Genesco(US:GCO)2019-09-06 17:22Financial Data and Key Metrics Changes - The company reported adjusted earnings per share of $0.15, a significant improvement from a loss of $0.01 in the same quarter last year [10][18] - Consolidated revenue was flat at $487 million, but excluding the impact of lower exchange rates, revenue increased by 1% [19] - Consolidated comparable sales rose by 3%, with store comps up 1% and direct comps up 20% [19][22] Business Line Data and Key Metrics Changes - Journeys achieved a 4% comp increase, building on a robust 10% gain from the previous year, marking the ninth consecutive quarter of positive sales [20] - Schuh's comp sales were flat, improving from a negative 7% a year ago, driven by strong e-commerce performance despite challenging retail conditions in the U.K. [21][12] - Johnston & Murphy posted a 1% comp gain, benefiting from strong apparel sales, although it faced tougher comparisons from the previous year [14] Market Data and Key Metrics Changes - E-commerce sales accelerated, with direct sales accounting for 10% of total retail sales, up 150 basis points [19][22] - The U.K. market remains challenging due to soft consumer demand and economic uncertainty related to Brexit, impacting Schuh's performance [12][37] Company Strategy and Development Direction - The company is focused on enhancing profitability through a 20-point plan for Schuh, which includes cost reduction initiatives and improved inventory management [13][42] - There is a commitment to renegotiate rents for Schuh's store fleet to improve profitability amid declining foot traffic [13][25] - The company is optimistic about its future, leveraging strong brand connections and advanced digital capabilities to navigate the retail landscape [45][46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong start to the fiscal year, with positive trends continuing into the third quarter [16][44] - The company raised its full-year earnings per share guidance to a range of $3.80 to $4.20, reflecting optimism about Journeys' performance despite foreign exchange headwinds at Schuh [29][30] - Management acknowledged potential headwinds from tariffs and Brexit but emphasized proactive measures to mitigate their impact [33][37] Other Important Information - The company has successfully negotiated 92 renewals with a 15% reduction in cash rent, providing flexibility in its cost structure [25] - The company aims to eliminate $20 million in costs this year through stranded cost elimination and other savings initiatives [24][26] Q&A Session Summary Question: Insights on Journeys' performance and e-commerce growth - Management noted a broad-based strength in Journeys, with a strong performance in casual and athletic styles, and highlighted investments in e-commerce driving traffic to both online and physical stores [48][51] Question: Sustainability of Journeys' performance amid tough comparisons - Management indicated that while comparisons will become tougher, the positive trends observed in the second quarter suggest a strong underlying business [54][55] Question: Outlook for Schuh amidst uncertainty - Management expressed confidence in Schuh's underlying business but acknowledged the challenges posed by the uncertain U.K. market and Brexit [57][58] Question: Impact of stranded costs and cost-saving initiatives - Management clarified that the $12 million to $15 million in stranded costs is an annualized figure, with plans to eliminate these costs over time [60][61] Question: Potential impact of tariffs on costs - Management confirmed a $1 million direct exposure to tariffs for the current fiscal year, primarily related to products sourced directly from China [66][67]