Genesco Inc. Chair, President and CEO Mimi Vaughn laid out a bold vision for the company’s Journeys business on Monday, September 14, as she said the biggest opportunity they see is to serve a customer group that is six to seven times larger than what they have traditionally served at the teen-oriented footwear banner.
“I think Journeys has always been about serving the teen consumer,” Vaughn summarized at the Goldman Sachs Global Consumer and Retail Conference.
But she then said that over the course of the last several quarters the company has dialed further into who specifically the Journeys brand is serving and saw an even bigger opportunity within the female market. She said Journeys has tilted female lately, but are now about owning it and claiming it while much of their athletic footwear competition serves the male teen market.
“But we have an opportunity here to dial into the female consumer to an even greater extent,” Vaughn continued. “And that female consumer today wants to experiment with her look.”
She pointed to the “Turn it Up ” back-to-school campaign with Madison Bailey where the Outer Banks actress presented three different outfits where she’s representing three different versions of herself as central to this expansion of market size.
The CEO said they have an opportunity to serve the teen that’s experimenting with who do they want to be, that doesn’t want to be pigeon-holed as prior generations were at their age. She said that by serving that consumer across both athletic and casual footwear Journeys has an ability to do all of that.
“So a bigger market, six to seven times larger is our opportunity,” she said. “We’ve dialed into our assortment. We’ve improved our assortment. We’ve elevated our assortment. We have brought a lot more attention to the Journeys brand. We’ve leaned into our overall marketing and our social campaigns. We’ve improved our store experience.”
She said Journeys has really dialed into this consumer base and those consumers are liking what they see.
“We’re reaching out so that more people can come and rediscover what Journeys is all about today,” she added.
Vaughn said they will build on this approach with more brand building and awareness building.
She continued, “Our teens are so socially oriented. They learn and discover through social. And our ability to take campaigns like we just had and magnify campaigns through the influencers we use, through the celebrities that we use, is working really well.”
Vaughn said when they launched the “Life on Loud” campaign platform they saw that online traffic improved by 30 percent. Store traffic actually improved significantly to a point where Journeys was “outpacing where the industry was.” She said the ability to pulse out in those moments when the consumer’s ready to shop and to be able to capture that consumer and build awareness is very much front and center in terms of how they are thinking about being able to reach this dynamic demographic that they serve.
Journeys 4.0
The new store format rollout is reportedly having “a lot of good success” according to Vaughn’s comments. She said 4.0 is the “visible representation of the new Journeys strategy and how we’re serving the consumer today.”
Genesco opened 85 stores with the new format last year and is set to open 95 this year.
So what is so special? The new format is generating a lift of more than 25 percent that will continue to propel overall comps. The format is also generating better traffic, higher conversion, and higher ASPs.
“So I think we’re very happy with the economics. We can’t roll those out fast enough,” added company CFO Jonathan Collins. “They’re super high on our priority list in terms of capital deployment and so the faster we can accelerate those, I think the faster we’ll be able to improve the economics of our business.”
Collins also noted that they are now looking at taking the Journeys Kids format and mixing it with the 4.0 format to experiment with combining the two and assessing much leverage that will provide in terms of selling floor space.
Vaughn said that of the and 90-plus Journeys stores that the company will be remodeling this year, two-thirds will be remodels in place, and one-third will be enlarging current stores. She said they are performing better in higher-tiered malls, and are performing better “in great geographies like California and Texas.”
She added that with Journeys stores averaging “a little over 2,000, 2,200, 2,300 square feet” they are now upsizing to 4,000 square feet.
“We’re trying a few 5,000 square foot store footprints and we think there’s really great opportunity here to be able to display,” Vaughn suggested. “We find that we need more room particularly in these peak periods. And because we’re outperforming in these higher-tiered malls and in really great demographic areas that we’re leaning into upsizing the size of our overall store footprint itself.”
Journeys reported recently that it has delivered eight consecutive quarters of positive comps, with August accelerating to a mid-single digit level. The conference moderator dug into the execution required to continue this streak.
“So the one thing I would say in terms of how the consumer is shopping is that when there’s a reason to shop, and in footwear specifically, when there is a reason to shop, they come out and shop ferociously,” Vaughn shared. “And when there isn’t a reason to shop, they sort of take a break and go and do some other things.”
She said they saw some of this trend during the course of the spring season, where it was a later spring because it took a while for the weather to warm up. When May arrived – and May is historically a lower month for Journeys – it turned out to be a good month for the retailer due to the lag from March and April. She said that in June and July the consumer turned their attention to other activities outside of shopping.
“I think the consumer has a lot of confidence in when they’re ready to shop that they can find what they want to shop in a way they never have before. And so they really wait until the very last moment to be able to go out and shop,” the CEO opined.
“And they came back and there was a later Labor Day this year and so there was an entire shift of back-to-school which really affected the second quarter,” Vaughn said. “And we saw comps move up into the mid-single digits in Journeys, as we expected it would. And so we had a really strong back-to-school selling season.”
She said they expect the consumer is going to take a break again until the weather gets a bit cooler and there’s a reason to shop over the holidays. “Our ability to execute against this and our ability to have the depth of the product is a critical component of capitalizing on those moments when the consumer comes out to shop,” she added.
The Back Half
When asked if Vaughn and her team were seeing any change in price, mix or promotional intensity during back-to-school and their plans for promotions and pricing in the back half of the year, the CEO said they want to be a full-price seller, and they want to have must-have product as opposed to attracting the customer through selling on promotion. She admitted that it’s harder to do in a promotional environment, but also said they have been doing it.
“I would say that the promotional activity is not new,” Vaughn continued. “It’s been going on for well over a year at this point in time. And so our strategy is to stick to what we’re doing and just stay out of the fray because when you start to promote [you promote] your way down to the bottom. Most of the time, our industry promotes when we’re in an over-inventory position.”
She said that there is certainly promoting on the athletic side of the business, and there is some over-inventorying, and therefore they are anticipating the back half to be a more promotional period.
“But we will do our all, as we have been doing, to stay out of that promotional fray,” the CEO said.
Vaughn said prices were higher in the front half of the year and they expect that they will be higher in the back half of the year.
“I wouldn’t expect a big step-up but I also wouldn’t expect that we’re going to promote our way into lower price points [either], she said.
Asked about the impact of weather on their back half plans, Vaughn responded that the boots Journeys sells are purely fashion.
“They’re not necessarily for cold weather,” she said, sharing an anecdote of kids returning to school in 90-degree weather in Nashville were wearing Uggs.
“But it is all about fashion, and if you’re a middle school girl, then you want to be on trend and you’re going to show up and you’re going to be wearing whatever is on fashion,” she highlighted.
“So at the margin, we are not weather dependent,” Vaughn continued. “We do like to see triggers that tell the consumer it’s time to shift seasons and it’s time to think about changing your wardrobe and we certainly haven’t seen that. It’s just been so hot through the course of the summer and into the fall, that trigger that tells the consumer it’s time to start mixing up your wardrobe hasn’t happened yet, but it’s just timing in terms of when that happens. So I think there will be a shift in timing for us, but doesn’t necessarily mean that it will impact the season.”
Image courtesy Journeys/Genesco, Inc.
