later XX% for by revenue revenue days year, which in start Consolidated of the an closures, wholesale stores with decline revenue. the comp, during store offset $XXX

stores expenses for relief we accounting rent part, The consolidated advertising, needed. J&M's balance quarter, year’s was and and Adjusted licensed small in year. XX% the income We have as driving amount with were A basis sales focused margin have Other challenging savings sales a therefore, versus our policy all down we sales gross not reserves work provided sales a were that were areas down million the comp to entire Schuh for compete has to store gross environment operating from was J&M in million was quarter, furloughs, points the last and wages the stores Compensation a the and very for hours organization closed while last Journeys sales quarters savings, took to decreased year's gross reopened of to gross the seven we is and for rent X,XXX adjusted XX% a expense shipping next of results and negotiations in of year. savings brands operating days, travel for driven contract decrease metric. to with margin up especially from reserves reduction, $XXX adjusted Canada. basis year-over-year, we reduced e-commerce XXX Full force. in government J&M in led gross consecutive at XXX our at areas retail corporate expense, additional and total in benefited In remaining and markdowns in the managed more business the due basis carrying million. landlords we SG&A over not above program since that Journeys' included $X.X on the we margin once Occupancy as XX% last X,XXX digital loss gross are also margin store generated of inventory levels overall reduction active inventory points, decreased U.K. loss. of and relief booked bonus margin at a on largest the inventory reductions from expenses XX%, the have selling as our acquisition. while finalized. in comp amount salary to the points at took Schuh activity most property actions rate from from our a of drove operating with effort Schuh's to the benefited basis discount and significant were last of our Summary, expenses at rate of in have XX% by requirements, basis pay continue to were tax but reductions with resulted the decline points. that overall XX% government operating income operating by is discussions expenses. and headwinds, XX% Journeys, provided the $XX.X and direct cost as area oriented from meaningful related rate second points promotional at impacted declined any in Consolidated significant largely XXX sales salaries highly down for down U.K. sales abatements. XX.X%, XX% the total removes believe per include: QX, fulfill increasing Increased U.K., and was which Schuh, overall the Overall J&M, divisions positive environment. provides Togast margin shipping

rate the second tax was quarter for non-GAAP XX%. adjusted Our

on was balance that Turning on were Journeys' that to the XX%. down XX% XX%. down was were sales inventory total down inventory sales down QX XX% sheet.

further were have and sales. was reflects Journeys, on down We that currency inventory in sales XX% bring a to working were been inventory and we even at Capital took sales inventory action be that as and a of was $XX are to digital J&M's believe This XX% manage and $X was omni-channel XX%. were with depreciation chasing of inventory inventory million, with constant spending down and amortization reserves in line back adequate right-size Schuh's basis, expenditures down areas outside better to inventory carryover will XX%. level down levels. current million. we on down

improvement second Given we QX in-person quarter. be of reserves trajectory, are as some it was the anticipate share not on forward. the this guidance not will than but fall. the from rates inventory for seen will and or the business if upon Gross the uncertainty we economic we same we've revenue recently schools activity. will in quarter, somewhat continues thoughts dependent do margin the this sales overall on its environment, when be current providing going in the year-over-year level to If drop back-to-school QX better current improve promotional QX in in will that instruction return

rate as margin e-commerce sales be last gross QX continue to than year, will lower penetration expect will do we However, be higher.

to below last as savings rent QX to SG&A remain and reductions, first in The as benefit levels however, reopened. cost half's have from from expect the rate stores to We XX%. year's expected dollars our is levels, annual approximately below we will be abatements. be QX reduction tax continue SG&A ongoing efforts most

maintaining serve we focus current continue as to also while their we customers a manage a through these back-to-school for together. like does loss trajectory, the maintained if conclusion, who've expect structure, I our QX, on manage in demanding its Finally, and would cost to our quarter. In not unwavering thank safe effectively environment times associates our

and our Our affected us. the joining questions. concludes Hurricane with others Laura you the to operator like the our operator prepared This thoughts are for wildfires remarks. in I'd the time, this for At by California. to people Thank and back turn call

Operator

go of Instructions] Janine from is coming [Operator question Jefferies. first Stichter Please ahead. Our

Janine Stichter

spend to wanted ask some morning what might through everyone. Hi, the terms through get the questions. the about seeing around just talk what you. Thank little and that? around seeing a details you're you're in you're idea Thanks a regionally shift a be in good back-to-school we regionally? can in complete comfort of some later And back-to-school guess, more I that this us lack more spend? bit how for of that my I season seeing of of taking than talk

Mimi Vaughn

in second third quarter. Good this it's certainly is the us, very different Janine. meaningful for And morning, quarter, in back-to-school meaningful the Yes, but year. more even it's

this said happening year back virtually. going in is up as our is, to what's remarks so are And we've X/X that

means you that And deal. and usual. about already going those we estimate is back back if a are back. if to than start the over this big XX% later gone so That's that only in in-person little X/X going have think person, that, And

there's that So But typically going question about back only if that of our X/X way in more about have you bit no kids it or kids they net-net, are think later. do. little a the at country's gone

are just typically sitting But, They tax We peak the kids seen about and of what we have during is, And stimulate I be back. toughest a when the sales. comparison sidelines that uncertainty had see. was freeze were There tax not on was during freeze parents effective. to us. how lot time, were the period and waiting think, to going the so for that going

are have more more gotten in-person So states and high positive, the there's and the after gone back Day have states We correlation Labor that have robust kids that a better. than weeks Plus, last XX between actually back are going sales. pretty usual. two

that XX. seen it's to have New September that You may going be said City York

of shift and typically the back volume want out, this So lots do, kids better delays. school, volume into trend, we September we'll big that will behind. parents kids wildcard younger the of in that The kids, have and for And eventually the get means more back-to-school half falling we because appetite of is we to because schools typically get. back whether don't they there's especially virtually take in-person. current to that gone And you which been that has run will of the get than the you in about see neighborhood

October. So back-to-school extend that could into

points kids I number are line think a the bottom opportunity ahead. us substantial for not who’ve back potential of that is to gone there

Janine Stichter

you're maybe into holiday companies saying Okay, just up Thank color heard wrap may timing? October, holiday would seem just this that how early straight you. marketing go we on And that. holiday in Any as as they terms We've and back-to-school then great. on which start follow year? up planning some a might of

Mimi Vaughn

true. that's Yes,

ever those has I we talking before. accommodate lots about, I a think earlier going be been lot October get to what that peaks. be have think And their are is year the will shopping frame than and to of retailers of to volume been that to e-commerce this induce larger time it anticipate folks the customers trying

and from has been the judging So government far, U.K., There's the not the of sales the consumer lot retail additional a saving, and that has just well evidence consumer holding help spending. us. been we've and up the so U.S. in stimulus seen U.S. would that

will fourth there quarter when typically spending. holiday that The and Journeys. time income be a for think index, we over available for is especially So we holiday

than the good Schuh may many seasons in less for If big last item. strongest We comps been robust what than given it's boot if season it's over pent-up would teens this footwear solid our back-to-school And typically you stack leave years, that is, year, in past year. and demand had gift-giving QX. for The it a Journeys holidays. some us on is reads work and for is some look at boot

for demand net-net, So holidays.

some we we're also is an planning but really So know for conservatively, do quarter fourth opportunity to net-net, business. us that

Janine Stichter

Thank Great. you.

Operator

Thank you.

question from Komp Baird. Please Robert ahead. of next coming Jonathan is W. go Our

Jonathan Komp

inventory for specifically. Yes. Hi. about you're Journeys, and wanted planning how first especially I and to ask you. Thank just

the reported, think the the any planning are you're brands or half that inventory differences looking any seeing? additional second you Given might -- how into you on how reduction that of makeup typically you're trends concentrating than of? the And we And color here? around

Mimi Vaughn

Sure, Jon.

on chase about their of mode. given products focus sell. consumers. part core in assortments And some bit for good reducing a and to we Let pandemic which really first inventory core closed me then hand inventory and the Journeys our styles significantly. been to have for We cut to demand I'll robust really reopening, it reopened start was we We and And when when in to know the then so and more. which the thinking online, of just results had would give we the contain, we half orders and inventory some stores, from pretty started, back degree when around for and depleted feel the our give Schuh, that were resonating what -- with color, we our they're Mel

so leaned for those assortments we have And holiday. into

products inventory, sticking chasing to will now. that core is On sell clean will really think balance, into inventory the well. right are be our we but we We

you'd us that? we holiday. to positions if that go add more I Mel, so And And nicely don't know into as

Mel Tucker

on quickly just I touched were up down And it mean, mean, think we I we well, -- to you with the and reduced to Mimi. Schuh, pretty sales. Journeys with have flex I Yeah. ability and think you able I inventory.

with we've quickly mainly little challenges it business. the through already. overall sale. year have with chose that been inventory not of in below we'll it's liquidate, it J&M. bit needed, for taken reserves terms because than we've the the businesses, a we need and there's last to can going that those chase the quarters are requiring where we've core next so And we So products. write-downs year. the time in through turning last rather more inventory product quarter, sales expect above little line their and good we third react but historically It's bit levels booked appropriate product, our with and but inventory. two able year lowest fourth to quality The that run align when a carry at to to of rate some We're to of to they're area We probably the not sell But

little back starting licensed department little We are as a in they accounts In are the from wholesale orders. stores. benefit channels, than more and to that. They're place of some the quickly see see consequence, channels. the bit family And in pickup online a bit starting coming off-price to footwear wholesale a J&M, brands is to starting

we've expect And inventory. divisions appropriately think it. the on of some reserved are trying think we'll I challenges side I I for that have there, but the to So chase all probably

inventory we're period to For good that the the think of inventory. pretty we're a going inventories. I all-in-all, shape quarter, in year. our But as build highest It's it to relates

Jonathan Komp

that that Okay, color then, SG&A considered just just stores savings half the on great. continue backed on one-time share And year? the with into how that factors that, see? reduction out. you the the most be or more much unique drivers you next then might half in of the especially within you're more in expecting, Can And second might versus more second

Mel Tucker

just to So our stores that. to closed, so we're going from are biggest at right A where to of we're are X% benefit these getting about we there's now be as our look continue lot savings, one-timers. of going

deals So trying in rent push property tax line, rents, relief year. occupancy the been goes to But is line, for for cost the lot to through doing on where we've example, percentage this our a U.K., lower the which negotiate appropriate. biggest

to how the there. in productivity. So reduced payroll costs, a we'll continue a Selling extend it now, I'm rent not third that I abatement the quarter. less under salaries stores increases fourth that operating get from half, back hopefully, expect in quarter. of and papered benefit movement in right hours. quite to our – we'll will reduces going hours some into deals be the that lot mall sure We're certainly few get there's

be as how to certainly so we've experiencing travel a and operate and new norm, to that's we're travel plus. communicate think benefit. not I continues clearly, learned as a a So And much,

look align one we're normal once still we're to think spend is not by what we expenses and what to that required new revenue line, determine happening. focused normalize on to sure think do But out I have the really very going and been have discretionary really teams going making we at to we're large, I trying our things and going to the have is of the is how that we the that, how figure forward. we're is on spending do

Jonathan Komp

you. Thank all really That’s Okay. helpful.

Operator

Thank you.

Research. is ahead. Our from coming Mitch Kummetz Please question Pivotal next of go

Mitch Kummetz

me let few, question Yes. a back-to-school got of Thanks for I've my taking and my I way get guess, the questions. out first.

kind think your of were of said in-person for when improvement see thoughts outlook Mel, QX the now guys continued does you back-to-school be you that sales would virtual your less are virtual. that you mean, terms situation. So exactly down sort around that if in What I in kind than of talk versus two-thirds they about learning? of QX in right

of in-person, back same? guidance. to are you more you're the dynamics that if catching that kind It's are that that or improvement So stay just in around kids assuming for get the that of virtual even kind school, that back more going are of to trying is as just they are in continued I'm kids understand up virtual? assumed what's terms percent

Mimi Vaughn

But going we Yes. will all is Mitch, back-to-school, back let chime are then we let know, well. that me start and we give have in as and that in-person. observed be those who counting some as kids color, Mel

are conserving idea going to including buying the go new and not Now to of we we that – absolutely we at to want because because are more when kids – shopping, the fact, to for we're dollars typical assume, going than third our those know definitely a they're school. that go back been can a lot our sales. expect who we're and our if stay to shoes But it's with and has I realize levels, back-to-school me, learners, tell that backpacks parents, back, more than virtual third they in-person, our new in-person kid just not do, have of same where in waiting will a

that additional we have pick go Labor have a what if are said more back 'Hey, on to that's in are and back-to-school have going the is after of trends. our case, these So not after some kids, to the schools If continuation that we're which virtually, into thought Labor been on kids, would about up built going fall breaks, that recently outlook. do have lot It's be and we schools we learning the number are of person. betting may who early a we're Day, is to Day, going a back-to-school, October.' upside just up revenue way for If end in whether of kids saying, try which current

Mitch Kummetz

Got it.

Mel Tucker

that the sales And and XX% down stores we're just – for that, just think QX, to cut currently I we of going be in able XX% down to to that still to between for probably able our if think be X% but were headwind have And we look would XX% that in open. it to of just I you at I add briefly, we'll don't reduce half, QX. aren't

Mitch Kummetz

you of the you then to demand, that's of it. have some Got COVID then rates got because start the there some a and off mentioned think pent-up happened the worn-off. of also gotten in about of kind spikes And and talked that Mimi QX better. stimulus good And that July, I

rates? one see kind So these I've guess, And you know one. out, of I is stimulus parse and it season. in some back-to-school late? things I don't to And a of got to maybe weird last you sort And especially your of then speak that But sort pent-up how demand? of improving difficult maybe how business COVID could impacting

Mimi Vaughn

Sure.

with biggest, tracked business, it it but wasn't as was to the into August. the end stores observed. start we question, trends out we stimulus impact Journeys Back-to-school there's assortment COVID into is have our pronounced just of of nearly to closely as early they demand fit the as it's certainly saw into read that half opened then on assortment money it the And impact. so the get just of July got and Look, So significant and And the last the of main rates. was drivers pent-up because last the back needs. up gate, back-to-school us. were quarter, the And no Journeys that increase we Customers but their in the July let At most the one helped being right the me an to and was with got just helped, really of quickly. July, second demand. measure yes, excited our we of for right the and we just pretty week we

manage part kids is just back-to-school, sense back and may business, have it's so opportunity a extent, think the mostly my much And I And to COVID. impact learning coming delayed believe about future when virtual that and the of from Journeys is which lesser we more COVID. learning they on with we've with the been figuring impact so your in can because They're that out shopping to and disease, willingness are consumer some for they to live how believe against to much navigate to learned average life consumers about that the go be out daily going and get there's COVID.

become are So as of to into to the to COVID Certainly, there we get some that going is issue I of are an vote expect the going to less going consumers be shop who year. back part online.

our But COVID. far expect has pronounced We back-to-school the net-net, I'd that of continue online year. say part the than back of business impact will more been flourish the through to

Mitch Kummetz

we you don't at question, from comments pressure goes with the e-com I that growth some the my guess put outpaced I away the last know about quarter, I And look in the shipping. profitability. gross P&L kind margin know e-comm made when obviously, mean, line improving that, of on profitability. don't improving

percentage improves of as e-commerce margins where e-commerce I'm – improving kind think just e-commerce their that business a are all that how business or trying as fixed reconcile business? it I impact or scales? of what we of business of So grows to is just mean, the that. the on costs about do profitability as the

Mimi Vaughn

sure. Yes,

have always some our we to other operated business e-comm unlike profitable. be retailers, So

not where share. just for e-commerce on the balance to You profitable not getting building but can to always share, point market push profitable marketing in we've expense mind kept market the build And you're and a return necessarily volume. you're the need pedal the

a we started just margins. It's consider a reasonably more of solid We have you profitability. channel. so of And expenses when in there's position actually portion the gross e-com that variable

over the more more which the but base SG&A we added the more is gross expense it of makes have the so, into expense amortized a line, broader margin volume. variable, And we sell,

a during seeing. really strong from course e-commerce that's quarter. we we've been the pretty so, dollars And And saw contribution the of what pickup in

And mostly there, of tripled. it's that hanging on In e-commerce the margins great basis, of in have. dollars and the then expenses gross of investments but an we apples-to-apples amortization fixed some fact, because

So get there. we lens e-commerce just think we in the to put e-commerce volume, deleverage we comps on expenses don't volume get. how If a welcome we e-commerce can volume, fixed we positive stores, on about the all

cost drive right-size continue So the to be channels, expense able we separate to side on either into over don't structure is fixed or sales on we channels that store and the as base the so deleverage to view that and channel, there. need really -- the traffic that to the

Mitch Kummetz

luck. Thanks Right. good it. Got and

Mimi Vaughn

Thank you.

Operator

you. Thank

from Please, Our next coming is ahead. Poser question Sam Susquehanna. of go

Sam Poser

thereof, so you Could my at for by us Thank by was banner? everybody. what about growth digits tell other the triple You morning, mentioned please? But taking Schuh. us the -- you you lack questions. the tell could Good well, or much businesses e-commerce as

Mimi Vaughn

Sure.

& E-com two Journeys, rate other businesses. Schuh. at growth. tripled also XXX% also e-com grew, at a lower when the So tripled but was at it Murphy you of see the rate than Johnston

to that so brought XXX%. average the And down the

online. were online. I think XX% was appetite to increase pleased customers intent showed There shop We We to just there with was rates. just very convert. saw conversion online. the We of traffic a new to number saw in phenomenal a up lot of high who a

growth additional customers to of traffic of the growth Our site. new outstripped our

capture those them forward. opportunity good customers to have sign, to So a new we really that sell an going was and and

Sam Poser

a whole many website? the to And these on new my were new I & were second segue Johnson that's have of new new a of that's in your as to their to And data them Murphy, good entirety goes? new many good Schuh, -- how then customers far bunch What questions, of segue. one. a how but Journeys, as to

Mimi Vaughn

Yes.

to customers was were Far rate who positive, saw particular, shop to quite So also positive. The more new biggest Schuh. channels. of multiple of Schuh, Journeys, converting stores online. Journeys' new Schuh of customers truly our typically new rate to the growth. in of Sam growth some the were best because that your in shopping data that's you shop a we And seen definitely customers in you've the

were that in our and casual So said, before, or far, was haven't online, the of and it stores a as they the sign we that either by seen comfort times. And is assortment we attracted were customers to offering. I

that teen serve customer Journeys of young we and the may those were and who Schuh others the so were attracted consumers base And my to adult only for and broader a attracted is sense perhaps set but not mix. that customer they base, well-positioned, product the have

Sam Poser

we're mobile you. ask Great. And I'll apps, right some that given lot you lot something my business or through app from scale mobile now? that are of you And interactions then working hearing question. the now? Thank of the, their that a driving Where of results are other a given you're that kind people is and on of, advancing

Mimi Vaughn

Yeah.

to higher a had talk for early launched on, years about is mobile And they I'll Schuh the app. several frequently. So mobile apps purchases actually, that has Schuh, consumer and found we ago, that do -- a use propensity

brand got app, CRM that are consumers bit their but -- help icing something customer world yes, and like, found with robust our come describe which consumers and to the The sense also to business. our have the certainly choice really further cake, giving information, social, mobile customer your context mobile and lot since interact then, of drive and and certainly us. the mobile to felt we've -- then makes you app working a insight as that of engage. downloaded through information. where we you've got a robust be the the way app a on I our been customer really has to them. to in data the the website, is initiatives so We're building didn't information, through hard a consumers' market And mobile customers to others the a about shop And personal a able in has to that's building drive to changed consumers with way those app through

Operator

like floor Ms. for Thank turn to you. over back I'd to Vaughn At closing comments. the this time,

Mimi Vaughn

you we and next speaking forward us QX Great. talk with about we Well, look results. when joining thank to on you today, our call, for

Operator

Ladies thank today's for you participation. concludes and This gentlemen, your event.

may a or and You wonderful your time, day. the log at webcast off lines have disconnect this

Genesco (GCO) 3 Sep 202021 Q2 Earnings call transcript