Genesco(US:GCO)2024-05-31 15:33Financial Data and Key Metrics Changes - Consolidated revenue for Q1 was $458 million, down approximately 5% compared to last year, with store closures negatively impacting sales by 1% [29] - Total company comparable sales were down 5%, with store comps down 7% and direct comps up 3%, while digital sales accounted for 23% of total retail sales, up from 21% last year [30] - Adjusted gross margin increased by 30 basis points year-over-year, driven by disciplined inventory management and a greater mix of direct-to-consumer sales [30] - Adjusted operating loss was $30 million compared to a loss of $22.7 million in Q1 last year, resulting in an adjusted diluted loss per share of $2.10 versus a loss of $1.59 last year [34] Business Line Data and Key Metrics Changes - Journeys' sales, gross margin, and expenses exceeded expectations in Q1, with inventory down 20% year-over-year, helping to keep markdowns in check [10][29] - Schuh faced challenges due to a tough UK macro environment and unseasonable weather, but strong Easter sales partially offset weaker periods [13] - Johnston & Murphy saw challenges in Q1 due to strong multi-year comparisons, but apparel and accessories performed well, representing nearly half of its direct-to-consumer business [16] Market Data and Key Metrics Changes - The consumer environment remains choppy, with consumers showing selective shopping behavior due to ongoing inflationary pressures [7] - The UK consumer has become more discriminating, impacting footwear category purchases and frequency [13] Company Strategy and Development Direction - The company is focused on evolving its product assortment and branding to respond to changes in consumer shopping behavior, particularly at Journeys [8][19] - Strategic initiatives include enhancing the omni-channel experience, improving brand presence, and leveraging customer data analytics for targeted marketing [22][60] - The company aims to optimize operational efficiencies and reduce fixed costs through store closures and cost-saving measures [38] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the back half of the fiscal year, anticipating stronger performance as new product receipts hit stores [26][39] - The company is maintaining a conservative view on sales and margins due to ongoing consumer and macroeconomic uncertainties [41] Other Important Information - The company ended the quarter with a net debt position of approximately $40 million and clean inventories down 17% from last year [35] - Capital expenditures in Q1 were $6 million, primarily directed towards retail stores and digital initiatives [35] Q&A Session Summary Question: Guidance for Journeys business in Q2 and back half - Management expects a cautious view for Q2, with hopes for a positive comp in Q4, but acknowledges challenges in the vulcanized category [46] Question: Margins and SG&A assumptions - Management noted lower markdowns in Q1 contributed to margin outperformance, but mixed shifts in product could pressure margins going forward [48][49] Question: Assortment changes at Journeys - Significant changes in the product assortment are expected, with a focus on diversifying beyond vulcanized products [54][56] Question: Johnston & Murphy marketing campaign - Early feedback on the new campaign has been positive, with efforts to attract younger customers and reposition the brand [65][67] Question: Add-on purchases and customer engagement - Higher average selling prices and successful buy online pick up in store initiatives have contributed to increased add-on sales [73]