Genesco(GCO)2022-05-26 18:50Financial Data and Key Metrics Changes - Consolidated revenue for Q1 was $521 million, down 3% year-over-year, primarily due to the anniversary of significant stimulus last year [25] - Adjusted diluted earnings per share (EPS) was $0.44, compared to $0.79 last year and $0.33 in fiscal 2020 [30] - Adjusted operating income was $9 million, representing a 2% operating margin compared to $19 million or 3% last year [30] Business Line Data and Key Metrics Changes - Journeys revenue decreased by 16% due to inventory delays, while Schuh revenue increased by 28% and Johnston & Murphy (J&M) revenue rose by 46% [25] - Schuh achieved record first-quarter revenues, up 35% on a constant currency basis compared to last year, and up 14% over pre-pandemic levels [14] - J&M's revenue growth was driven by a shift towards casual and comfortable products, with sales almost on par with Q1 fiscal 2020 despite inventory levels being 30% below pre-pandemic [16] Market Data and Key Metrics Changes - Digital sales accounted for 19% of total retail sales, down from 25% last year but up from 11% in fiscal year 2020 [26] - Schuh's digital sales increased over 110% compared to pre-pandemic levels, indicating strong online performance [14] - The company ended the quarter with 30 fewer stores compared to a year ago, optimizing its store footprint [26] Company Strategy and Development Direction - The company is focused on a footwear strategy that emphasizes digital penetration, improving store economics, and growing branded sales [8] - Six strategic pillars are driving the business transformation, including investment in digital and omnichannel, deepening consumer insights, and pursuing synergistic acquisitions [20] - The company is optimistic about future growth despite current economic challenges, planning for a stronger second half of the fiscal year [19] Management's Comments on Operating Environment and Future Outlook - Management noted that the operating environment has become increasingly challenging, with expectations for a more promotional environment compared to last year [34] - The company anticipates that the factors leading to strong full-price selling will not be sustained, and is preparing for potential consumer shifts due to rising costs [54] - Management reaffirmed fiscal 2023 full-year guidance for adjusted EPS to be between $7 and $7.75, with expectations for sales growth of 1% to 3% [34] Other Important Information - The company is making progress on ESG initiatives, including a North American carbon footprint assessment [18] - Inventory levels were reported at $401 million, 9% higher than fiscal year 2020, with significant receipts occurring late in Q1 [31] - The company repurchased $6.5 million of stock during the first quarter [32] Q&A Session Summary Question: Can you talk about the differential in gross margin between casual styles and fashion athletic? - Management indicated that casual brands typically have a better margin profile than athletic brands, and they expect positive margins from carryover winter styles received at last year's prices [40] Question: Did you feel similar tailwinds in other concepts as well in the quarter to date period? - Management noted that while Journeys faced inventory challenges, both Johnston & Murphy and Schuh experienced positive results, with Schuh benefiting from a fully open store environment [43] Question: Can you elaborate on the better access at Schuh? - Management explained that better access primarily refers to improved allocations within existing brands and moving up tiers, rather than new brands [64]