Good day everyone and welcome to the Genesco Second Quarter Fiscal 2025 Conference Call. Just a reminder, today's call is being recorded. I'll now turn the call over to Darryl MacQuarrie, Senior Director of FP&A. Please go ahead, sir.

Good morning, everyone and thank you for joining us to discuss our Second Quarter Fiscal 2025 Results. Participants on the call expect to make forward-looking statements reflecting our expectations as of today, but actual results could be different. Genesco refers you to this morning's earnings release and the company's SEC filings, including its most recent 10-K and 10-Q filings, for some of the factors that could cause differences from the expectations reflected in the forward-looking statements made today. Participants also expect to refer to certain adjusted financial measures during the call. All non-GAAP financial measures are reconciled to their GAAP counterparts in the attachments to this morning's press release and in schedules available on the company's website in the quarterly results section. We have also posted a presentation summarizing our results here as well. With me on the call today is Mimi Vaughn, Board Chair, President and Chief Executive Officer and Tom George, Chief Financial Officer. Now I'd like to turn the call over to Mimi.

Thanks, Darryl. Good morning, everyone, and thank you for joining us. I'll start today with a review of the key drivers of our second quarter performance, and provide an update on the strategic initiatives to drive growth at Journeys and elsewhere in our company. Tom will review the financials in more detail and walk through our current outlook, and then we'll be happy to take questions. We were pleased in the second quarter to once again deliver top and bottom-line results ahead of our expectations. Sales exceeded the levels we anticipated led by journeys more than offsetting some pressure as Schuh and Johnston & Murphy, which continue to face robust multi-year comparisons. Our digital business was a standout of high single-digits, and our ongoing plan to optimize the store footprint and reduce costs contributed to the bottom-line as well, allowing us to leverage expenses in what is one of our lower volume quarters. Our Number #1 priority is and has been to improve performance at Journeys. Step one of our plan centered around efforts to inject our product assortment with more newness, excitement, and storytelling to drive an inflection in Journeys comps and deliver that to our consumers through enhanced store, digital, and social experiences. And as we anticipated, our Q2 results demonstrated solid progress against that plan. Journeys’ assortment resonated well, driving strong sequential sales improvement, with comps turning positive in July, before the onset of Back-to-School, and accelerating into August. We saw a notable pickup in attention to footwear, marked by growth in traffic by our North American youth consumer as the quarter progressed. The Journeys customer has become more interested in a broader range of brands they are buying and more diversified in the styles they are wearing. This shift plays well into Journeys’ proposition as the…

Thanks, Mimi. We were pleased results for the quarter exceeded expectations. Improved profitability in Journeys in Genesco brands more than offset pressures in J&M and Schuh. Looking ahead, getting back to positive comps at Journeys provides us with meaningful opportunity to drive earnings per share upside given the cost reductions and share repurchases we have made and overall leverage in our model. Turning to results, consolidated revenue for the quarter was $525 million, which was better than we anticipated and flowed-through to better leverage. In addition, the Journeys stores we closed over the last year, which drove a roughly 4% reduction in the size of our total fleet, resulted in improved overall productivity and had only a 1% net impact on total sales. The progress we've made in our digital business helped overcome the top-line pressure on our stores and wholesale business. Total company comps were down 2%, which was a healthy sequential acceleration. By channel, total store comps were down 4%, while direct comps were up 8%, with digital sales accounting for 22% of total retail sales. Overall, adjusted gross margin was down 90 basis points compared to last year. By division, Journeys’ gross margin was down 90 basis points, due primarily to product mix and a higher mix of e-com sales. Schuh's gross margin decreased 210 basis points, driven mainly by increased promotional activity. J&M's gross margin was up 40 basis points, due largely to a comparison against increased inventory reserves last year, partially offset by increased retail markdowns and a lower mix of DTC volume. Lastly, Genesco Brands adjusted gross margin was down 20 basis points due primarily to brand sales mix shift. Moving down to P&L, SG&A expense was 48.6% of sales, leveraging 100 basis points over last year. The combination of our cost savings initiatives,…

Thank you. We'll now be conducting a question-and-answer session. [Operator Instructions] Thank you, and our first question comes from the line of Mitch Kummetz with Seaport Research. Please proceed with your questions.

Yes, thanks for taking my questions. I've got a handful. I want to start with the third quarter guide. Tom, if I heard you correctly, I think you said you are expecting a low single digit comp. Was that a consolidated comp? And if so, what kind of a Journeys comp is embedded in that?

Yeah, Mitch, that is a consolidated comp and relative to Journeys, Journeys is low single digits as well.

And then how are you thinking about September and October? It sounds like August has been a very good month for Journeys. Mimi, you talked about the pattern of shopping, the consumers are shopping peaks and kind of disappearing in between. Are you assuming that comp stays positive in September and October or does that kind of single-digit journeys assume that you kind of go negative for the balance of the quarter?

Mitch, thanks for joining us this morning. We are really excited about what we are seeing in Journeys. What is different now is that there is more interest in footwear overall, just in general, in the category, and a lot of interest with our youth consumer. And, you know, they've been quite interested in buying apparel and typically when they are interested in buying apparel, they're then interested in buying footwear. And we couple that with Journeys much improved assortment and we're going after a diversified assortment of brands and of styles and repositioning overall what we are offering and that's been a good combination. And so as we said, we saw a nice pickup as we dropped a new product that our merchant team's been working hard to chase in July and then that accelerated into August. We expect that we will continue to see positive comps because we do have that product that will drive and that combination of consumer demand and having great product to serve the consumer will continue into September and October, but we also then think the consumer just pulls back and gets interested in other things. We then again think about holiday and being able to pursue demand during those peak weeks leading into holiday. And so it continues to be positive, to be pulling back, and then strength things again as we get to the holiday period.

And then, Mimi, for holiday, I guess starting with back-to-school, I mean, it seems like you've had a lot of newness, particularly on the athletic side, which really feeds into kind of back-to-school demand. But going into holidays, then it kind of shifts more towards boots and things like that. Do you feel like you've got enough newness on the boot side to maintain this momentum, or do you just think that like what you're doing on the athletic piece really just sort of carries forward into holiday, as well to drive the positive comp and 4Q that Tom referenced in the outlet?

Sure, Mitch, what's interesting is that what we've seen resonating for back-to-school is not just athletic, but it's also on our casual side. And so it is not just one brand, it really is a variety of brands, and in fact we saw strength in even more brands than we had anticipated for back-to-school. So it's a few brands certainly on the athletic side and athletic is where we have strengthened the most. You're right about that. But also on what we call the casual side, we have seen some nice strengths. The category in particular, it seems like consumers have gone more to season-less style, whereas they used to shift to sandals in summer, you know, [where] (ph) athletic year-round and then boots in the winter. Seems like there's more carry-through of product. And so we've read-through all of that and have leaned into an assortment that will be more athletically oriented for holiday but will also lean across all those brands and all those styles that are resonating. And so, you know, we've talked with you about how the boot category specifically has been declining over the past few years. We're not expecting boots, say, to pick up, but we are seeing some green shoots across some boot brands. And so if that comes and gets some traction, then that'll be additive to where we are. But it's really looking through the assortment today and saying what's going to resonate in the fourth quarter and we do believe that we have the product to back up the comps that we are expecting for holiday.

And then maybe you mentioned in your prepared remarks this opportunity to better serve the teen girl consumer. Can you just elaborate on that? How much of that is again like further tweaking the assortment versus maybe doing a better job marketing to that consumer and then from an assortment standpoint, obviously there are lead times. So how quickly can you make adjustments in order to better serve that consumer?

Sure, Mitch. So it's all of the above in terms of what you're talking about. If you think about the competition that serves the team customer, there are lots of great competitors out there who do a terrific job, particularly serving that male, that boy customer with athletic product. And our ability to serve that teen across that diversified assortment of both athletic and of casual for whatever your wearing occasions are. And girls are wearing athletic, they are slipping into sandals, they are wearing athletic across lots of brands. I mean, we've seen coming away from vulcanized that the concentration within a couple of brands has proliferated. And more options is better for us. More ability to serve the customer is better for us. We are more female than we are male today. We traditionally have been serving the female consumer well, but we are doubling down on that. We've done a battery of research that's allowed us to do even more refined segmentation around our customer group. And so you're going to see a real change in our overall marketing to the consumer. You're going to see some real emphasis within our stores to cater to that female customer. You're going to see an elevation of our assortment. You're going to see just the premium nature of our brands come through because we've gotten that feedback that we can really deliver to the customer on that space and she's looking for it. It's the white space in the market that we are jumping into. And so this is something we've been talking about for a while and we have been working on the assortment to be able to deliver on that vision. And so it's a complete picture of starting with product, adding marketing, having a great store environment, getting out there on social, speaking to that customer, letting her know that we are the place when she thinks about coming and buying her fashion footwear. And it's not just the female that we're talking about, but we do think leading with a female, we will open up the aperture for customers, we aren't serving today and certainly welcome anybody who wants to come shop in our Journeys stores.

And then my last question just on the stores, you talked about a refresh starting in 3Q. Is that going to be complete before the holiday season really kicks in and then as far as the updated concept is concerned and can you just remind us like what's really different there versus the current box? And, like, when do you expect to have that test done? And what might a rollout look in terms of taking that to more doors.

So Mitch, the refresh that we're talking about starting in Q3 will touch all of our stores, and it's going to be a lot with visuals. It's going to be a lot with how we merchandise within the stores. We started a little bit of that, but this will be a rollout across the entire footprint. And that will be completed before holiday kicks in. We are taking advantage of that period between back-to-school and holiday. And it is visuals as you walk in the store. It's -- the placement of product within the store. It's those things that we can get done in a pretty immediate and pretty impactful fashion. Then in terms of what's really different in terms of the new concept versus the current box, I think you've known our Journeys Store for a long time and I would say that it's been more of an evolution than a revolution. And this new concept is going to be really different, and it is going to absolutely highlight the product. It is going to put us in a position where we'll have more flexibility and more functionality but that we can highlight our brand partners, we can speak to the product, we can speak to our customer, we'll have flexibility of being able to do it in this new box. And yet it will at the same time keep that great youth energy and that excitement that Journeys is all about. The beginning, we are going to roll out to a handful of stores to begin with, as we said, starting in October, and we're starting in the big volume locations where we know we can drive productivity and the impact. And so we will test as we go along. And not only are we putting in place a new look of the store, but we are combining that with better marketing, with better social, with increased merchandising. And so it's going be a full picture, a full 360 picture to be able to speak to the customer that we're trying to appeal to. And so we're going to test that and we're going to roll it as we get the results and then we'll go from there.

Great, thanks, good luck.

Thank you.

Thank you. [Operator Instructions] The next question today comes from the line of Mantero Moreno-Cheek with Jefferies. Please proceed with your questions.

Hello, and thanks for taking my call today. Just two quick ones from me. First one is just -- I think last when we talked about Johnston & Murphy marketing and it was like not your [father's shoe] (ph). So just anything else how you're thinking with the marketing for J&M and just [better of] (ph) the brands in your company.

Good morning, Mantero. We have been pleased with the results of our new brand marketing campaign for Johnston & Murphy and it speaks to the progress that we've made and reinventing the brand and evolving with the consumer. I know that we pivoted hard into casual and comfortable styles and traditionally Johnston & Murphy has been known for wingtips and cap toes, but we did a lot coming out of the pandemic to absolutely reposition the assortment. And we need to let the customer know about this and also know about the great technology and the features that we have built into our footwear. In addition to that, we've grown categories outside of footwear and it comprises almost half of what we're selling in our DTC channels today. And so getting the word out has been really, really important. We have found that our awareness for our Johnston & Murphy customer is lower than we'd like it to be. So the brand marketing is directed at updating the consumer to know the latest with Johnston & Murphy and then also being able to build that awareness for customers who are similar to the ones who already shopped with us but don't necessarily know about Johnston & Murphy. What is important right now is newness, new products and new franchises and I spoke about that in the overall remarks that we are pulling forward product because it's what's resonating with the consumer. There is a real opportunity for innovation and more distinctive product and so it's not just marketing that is going to make a difference and drive sales going forward. But it is also the great product and the great product stories that we'll tell with that marketing.

Thank you. And then also just on – what brands would you say, not brands, what would you say is a great trend that we should be looking forward to for the back-to-school season right now?

Yeah, so it's a good question and I can't tell all our secrets. You'll have to come in our store to check it out, but the theme of the day is diversification and great interest. And I said it to Mitch, but what is exciting right now is that the customer is really enthusiastic about footwear. And we've seen that in overall traffic patterns for the category, but Journeys traffic has really outstripped the overall category benchmark. And so there's a lot of just interest in footwear, and I think that over time we've spent a lot of time discussing the fact that -- that during the pandemic we didn't offer a lot of innovation and our brands didn't offer a lot of innovation and that innovation is hitting now and it's not just interest in one brand it's not just interest in athletic or in non-athletic product, it's really interest across the board in a number of brands and a number of styles. What is good for us is that average selling price is also has also gone up, ticked up pretty significantly with the new assortment that we are selling, which is more premium product at higher price points. And so there's interest across a number of different brands. There's still a move away from vulcanized product, which was represented by a couple of strong brands in particular but vulcanized will always be part of our assortment and we you know we will continue to offer newness that comes along with vulcanized, but the great trend right now is a lot of interest and a lot of diversification and better price points as a result of all of that.

Thank you.

Thank you.

Thank you. At this time, I'd like to turn the floor back to management for further remarks.

Great. Thank you for joining us today, and we look forward to speaking to you on our third quarter earnings call.

All right, thank you.

This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.