• Revenue: $596 million, up 3% year-over-year.
• Total Company Comps: Up 6%, with store comps up 4% and e-commerce up 15%.
• Gross Margin: Down 30 basis points compared to last year.
• SG&A Expense: 46.1% of sales, an improvement of 10 basis points from last year.
• Adjusted Operating Income: $10.3 million, compared to $11 million last year.
• Net Debt Position: Approximately $67 million.
• Inventory: Up 1% from last year.
• Store Closures: Closed 14 stores, ending the quarter with 1,302 total stores.
• Share Repurchases: Almost 18,000 shares repurchased for $0.4 million.
• EPS Guidance: Raised to $0.80 to $1 for the full year.

• Warning! GuruFocus has detected 5 Warning Sign with GCO.

Release Date: December 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Genesco Inc (NYSE:GCO) exceeded expectations for the third quarter, marking another quarter of year-over-year sales increases and a strong return to positive comps.
• Journeys' comparable sales were up double digits, driven by improvements in product assortment and store visuals.
• Digital sales were a standout, up mid-teens, with digital penetration reaching over 24% of retail sales.
• Ongoing cost reduction and store optimization efforts contributed to adjusted EPS, which was meaningfully above projections.
• The company raised its full-year EPS guidance, reflecting confidence in continued performance improvements.

Negative Points

• Schuh's performance was hampered by the difficult macroeconomic environment in the UK.
• Johnston & Murphy faced softer demand for premium nonathletic footwear, pressuring its top line.
• The company anticipates a more promotional environment in some businesses in the fourth quarter.
• Gross margin was down 30 basis points compared to last year, impacted by product mix and promotional activities.
• Consumer behavior remains needs-based, with shoppers being selective about purchases, posing challenges for sales growth.

Q & A Highlights

Q: Can you elaborate on the progress of Journeys' product assortment and how it impacts brand partnerships and allocations? A: Mimi Vaughn, CEO, explained that Journeys has diversified its product assortment, moving away from a long cycle of cannabis products to a broader range of brands. The back-to-school success was driven by multiple brands, not just one or two, indicating strong partnerships. The company is in the early stages of restoring Journeys to historical sales and profitability levels, with a focus on serving the teen customer, particularly the Team Girl.

Q: How are store closures affecting productivity, and what are the plans for the new store design rollout? A: Mimi Vaughn, CEO, stated that store closures are part of optimizing the footprint due to changes in consumer shopping patterns. The company uses analytics to drive traffic to remaining stores or online. The new store design, which is more aspirational and showcases premium products, has been implemented in 10 stores with positive early results. Plans include opening 15 stores this year and potentially more next year, depending on results.

Q: What is the outlook for Journeys' comps in the fourth quarter, and how is the business performing quarter-to-date? A: Mimi Vaughn, CEO, noted that Journeys is expected to have positive comps in Q4, though not as high as the 11% seen in Q3. The business has performed well quarter-to-date, with strong Black Friday results and less promotional activity compared to the market. The company is well-positioned in inventory to drive sales.

Q: Can you discuss the demand creation opportunities for Journeys and the role of digital advertising and analytics? A: Mimi Vaughn, CEO, highlighted that demand creation involves articulating Journeys' brand purpose, increasing brand awareness, and expanding the customer base. The company is investing in digital advertising, social media presence, and leveraging its loyalty program and CRM capabilities to enhance customer engagement and drive growth.

Q: How is Schuh planning to improve access to key brands, and when might this impact be seen? A: Mimi Vaughn, CEO, explained that Schuh is leveraging synergies with Journeys to improve brand access. The company has line of sight into better product access for future seasons, with some improvements expected as early as spring. However, consumer headwinds in the UK remain a challenge.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.