Good day, everyone, and welcome to the Genesco First Quarter Fiscal 2026 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 and IR. Please go ahead, sir.

Good morning, everyone, and thank you for joining us to discuss our first quarter fiscal 2026 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 Sandra Harris, Senior Vice President, Finance and 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. Following the significant momentum in last year's back half, we are pleased with our start to fiscal '26 with both sales and operating income coming in nicely above our expectations and last year. First quarter sales growth once again outpaced the industry, highlighted by an overall 5% comparable sales increase above the high end of our full year guidance range, led again by strong Journeys results. Our overall comps were relatively consistent for February and March, April combined, highlighting the strength of our assortments as we transitioned out of winter and into spring. Journeys comps increased high-single digits as the initial phase of our strategic plan to accelerate growth extended its momentum and Journeys continued to gain market share. The consumer environment remains choppy and with recent first quarter events, this choppiness has become more pronounced. Consumers show a willingness to shop when there's a reason like we saw over Valentine's Day and Easter and retreat when there's not. And they remain quite selective. Our merchant and product teams continue to innovate and add freshness to our assortments to satisfy shoppers who are looking for must-have product and a reason to buy something new and who are passing on everything else. We know that in this environment, it is compelling footwear and freshness that motivate the consumer to purchase, and we've taken major actions to respond to these consumer needs. First quarter results are evidence of this outstanding work with all channels posting positive growth. Comparable sales increased 5%, our third consecutive positive increase with both stores up mid-single digits and online up high-single digits and wholesale channel growth of 5%. Journeys comps were strongly positive for the third consecutive quarter as well, up 8% and Schuh continued its…

Thanks, Mimi. Overall, we were pleased with our first quarter performance, delivering improved results compared to last year, even though the consumer environment became increasingly uncertain in April. Total revenue and comps increased in the mid-single digits. We effectively leveraged SG&A and our adjusted earnings per share loss improved by $0.05 year-over-year. Excluding the impact of opportunistic share repurchases, which were dilutive to EPS for the quarter, but are expected to be accretive over the full year, adjusted earnings per share would have been $0.05 better. Revenue for the quarter of $474 million increased approximately 4%, driven by overall comp growth up 5%, our third consecutive quarter of positive comps, with store comps improving 5% and direct comps increasing 7%. Journeys led the businesses with comps up 8%, followed by Schuh up 1%, while Johnston & Murphy comps declined 2%. Traffic continues to be challenging, but we are seeing improvements in conversion and average transaction size to help offset the traffic declines. The positive contribution from comps were partially offset by lower revenue due to closed stores. Adjusted gross margin for the quarter of 46.7% declined 90 basis points compared to last year. The change in rate was primarily related to an anticipated shift to higher price point, but lower-margin product in both Journeys and Schuh due to the increased penetration of athletic styles, combined with higher promotional activity at Schuh and the pull forward of liquidation product in Genesco Brands Group. Moving down the P&L. SG&A expense was 52.5% of sales, 170 basis points better than the prior year and with the higher sales better than we expected. The improvement was driven by reduced occupancy and bonus expense, along with cost savings initiatives across multiple areas, reflective of the continued benefits from our prior year cost savings program and…

[Operator Instructions] And our first question is from the line of Joseph Civello with Truist.

Congrats on a great quarter. Just wanted to ask a few questions about the Journeys strength. In addition to some wider assortments with existing partners, we also saw you establish some new relationships last year with some hot athletic brands. Can you talk about the impacts of those on the 1Q comp and give us a little more color on how scaled those assortments are through your footprint?

Good morning, Joe. Thanks for joining us this morning. And we are really excited about the momentum that we have been seeing in our Journeys business as a result of not just great product, but the number of other efforts that I did talk about. And part of our overall strategy as we think about our product initiatives is to show our leadership and it's to show our leadership across athletic, across casual and across canvas to meet the needs of our teen consumer. Part of what leadership means is being -- is having the most relevant styles in the most relevant brands. And as we think about our assortment, that's the objective as we add new product to the brands that we already carry. And so the comp in the quarter was actually driven by our existing brands. But the impactful newer brands, and we got HOKA this quarter, we introduced HOKA. We usually don't talk about brands, but since you asked the question, Saucony was another one that we have reintroduced. They're really impactful in terms of our customers' reaction to the new offerings. They help validate Journeys in these categories that we haven't had historical strength in. Lifestyle running is a really good example of a category that's important to our teen consumer. And our portfolio of brands shows our commitment to the category. And so -- and the trend development. So as I said, in terms of comp, we typically start with a handful of stores. And by a handful, I mean, like 50-plus stores that we begin a new brand, and then we ramp that up over time. And so in development of brands, it really is a start, test, react. We were very pleased with the reaction that we saw. And then we scale up from there, and we can scale quickly and we can put a lot of effort behind moving significant volume when we know it's the right time.

Got it. That's very helpful. And then secondly, can you just talk a little bit more about the trends for the vulcanized product, of course, under pressure, but how did it compare to your expectations? And what do you see for that category moving forward?

Yes. Again, I was talking about the overall strategy that we have in the assortment is to demonstrate great leadership across not only canvas, which we've traditionally been known for and canvas and vulcanized we talk about interchangeably, but also in athletic and in casual, which we are known for as well. We have seen fashion broadening and teams embracing a lot more wearing occasions and Journeys is well positioned to take advantage of this. And -- so the results, I said were really good for us. We had 7 brands that were up double digits on both the casual and the athletic side and especially strong growth on the athletic side. Our new leadership in Journeys have a lot of great relationships on the athletic side. We see it as an opportunity to be able to continue to build. On the vulcanized side, we have seen pressure on vulcanized. We continue to see pressure on canvas products through the quarter, but the strength of our other brands, the strength of the assortment is more than offsetting and has been more than offsetting that pressure over the last several quarters.

Our next question is from the line of Mitch Kummetz with Seaport Research Partners.

I've got a few. Let me start with the second quarter and the guide there. Cassandra, I think you said that you expect a positive comp from Journeys. I don't know if you could be more specific there. Mimi, I think in your prepared remarks, you said that Journeys is tracking -- early 2Q is tracking similar to the first quarter. Is your guidance -- your sales guidance on 2Q assuming Journeys is at a high-single digit comp? Or is there a different underlying assumption embedded in the outlook?

Thanks for your question, Mitch. We were pleased with Journeys results. Journeys had a plus 8% comp in the first quarter. And as I said, we are tracking at about the same level where we were. We have seen quite a lot of choppiness out there where the consumer retreats during periods of non-shopping -- they don't shop during times when there isn't a reason to shop, and then they come and they shop in a huge force and Journeys capitalized on that. And so we have taken that. We start to anniversary stronger comps as we go through the back part of the year. We're very optimistic about where Journeys business is going. And Sandra talked about an overall comp for the year. So we've taken our trends and built that into the second quarter. We do still expect a very nicely positive Journeys comp.

Yes. And then Mitch, just to add on the second quarter sales, as we spoke about, we do have the favorable FX on overall sales that's coming into the quarter. So that is definitely one of the impacts as to why we're saying we're slightly better than last year. But I also want to remind you that positive comps at Journeys, but similar to what we saw in the first quarter, we have considered consumer softness continuing in our J&M business, specifically in our factory stores. And then also our Schuh U.K. consumer continues to have pressure on them. So those comps for Journeys will be slightly mitigated by our other 2 businesses.

Yes. And overall, the second quarter is just a low quarter for us, and there's not a lot of reasons to shop. So Easter in the first quarter, you have back-to-school or really gearing up for back-to-school and for holiday.

So 2 more questions. One, on the back half for Journeys, obviously, the back half is much more important for you guys, particularly at Journeys. And you guys are going to start lapping much more difficult comparisons starting in the third quarter. Talk to us about what are going to be the -- first of all, what kind of a comp are you assuming for Journeys in the back half? I assume something positive. And talk about the drivers. How much impact do you expect to see from the 4.0 stores on the back half? How does your product access compare, you think it will compare versus maybe a year ago that could help drive the comp? And then you also talked about a trend towards low profile, assuming that, that continues to develop like how positive might that be for you guys at Journeys in the back half? So just maybe kind of walk through some of the drivers of the Journeys in the back half as you start to lap much more difficult comparisons. And then I have one last question.

Mitch, that's a lot of questions. So let's get started here. We are -- we know we are lapping more difficult comparisons for Journeys, but you'll have to go back to the past several years, and we have a lot of opportunity. The most important thing I'll say is that our strategy is geared at serving a much broader market. It's 6 to 7x bigger. We see an opportunity to serve this teen girl really well in a way that nobody else is doing. And so that is just the cornerstone of the strategy. Not only are we serving a broader market, but we're also serving the customer with more premium product. And so if you think about that, you think about more customers, you think about more premium product that drives lots of opportunity for growth. The first phase of our overall Journeys program was to inject the assortment with a lot better product. We knew that the customer preferences were changing. And so that's what our merchant team and Chris Santaella led to let that happen in the back part of the year. And of course, we're benefiting in the front part of the year. But we're not finished. We're going to continue to build on our overall product assortment. I talked a little bit about the new brands that we have introduced. We're not counting on those. What we're counting on is more allocation, better allocation of product that we are currently selling. And so strengthening further our product leadership, again, we've just begun, strengthening our inventory position, differentiating our scale across these number of in-demand brands and building our longer-term strategic partnerships. And so this isn't necessarily we've got 1 year worth of growth. It is we've started in one place, and we'll continue to build…

That's helpful. And then lastly, you mentioned that the consumer continues to be very focused on kind of must-have key items. And you also made a comment so much to the effect that the brands with the most momentum are the ones that are probably best positioned to take price. So when you think about your business and maybe some price increases coming your way, like what percent of your business is kind of must-have key items? And how confident are you that if prices increase on some of those products that the consumer will be pretty willing to spend more to get what they want? And that's it for me.

Yes. So typically, when we talk about key items, we're talking about just a specific model. I think when I'm talking about key items now, I'm just really talking about brands, key brands and key franchises. So we have a lot to pick from, Mitch, in terms of where our consumer is going. Again, the momentum across a range of brands has been good, really being able to satisfy what needs the customer has, what brands they're looking for, which styles they are looking for. And it's not just one style, but it's multiple styles is really what we are focused on. And so we have seen in prior times when the customer gets squeezed that the customer gravitates toward lower price point product. And they're not doing it this time around, and they are stretching up to buy what they want. And so you asked about price increases. We haven't heard a lot yet from our brand partners about price increases. We expect we will hear some about that. But I think that it is the in-demand brands that have more opportunity to take price and the less demand brands don't. So our brands are working carefully through where opportunities are and where they aren't. I think there is really high awareness that there's a lot of price sensitivity in the market, and everyone is trending cautiously here.

The next question is from the line of Corey Tarlowe with Jefferies.

Mimi, I just was curious to get your perspective on the recent M&A in the footwear and footwear retail landscape. Does that cause you to think differently at all about the space, your competition and maybe some of your key brand partners?

Corey, thanks for joining us this morning, and thanks for the question. So there has been some M&A activity certainly in the footwear landscape, and it's largely been focused on more of the performance athletic side and more of the performance side, and there's been consolidation in general there. I think when you think about what we do, we talked about being -- strengthening our positioning with the team, with a style-led team who is interested in a diversified assortment across athletic, and they use athletic for lifestyle purposes. We're really lifestyle-driven. So it's about lifestyle for us. It's about style. It's about being able to offer the assortment across a number of different categories. And so we're quite -- we're positioned quite differently from a place where much of that activity has been taking place. And we feel great about the opportunity in Journeys, the opportunity to serve more customers with the strategies that I have been talking about.

That's great. And then just on the gross margin, I was curious if you could maybe talk a little bit more about the impacts in the quarter and maybe perhaps what sticks and then how you think about between balancing price increases versus, I guess, cost absorption as it relates to tariffs for the full year?

So we had called out that we had expected that -- if you remember, we had been shifting out of canvas product to an athletic -- more of an athletic assortment. And the margin profile is different between canvas. Canvas has the best margin profile, but the athletic part of the assortment has highest price points. And so we are getting more gross margin dollars. So it's not necessarily a bad trade-off here. So we had called that out in terms of we expected the pressure until we anniversary that in the first half of the year. And so that really was the largest driver around gross margin, and we expect that, that will let off a bit through the back part of the year. We do and Sandra did call out that we have some onetime unusual hits in the second quarter in particular, but we're working hard because of tariffs, and we're working hard to offset that. And so we think that structurally, there isn't anything that over the longer term will be affecting gross margins beyond what I just mentioned. In terms of balancing price increases versus cost absorption, I did say that we are not expecting to get any -- to take any gross margin -- have any gross margin impact as a result of tariffs. We are working with our brand partners there. We are in a place where we are rebuilding Journeys overall margins. You know our story, and we're in the process of rebuilding. And in rebuilding, we've got an eye on overall profitability. And so we're, again, working with our brands to make the best decisions in this area.

Corey, a little more color around the quarter on the margin. I also just want to call out, like I did in the script that we did have a really strong quarter for our Genesco Brands Group, but it was a pull on our margins as we pull forward that liquidation product. And then our second quarter margins, I just want to remind everybody that we did already have in our guidance the first round of tariffs. And so adding the additional round of tariffs, combined with the mitigation efforts that Mimi talked about and a shift as we have less sales in Q2 related to the Genesco Brands business, both for lost sales on tariffs as well as the pull forward in Q1 is the impact on the Q2 margins.

Got it. And then just lastly on inventory. Is there a way to break down what's price versus units in the first quarter? And then how does that shape throughout the remainder of the year?

Price was not yet a factor in Q1. I think tariffs went in place. We were already selling inventory in Q1 that we had on hand before tariffs really came into be. So you can know that our ASPs are up pretty significantly. And so there is a trade-off between ASPs and units, and we're trying to hit a sales plan. And we think that our inventory is in really good shape. It is up because we were at pretty low levels in inventory last year. We had sold through, rationalized a lot of the Journeys inventory to keep it clean. And so we were down 20% when we started the year last year. And so there is a buildup to be able to support the sales momentum. And so we feel like we've got the inventory that we need. And our partners work with us no matter sort of what happens through the course of the year to help us to manage inventory in a really positive way.

I'll now hand the call back to management for closing remarks.

Thank you for joining us. We look forward to speaking with you again on our next quarter's earnings.

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.