At the 2023 ICR Conference, Mimi Vaughn, Genesco’s board chair, president and CEO, said the company’s flagship chain, Journeys, delivered lower-than-expected results over the holiday-selling period due, primarily, to a highly promotional selling environment and weaker store traffic.
Journey’s comps were down 2 percent in the quarter-to-date period ended December 24. Reported sales overall grew 3 percent. Genesco updated its holiday sales in a press release prior to its ICR presentation.
“The store channel was where we didn’t see the traffic materialize in the way that we thought it might but online was robust selling,” said Vaughn. “In general, Journeys was affected by the overall very promotional footwear environment. Other brands were promoting because of excess inventory.”
She added, “We also feel the Journeys customer was taking a break. Some of our research told us that they were buying fewer shoes. They bought a lot of shoes in the last couple of years.”
Vaughn said that although Journeys saw “demand” for casual product in line with recent trends, customers were “sensitive” to prices amid price increases due to inflationary pressures. Said Vaughn, “They were trading down in terms of price points and there was less purchasing of an add-on product. Overall, we were less promotional, or right in the ballpark of, as we thought we would be. We didn’t have a lot of pressure on Journeys’ gross margin.”
Vaughn noted that Journeys was coming off a record year last year and the back-to-school selling period had shown Journeys’ customer was “being squeezed and pinched in the wallet and were making choices about what they wanted to buy. We saw them come out and shop during back to school but then retreat and conserve cash during the non-peak periods.”
Similarly, over the holiday period for Journeys, November started out “slowly,” impacted by warm weather in various parts of the country. Journeys’ customers “did come out over Black Friday weekend,” but then the chain saw a lull in December with storms arriving closer to Christmas also impacting traffic.
At its other stores, Schuh, its footwear chain in the U.K., saw comps climb 18 percent over November and December with total sales ahead 6 percent.
Said Vaughn, “In the UK, the market has been quite challenged. Inflation is even higher than it is in the U.S. and, overall, the environment has been challenged. In spite of that, our Schuh business put up an 18 percent comp. We had robust selling within our stores and the consumer was excited to come back and start shopping again. And we benefited across our assortment from our product strategies, our marketing strategies and our brand purpose strategies.
From a merchandising standpoint, Schuh saw strength in casual product in line with recent trends but “also sold a lot of performance athletic product.”
Finally, Johnston & Murphy Group’s comps were up 15 percent with total sales climbing 11 percent.
Vaughn said Johnston & Murphy continues to benefit from a repositioning over the pandemic to shift emphasis toward a “more casual, more comfortable lifestyle” with products playing up “great proprietary technology features—the Axis Chassis system, waterproof, moisture wicking and nice comfort properties.”
She added about Johnson & Murphy, “Everything sold. Footwear sold. Apparel sold out. Outerwear sold. Direct was the star of the show, but we also had nice selling within stores.”
Overall, Genesco’s comparable sales, including stores and direct sales, increased 3 percent for the quarter-to-date period ended December 24. Same-store sales decreased 2 percent and sales for the company’s e-commerce businesses jumped 22 percent.
Said Vaughn, “We were very pleased with the 3 percent growth overall. It shows real momentum in our business against a record year last year, and we are also pleased with the execution of our teams and what was quite an unpredictable consumer environment.”
For January, including the week after Christmas, sales picked up with sales early on seeing double-digit growth across channels. Said Vaughn, “I think the consumer was looking for some winter holiday shopping, seeing what they could come and pick up from us. But overall, we were pleased with the holiday season.”
Genesco also said it expects total year-adjusted EPS to be at the low end of its most recent range of $5.50 to $5.90 compared with its prior view calling for earnings to arrive near the midpoint. Vaughn said at the ICR event that Genesco saw “more pressure on gross margin, not from markdown and promotional activity but more from freight, shipping and warehousing because of the shift to online and then a deleverage because of the shift to online again.”
Photo courtesy Genesco/Journey’s
