Good day, everyone, and welcome to Genesco Third Quarter Fiscal 2026 Conference Call. Just a reminder, today's call is being recorded. I'll now turn the call over to Jason Ware, Vice President of Finance and Investor Relations. Please go ahead, sir.

Good morning, everyone, and thank you for joining us to discuss our third 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-Ks 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 Eckel Vaughn, Board Chair, President, and Chief Executive Officer, and Sandra Harris, Senior Vice President, Finance, and Chief Financial Officer. I'd like to turn the call over to Mimi. Thanks, Jason. Good morning, everyone.

And thank you for joining us on our third quarter earnings call. We delivered solid performance versus last year in this important back-to-school quarter led by Journeys, which achieved 6% comp growth and more than a 50% increase in operating income. This significant improvement in profitability was partially offset by the anticipated exit of licenses in Genesco Brands Group, the impact of tariffs, and more than expected gross margin pressure at Schuh as the UK market faced heightened promotional activity. Against this backdrop, we delivered our fifth consecutive quarter of positive comp sales growth overall and third quarter results within our expectations, albeit at the lower end, reflecting both the strength and resilience of our portfolio in a dynamic consumer environment. Total comparable sales increased 3% with store comps up a noteworthy 5%, coupled with a modest decline in e-commerce comp, which faced tougher comparisons against last year's double-digit gains. These results reflect our investment in the store channel and the strength of our in-store experience supported by well-executed assortments and engaged teams that continue to drive conversion. The consumer environment continues to reflect customers shopping when there's a reason and pulling back when there's not. This pattern became much more pronounced for our category during back-to-school this year, which is factoring into our view of the fourth quarter. In the third quarter, demand was even stronger than we expected during the heart of back-to-school, and then traffic and purchase intent softened considerably and more than we expected in the weeks following with an especially challenging October. Customers are searching for must-have items and newness and freshness to drive their purchases. Importantly, when you have what our customer wants, they are willing to pay up for what they want, but they are conserving on footwear shopping in non-peak times and…

While it's still early, the campaign generated strong media coverage and immediate double-digit traffic gains which translated into improved comp trends and new customer acquisition. We look forward to ongoing collaboration with Peyton. And finally, we're investing in J&M store remodels and new store openings with impactful results. And now early in Q4, have inflected to a net store increase to drive growth going forward. Rounding out the branded business, the impact of tariffs, which affects this business the most, and the continued liquidation of licenses we're exiting substantially pressured both Genesco Brands Group gross margins and our overall performance during the quarter. We look forward to completing the liquidation by the end of the year and moving past this headwind. And now let me briefly recap the exciting progress fueling Journeys' strategic growth plan. Our strategy focuses on Journeys as the destination for the style-led teen, especially the teen girl. As no other concept goes across athletic casual and canvas footwear. This is how we are differentiated and the white space we identified to build on the traditional strengths of Journeys to serve a wider teen audience interested in style and trend that's six to seven times larger than the market we've historically served. As a reminder, we're executing across four key areas. First, product elevation and diversification. We're driving product elevation and diversified footwear leadership with best-in-class and more premium footwear brands. This work is achieving great impact as we saw an increase in third-quarter average transaction volume on top of significant growth last year. As we strive to represent all brands in our customers' closet, we launched Nike in November, with an assortment of premium styles that is just right for our team. The Nike addition added newness to Journeys offering and generated true excitement and energy…

Importantly, we achieved this leverage while increasing marketing investment to support growth. All banners delivered expense leverage other than Schuh which deleveraged with the lower store comp. Adjusted operating income for the quarter was $12.9 million above last year's $10.3 million, resulting in adjusted diluted earnings per share of $0.79 compared to $0.61 in the same period last year. The growth was driven by the sales increase and expense leverage and was partially offset by the gross margin pressure already highlighted. Turning to the balance sheet and capital allocation. Free cash flow for the quarter improved nearly $5 million year over year. Inventory was up 7% compared to last year in part because strong sell-through of key new styles in the third quarter last year left us with tighter inventory levels heading into the holiday season. Our inventory is clean, and we're taking actions in the quarter to rightsize our inventory at Schuh. Capital expenditures totaled $18 million focused on store remodels, new stores, digital investments, and customer experience enhancements. We ended the quarter with 1,245 stores, having opened four and closed 12. Our Journeys 4.0 stores continue to deliver exceptional performance across all key metrics, comps, traffic, conversion, and average transaction size. We now have 76 Journeys 4.0 locations and expect more than 80 by year-end. And their consistent outperformance reinforces our confidence in the concept as we continue to expand the rollout. We did not repurchase any shares in the quarter, but as a reminder, we did repurchase approximately 600,000 shares in the first quarter, approximately 5% of shares outstanding, leaving $29.8 million remaining under our current share repurchase authorization. Now turning to guidance. We now expect to deliver full-year adjusted earnings per share of approximately $0.95 reflecting a higher tax rate of 34%. At our previously assumed…

Thank you. We'll now be conducting a question and answer session. Like to ask a question at this time, you may press star 1 from your telephone keypad. A confirmation tone will indicate your line is in the question queue. Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please for our first question. Thank you. And the first question comes from the line of Mitch Kummetz with Seaport Research. Please proceed with your questions. Yes. Thanks for taking my questions. I think I've got three of them. Let me start on Journeys and the outlook for the fourth quarter because you guys have lowered your sales outlook for Journeys for the year. And if my math is, you know, close to being right, that implies maybe sort of flat to down. Low single-digit sales for Journeys in the fourth quarter. I'm wondering if that's essentially what you're thinking. And I'm wondering if you expect Journeys to how you expect Journeys to comp in the quarter? Are you kind of looking for sort of a flat to slightly positive comp for Journeys in Q4? And then I have two others.

Great. Thanks for your question, Mitch, and thanks for joining us this morning. In terms of Journeys outlook, I will just take us back to last year where Journeys had really a very strong back half of the year. I think it was a plus 11 comp and then a plus 14 comp. And so when we look to the fourth quarter, one of the things we called out today is that we have seen that during the non-peak shopping times, the consumer is pulling back. And we saw that we had a very strong back-to-school. We had a record back-to-school sold through a lot of the terrific product that we're carrying, and then we saw the consumer pull back in the week following. And so as we think to the fourth quarter, we have gone through a non-period at the beginning of November, and we're mindful of the non-peak period in January. But we're optimistic for robust sales for Journeys during the time when the consumer is gonna come out to shop. And so when you look on a stacked comp basis over the last couple of years, we are expecting positive comps for Journeys in the fourth quarter. If you take the stack and you moderate just a bit, then that is really where we end up coming out. If you look specifically at how we're thinking about the sales moderation, we're thinking about very strong store growth, as we've seen all year. But we're moderating the e-commerce comp because we're going against such strong comparisons, and we saw that also in the third quarter. In general, we are, you know, again, optimistic for positive comps for Journeys. We have closed some stores, and so that ends up impacting the overall sales number. But in fact, Journeys is more productive in the stores that we are running, and we are using initiatives like the 4.0 to make the strong stories even stronger. And so net-net, when all is said and done, we expect a stronger portfolio and stack comps that are in line with where we were in the third quarter.

And maybe just as a follow-up to that, maybe in the on prior calls, I think you called out the lift that you've gotten from the 4.0 stores. Can you say what that was in the third quarter?

Sure. We continue to see about the same level of performance out of the 4.0, just really strong overall performance. Even during the non-peak periods, our 4.0 stores performed at a higher level than the rest of our store fleet. So we know that that initiative is really helping to both attract new customers and to, you know, elevate the environment where we see higher transaction size and higher conversion altogether. We have just anniversaried the initial opening of the 4.0 stores. We had about 10 open by the end of the year last year. We expect that we're gonna have more than 80 open by the end of the year this year. We've accelerated through the course of the year what we can see what we believe we can do as far as, you know, having more remodels because we like so much the impact that it's having on our business. Again, we're mindful of the very strong comparisons to last year in Journeys, but we feel very good about our product assortment and all the other initiatives that I talked about on the call in terms of attracting new customers and really, attracting that wider group of young customers, particularly that teen girl to what we have at Journeys these days.

And then, I wanted to clarify something. In the press release, I think it's you, Mimi, that are quoted saying that given the improvement in the sales trend for Black Friday, Cyber Monday, that that could to a positive start to the fourth quarter. That suggests to me that sales are up were up in November. I just wanna maybe see if that was actually the case and if Journeys was positive comp in November. I know there are a lot of non-peak shopping days in November before you get to Black Friday. So I was curious if Journeys was positive comp in November. And how do you expect the balance of the quarter to play out? I mean, between now and Christmas, there's a lot of peak shopping days. Do you expect, you know, December to be positive comp per and then things to really kind of fall off in January. Is that sort of the trajectory that you're expecting?

Yeah. So we were positive with Journeys comps in November. We saw a strengthening into the holiday. We had a record Black Friday on top of a record Black Friday last year. And so when there is a reason to come out and shop, our customer is shopping. And the exciting thing that I would call out, Mitch, is that we were doing a lot of full-price selling. We were not promotional over the Black Friday weekend. If you walk the malls, if you walked the shopping districts, you saw that our athletic competition was highly, highly promotional. They've been promotional for some time, but they accelerated the messaging around promotional activity. And so a customer who is getting squeezed is and looking for a deal had plenty of opportunities to get deals at our competition, but we saw very nice full-price selling. We saw higher average transaction value over the Black Friday weekend. We saw robust sales online as well. And so here again, when the customer comes out to shop, feel like we're gonna get our fair share and then some. In particular, when we think about the shopping days going forward, we are expecting that we will have a very positive holiday. Our assortment is better than it's ever been. We've added Nike, most recently just to appeal further to our team customer. We are mindful of the fact that after the holiday with a consumer that is conserving to spend during the holiday and who's paying up what they really wanna have. That in January that, we would expect to see the pullback that we saw after back-to-school after holiday in January.

And then maybe just one last one for me because you mentioned Nike. Can you say how many doors I mean, my understanding is that it went into the 4.0 doors and online. But can you say how many doors you launched Nike in and kinda what your plan is in terms of moving forward with Nike in terms of bringing it into new doors, or maybe broadening the assortment?

Sure. We are excited about this partnership with Nike, and we have carried Nike in Journeys before, but it has been some it's been some time. And like any of our brands, Mitch, we don't start in all of our stores. We do start in a handful of doors. I've talked in the past about new brands that we've introduced. It might be 50 doors. It might be 100 doors. You know, 200 would be a lot of doors for us to introduce a brand into because we wanna see how it performs. We dropped Nike at Journeys on November 12. So it's been a matter of days that we have been carrying the brand, but we are seriously excited about this because it fits our strategy to offer to our target customer all the brands that they're interested in across our diversified assortment. And Nike is with us because they want to reach the teen customer and they want to reach the teen girl. I mean, that's a very compelling partnership for us. What's really important is that we got top-tier product. You see the Vomeros and the P6000s. But Dunks and Air Force Ones are also an important part of the wardrobe of our team, and so we've got just the right assortment for our team. So, you know, we're gonna start with Nike in the same way that we start with everybody else. It isn't gonna drive huge volume initially. None of the brands that we introduced do, but it's super important in terms of validating Journeys as the place to go for the top brands. We will build and believe that Nike can absolutely move into, you know, one of, certainly our top 10. And, one of, one of our more major brands.

Great. Thanks, and good luck.

Thank you, Mitch.

Our next questions come from the line of Joseph Vincent Civello with Truist Securities. Please proceed with your questions.

Guys. Thanks so much for taking my questions. Can you give any more color on the demand trends between Canvas and Athletic? One is the divergence between the two expanding, and two, how should we be thinking about the innovation pipeline across both for 2026?

So thanks for joining us this morning, and I'm just gonna talk about fashion trends in general, in Journeys. And, you know, we've talked about fashion broadening and teens embracing more wearing occasions. And so we have a really nice assortment. It's our unique positioning that we've got both the fashion and the fashion athletic and the casual brands. When we look to see during the third quarter, we typically start to sell more boots, and you know, this is the time of year that the customer looks to specific boot brands. We have seen a trend where boots were actually positive. They were good for us in the third quarter, and we expect to be positive in the fourth quarter, but it's very, very brand specific. The other trend that we have seen is that we have seen the consumer moving toward wearing athletic footwear much more year-round. And so we saw growth in our casual brands, as I said, but even more growth in our athletic assortment. And so we are really, you know, really excited about the lifestyle athletic that we are selling. In terms of Canvas, you know, Canvas is not as strongly in demand by our overall customer. It's still an important part of our mix. In terms of the innovation pipeline, between the two going into 2026, we see more innovation on the athletic lifestyle side than we do on the Canvas side.

Got it. Very helpful. On the Boots would you say that, you know, there's, like, new innovations that are driving a lot of that growth for those specific brands, or is it better access on your part? Should we think about it as, like, the bigger lever there?

I would talk a little bit about boots as starting with just fashion. And I'll say that we don't sell fashion boots per se. We're not selling, like, certain looks of boots that tend to be represented by, you know, non-branded offerings. We sell boots that are related to specific brands. Traditional boots have become less of a part of our assortment over the last couple of years. We've seen the customer gravitating toward much lower shafts, more moccasin-like products a lot of fur. It gives the warmth so there's definitely a seasonal switch, but it's been out of taller boots into, you know, shorter boots and into moccasin-type boots in addition to the customer trading into athletic. On the boot front, as I said, it's very brand specific. There are some iconic brands that are in demand right now by the consumer, and so that's been fueling our growth.

Got it. And then, one last one for me. Can you just give any more color on, like, the pullback you saw in terms of income demographics or anything like that? Just to help us understand, you know, where we saw things slow.

Sure. You know, interestingly, we attract a broad demographic group within Journeys. And what we have seen in the past is when the consumer gets squeezed they gravitate to a lower price point product. We're not seeing that at all. We're seeing the consumer stretch up to buy what they want, and paying up. Our average transaction size is up pretty significantly. But they're conserving in between. And so when we look across our demographic cohorts, we certainly see that the higher income customer is more robustly spending but we're seeing that in general, the customer is stretching up to be able to purchase what they want when they have a reason to go out and go shopping. But the pullback really is around conserving their cash for other things that they want to purchase.

Got it. Thanks so much again.

Thank you, Joe.

The next questions are from the line of Mantero Valentino Moreno-Cheek with Jefferies. Please proceed with your questions.

Thanks for taking my question today. So you highlighted Journeys' strong comp growth and the new brand launch at Nike. And as you look ahead, are there any major next steps to continue expanding Journeys' brand portfolio? And, also, how should we think about the current momentum and how that shapes growth outlook going forward?

Good morning, Mantero. In terms of Journeys and the Nike introduction, I think I've talked about several of the brands that we have been introducing in Journeys over the past few months. Brands like HOKA and Saucony as well. And all of these are important in terms of validating Journeys and categories we haven't had historical strength in. And brands that are an important part of our overall mix. So lifestyle running is a really great example of a category that's important. As I said, they don't start as major revenue plays, but they do build into top brands in our portfolio. So the key for us is that we are absolutely pursuing a strategy of more diversification. And more diversification means that when styles or brands or categories get hot, that we're well represented in that. And if you go back over Journeys' history, you'll see that brands rotate in and out of our top assortment that our consumer, our teen customer has an insatiable appetite for something new and something different and something that's next. And so our business model actually is a business model that can stand the test of time with the diversification because we can manage that rotation in and out of the brands that are important to our consumer. And so it's having the right brands, having strong relationships with these brands, building growth plans going forward, and being able to navigate where the consumer takes us and where we take the consumer. In terms of how should we think about Journeys' sales momentum, we're just mindful of the fact that last year was a really strong period for Journeys as we significantly changed the assortment and drove comps well into the double digits. And while we are anniversarying those strong comps quite nicely,…

And then on margins, gross margin declined, and that was primarily due to margin pressure at Schuh and then ongoing tariff pressures. And so sorry I missed this. Where do you see the greatest opportunities to improve margin from here? And what are the key levers that you plan to pull to drive margin expansion in the near term and in the long term?

Thank you. That's a great question. I'll just start with some thoughts and then ask Sandra to weigh in on this. But our margin pressure this year was driven by three major factors. You got two of them. Schuh is one of them. Tariffs is another one of them. But we are also it's our smallest business, but we are exiting a big license with Levi's. We're excited about a we're gonna replace it with Wrangler, but it's gonna take some time to do that. So when you look at our overall gross margin profile, in the quarter, we took a pretty direct hit from product that we're liquidating from Levi's. That's a one-time thing. We won't repeat that. That will be out of our mix. But it was several hundreds of basis points for the division itself and had an impact overall. The second area is tariffs, and we had a really, you know, I'd say unique for a period of time situation in our wholesale business where we had locked in wholesale pricing, last early in the year. And, we needed to honor those prices. And so it's difficult to raise prices even though our goods came in at a higher rate of tariffs. So that squeezed us there. And we will be able to manage pricing over time and do a lot of other take a lot of other actions to manage the product cost. But, over time, we see that we will be able to manage that. And then on Schuh, I mean, it's probably gonna be close to a couple of hundred basis points that we will give up in Schuh. Because the market has been really so promotional. And I think that looking into next year, we're gonna do a lot of things where…

The challenges we're going to issue, which we may address the actions we're taking.

Got it. And then I guess just one more for me. On marketing and ad spend. Those have been pretty topical recently, and I know you noted your Live On Loud campaign and the Peyton Manning, Johnson and Murphy has been performing well. So, I guess, is there anything else to know on these campaigns and how they help drive increased conversion or traffic?

And, also, just how should we think about ad/marketing spend going forward?

Sure. So we thinking about brand investment and brand marketing, is a very important initiative across all of our businesses. And I'll come back to that. But I want to point out that our teams did an extraordinary job of managing expenses across the quarter and we ended up with 140 basis points of leverage in spite of additional marketing spend. And so the idea really is as we think about shaping our cost structure and managing our cost structure, it's in a way for us to be able to fund the investment in overall marketing. And so, much of the marketing spend we've done in the past has been performance marketing to drive the growth of the digital channel, which has been quite successful.

Through areas like paid search and direct mail with catalogs but we have been shifting our spend over the last year into these brand into brand marketing and more top of the funnel activities in order to attract new customers. And so, you call that life out loud. You call that Peyton, those are two great examples that we are really thrilled about. And these types of investments will pay off over time. They are aimed at building awareness and attracting into our brand. We think we've got brands. We think we've got great merchandise. But our awareness is a lot lower than we would like it to be. And so these are directly aimed at being able to build and drive awareness.

Thank you very much. Thank you.

That concludes our question and answer session. I'll turn the floor back to Mimi for closing comments.

Thank you for joining us today. Wish everybody a happy holidays and look forward to talking with you when we report earnings and also after the holidays at the ICR conference.

This will conclude today's conference. You may disconnect your lines at this time. We thank you for your participation. Have a wonderful day.