Q3 2024 Genesco Inc Earnings Call

Speaker 1: Good day everyone and welcome to the Genesco third quarter fiscal 2024 conference call. Just a reminder today's

Good day, everyone and welcome to the Genesco third quarter fiscal 2020 for a conference call.

Just a reminder, today's call is being recorded.

Speaker 1: I'll now turn the call over to Dow and the Clery. Senior Director of FPNA.

I'll now turn the call over to down Macquarie Senior Director S. P N a.

Please go ahead Sir.

Speaker 2: Good morning, everyone, and thank you for joining us to discuss our third quarter fiscal 24 results.

Good morning, everyone and thank you for joining us to discuss our third quarter fiscal 'twenty four result.

Speaker 2: Participants on the call expect to make forward-looking statements reflecting our expectations as of today.

It's been on the call expect to make forward looking statements, reflecting our expectations as of today.

But actual results could be different.

Speaker 2: Genesco Repersue to this morning's earnings release and the company's SEP violence.

<unk> refers you to this morning's earnings release and the company's SEC filings.

Speaker 2: including its most recent 10-K and 10-Q filings, were some of the factors that could cause differences from the expectations reflected in the forward-looking statements made today.

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.

Speaker 2: Participants also expect to refer to certain adjusted financial measures during the call.

Participants also expect to refer to certain adjusted financial measures during the call.

Speaker 2: All non- GAAP financial measures are reconciled to the GAP counterparts in the attachments to this morning's press release. And as get as available on the company's flip site in the quarterly results, six.

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.

Speaker 2: We have also posted a presentation summarizing our results here as well.

We have also posted a presentation summarizing our results here as well.

Speaker 2: With me on the call today is Mimi Vaughn, board chair, president and chief executive officer, and Tom George, chief financial officer.

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 me.

Speaker 3: Thanks, Farrell. Good morning, everyone. And thank you for joining us.

Thanks, Darryl and good morning, everyone and thank you for joining us.

Speaker 3: Before I discuss third quarter performance, earlier this week, we announced the appointment of Andy Gray as journeys new presence.

Before I discuss third quarter performance earlier this week, we announced the appointment of Andy Great journey, New President.

Speaker 3: Andy is an exceptional and experienced leader who brings invaluable expertise in brand building, product innovation, and the other areas essential to building journey business for the future.

Andy as an exceptional and experienced leader who brings in valuable expertise and brand building product innovation and the other areas are essential to building journeys business.

The future.

Speaker 3: And his connections to youth culture and the strong brand relationship he's built over his accomplished career make him the ideal person to lead the talented team we have in place at Journeys. As we work to elevate the business and unlock the great potential we see ahead.

And its connection to youth culture, and a strong brand relationships built over his accomplished career make him the ideal person to lead the talented team we have in place at journeys as we work to elevate the business and unlock the great potential we see ahead.

Speaker 3: I look forward to his partnership and am excited for him to join recently appointed COO Mike Seipert to drive success going forward. Welcome Andy. Now moving to results.

I look forward to his partnership and I'm excited for him to join the recently appointed CLO, Mike Pfeiffer to drive success going forward welcome Andy.

Now moving to results.

Speaker 3: Following a later start to back to school, sales picked up early in the third quarter and we're generally tracking to our expectations.

Following a later start to back to school sales picked up early in the third quarter and we're generally tracking to our expectations.

Speaker 3: However, we saw a market change and trend in October as the later change of seasons needed initial demand and delayed the start of the selling season for fall products.

However, we saw a market change in trend in October as the later change of season, you did initial demand and delayed the start of the selling season for fall product.

Speaker 3: In addition, our branded businesses were impacted by disruption related to the implementation of a new ERP system contributing to lower overall results than we anticipated for the quarter.

In addition, our branded businesses were impacted by disruption related to the implementation of a new ERP system.

We're getting to lower overall results than we anticipated for the quarter.

Speaker 3: Despite these headwinds, we will please that sales trends within our journey season have continued to show sequential improvement and shoe and Johnson and Murphy delivered record third quarter sales.

Despite these headwinds we were pleased that sales trends within our journeys business continued to show sequential improvement.

Shoe and Johnston <unk> Murphy delivered record third quarter sales.

Speaker 3: The operating environment remained challenging as ongoing inflationary pressures and economic uncertainty continued to impact discretionary spending.

The operating environment remained challenging as ongoing inflationary pressures and economic uncertainty continues to impact discretionary spending.

Speaker 3: As we've seen throughout this year, consumers continue to make top choices on where to spend their dollars, often choosing other categories over discretionary purchase.

As we've seen throughout this year consumers continue to make tough choices on where to spend their dollars often choosing other categories over discretionary purchases.

Speaker 3: And when they do shop, they're doing so closer to need and are carefully discriminating in their purchase decision.

And when they do shop, they're doing so closer to need and are carefully discriminating in their purchasing decisions.

Against this backdrop, we continue to advance our strategies to drive consumer demand and make the business more productive and more profitable.

Speaker 3: Against this backdrop, we continue to advance our strategies to drive consumer demand and make the business more productive and more profitable.

Speaker 3: Are Dirty store closure plans or on track having closed 75% of the approximately 100 doors planned through the end of Q3 and the remainder targeted to close by year.

Our journeys store closure plans are on track, having closed 75% of the approximately 100 doors planned through the end of Q3.

And the remainder targeted to close by year end.

Speaker 3: We also remain on pace with efforts to realign our cost base and realize $40 million with annualized cost savings by the end of fiscal 25.

We also remain on pace with efforts to realign our cost base and realized $40 million of annualized cost.

Cost savings by the end of fiscal 'twenty five.

Speaker 3: Finally, we once again maintain strong inventory discipline in Q3 with total inventory down high single digits year over year.

Finally, we once again maintained its strong inventory discipline in Q3 with total inventory down high single digits year over year.

Speaker 3: Other key highlights from Q3 included growing our overall comparable digital business by 8% and expanding digital penetration to 21% versus 18% a year ago.

Other key highlights from Q3 included growing our overall comparable digital business by 80%.

Expanding digital penetration to 21% versus 18% a year ago.

We launched buy online pick up in store at journeys in Jan and then October took quite promising early results offering additional convenience and time for the holidays as we continue advancing our omni channel experience.

Speaker 3: We launched by online pick up and store at Journeys and JNN in October to quite promising early results, offering additional convenience in time for the holidays as we continue advancing our on the channel experience.

Speaker 3: And finally, during this all-access loyalty program is off to a strong start performing well against our high exit.

And finally at journeys all access loyalty program is off to a strong start performing well against our high expectations.

Speaker 3: Now, discussing our individual businesses in more detail and starting with journey.

Now discussing our individual businesses in more detail and starting with journeys.

Speaker 3: The negative sales trend we experienced through the first half of the year continues to sequentially improve in Q3.

But the aggregate sales trend we experienced through the first half of the year continued to sequentially improve in Q3.

Speaker 3: Back to school trends we discussed in late August , accelerated into September , and the changes our merchants were able to affect across the product mix resonated well, enabling journeys to outpace our most recent expectations.

Back to school trends, we discussed in late August accelerated into September.

And the changes our merchants were able to effect across the product mix resonated well, enabling journeys to outpace our most recent expectations.

Speaker 3: Sales of must have items were strong and we continue to chase into that product.

Sales of must have items were strong and we continue continue to chase into that product.

Speaker 3: Even though this wasn't enough to offset the lack of newness in industry discounting and athletic, or the unanticipated late start to fall selling, journeys traffic and conversion nonetheless improved considerably versus Q2.

Even though this wasn't enough to offset the lack of newness and industry discounting in athletic or the unanticipated late start to fall selling journeys traffic and conversion nonetheless improved considerably versus Q2.

Speaker 3: In order to date, I'm pleased to say that Journeys Comps has shifted into positive territory for the first time this year, driven in part by a strong Black Friday weekend.

And quarter to date I'm pleased to say that journeys comps has shifted into positive territory for the first time this year driven in part by a strong Black Friday weekend.

Speaker 3: Although the environment remains volatile, consumers are responding well to the newness we and our brand partners have injected into the product of sorting.

Although the environment remains volatile consumers are responding well to the newness, we and our brand partners have injected into the product assortment.

Speaker 3: We're excited to amplify the journey story through our holiday campaigns, which among other things will feature more SMS campaign usage and increased investment in digital marketing, as well as new campaigns and rewards for all access members. It's important to recognize and Lord, as your human nature to change running tabs on the context and repent to the knowledge of speaking to you, and live a peaceful life together.

We're excited to amplify the journey story through our holiday campaigns, which among other things will feature more SMS campaign usage and increased investment in digital marketing as well as new campaigns and rewards for all access members.

Now moving to the U K.

Speaker 3: Despite facing the consumer pullback in October , she delivered the strongest constant currency in bird quarter sales to date, reflecting our efforts to enhance its customer value proposition and access to top-tier products.

Despite facing the consumer pullback in October schuh delivered the strongest constant currency third quarter sales to date, reflecting our efforts to enhance its customer value proposition and access to top tier product.

Speaker 3: Solid double digit sales growth and a 5% comp were driven by a compelling back to school assortment led by the Kansas as followed by women's adding to the outstanding performance who has achieved this year.

Solid double digit sales growth and a 5% comp were driven by our compelling back to school assortment led by the kids business, followed by women's adding to the outstanding performance shoe has achieved this year.

Speaker 3: to accomplish this through growth of casual product aided by higher average selling prices and success in non-footwork categories like that.

To accomplish this through growth of casual product.

And by higher average selling prices and success and non footwear categories like backpacks.

Speaker 3: The delay in change of seasons and resulting pressure on sales later in the quarter was most pronounced in stores as shoes digital business notched positive gains throughout 2-3 and continues to account for nearly 40% of total sales.

The delay in change of seasons, and resulting pressure on sales later in the quarter was most pronounced in stores as shoes digital business notch positive gains throughout Q3 and continues to account for nearly 40% of total sales.

She was growing strength and recognition as a leading fashion footwear destination for the youth consumer has been driving market share gains.

Speaker 3: Choose growing strength and recognition as the leading passion footwear destination for the youth consumer has been driving market share games.

Speaker 3: As of mid-October, shoe ranked number 10 in UK footwear market share, according to Cantar, maintaining its position after moving up three spots earlier in the year. Loyalty continues to...

As of mid October Schuh ranked number 10 in UK footwear market share according to kantar, maintaining its position after moving up three spots earlier in the year.

Loyalty continues to both bolster this effort tracking.

Speaker 3: Tracking at about 30% of shoes, Q3 sales, total shoe club members now stand above 2 million and counting with members more highly engaged and purchasing more frequent.

Tracking at about 30% of shoes Q3 sales.

Total shoe club members now stand above $2 million and counting with members more highly engaged and purchasing more frequently.

Speaker 3: Students running exciting holiday campaigns through the season to surprise and delight customers, including bundle promotions and digital content tied to a community program.

Students running exciting holiday campaign through the season to surprise and delight customers, including bundled promotions and digital content tied to the loyalty program.

Speaker 3: Starting now to Johnson and Murphy, the brand added to it strong run this year, posting positive sales growth and record third quarter sale despite a unique set of headwinds and a tough multi-year compare.

Turning now to Johnston <unk> Murphy the brand added to its strong run this year posting positive sales growth and record third quarter sales. Despite a unique set of headwinds and a tough multiyear compare.

Speaker 3: While the challenges J&M encountered from the new ERP system implementation led to some loss sales in Q3, this more robust modern platform provides greater agility to support J&M growth and the growth of our other brandatives.

While the challenges encountered in the new ERP system implementation led to some lost sales in Q3.

This is more robust modern platform provides greater agility to support <unk> growth and the growth of our other branded business.

Speaker 3: J&M was also not immune to the broader consumer pullback that hit him off October and stole sales of Outerware and other fall products.

Japan was also not immune to the broader consumer pullback that hit in October and stalled sales of outerwear and other fall products.

Speaker 3: Casual continue to drive results accounting for over 75% of direct you can see where footwear says.

Cash flow continued to drive results accounting for over 75% of direct to consumer footwear sales.

Speaker 3: A pair of all of the bright spots growing 7% and together with accessories now accounts for over 40% of J&M's DTC sales.

Apparel was a bright spot growing 7% and together with accessories now accounts for over 40% of Jane M. DTC sales.

Speaker 3: We're benefiting from the all-encompassing changes we made coming out of the pandemic to reposition the business as a more casual multi-category lifestyle brand.

We're benefiting from the all encompassing changes we made coming out of the pandemic to reposition the business as a more casual multi category lifestyle brand.

Speaker 3: Supporting this effort is J&M Insiders A Synodity Program.

Supporting this effort is Shannon insiders affinity program insiders now account for approximately 60% of Gms DTC revenue with over 60% of new customers joining the program.

Speaker 3: Insiders now account for approximately 60% of JNM's DTC revenue with over 60% of new customers joining the process.

Speaker 3: Looking at that, we remain very positive on J&M's longer term potential and are investing again.

Looking ahead, we remain very positive on Jan EMS longer term potential and are investing against it as.

Speaker 3: As part of this next phase of growth, J&M has partnered with a new creative agency to unlock the significant opportunity to increase its brand awareness, which currently stands at only 35%. And educate consumers about the shift away from its parentage-dress-you-legacy.

As part of this next phase of growth J N. M has partnered with a new creative agency to unlock the significant opportunity to increase its brand awareness, which currently stands at only 35% and educate consumers about the shift away from its heritage dress shoe legacy.

Speaker 3: This new top of the funnel marketing launches of the spring, as we expand our marketing reach to broader range of

This new top of the funnel marketing launches in the spring.

As we expand our marketing reach to a broader range of customers.

Speaker 3: Now, turning back to journeys, we're pressing forward with our Elevate Plan, which leverages the elements of our footwear focus strategy and drives action to meaningfully accelerate journeys, improvement, and top-line growth.

Now turning back to journeys, we're pressing forward with our elevate plan, which leverages the elements of our footwear focused strategy and drive action to meaningfully accelerate journeys improvement and topline growth.

Speaker 3: Journeys has approved and track record of managing through adverse cycles, responding to changing consumer and fashion dynamics, and coming out stronger on the other side.

Journeys has a proven track record of managing through adverse cycles, responding to changing consumer and fashion dynamics and coming out stronger on the other side.

Speaker 3: The fundamental tennis adjourned, journey's value proposition to customers remain intact.

The fundamental tenets of juror journeys value proposition to customers remain intact.

Speaker 3: with our focus on fashion footwear and compelling mix of and access to top brands. No other retailer serves the team consumer quite the same as Drew.

With our focus on fashion footwear, and compelling mix of and access to top brands no. Other retailer serves the teen consumer quite the same as journeys.

Speaker 3: Probably have much more to unlock as we finish this year and get into fiscal 25. The work we've done today is paying dividends.

While we have much more to unlock as we finish this year and get into fiscal 'twenty five the work we've done to date is paying dividends today.

Speaker 3: Today I'll highlight the city areas of our plan where we're making good products.

Today I'll highlight the key areas of our plan, we're making good progress.

Number one strengthening customer engagement and expanding relationships with our target team customer.

Speaker 3: Number one, strengthening customer engagement and expanding relationships with our target team customers.

Speaker 3: Initial results from the All Access Loyalty Program are very encouraging, with roughly 1.5 million members signed up since launching in July .

Initial results from the all access loyalty program are very encouraging with roughly $1 5 million members signed up since launching in July remember.

Speaker 3: Members are already buying more often than non-members and spending more per average order.

Members are already buying more often than non members and spending more per average order.

Speaker 3: With considerable runway ahead of us, we're just beginning to maximize our CRM and loyalty data to more strategically target customers based on purchase history and brand preferences.

With considerable runway ahead of us, we're just beginning to maximize our CRM and loyalty data to more strategically target customers based on purchase history and brand preferences.

Speaker 3: During Q3, we ran Integrated Campaigns, focused on two grant partners to elevate journeys as the destination for these top brands.

During Q3, we ran integrated campaigns focused on key brand partners to elevate journeys as the destination for these top brands.

Speaker 3: These included all access tie-ins, install presents, home page presents, and social call outs.

These included all access tie ins in store presence tompane homepage presence and social callouts.

Speaker 3: Number two, elevating product and strengthening our brand relations.

Number two elevating product and strengthening our brand relationships.

Speaker 3: We've been working diligently with our brand partners to add more differentiation to the journey's assortment. Increase our access to the most in-demand brands and styles, expand the number of exclusives, and test new brands, which would add new dimension to the assortment.

We've been working diligently with our brand partners to add more differentiation to the journeys assortment increase our access to the most in demand brands and styles expand the number of exclusive and test new brands, which would add new dimension to the assortment.

Speaker 3: But more than that, we further focused the partnership conversation on a strategic view that reinforces jury's value proposition and unique position in accessing the coveted team's

But more than that we further focus the partnership conversation on a strategic view that reinforces journeys value proposition and unique position in accessing the covenant teen customer.

Speaker 3: While fully repositioning the assortment will take some time, we've made good progress that we will build upon for upcoming seasons. And number three,

While fully repositioning the assortment will take some time, we've made good progress that we will build upon for upcoming seasons.

And number three sharpening journeys brand marketing.

Speaker 3: Our customer insight work also informed us that while journeys is top of mind to consumers for certain brands would carry, we have the opportunity to increase mind share for all the leading fashion brands we sell.

Our customer insight work also informed us that while journeys is top of mind to consumers for certain brands. We carry we have the opportunity to increase mindshare for all of the leading fashion brands we sell.

Speaker 3: We're applying those learnings to drive stronger awareness and strengthen journey's voice across social channels. We increase paid social investments for back to school and are doubling down our efforts for holiday.

We're applying those learnings to drive stronger awareness and strengthen journeys voice across social channels, we increased paid social investment for back to school and are doubling down our efforts for holiday.

Speaker 3: Number four, implementing incremental initiatives to drive digital and omnichannel growth.

Number four implementing incremental initiatives to drive digital and omni channel growth.

Speaker 3: We recently launched Fire Online Pickup and Store across the journey fleet to a strong initial response.

You recently launched buy online pick up in store across the journey sleep to a strong initial response.

Speaker 3: We're encouraged by what we're seeing at this early stage in terms of customer adoption and attachment rates when customers pick up in store.

We're encouraged by what we're seeing at this early stage in terms of customer adoption and attachment rates.

When customers pick up in store.

Speaker 3: I'll go small and total right now. These add-on purchases are driving a meaningful lift in AOV.

Although small in total right now these add on purchases are driving a meaningful lift in a L. B.

Speaker 3: We're excited to see how focus continues to evolve in our full service environment.

We're excited to see how focus continues to evolve in our full service environment.

Beyond both us as part of our effort to grow journeys digital business. We've also raised product SKU counts on our websites and expanded our drop ship partners to more than 50.

Speaker 3: and number five, optimizing our journey's footprint and driving productivity and efficiency.

And number five optimizing our journeys footprint and driving productivity and efficiency.

Speaker 3: We implemented key learning from our store time studies that are having a positive impact on conversion and productivity.

We have implemented key learnings from our store time studies that are having a positive impact on conversion and productivity.

Speaker 3: These include shortening the time it takes to get shoes from the stock room and eliminating unproductive daily process.

These include shortening the time it takes to get shoes from the stock room, and eliminating unproductive daily processes.

Speaker 3: Our new point is to hardware and software are also generating additional operating efficiencies and contributing to higher average transactions.

Our new point of sale hardware and software are also generating additional operating efficiencies and contributing to higher average transaction size.

Speaker 3: Regarding the store closures I mentioned earlier, we expect to achieve annualized savings of about $25 million, which is in addition to the $40 million of annualized cost savings we're talking.

Regarding the store closures I mentioned earlier, we expect to achieve annualized savings of about $25 million, which is in addition to the $40 million of annualized cost savings we are targeting.

Speaker 3: Given that we need very little sales transfer from those stores to achieve a breakeven operating income, we're deploying customized communications to direct consumers to online or to nearby.

Given that we need very little sales transfer from those stores to achieve a breakeven operating income.

We're deploying customized communications to direct consumers to online or to nearby stores.

Speaker 3: To sum it up, we're pleased with the progress we're making with the Journey's Elevate Plan and the ongoing improvement in comps day.

To sum it up we're pleased with the progress, we're making with the journeys elevate plan and the ongoing improvement in comp sales.

Speaker 3: The team has worked hard this year to adapt to the dynamic shift and challenges in the market.

The team has worked hard this year to adapt to the dynamic shifts and challenges in the market.

Speaker 3: I have strong beliefs in our abilities to address these challenges and in a much stronger journey future. is

I have strong belief in our ability to address these challenges and in a much stronger journeys future.

Now moving to our outlook.

Speaker 3: As we entered the fourth quarter, we saw an acceleration in all-selling and positive store traffic with the arrival of more seasonable weather.

As we entered the fourth quarter, we saw an acceleration in all selling and positive store traffic with the arrival of more seasonable weather.

Speaker 3: And following a strong start to the holiday season, I'm pleased to say our total company comps are currently running positive quarter to date.

And following a strong start to the holiday season, I am pleased to say our total company comps are currently running positive quarter to date.

Speaker 3: In addition to journey strength, J&M experienced record online demand and its best Thanksgiving weekend today.

In addition to journeys strength Jane M experienced record online demand and its best Thanksgiving weekend to de lever.

Speaker 3: Leaving us more confident, we are on the other side of the pullback about Cobra.

Leaving us more confident we are on the other side of the pullback of October.

Speaker 3: That said, the environment remains choppy and footwear promotions were even more widespread than we anticipated over the holiday week.

That said the environment remains choppy and footwear promotions were even more widespread than we anticipated over the holiday weekend.

Speaker 3: In response, we've made the strategic decision to increase promotional activity going forward, especially at journeys over the holidays, to drive sales in this competitive environment.

In response, we've made the strategic decision to increase promotional activity going forward, especially at journeys over the holidays to drive sales in this competitive environment.

Speaker 3: The resulting margin impact is reflected in our revised guidance for which Tom will provide more details.

The resulting margin impact is reflected in our revised guidance for which Tom will provide more details.

Speaker 3: We're largely a non-promotional retailer and plan to stay that way, but believe this is a moment in time and these actions are appropriate for this season.

We're largely a non promotional retailer and plan to stay that way, but believe this is a moment in time and these actions are appropriate for this season.

Yeah.

Speaker 3: Before closing, I'd like to thank all our amazing people across our company for your hard work and dedication through this challenging environment.

Before closing I'd like to thank all of our amazing people across our company for your hard work and dedication through this challenging environment.

Speaker 3: I appreciate your efforts throughout the year, but especially heading into the busy holiday season. When I'm certain you'll raise your game to an even higher level.

I appreciate your efforts throughout the year, but especially heading into the busy holiday season, when I'm certain you'll raise their game to an even higher level.

As we look forward I'm very encouraged by the many initiatives that are driving meaningful progress the strength of our brands and retail concepts and the strategies were executing that will show the resilience of our business.

And with that I'll pass the call over to Tom.

Speaker 4: Thanks Mimi. Our third quarter financial performance not only reflects the challenges and hurdles we faced, but also the progress we continue to make.

Thanks, Mimi our third quarter financial performance not only reflects the challenges and hurdles we faced but also the progress we continue to make.

Speaker 4: As we now round out the fiscal year and begin to look to fiscal 25, we believe our solid foundation and increased efforts around financial discipline will position us to drive stronger results.

As we now round out the fiscal year and begin to look to fiscal 'twenty five we believe our solid foundation and increased efforts around financial discipline will position us to drive stronger results.

Speaker 4: Turning to our results for the quarter, consolidated revenue was 579 million, down 4% compared to last year, and down 5% on a constant currency basis. Mainly driven by...

Turning to our results for the quarter.

<unk> revenue was $579 million.

One, 4% compared to last year and down 5% on a constant currency basis.

But mainly driven by the sales decline at journeys.

Speaker 4: Relative direct expectations, better sales trends at journeys were offset by lower than expected sales.

Relative to our expectations better sales trends at journeys were offset by lower than expected sales.

Speaker 4: and associated de-laid-rigant expenses in our branded businesses in shoes.

And associated deleverage on expenses and our branded businesses.

Shoot.

Speaker 4: Total cops were down 4%. All of still negative, we were pleased to see another sequential improvement in the trended journey.

Total comps were down 4%, although still negative we were pleased to see another sequential improvement in the trend of journeys. Meanwhile, comps at Schuh and Jane M remained positive. Despite the later seasonal transition in our branded businesses dealing with this ERP conversion.

Speaker 4: Meanwhile, comps to Chiu and J&M remain positive, despite the later seasonal transition and our branded businesses dealing with its ERP conversion challenge.

Speaker 4: By channel, total store costs were down 7%. While direct costs were up 8%.

Challenges.

Channel total store comps were down 7%, while direct comps were up 8% by business shoes total comps increased 5% Jane M. Total comps increased 1% and journeys total comps were down 8%.

Speaker 4: by business shoes total cost increase by percent. J&M total cost increase 1% and journeys total cost.

Speaker 4: Overall gross margin was in line with our expectations down 60 basis points as compared to last year.

Overall gross margin was in line with our expectations.

60 basis points as compared to last year.

Speaker 4: By business, Journey's Gross Margin was down 110 basis points, mostly due to the expected increase in promotional activity, including introductory coupons for Journey's loyalty program, along with some next shift.

By business journeys gross margin was down 110 basis points, mostly due to the expected increase in promotional activity.

<unk> introductory coupons for journeys loyalty program, along with some mix shift change.

Speaker 4: Shoes Gross Marginal was up 100 basis points as the division benefited from reduced duties from its new Ireland based distribution center, as well as a more elevated product disorder.

<unk> gross margin was up 100 basis points as the division benefited from reduced students from its new Ireland based distribution center as well as a more elevated product assortment mix.

Speaker 4: JNM's gross margin was down 210 basis points due to a more normalized mark down and closed out cadence.

<unk> gross margin was down 210 basis points due to a more normalized markdown and closeout cadence versus last year.

Speaker 4: J&M had much more inventory available to sell this year versus last. As much the last year's product was cotton.

Jamie had much more inventory available to sell this year versus last as much of last year's product was cut in transit finally, Genesco brands group gross margin was up 270 basis points as we continue to benefit from lower freight and logistics cost and price increases.

Speaker 4: Finally, Genetsco Brands Group, Gross Margin was up 270 basis points as we continue to benefit from lower freight and logistics cost and price.

Speaker 4: Adjusted FGNA expense was 46.2% of sales and increase of 190 basis points over last year with most of the deloverage driven by the lower journey sales. And absolute dollars, FGNA expenses were flat the last year.

Adjusted SG&A expense was 46, 2% of sales an increase of 190 basis points over last year with most of the deleverage driven by the lower journey sales.

Absolute dollars SG&A expenses were flat to last year.

Speaker 4: in line with our strategic pillar to reshape the cost base to reinvest for future growth. We have gained traction with our cost savings initiatives while at the same time increasing the variability of our expense.

In line with our strategic pillar to reshape the cost base to reinvest for future growth. We have gained traction with our cost savings initiatives, while at the same time, increasing the variability of our expense base.

Speaker 4: This resulted in reduced occupancy, selling salaries and other store costs.

This resulted in reduced occupancy selling salaries and other store cost.

Speaker 4: and enable us to invest in marketing which drove increased sales. In addition, we invested in systems and people to drive our business forward, which resulted in increased appreciation and IT compensation for new-

And enable us to invest in marketing, which drove increased sales. In addition, we invested in systems and people to drive our business forward.

This resulted in increased depreciation and compensation.

For new technology initiatives.

Speaker 4: Lowering overall occupancy cost and reducing the amount of fixed expense in the store channel remains a key priority.

Lowering the overall occupancy cost and reducing the amount of fixed expense in the store channel remains a key priority.

Speaker 4: In Q3, we achieved a 16% reduction in straight line ran expense on 59 lease renewals across the company, with an average term of a

In Q3, we achieved a 16% reduction in <unk>.

Straight line rent expense on 59 lease renewals across the company with an average term of approximately three years.

Speaker 4: This brings our year-to-date renewals to 155, with over 50% of our fleet still coming up from a new in the next couple years. We have a lot of runway to capture additional safe.

This brings our year to date renewals to 155.

With over 50% of our fleet's still coming up for renewal in the next couple of years, we have a lot of runway to capture additional savings.

While we have been making nice headway on rent savings and savings on selling salaries increasing.

Increasing wages continue to be an area of challenge.

Speaker 4: All tolls in an environment where these and other cost pressures have been prevalent and ubiquitous.

All told in an environment, where these and other cost pressures have been.

Prevalent and ubiquitous we.

Speaker 4: We were pleased to hold our SGNA dollars flat till last year.

We were pleased to hold our SG&A dollars flat to last year.

Speaker 4: Summary for the third quarter, we realized that just an operating income of $11 million compared to just an operating income of 26.3 million for Q3 last year.

In summary for the third quarter, we realized adjusted operating income of.

Of $11 million compared to adjusted operating income of $26 3 million for Q3 last year.

Speaker 4: This all resulted in adjusted deluded earnings per share of 57 cents for the quarter, versus earnings per share of $1.65 less.

This all resulted in adjusted diluted earnings per share of 57 for the quarter.

Versus earnings per share of $1 65 last year.

Speaker 4: Relative to our internal expectations, the extent of the ERP disruption coupled with a higher than expected tax rate had a large impact on this lower EPS result.

Relative to our internal expectations.

The ERP disruption, coupled with a higher than expected tax rate.

We had a large impact on this lower EPS result.

Speaker 4: Turning out a capital allocation and a balance sheet as expected we ended the quarter and in that borrowing position.

Turning now to capital allocation and the balance sheet as expected we ended the quarter in a net borrowing position.

Speaker 4: Regarding inventory, we were very pleased to keep our inventory levels well controlled down 8% year over year. With respect to journey specifically, we continue to work with our brand partners to adjust receipts enabling us to end the quarter with inventory, 14% lower than last year, and more fully positioned with the newness we've needed in the assault.

Inventory, we were very pleased to keep our inventory levels, well controlled down 8% year over year with respect to journey, specifically, we continue to work with our brand partners to adjust receipts, enabling us to end the quarter with inventory is 14% lower than last year.

And more fully positioned with the newness with needed in the assortment.

Speaker 4: Choose inventories and increase compared to last year to support the higher levels of demand in the business.

Shoes inventories increased compared to last year to support the higher levels of demand in the business and all of those <unk> inventories were down versus a year ago as I mentioned.

Speaker 4: And although J&M's, inventories were down versus C or go, as I mentioned...

Speaker 4: A significant amount of last year's inventory was in transit and unavailable for sale. Overall, we expect to end this year with inventory down high single digits versus last year as we continue to thoughtfully manage our sort.

Significant amount of last year's inventory was in transit and unavailable for sales.

Overall, we expect to end this year with inventory down high single digits versus last year as we continue to thoughtfully manage our assortments and keep our inventory position clean entering fiscal 'twenty five.

Speaker 4: Keep our inventory position clean entering fiscal 25.

Speaker 4: Capital expenditures in key three were fifteen million dollars with the investments primarily directed to retail stores and our digital and army channel in

Capital expenditures in Q3 were $15 million with investments, primarily directed to retail stores and our digital and Omnichannel initiatives. We opened five stores, which were primarily off mall and outlets.

Speaker 4: We opened five stores which were primarily optimal and netless.

Most 'twenty ending the quarter with 1360 total stores.

Firstly, we didn't repurchase any shares during the quarter and our current authorization remains at $52 million.

Speaker 4: Over the past five years, we have repurchased almost 50% of our outstanding shares.

Over the past five years, we've repurchased almost 50% of our outstanding shares.

Speaker 4: Regarding our cost savings and issues, we are working diligently to deliver the annualized run rate of up to $40 million in cost savings by the end of fiscal 25. We expect savings from reduced store rents, lower corporate shared services and turning central expenses selling salary productivity gains.

Regarding our cost savings initiatives, we are working diligently to deliver the annualized run rate of up to $40 million in cost savings by the end of fiscal 'twenty five we expect savings from reduced store rents lower corporate shared services.

Journey Central expenses.

Selling salary productivity gains.

<unk> warehouse and logistics costs.

Speaker 4: and reduce freight cost from on the channel inventory location optimization.

And reduce freight costs from Omnichannel inventory location optimization initiatives. When you combine our efforts to increase the variability of our cost structure, along with progress on our cost savings plan we.

Speaker 4: when you combine our efforts to increase the variability of our cost structure along with progress on our cost savings plan.

Speaker 4: We are in pace to achieve approximately $20 million of cost reductions.

We are on pace to achieve approximately $20 million of cost reductions in fiscal 'twenty four.

Speaker 4: Which respect to store closures, we close 74 journey stores to the end of Q3 or roughly 7% of the total fleet since the beginning of this year. These were primarily...

With respect to store closures, we closed 74 journey stores through the end of Q3 or roughly 7% of the total fleet since the beginning of this year.

These were primarily mall based locations.

Speaker 4: As Mimi mentioned, the savings from the 100 journey stores we aim to close by the end of the year eliminates roughly an additional $25 million in costs from SG&A.

As Mimi mentioned the savings from the 100 journeys stores, we aim to close by the end of the year eliminates roughly an additional $25 million in costs from SG&A expense, which on an annualized basis will begin to benefit us in fiscal 'twenty five.

Speaker 4: which on an annualized basis will begin to benefit us in fiscal 25.

Speaker 4: The goal of these cost savings and store closure programs is to achieve expense leverage and drive operating margin expansion on more modest increases in sales growth.

The goal of these cost savings and store closure programs is to achieve expense leverage and drive operating margin expansion on a more modest increases in sales growth.

Now turning to guidance overall sales trends have accelerated nicely thus far into Q4 in part due to positive adjustments. We we made several months ago to the product assortment that given product lead times are having an impact now at journeys.

Speaker 4: Overall sales trends have accelerated nicely thus far into Q4. In part due to positive adjustments, we made several months ago to the product assortment. That given product lead times are having an impact now at June .

Speaker 4: However, the very building and consumer demand we see week to week, coupled with the heightened promotional activity at the start of the holiday season.

However, the variability in consumer demand, we see week to week, coupled with a heightened promotional activity at the start of the holiday season.

Speaker 4: Let us to take a more promotional stance going forward especially to drive the man-new journeys and remain competitive in this environment.

Has led us to take a more promotional stance going forward.

Especially to drive demand at journeys and remain competitive in this environment.

Speaker 4: While we expect this to positively impact sales, it will also result in some additional gross margin pressure.

While we expect this to positively impact sales. It will also result in some additional gross margin pressure.

Speaker 4: We now also expect growth that's shoe to be somewhat more muted in our prior expectations, given the softer consumer trends of late. And we expect the ongoing lack of visibility in the wholesale channel to put some pressure on J&M and our other branded business.

We now also expect growth at schuh to be somewhat more muted than our prior expectations given the softer consumer trends of late.

And we expect the ongoing lack of visibility in the wholesale channel.

Put some pressure on Jan <unk> and our other branded business.

Combining all these factors we now expect full year total sales to decrease 1% to 2% versus our prior expectations of down 2% to 4%.

Speaker 4: including the 53rd week, which we expect to add approximately $25 million of sales and have a small negative effect on earnings per share. We expect sales to decrease two to three.

Leading the 50, <unk> week, which we expect to add approximately $25 million of sales and have a small negative effect on earnings per share, we expect sales to decrease 2% to 3%.

Speaker 4: colored by division on the total year end sales compared to last.

Some color by division on the total year end sales compared to last year for journeys. We continue to expect a high single digit decline for Schuh, we continue to expect low double digit growth for Jan and we now expect high single digit growth and for Genesco brands.

Speaker 4: For journeys, we continue to expect a high single digit decline. For shoe, we continue to expect low double digit growth. For J&M, we now expect high single digit growth. And for Genesco brands, a low double digit decline.

A low double digit decline.

Speaker 4: We now expect gross margin to be down 40 to 50 basis points compared to our prior view for fiscal 24 gross margin to be flat to down 20 basis.

We now expect gross margin to be down.

40 to 50 basis points compared to our prior view for fiscal 'twenty four gross margin to be flat to down 20 basis points.

Speaker 4: Changing our guidance is driven primarily by increased promotional activities and journeys going forward in the fourth quarter, as well as product mix.

Change in our guidance is driven primarily by increased promotional activities at journeys going forward in the fourth quarter as well as products product mix shift. We now expect adjusted SG&A as a percentage of sales to deleverage 200 to 220 basis points compared to our prior view.

Speaker 4: We now expect the justice FGMAs to percentage of sales to deliver.

Speaker 4: 200 to 220 basis points compared to our prior view of 220 to 240 basis points.

Of 220 to 240 basis points of deleverage given our Q3 actual results and revised assumptions for Q4, we now expect full year adjusted earnings per share of $1 50 to $2 compared to our prior range of $2 to $2 50.

Speaker 4: Given our key three actual results and revised assumptions for Q4, we now expect full year adjusted earnings per share of $1.50 to $2.

Speaker 4: and paired to our prior range of $2 to $2 and $5.

Speaker 4: Our expectation is that we will be near the midpoint of this ring.

Our expectation is that we will be near the midpoint of this range or.

Speaker 4: Our guidance assumes no additional sherry purchases, which results in fiscal 24 average shares outstanding.

Our guidance assumes no additional share repurchases, which results in fiscal 'twenty for average shares outstanding.

Speaker 4: of approximately 11.4 million, and we expect the tax rate to be approximately 24.

Of approximately $11 4 million and we expect the tax rate to be approximately 24%.

Speaker 4: To close, we continue to take the necessary measures to navigate the current consumer environment while also proactively evolving our company towards a leaner and more agile state to better meet the needs of our consumer, drive stronger profitability, and ultimately deliver greater returns to our shareholders. Operator, we are now ready to...

To close we continue to take the necessary measures to navigate the current consumer environment, while also proactively evolving our company towards a leaner and more agile state to better meet the needs of our consumer drive stronger profitability and ultimately deliver greater returns stores.

Shareholders.

Operator, we're now ready to open the call for questions.

Speaker 1: Thank you. If you'd like to ask a question today, please press star one from your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to move your...

Thank you.

I'd like to ask a question today. Please press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue.

You May press star two if you'd like to move your question from the queue.

Speaker 1: For distance using a sweeper equipment, it may be necessary to pick up your handset before pressing the star keys.

And just since using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

One moment, please when we poll for questions. Thank you.

Yeah.

Yeah.

Thank you. Our first question is from the line of Mitch <unk> with Seaport Research. Please proceed with your question.

Speaker 1: Thank you our first question is from the line of Mitch Cummins with Seaport Research. Please receive it.

Speaker 5: Yes, thanks for taking my questions. I guess I've got a few. Maybe when you guys reported to you, you raised your gross margin outlook and part of that was because of you were expecting improvement in the journeys.

Yes, thanks for taking my questions.

I guess I've got a few.

Maybe when you guys reported.

You raised your gross margin outlook and part of that was.

Because oh.

You were expecting improvement in the journeys <unk> gross margin with more newness kind of flowing into the assortment I think.

Speaker 5: 4-Q gross margin with more newness kind of flowing into the absorbent. I think you also made a comment at the time.

You also made a comment at the time.

Speaker 5: that like the consumers looking for two things must have product or good deals. And I'm wondering, you know, what's changed from three months ago is the newness.

Like the consumers looking for two things must have product.

Or good deals and Im wondering whats changed from three months ago the newness.

Speaker 5: not performing as well or is what I would maybe call sort of non-newness in the assortment, is that just requiring deeper discounts to move the product? Can you just maybe elaborate on that?

Not.

Performing as well or is what I would maybe call sort of non newness in the assortment is that just requiring.

No deeper discounts to move the product can you just maybe sort of elaborate on that.

Speaker 3: Thanks for your question, Mitch. And there really has been quite a lot going on. And we've seen a lot of up and ups and downs in the consumer environment over the last few months.

Thanks for your question match and there really has been quite a lot going on and we've seen a lot of ups and downs.

In the consumer environment over the last few months and absolutely. The newness is working our merchants have done a phenomenal job chasing into product that is resonating with the consumer and that is selling through quite nicely. What we saw in.

Speaker 3: And absolutely, the newness is working. Our merchants have done a phenomenal job chasing into product that is resonating with the consumer. And that is selling through quite nicely.

Speaker 3: What we saw, and I'm going to take you through, I'm going to take you to October and then bring you into November and bring you into Black Friday just to give you a sense of where we are.

I'm going to take you through I'm going to take you to October and then bring you into November and bring you to into Black Friday, just to give you a sense of where we are but starting in October.

Speaker 3: But starting in October , traffic was out there, but conversion was tough. And I think we and anybody else who sells all products and sells boots really saw that the consumer was not motivated to spend in October , they were looking. But for us, boots represent 40 to 50% of our mix in the fourth quarter. And so if your boot sales aren't coming through, then that's what made for October .

Traffic was out there, but conversion was tough and I think we and anybody else who sells fall product himself boots really saw that the consumer was not motivated to spend in October they were looking.

But for US foods represent 40% to 50% of our mix in the fourth quarter and so if you boot sales arent coming through then.

That's what made for October we saw a market change in November where with colder weather. There was a lot of good positive traffic in all of our retail concepts.

And if you are out over Black Friday. It was it was a joyful experience I mean people are out people who are shopping in the malls. There would seem to just be pent up pent up excitement for shopping.

Speaker 3: seem to just be pent up excitement for shopping.

Speaker 3: But what we also saw is that our brands in particular were really promotional. We were as promotional as we thought we would be over Black Friday and really in the third quarter.

But what we also saw is that our brands in particular.

We're really promotional we were as promotional as we thought we would be over black Friday and really in the third quarter, but we saw that.

Speaker 3: But we saw that the inventory build up.

The inventory buildup from some of the slower sales in footwear over the course of the year.

Speaker 3: from some of the slower sales and footwear over the course of the year.

Was it some of our brands to say that they were going to deviate from that pricing and get more promotional now that promotional activity worked well it drove it drove sales and so with traffic and some of the promotion on the right product.

Speaker 3: Some of our brands to say that they were gonna deviate from that pricing and get more promotional. Now that promotional activity worked well. It drove sales. And so with traffic and some of the promotion on the right product, there's a bifurcation in the market here, Mitch where the must have items are flying off at full price.

There is a bifurcation in the market here is match, where the must have items are flying off that full price, but anything else needs. Some encouragement in order to.

Speaker 3: But anything else needs some encouragement in order to move. And so as we have evaluated that, and it's a bit of a habit of have not world these days within our brand world, the footwork category is lining up to be more promotional this holiday. And what you'll see in our guidance is that we are driving more sales.

In order to move and so as we have evaluated that and it's a bit of a habit I have not world. These days within our brand world.

<unk> category is lining up to be more promotional this holiday and what youll see in our guidance is that we are that we are driving more sales and that we are going to be taking a few more markdowns to be able to get there, but we are anticipating and what we're hopeful for is that this will be the final push.

Speaker 3: and that we are going to be taking a few more mark downs to be able to get there. What we're anticipating and what we're hopeful for is that this will be the final push.

Speaker 6: through the year to clear through the inventory overhang in the market and that we all we for sure will be able to that we all as an industry will be able to start next year clean. That's hope.

Through the year it is clear through the inventory overhang in the market and that we all we for sure will be able that we all as an industry, we will be able to start next year clean.

Okay.

That's helpful and then you talked about.

Speaker 5: Some of the strategies at journey, I think a lot of them you said repositioning the assortment kind of got the impression that this was more maybe significant and kind of the typical tweaks that you guys are always making in terms of the assortment and merchandising. Again, can you maybe speak more to that? Is this what exactly are you looking to do in terms of repositioning the assortment there? What's the aim to that strategy?

Some of the some of the strategies.

Germany, I think one of them you said repositioning of the assortment.

Got the impression that this is more significant than kind of a typical tweaks that you guys.

We're always making in terms of the assortment and the merchandising.

Again could you maybe speak more to that is what exactly are you looking to do in terms of repositioning of the assortment there.

Whats the aim to that strategy.

Yeah, So Mitch we.

Speaker 3: Mitch, we're the destination for where teens go to buy their fashion footwear. And we always have a great supply of the best items that people are, that our teens are looking for and that our customer is looking for.

The destination for where teens go to buy their fashion footwear, and we always have.

Great supply is the best items that people are that our teams are looking for and that our customer is looking for our customers hanging in there they are being very discerning when it comes to retail spend and the choices of what they are spending on.

Speaker 3: Our customers hanging in there, they're being very discerning when it comes to retail spend and the choices of what they're spending on. I think that all of the comments and I don't know that we're deviating from our merchandising trends, but what we did see at the beginning of this year is that our consumer had a huge appetite for newness.

I think that all of the comments and <unk>.

I don't know that we are deviating from from our merchandising trends, but what we did see at the beginning of this year is that our consumer had a huge appetite for newness and Thats. What we are chasing into and that's why we've chased into for the back part of the year and Thats what is driving our sale.

Speaker 3: And that's what we're chasing into. And that's what we've chased into for the back part of the year. And that's what is driving our sales and the improvement. We're quite pleased at the improvement from where we started at the beginning of the year in journeys to the point we are right now where, you know, we're having the best results of the year and a big, big pick up. So it really is.

And the improvement we are quite pleased at the improvement from where we started at the beginning of the year in journeys to the point, we are right now where we're having the best results of the year and a big big pickup. So it really is that we're chasing into this newness, we are working with our brands in order.

Speaker 3: that we're chasing into this newness. We're working with our brands in order to further differentiate our assortment to have more of the must have product to have more exclusive and to continue to get in front of the consumer as the destination of choice.

To further differentiate our assortment to have more of a must have product to have more exclusive and to continue to get in front of the consumer as the destination of choice.

Speaker 5: And then lastly, just in terms of the uptick and promotional activity, I mean, you did mention that boots are a large percentage of your mix in 4Q and that the season got off to a slow start. Looks like the journey's inventory is actually in good shape, but in terms of its content, you guys sitting on a few too many boots and as part of the promotional strategy in order to kind of work through maybe some excess inventory there or is that not the case.

And then lastly, just in terms of the uptick in promotional activity I mean, you did mentioned that.

Boots or a large percentage of your mix in <unk> and that the season got off to a slow start it looks like the journeys inventory is actually in good shape, but in terms of its content.

Sitting on a few too many boots and as part of the promotional strategy in order to kind of work through maybe some excess inventory there was not that good.

Uh huh.

Yes, I would say that we want to make sure that we have enough enough dry powder, Mitch to be able to move on whatever items that.

That we need to move on for as the holiday unfolds and certainly I think that we were in the third quarter and certainly over the course of November we are.

We saw good sales in journeys and so in spite of some of the lower boot sales we were selling other product that the consumer was interested in buying when we've had these hold spurts at least here in <unk>.

Speaker 3: Cold spurts, at least here, and as in much of the rest of the country, we've had Cold spurts and it's gotten warm and Cold spurts and it's gotten warm again. And in those Cold spurts, we do see

Much of the rest of the country, we had cold spring has gotten warm and cold person, it's gotten warm again in those cold starts we do see the self.

Speaker 3: that self-rew of of of boots and we see a pickup in boots and so we we know that it will be cold. We know the consumer we believe the consumer is going to be out shopping around holiday and we'll move the boot inventory that we have and then we'll take them whatever marks we need to at the end of the season.

Sell through of our boots, and we see a pickup in the <unk>. So we we know that it will be cold. We know the consumer we believe the consumer is going to be out shopping around holiday and we will move the boot inventory that we have and then we will take them whatever marks we need to at the end of the season.

Thank you.

Speaker 1: Our next questions are from the line of Menterro Marano Sheik with Jeffries.

Our next questions are from the line of mature over in a sheet with Jefferies. Please proceed with your questions.

Speaker 1: Hi, thank you for taking our call. I just wanted to do see if you could describe the differences between the US and UK consumers. Are there any trends really worth calling out between those two and can we click those trends to continue in the next year?

Alright, Thank you for taking our call.

You see if you could describe the differences between the U S and UK consumers.

Are there any trends really worth calling out between those two and can we expect those trends to continue into next year.

Speaker 3: Thank you for your question. And so interestingly, the US market and the UK market have tracked, you know, from an economic point of view similarly in terms of high inflation and the consumer having to make choices.

Thank you for your question.

So interestingly the U S market and the U K market have tracked.

Yeah.

From an economic point of view similarly in terms of high inflation and the consumer having to make choices. Our shoe business has had an exceptional year has outperformed the market has moved up three places in terms of ranking in overall market share and so we have been.

Speaker 3: Our shoe business has had an exceptional year, has outperformed the market, has moved up three places in terms of ranking in overall market share. And so we've been out, outpunching the competition.

Ill punching the competition.

Speaker 3: Most recently, and so I think if you have products that the consumer wants, and if you have products that resonates with the consumer, then consumers who are making choices among items that they're spending on, you can motivate that purchase.

Most recently and so I think if you have products that the consumer wants and if you have product that resonates with the consumer then.

<unk>, who are making choices.

Items that they are spending on you can motivate you can motivate that that that purchase.

Speaker 3: What we've seen most recently is that across the board there was a slowdown with the start of the fall selling season and we have seen a turnaround there in the US.

What we've seen most recently is that across the board there was a slowdown with the start of the fall selling season, and we have seen a turnaround there in the U S.

Speaker 3: with really robust Black Friday sales. Our store traffic was up, stores were the great highlight of the Black Friday weekend, but all together, the consumer in the United States was out to shop.

With a really robust black Friday sales or store traffic was up stores, where the great highlight of the Black Friday weekend, but altogether. This consumer in the United States was out to shop.

Speaker 3: We had a very strong Black Friday weekend in the UK last year. Right now, we think that the UK consumer is waiting, holding out. Typically, the UK market goes on sale before Christmas.

We had a very strong black Friday weekend in the U K last year right now we think that the UK consumer is waiting holding out typically the UK market goes.

Goes on sale before Christmas, we think there may be some hold back in the UK market and that's the difference right now is that the U S.

Speaker 3: We think there may be some hold back in the UK market. And that's the difference right now, is that the US showed a lot of pickup and traffic over the Black Friday weekend. And the UK, we think that there will be, the season has to unfold further.

Showed a lot of.

Pickup in traffic over the Black Friday weekend, and the U K, we think that there will be.

Reason has to unfold further altogether the way the consumers acting as that they will pay up for the must have product, but other than that they really are seeking the value that I talked about.

Speaker 3: All together, the way the consumers acting is that they'll pay up for the must-have product, but other than that, they really are seeking the value that I talked about.

Yeah.

Speaker 7: Thank you. And then another follow up. Are there any supply chain or material costs that are headed into the moment? And if they are, are there any that will turn to tail when it's next year? Thank you.

Thank you and then another follow on a quick follow up.

Are there any supply chain or material costs that are headwinds at the moment.

If there are any of them.

I will turn to tailwind next year. Thank you.

Yes, I would say at this point in time, we feel really good about the supply chain and the cost that we're going to expect going forward. This year, we're getting a lot of relief on freight logistics costs in our in our branded business and that was the big Big headwind last year as well as air freight to get good product and so we're starting to see.

The improvement in our gross margins in our branded business as a result.

Speaker 4: of the reduced rate logistics cost. And really not ahead when it all is all the efforts we're making in our branded business from a sourcing perspective and a design and development perspective and a cost.

The reduced logistics cost and really not a headwind at all is all the efforts, we're making in our branded business from a sourcing perspective, and a design and development perspective, and a cost estimating perspective, we expect good gross margin expansion going forward from that perspective, and then on the retail business.

Speaker 4: perspective we expect good gross margin expansion going forward from that perspective and then on the retail business

Speaker 4: You know that, we really think that we're in a good position with all our branded partners and we don't see any headwinds.

That we are.

We really think that we're in a good position with all our branded partners and we don't see any headwinds there going forward that cause pressure that we've been facing has been around wages and so a lot of the initiatives that we are talking about is to be able to make.

Speaker 6: The cost pressure that we've been facing has been around wages. And so a lot of the initiatives that we are talking about is to be able to make our use of labor more efficient. And so in our distribution centers, we've been adding automation and that has helped to bend the curve on just overall wage increases.

Our use of labor more efficient and so in our distribution centers, we have been adding automation and that has helped to bend the curve on just overall wage increases in our stores. We have spent a lot of time on store time studies, where we are looking to get much more efficient with it.

Speaker 3: In our stores, we have spent a lot of time on store time studies where we are looking to get much more efficient within our stores, take out the nonproductive hours and shifts.

Our stores take out the nonproductive hours and shift the labor into selling and we're seeing that pay some dividends. We've started on that work in journeys and schuh, we are doubling down on our efforts there, but that's where we're seeing a lot of the of the overall cost pressure for this year that with.

Speaker 7: the labor into selling and we're seeing that case of dividends. We've started on that work in journeys and in shoe we are doubling down on our efforts there but that's where we're seeing a lot of the overall cost pressure for this year that with the work we're doing, we anticipate that we will make progress in this area for the coming year. Thank you, Ambassador Lecognito. What's the quarter?

With the work we're doing we anticipate that we will we will we will make progress in this area for the coming year.

Thank you and best of luck I mean, once a quarter.

Thank you.

Thank you.

At this time I'll turn the floor back to me for any closing remarks.

Speaker 3: Thank you for joining us today, wishing everybody the best of the holiday season and look forward to talking with you in the new year.

Thank you for joining us today wishing everybody the best of the holiday season, and look forward to talking with you in the new year.

Speaker 1: This will conclude today's conference. You may just connect your lines at this time, but thank you for your participation.

This will conclude today's conference you may disconnect your lines at this time and thank you for your participation.

Yeah.

[music].

Speaker 1: Good day everyone and welcome to the Genesco 3rd quarter fiscal 2024 conference call.

Speaker 8: Music Music

Speaker 1: Good day everyone and welcome to the Genesco third quarter fiscal 2024 conference call. Just a reminder today's

Good day, everyone and welcome to the Genesco third quarter fiscal 2020 for a conference call.

Just a reminder, today's call is being recorded.

Speaker 1: I'll now turn the call over to Dow and the Clery Senior Director of FPNA.

I'll now turn the call over to Dow Macquarie Senior Director S. P. N. A please go ahead sir.

Speaker 2: Good morning everyone and thank you for joining us to discuss our third quarter fiscal 24 results.

Good morning, everyone and thank you for joining us to discuss our third quarter fiscal 'twenty four results.

Participants on the call expect to make forward looking statements, reflecting our expectations as of today, but.

But actual results could be different.

Speaker 2: Genesco Repersue to this morning's earnings release and the company's SEP file

<unk> refers you to this morning's earnings release, and the Companys 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.

Speaker 2: including its most recent 10K and 10Q violins for some of the factors that could cause differences from the expectations reflected in the four looking statements made today.

Speaker 2: participants also expect to refer to certain adjusted financial measures during the call.

Participants also expect to refer to certain adjusted financial measures during the call.

Speaker 2: All non- GAAP financial measures are reconciled to the GAP counterparts in the attachments to this morning's press release. And, as get as available on the company's website in the quarterly results section.

All non-GAAP financial measures are reconciled to the 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.

Speaker 2: We have also posted a presentation summarizing our results here as well.

We have also posted a presentation summarizing our results here as well.

Speaker 2: With me on the call today is Mimi Vaughn, board chair, president and chief executive officer, and Tom George, chief financial officer.

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 me.

Speaker 3: Thanks, Sarah. Good morning, everyone. And thank you for joining us.

Thanks, Darryl and good morning, everyone and thank you for joining us.

Speaker 3: Before I discuss third quarter performance, earlier this week, we announced the appointment of Andy Gray as journeys, new presence.

Before I discuss third quarter performance earlier this week, we announced the appointment of Andy Gray as journeys new President.

Speaker 3: Andy is an exceptional and experienced leader who brings invaluable expertise in brand building, product innovation, and the other areas essential to building journey business for the future.

Andy as an exceptional and experienced leader who brings in valuable expertise in brand building product innovation and the other areas are essential to building journeys business for the future.

Speaker 3: And his connection to youth culture and the strong brand relationship he's built over his accomplished career make him the ideal person to lead the talented team we have in place at Journeys as we work to elevate the business and unlock the great potential we see ahead.

And its connection to youth culture, and the strong brand relationships built over his accomplished career make him the ideal person to lead the talented team we have in place that journey as we work to elevate the business and unlock the great potential we see ahead.

Speaker 3: I look forward to his partnership and I'm excited for him to join recently appointed COO Mike Piper to drive success going forward. Welcome Andy. Now moving to results.

I look forward to his partnership and I'm excited for him to join our recently appointed CFO.

Hello, Mike fiber to drive success going forward.

Welcome Andy.

Now moving to results.

Speaker 3: Following a later start to back to school, sales picked up early in the third quarter and we're generally tracking to our expectations.

Following a later start to back to school sales picked up early in the third quarter and we're generally tracking to our expectations.

Speaker 3: However, we saw a market change and trend in October as the later change of seasons needed initial demand and delayed the start of the selling season for fall products.

However, we saw a market change in trend in October as the later change of seasons needed initial demand and delayed the start of the selling season for our fall product.

Speaker 3: In addition, our branded businesses were impacted by disruption related to the implementation of a new ERP system contributing to lower overall results than we anticipated for the quarter.

In addition, our branded businesses were impacted by disruption related to the implementation of a new ERP system contributing to lower overall result than we anticipated for the quarter.

Speaker 3: Despite these headwinds, we were pleased that sales trends within our journey's business continued to show sequential improvement and shoe and Johnson and Murphy delivered record third quarter sales.

Despite these headwinds we were pleased that sales trends within our journeys business continued to show sequential improvement and Schuh and Johnston <unk> Murphy delivered record third quarter sales.

Speaker 3: The operating environment remained challenging as ongoing inflationary pressures and economic uncertainty continued to impact discretionary spending.

The operating environment remained challenging as ongoing inflationary pressures and economic uncertainty continues to impact discretionary spending.

Speaker 3: As we've seen throughout this year, consumers continue to make top choices on where we spend their dollars, often choosing other categories over discretionary purchase.

As we've seen throughout this year consumers continue to make tough choices on where to spend their dollars.

Often choosing other categories over discretionary purchases.

Speaker 3: And when they do shout out, they're doing so closer to need and are carefully discriminating in their purchase decision.

And when they do shop, they're doing so closer to need and are carefully discriminating in their purchasing decisions.

Speaker 3: Against this backdrop, we continue to advance our strategies to drive consumer demand and make the business more productive and more profitable.

Against this backdrop, we continued to advance our strategies to drive consumer demand and make the business more productive and more profitable.

Speaker 3: Are journey store closure plans or on track having closed 75% of the approximately 100 doors planned for the end of Q3. And the remainder targeted to close by year.

Our journeys store closure plans are on track, having closed 75% of the approximately 100 doors planned through the end of Q3.

And the remainder targeted to close by year end.

Speaker 3: We also remain on pace with efforts to realign our cost base and realize $40 million with annualized cost savings by the end of fiscal 25.

We also remain on pace with efforts to realign our cost base and realized $40 million of annualized cost.

Cost savings by the end of fiscal 'twenty five.

Speaker 3: Finally, we once again maintain strong inventory discipline in Q3 with total inventory down high single digits year over year.

Finally, we once again maintained strong inventory discipline in Q3 with total inventory down high single digits year over year.

Speaker 3: Other key highlights from Q3 included growing our overall comparable digital business by 8% and expanding digital penetration to 21% versus 18% a year ago.

Other key highlights from Q3 included growing our overall comparable digital business by 80% and.

And expanding digital penetration to 21% versus 18% a year ago.

Speaker 3: We launched by online pickup and store at Journeys and JNN in October to quite promising early results, offering additional convenience in time for the holidays as we continue advancing our on-the-channel experience.

We launched buy online pick up in store at journeys and <unk> in October two quite promising early results.

Operating additional convenience and time for the holidays as we continue advancing our omnichannel experience.

Speaker 3: And finally, during the All Access Lilty program, is off to a strong start performing well against our high exit.

And finally at journeys all access loyalty program is off to a strong start performing well against our high expectations.

Speaker 3: Now discussing our individual businesses in more detail and starting with journey.

Now discussing our individual businesses in more detail and starting with journeys.

Speaker 3: The negative sales trend we experienced through the first half of the year continued to sequentially improve in Q3.

The negative sales trend, we experienced through the first half of the year continued to sequentially improve in Q3.

Speaker 3: Back to school trends we discussed in late August , accelerated into September , and the changes our merchants were able to affect across the product mix resonated well. Enabling journeys to outpace our most recent expectations.

Back to school trends, we discussed in late August accelerated into September.

And the changes our merchants were able to effect across the product mix resonated well, enabling journeys to outpace our most recent expectations.

Speaker 3: Sales of must-have items were strong, and we continue to chase into that product.

Sales of must have items were strong and we continue continue to chase into that product.

Speaker 3: Even though this wasn't enough to offset the lack of newness in industry discounting and athletic, or the unanticipated late start to fall selling, journey traffic and conversion nonetheless improves considerably versus Q2.

Even though this wasn't enough to offset the lack of newness and industry discounting in athletic or the unanticipated late start to fall selling journeys traffic and conversion nonetheless improved considerably versus Q2.

Speaker 3: In the quarter to date, I'm pleased to say that journeys come has shifted into positive territory for the first time this year, driven in part by a strong Black Friday week year.

And quarter to date I am pleased to say that journeys comps has shifted into positive territory for the first time this year driven in part by a strong Black Friday weekend.

Speaker 3: Although the environment remains volatile, consumers are responding well to the newness we and our brand partners have injected into the product of sorts.

Although the environment remains volatile consumers are responding well to the newness, we and our brand partners have injected into the product assortment.

Speaker 3: We're excited to amplify the journey story through our holiday campaigns, which among other things will feature more SMS campaign usage and increased investment in digital marketing, as well as new campaigns and rewards for all access members. Number three we'll see compared.

We're excited to amplify the journey story through our holiday campaigns, which among other things will feature more SMS campaign usage and increased investment in digital marketing as well as new campaigns and rewards for all access members.

Now moving to the UK.

Speaker 3: Despite facing the consumer pullback in October , she delivered the strongest constant currency in third quarter sale today, reflecting our efforts to enhance its customer value proposition and access to top-tier products.

Despite facing the consumer pull back in October schuh delivered the strongest constant currency third quarter sales to date, reflecting our efforts to enhance its customer value proposition and access to top tier product.

Speaker 3: Solid double digit sales growth and a 5% comp were driven by a compelling back to school assortment led by the kids business, followed by women, adding to the outstanding performance you have achieved this year.

Solid double digit sales growth and a 5% comp were driven by our compelling back to school assortment led by the kids business, followed by women's adding to the outstanding performance shoe has achieved this year.

Speaker 3: to accomplish this through growth of casual product aided by higher average selling prices

She will accomplish this through growth of casual product aided by higher average selling prices and success and non footwear categories like backpacks.

Speaker 3: The delay in change of seasons and resulting pressure on sales later in the quarter was most pronounced in stores as shoes digital business notched positive gains throughout 2-3 and continues to account for nearly 40% of total sales.

The delay in change of seasons, and resulting pressure on sales later in the quarter was most pronounced in stores.

<unk> digital business notch positive gains throughout Q3 and continues to account for nearly 40% of total sales.

Speaker 3: She's growing strength and recognition as the leading passion for wear destination for the youth consumer has been driving market share games.

She is growing strength and recognition as the leading fashion footwear destination for the youth consumer has been driving market share gains.

Speaker 3: As of mid-October, shoe rank number 10 in UK footwear market share, according to Cantar, maintaining its position after moving up three spots earlier in the year. so

As of mid October Schuh ranked number 10 in UK footwear market share according to kantar, maintaining its position after moving up three spots earlier in the year.

Loyalty continues to both bolster this effort.

Speaker 3: Tracking at about 30% of shoes, Q3 sales, total shoe club members now stand above two million and counting with members more highly engaged and purchasing more frequent.

Racking at about 30% of shoes Q3 sales total shoe club members now stand above $2 million and counting with members more highly engaged and purchasing more frequently.

Students running exciting holiday campaign through the season to surprise and delight customers, including bundled promotions and digital content tied to the loyalty program.

Speaker 3: Student running exciting holiday campaigns through the season to surprise and delight customers, including bundle promotions and digital content tied to a community program.

Speaker 3: Starting now to Johnson and Murphy, the brand added to its strong run this year, posting positive sales growth and record third quarter sale despite a unique set of headwinds and a tough multi-year compare.

Turning now to Johnston <unk> Murphy the brand added to its strong run this year posting positive sales growth and record third quarter sales. Despite a unique set of headwinds and a tough multiyear compare.

Speaker 3: While the challenges J&M encountered from the new ERP system implementation led to some loss sales in Q3, this more robust modern platform provides greater agility to support J&M growth and the growth of our other brandatives.

While the challenges JM encountered from the new ERP system implementation led to some lost sales in Q3.

This is more robust modern platform provides greater agility to support <unk> growth and the growth of our other branded business.

Speaker 3: J&M was also not immune to the broader consumer pullback that hit him off camera and stole sales of outerwear and other fall products.

<unk> was also not immune to the broader consumer pullback that hit in October and strong sales of outerwear and other fall products.

Speaker 3: Casual continue to drive results accounting for over 75% of direct consumer footwear sales.

Cash flow continued to drive results accounting for over 75% of direct to consumer footwear sales.

Speaker 3: A pair all of the bright spot growing 7% and together with accessories now accounts for over 40% of J&M's DTC sales.

Apparel was a bright spot growing 7% and together with accessories now accounts for over 40% of Gms DTC sales.

Speaker 3: We're benefiting from the all-encompassing changes we made coming out of the pandemic to reposition the business as a more casual multi-category lifestyle brand.

We're benefiting from the all encompassing changes we made coming out of the pandemic to reposition the business as a more casual multi category lifestyle brand.

Speaker 3: Supporting this effort is J&M Insiders Acidity Program.

Supporting this effort is Jane M insiders affinity program.

Speaker 3: Insiders now account for approximately 60% of J&M's DTC revenue with over 60% of new customers joining the program.

<unk> now account for approximately 60% of Gms DTC revenue with over 60% of new customers joining the program.

Speaker 3: Looking at that, we remain very positive on J&M's longer term potential and are investing again.

Looking ahead, we remain very positive on <unk> longer term potential and are investing against it.

Speaker 3: As part of this next phase of growth, J&M has partnered with a new creative agency to unlock the significant opportunity to increase its brand awareness, which currently stands at only 35%. And educate consumers about the shift away from its parentage-dress-you legacy.

As part of this next phase of growth JM has partnered with a new creative agency to unlock the significant opportunity to increase its brand awareness, which currently stands at only 35% and educate consumers about the shift away from its heritage dress shoe legacy.

Speaker 3: This new top of the funnel marketing launches of the spring, as we expand our marketing reach to broader range of

This new top of the funnel marketing launches in the spring as we expand our marketing reach to a broader range of customers.

Speaker 3: Now, turning back to journeys, we're pressing forward with our Elevate Plan, which leverages the elements of our footwear focus strategy and drives action to meaningfully accelerate journeys, improvements, and top-line growth.

Now turning back to journeys, we're pressing forward with our elevate plan, which leverages the elements of our footwear focused strategy and drive action to meaningfully accelerate journeys improvement and topline growth.

Speaker 3: Journeys has approved a track record of managing through adverse cycles, responding to changing consumer and fashion dynamics, and coming out stronger on the other side.

Journeys has a proven track record of managing through adverse cycles, responding to changing consumer and fashion dynamics and coming out stronger on the other side.

Speaker 3: The fundamental tennis adjourned journey's value proposition to customers remain intact.

The fundamental tenets of juror journeys value proposition to customers remain intact.

Speaker 3: with our focus on fashion footwear and compelling mix of and access to top brands. No other retailer serves the team consumer quite the same as yours.

With our focus on fashion footwear, and compelling mix of and access to top brands no. Other retailer serves the teen consumer quite the same as journeys.

Speaker 3: While we have much more to unlock as we finish this year and get into fiscal 25, the work we've done today is paying dividends.

While we have much more to unlock as we finish this year and get into fiscal 'twenty five the work we've done to date is paying dividends.

Speaker 3: Today I'll highlight the key areas of our plan where we're making good progress.

Today I'll highlight the key areas of our plan, where we're making good progress.

Speaker 3: Number one, strengthening customer engagement and expanding relationships with our target team customers.

Number one strengthening customer engagement and expanding relationships with our target teen customer.

Speaker 3: Initial results from the All Access Loyalty Program are very encouraging, with roughly 1.5 million members signed up since launching in July .

Initial results from the all access loyalty program are very encouraging with roughly $1 5 million members signed up since launching in July remember.

Speaker 3: Members are already buying more often than non-members and spending more per average order.

Members are already buying more often than non members and spending more per average order.

Speaker 3: With considerable runway ahead of us, we're just beginning to maximize our CRM and loyalty data to more strategically target customers based on purchase history and brand preferences.

With considerable runway ahead of us, we're just beginning to maximize our CRM and loyalty data to more strategically target customers based on purchase history and brand preferences.

Speaker 3: During T3, we ran Integrated Campaigns, focused on T-Gran partners to elevate journeys as the destination for these top brands.

During Q3, we ran integrated campaigns focused on key brand partners to elevate journeys as the destination for these top brands.

Speaker 3: These included all access tie-ins, install presents, home page presents, and social call outs.

This included all access tie ins in store presence homepage homepage presses and social callouts.

Speaker 3: Number two, elevating product and strengthening our brand relations.

Number two elevating product and strengthening our brand relationships.

Speaker 3: We've been working diligently with our brand partners to add more differentiation to the journey's assortment. Increase our access to the most in-demand brands and styles, expand the number of exclusives, and test new brands, which would add new dimensions to the assortment.

We've been working diligently with our brand partners to add more differentiation to the journeys assortment increase our access to the most in demand brands and styles expand the number of exclusive and test new brands, which would add new dimensions to the assortment.

Speaker 3: But more than that, we further focused the partnership conversation on a strategic view that reinforces journey value proposition and unique position in accessing the coveted team's cuts.

But more than that we further focus the partnership conversation on the strategic view that reinforces journeys value proposition and unique position in accessing the coveted teen customer.

Speaker 3: While fully refusitioning the assurban will take some time, we've made good progress that we will build upon for upcoming seasons. And number three,

While fully repositioning the assortment we will take some time, we've made good progress that we will build upon for upcoming seasons.

And number three sharpening journeys brand marketing.

Speaker 3: Our customer insight work also informed us that while journeys is top of mind to consumers for certain brands would carry, we have the opportunity to increase mind share for all the leading fashion brands we sell.

Our customer insight work also informed us that while journeys is top of mind to consumers for certain brands. We carry we have the opportunity to increase mindshare for all of the leading fashion brands we sell.

Speaker 3: We're applying those learnings to drive stronger awareness and strengthen journey's voice across social channels. We increase paid social investments for back to school and are doubling down our efforts for holiday.

We're applying those learnings to drive stronger awareness and strengthen journeys voice across social channels, we increased paid social investment for back to school and are doubling down our efforts for holiday.

Speaker 3: Number four, implementing incremental initiatives to drive digital and omnichannel growth.

Number four implementing incremental initiatives to drive digital and Omnichannel growth.

Speaker 3: You recently launched by online pickup and store across the journey fleet to a strong initial response.

We recently launched buy online pick up in store across the journeys fleet to a strong initial response.

Speaker 3: We're encouraged by what we're seeing at this early stage in terms of customer adoption and attachment rates when customers pick up in store.

We're encouraged by what we're seeing at this early stage in terms of customer adoption and attachment rates.

When customers pick up in store.

Speaker 3: I'll go small and total right now. These add-on purchases are driving a meaningful lift in AOV.

Although small in total right now these add on purchases are driving a meaningful lift in <unk>.

Speaker 3: We're excited to see how focus continues to involve in our full service environment.

We're excited to see how focus continues to evolve in our full service environment.

Speaker 3: Beyond Bobus, as part of our effort to grow journey's digital business, we've also raised products, skew counts on our website and expanded our dropship partners to more than 50-

Beyond both us as part of our effort to grow journeys digital business. We've also raised product SKU counts on our websites and expanded our drop ship partners to more than 50.

Speaker 3: and number five, optimizing our journey's footprint and driving productivity and efficiency.

And number five optimizing our journeys footprint and driving productivity and efficiency.

Speaker 3: We implemented key learnings from our store time studies that are having a positive impact on conversion and productivity.

We have implemented key learnings from our store time studies that are having a positive impact on conversion and productivity.

Speaker 3: These include shortening the time it takes to get shoes from the stock room and eliminating unproductive daily process.

These include shortening the time it takes to get shoes from the stock room, and eliminating unproductive daily processes.

Speaker 3: Our new point of sale hardware and software are also generating additional operating efficiencies and contributing to higher average transactions.

Our new point of sale hardware and software also generating additional operating efficiencies and contributing to higher average transaction size.

Speaker 3: Regarding the store closures I mentioned earlier, we expect to achieve annualized savings of about $25 million, which is in addition to the $40 million of annualized cost savings we're talking.

Regarding the store closures I mentioned earlier, we expect to achieve annualized savings of about $25 million, which is in addition to the $40 million of annualized cost savings we are targeting.

Speaker 3: Given that we need very little sales transfer from those doors to achieve a breakeven operating income, we're deploying customized communications to direct consumers to online or to nearby.

Given that we need very little sales transfer from those stores to achieve a breakeven operating income, we're deploying customized communications to direct consumers to online or to nearby stores.

Speaker 3: To sum it up, we're pleased with the progress we're making with the Journey's Elevate Plan and the ongoing improvement in comp-jazz.

To sum it up we're pleased with the progress, we're making with the journeys elevate plan and the ongoing improvement in comp sales.

Speaker 3: The team has worked hard this year to adapt to the dynamic shift and challenges in the market.

The team has worked hard this year to adapt to the dynamic shifts and challenges in the market.

Speaker 3: I have strong belief in our abilities to address these challenges and in a much stronger journey future.

I have strong belief in our ability to address these challenges and in a much stronger journeys future.

Now moving to our outlook.

Speaker 3: As we entered the fourth quarter, we saw an acceleration in all-selling and positive store traffic with the arrival of more feasible weather.

As we entered the fourth quarter, we saw an acceleration in all selling and positive store traffic with the arrival of more seasonable weather.

Speaker 3: And following a strong start to the holiday season, I'm pleased to say our total company toms are currently running positive quarter to date.

And following a strong start to the holiday season, I am pleased to say our total company comps are currently running positive quarter to date.

Speaker 3: In addition to journey strength, J&M experienced record online demand and it's best Thanksgiving weekend today.

In addition to journeys strength Jane M experienced record online demand and its best Thanksgiving weekend to de lever.

Speaker 3: Leaving us more confident, we are on the other side of the pullback about Cuba.

Leaving us more confident we are on the other side of the pullback of October.

Speaker 3: That said, the environment remains choppy and footwear promotions were even more widespread than we anticipated over the holiday week.

That said the environment remains choppy and footwear promotions were even more widespread than we anticipated over the holiday weekend.

Speaker 3: In response, we've made the strategic decision to increase promotional activity going forward, especially at journeys over the holidays, to drive sales in this competitive environment.

In response, we've made the strategic decision to increase promotional activity going forward, especially at journeys over the holidays to drive sales in this competitive environment.

Speaker 3: The resulting margin impact is reflected in our revised guidance for which Tom will provide more details.

The resulting margin impact is reflected in our revised guidance for which Tom will provide more details.

Speaker 3: We're largely a non-promotional retailer and plan to stay that way, but believe this is a moment in time and these actions are appropriate for this season.

We're largely a non promotional retailer and plan to stay that way, but believe this is a moment in time and these actions are appropriate for this season.

Speaker 3: Before closing, I'd like to thank all our amazing people across our company for your hard work and dedication through this challenging environment.

Before closing I'd like to thank all of our amazing people across our company for your hard work and dedication through this challenging environment.

Speaker 3: I appreciate your efforts throughout the year, but especially heading into the busy holiday season, when I'm certain you'll raise your game to an even higher level.

I appreciate your efforts throughout the year, but especially heading into the busy holiday season, when I'm certain you'll raise their game to an even higher level.

Speaker 3: As we look forward, I'm very encouraged by the many initiatives that are driving meaningful progress, the strength of our brands and retail concepts, and the strategies we're executing that will show the resilience of our business. And with that,

As we look forward I'm very encouraged by the many initiatives that are driving meaningful progress the strength of our brands and retail concepts and the strategies were executing that will show the resilience of our business.

And with that I'll pass the call over to Tom.

Speaker 4: Thanks, Mimi. Our third quarter financial performance not only reflects the challenges and hurdles we faced, but also the progress we continued to make.

Thanks, Mary our third quarter financial performance not only reflects the challenges and hurdles we faced but also the progress we continue to make.

Speaker 4: As we now round out the fiscal year and begin to look to fiscal 25, we believe our solid foundation and increased efforts around financial discipline will position us to drive stronger results.

As we now round out the fiscal year and begin to look to fiscal 'twenty five we believe our solid foundation and increased efforts around financial discipline will position us to drive stronger results.

Speaker 4: Turning to our results for the quarter, consolidated revenue was 579 million, down 4% compared to last year, and down 5% on a constant currency basis, mainly driven by...

Turning to our results for the quarter.

<unk> revenue was $579 million down, 4% compared to last year and down 5% on a constant currency basis.

Mainly driven by the sales decline at journeys.

Speaker 4: Relative to our expectations, better sales trends at journeys were offset by lower than expected sales.

Relative to our expectations better sales trends at journeys were offset by lower than expected sales.

Speaker 4: and associated D-Leverage on expenses in our branded businesses in shoes.

Associated deleverage on expenses and our branded businesses and shoe.

Speaker 4: Total cops were down 4%. All of the still negative we were pleased to see another sequential improvement in the trended journey.

Total comps were down 4%, although still negative we were pleased to see another sequential improvement in the trend at journeys.

Speaker 4: Meanwhile, comps to Chiu and J&M remain positive, despite the later seasonal transition and our branded businesses dealing with its ERP conversion challenge.

Meanwhile, comps at Schuh and Jane M remain positive. Despite the later seasonal transition in our branded businesses dealing with this ERP conversion challenges by channel total store comps were down 7%, while direct comps were up 8% but business.

Speaker 4: By channel, total store comps were down 7%. While direct comps were up 8%.

Speaker 4: by business shoes total cost increase by percent. J&M total cost increase 1 percent. And journeys total cost.

Shoes total comps increased 5% Jane M total comps increased 1% and journeys total comps were down 8%.

Speaker 4: Overall gross margin was in line with our expectations down 60 basis points as compared to last year.

Overall gross margin was in line with our expectations down 60 basis points as compared to last year.

Speaker 4: By business, Journey's Gross Margin was down 110 basis points, mostly due to the expected increase in promotional activity, including introductory coupons for Journey's loyalty program, along with some next shift.

But business journeys gross margin was down 110 basis points, mostly due to the expected increase in promotional activity, including introductory coupons for journeys loyalty program, along with some mix shift.

Speaker 4: Choose Gross Marginal was up 100 basis points as the division benefitted from reduced studies from its new Ireland based distribution center, as well as a more elevated product disorder.

<unk> gross margin was up 100 basis points as the division benefited from reduced through these from its new Ireland based distribution center as well as a more elevated product assortment mix.

Speaker 4: J&M's gross margin was down 210 basis points due to a more normalized mark down and closed out cadence.

<unk> gross margin was down 210 basis points due to a more normalized markdown and closeout cadence versus last year.

Speaker 4: J&M had much more inventory available to sell this year versus last. As much the last year's product was cotton.

Jamie had much more inventory available to sell this year versus last as much of last year's product was caught in transit.

Speaker 4: Finally, Genetsco Brands Group, Gross Margin was up 270 basis points as we continue to benefit from lower freight and logistics cost and price.

So let's go brands group gross margin was up 270 basis points as we continue to benefit from lower freight and logistics cost and price increases.

Speaker 4: Adjusted SGNA expense was 46.2% of sales increase of 190 basis points over last year, with most of the deloverage driven by the lower journey sales. And absolute dollars, SGNA expenses were flat the last year.

Adjusted SG&A expense was 46, 2% of sales an increase of 190 basis points over last year with most of the deleverage driven by the lower journey sales in absolute dollars SG&A expenses were flat to last year.

Speaker 4: in line with our strategic pillar to reshape the cost-based to reinvest for future growth. We have gained traction with our cost savings initiatives while at the same time increasing the variability of our expense.

In line with our strategic pillar to reshape the cost base to reinvest for future growth we.

We have gained traction with our cost savings initiatives, while at the same time, increasing the variability of our expense base.

Speaker 4: This resulted in reduced occupancy, selling salaries and other store costs.

This resulted in reduced occupancy selling salaries and other store costs and.

Speaker 4: and enable us to invest in marketing which drove increased sales. In addition, we invested in systems and people to drive our business forward, which resulted in increased appreciation and IT compensation for new-

It enables us to invest in marketing, which drove increased sales.

In addition, we invested in systems and people to drive our business forward.

This resulted in increased depreciation and compensation.

For new technology initiatives.

Speaker 4: Lowering overall occupancy cost and reducing the amount of fixed expense in a store-channel remains a key priority.

Lowering the overall occupancy cost and reducing the amount of fixed expense in the store channel remains a key priority.

Speaker 4: In Q3, we achieved a 16% reduction in straight line run expense on 59 lease renewals across the company. With an average term of a

In Q3, we achieved a 16% reduction in <unk>.

Straight line rent expense on 59 lease renewals across the company with an average term of approximately three years.

Speaker 4: This brains are year-to-date renewals to 155, with over 50% of our fleet still coming up from a new in the next couple years. We have a lot of runway to capture additional safety.

This brings our year to date renewals to 155 with over 50% of our fleet's still coming up for renewal in the next couple of years, we have a lot of runway to come.

Capture additional savings.

Speaker 4: While we have been making nice headway and rent savings and savings on selling salaries, increasing wages continue to be

While we have been making nice headway on rent savings and savings on selling salaries.

Increasing wages continue to be an area of challenge.

Speaker 4: All told in an environment where these and other cost pressures have been prevalent and ubiquitous.

All told in an environment, where these and other cost pressures have been.

Prevalent and ubiquitous we.

Speaker 4: We were pleased to hold our SGNA dollars flat till last year.

We were pleased to hold our SG&A dollars flat to last year.

Speaker 4: Summary for the third quarter, we realized that just an operating income of $11 million compared to just an operating income of 26.3 million for Q3 last year.

In summary for the third quarter, we realized adjusted operating income of.

Of $11 million compared to adjusted operating income of $26 3 million for Q3 last year.

Speaker 4: This all resulted in adjusted deluded earnings per share of 57 cents for the quarter, versus earnings per share of $1.65 less.

All resulted in adjusted diluted earnings per share of <unk> 57 for the quarter.

Versus earnings per share of $1 65 last year.

Speaker 4: Relative to our internal expectations, the extent of the ERP disruption coupled with a higher than expected tax rate had a large impact on this lower EPS result.

Relative to our internal expectations.

The ERP disruption, coupled with a higher than expected tax rate.

We had a large impact on this lower EPS result.

Speaker 4: Turning out a capital allocation and a balance sheet, as expected, we ended the quarter and a net borrowing position.

Turning now to capital allocation and the balance sheet as expected we ended the quarter in a net borrowing position.

Speaker 4: Regarding inventory, we were very pleased to keep our inventory levels well controlled down 8% year over year. With respect to journey specifically, we continue to work with our brand partners to adjust receipts, enabling us to end the quarter with inventory, 14% lower than last year, and more fully positioned with the newness we've needed in the assault.

Inventory, we were very pleased to keep our inventory levels, well controlled down 8% year over year with respect to journey, specifically, we continue to work with our brand partners to adjust receipts, enabling us to end the quarter with inventory is 14% lower than last year.

And more fully positioned with the newness we've needed in the assortment.

Speaker 4: Choose inventories increase compared to last year to support the higher levels of demand in the business.

Choose inventories increased compared to last year to support the higher levels of demand in the business and all of those <unk> inventories were down versus a year ago as I mentioned.

Speaker 4: And although J&M's, the eminitors were down versus C or go, as I mentioned

Speaker 4: But significant amount of last year's inventory was in transit and unavailable for sale. Overall, we expect to end this year with inventory down a high single digits versus last year as we continue to thoughtfully manage our sort.

Significant amount of last year's inventory was in transit and unavailable for sales.

Overall, we expect to end this year with inventory down high single digits versus last year as we continue to thoughtfully manage our assortments and keep our inventory position clean entering fiscal 'twenty five.

Speaker 4: Keep our inventory position clean entering fiscal 25.

Speaker 4: Capital expenditures in Q3 were $15 million with the investments primarily directed to retail stores in our digital and Army Channel initial.

Capital expenditures in Q3 were $15 million with investments primarily directed to retail stores.

In our digital and omni channel initiatives, we opened five stores, which were primarily off mall and outlets and closed 20, ending the quarter with 1360 total stores lastly, we didn't repurchase any shares during the quarter and our current authorization remains at 52.

Speaker 4: We opened five stores which were primarily optimal and netless.

Speaker 4: close 20 and in the quarter with 1,360 total stores. Lastly, we didn't repurchase any shares during the quarter and our current authorization remains at $52 million. Over the past five years, we have repurchased almost 50% of our outstanding shares.

Over the past five years, we've repurchased almost 50% of our outstanding shares.

Speaker 4: Regarding our cost savings and issues we are working diligently to deliver the annualized run rate of up to $40 million in cost savings by the end of fiscal 25. We expect savings from reduced store rents lower corporate shared services and turning central expenses selling salary productivity gains.

Regarding our cost savings initiatives, we are working diligently to deliver the annualized run rate of up to $40 million in cost savings by the end of fiscal 'twenty five.

Expect savings from reduced store rents lower corporate shared services and journey central expenses.

Selling salary productivity gains.

Reduced warehouse and logistics costs and.

Speaker 4: and reduce freight cost from Army Channel inventory location optimization.

And reduce freight costs from Omnichannel inventory location optimization initiatives. When you combine our efforts to increase the variability of our cost structure, along with progress on our cost savings plan.

Speaker 4: when you combine our efforts to increase the variability of our cost structure along with progress on our cost savings plan.

Speaker 4: We are in pace to achieve approximately $20 million of cost reductions. We are now in slow motion by prompting by 75. The result makes it nearly possible We are now in slow motion by 75.

We are on pace to achieve approximately $20 million of cost reductions in fiscal 'twenty four.

Speaker 4: Which respect historic closures we close 74 journey stores to the end of key three or roughly 7% of the total fleet since the beginning of this year. These were primarily.

With respect to store closures, we closed 74 journeys stores through the end of Q3 or roughly 7%.

Of the total fleet since the beginning of this year.

These were primarily mall based locations.

Speaker 4: As Mimi mentioned, the savings from the 100 journey stores we aim to close by the end of the year eliminates roughly an additional $25 million in cost from SG&H.

As Mimi mentioned the savings from the 100 journeys stores, we aim to close by the end of the year eliminates roughly an additional $25 million in costs from SG&A expense, which on an annualized basis will begin to benefit us in fiscal 'twenty five.

Speaker 4: which on an annualized basis will begin to benefit us since fiscal 25.

Speaker 4: The goal of these cost savings and store closure programs is to achieve expense leverage and drive operating margin expansion on more modest increases in sales growth.

The goal of these cost savings and store closure programs is to achieve expense leverage and drive operating margin expansion on a more modest increases in sales growth.

Now turning to guidance overall sales trends have accelerated nicely, thus far into Q4 in part due to positive adjustments we've.

Speaker 4: Overall sales trends have accelerated nicely thus far into Q4, in part due to positive adjustments, we made several months ago to the product assortment. That given product lead times are having an impact now at June .

We made several months ago to the product assortment that given product lead times are having an impact now at journeys.

Speaker 4: However, the very building consumer demand we see week to week, coupled with the heightened promotional activity at the start of the holiday season.

However, the variability in consumer demand, we see week to week, coupled with the heightened promotional activity at the start of the holiday season.

Speaker 4: Let us to take a more promotional stance going forward, especially to drive the man-to-turnies and remain competitive in this environment.

Has led us to take a more promotional stance going forward, especially to drive demand at journeys and remain competitive in this environment.

Speaker 4: While we expect this to positively impact sales, it will also result in some additional gross margin pressure.

While we expect this to positively impact sales. It will also result in some additional gross margin pressure.

Speaker 4: We now also expect growth that's shoe to be somewhat more muted than our prior expectations, given the softer consumer trends of late. And we expect the ongoing lack of visibility in the wholesale channel to put some pressure on J&M and our other branded business.

We now also expect growth at schuh to be somewhat more muted than our prior expectations given the softer consumer trends of late.

And we expect the ongoing lack of visibility in the wholesale channel to put some pressure on Jan <unk> and our other branded business.

Speaker 4: Combining all these factors, we now expect full year total sales to decrease one to two percent versus our prior expectations of down two to four percent.

Combining all these factors, we now expect full year total sales to decrease 1% to 2%.

Our prior expectations of down 2% to 4%, excluding the 50, <unk> week, which we expect to add approximately $25 million of sales and have a small negative effect on earnings per share, we expect sales to decrease 2% to 3%.

Speaker 4: including the 53rd week, which we expect to add approximately $25 million of sales and have a small negative effect on earnings per share. We expect sales to decrease two to three-

Speaker 4: colored by division on the total year end sales compared to last.

Some color by division on the total year end sales compared to last year for journeys, we continue to expect.

Speaker 4: For journeys, we continue to expect a high single digit decline. For shoe, we continue to expect low double digit growth. For J&M, we now expect high single digit growth. And for Genesco brands, a low double digit decline.

High single digit decline for Schuh, we continue to expect.

So double digit growth for Jan and we now expect high single digit growth and for Genesco brands, a low double digit decline.

Speaker 4: We now expect gross margin to be down 40 to 50 basis points compared to our prior view for fiscal 24 gross margin to be flat to down 20 basis.

We now expect gross margin to be down.

40% to 50 basis points compared to our prior view for fiscal 'twenty four gross margin to be flat to down 20 basis points.

Speaker 4: Changing our guidance is driven primarily by increased promotional activities and journeys going forward in the fourth quarter, as well as product mix.

Change in our guidance is driven primarily by increased promotional activities at journeys going forward in the fourth quarter as well as products product mix shift. We now expect adjusted SG&A as a percentage of sales to deleverage 200 to 220 basis points compared to our prior view.

Speaker 4: We now expect the justice FGMA to percentage of sales to deliver.

Speaker 4: 200 to 220 basis points compared to our prior view of 220 to 240 basis points.

Of 220 to 240 basis points of deleverage.

Speaker 4: Given our key three actual results and revised assumptions for Q4, we now expect full year adjusted earnings per share of $1.50 to $2.

Our Q3 actual results and revised assumptions for Q4, we now expect full year adjusted earnings per share of $1 50 to $2 <unk>.

Speaker 4: We paired our prior range of $2 to $2 and $5.

Paired to our prior range of $2 to $2 50.

Speaker 4: Our expectation is that we will be near the midpoint of this ring.

Our expectation is that we will be near the midpoint of this range.

Speaker 4: Our guidance assumes no additional sherry purchases, which results in fiscal 24 average shares outstanding.

Our guidance assumes no additional share repurchases, which results in fiscal 'twenty for average shares outstanding.

Speaker 4: of approximately 11.4 million, and would expect the tax rate to be approximately 24.

Of approximately $11 4 million and we expect the tax rate to be approximately 24%.

Speaker 4: To close, we continue to take the necessary measures to navigate the current consumer environment while also proactively evolving our company towards a leaner and more agile state to better meet the needs of our consumer, drive stronger profitability and ultimately deliver greater returns to our shareholders. Operator, we are now ready to...

To close we continue to take the necessary measures to navigate the current consumer environment, while also proactively evolving our company towards a leaner and more agile state to better meet the needs of our consumer drive stronger profitability and ultimately deliver greater return story.

Shareholders.

Operator, we're now ready to open the call for questions.

Speaker 1: Thank you. If you'd like to ask a question today, please press star one from your telephone keypad, and a confirmation telephone will indicate your line is in the question queue. You may press star two if you'd like to move your...

Thank you.

I'd like to ask a question today. Please press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue.

You May press Star, two who would like to move your question from the queue.

Speaker 1: and distance using a sweeper equipment, it may be necessary to pick up your handset before pressing the star keys.

And just since using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

One moment. Please we poll for questions. Thank you.

Yeah.

Thank you. Our first question is from the line of Mitch Cummins with Seaport Research. Please proceed with your question.

Speaker 1: Thank you our first question is from the line of Mitch Helens with C-Port Research. Please receive it.

Speaker 5: Yes, thanks for taking my questions. I guess I've got a few. Maybe when you guys reported to you, you raised your gross margin outlook and part of that was because of you were expecting improvement in the journeys.

Yes, thanks for taking my questions.

I guess I've got a few.

Maybe when you guys reported Q you raised your gross margin outlook and part of that was because you.

You were expecting improvement in the.

Journeys.

Speaker 5: 4kg, gross margin with more newness kind of flowing into the absorbent. I think he also made a comment at the time.

<unk> gross margin with more newness flowing into the assortment I think you.

You also made a comment at the time that.

Speaker 5: that like the consumers looking for two things, must have product or good deals. And I'm wondering, you know, what's changed from three months ago is the newness.

Like the consumers looking for two things must have product.

Or good deals and Im wondering whats changed from three months ago the newness.

Speaker 5: not performing as well or is what I would maybe call sort of non-newness in the assortment, is that just requiring deeper discounts to move the product? Can you just maybe sort of elaborate on that?

Not.

Performing as well or is what I would maybe call sort of non newness in the assortment is that just requiring.

No deeper discounts to move the product can you just maybe sort of elaborate on that.

Speaker 3: Thanks for your question, Mitch. And there really has been quite a lot going on. And we've seen a lot of up and ups and downs in the consumer environment over the last few months.

Thanks for your question match and there really has been quite a lot going on and we've seen a lot of ups and downs.

In the consumer environment over the last few months and absolutely. The newness is working our merchants have done a phenomenal job chasing into product that is resonating with the consumer and and that is selling through quite nicely. What we saw.

Speaker 3: And absolutely, the newness is working. Our merchants have done a phenomenal job chasing into product that is resonating with the consumer. And that is selling through quite nicely.

Speaker 3: What we saw, and I'm going to take you through, I'm going to take you to October and then bring you into November and bring you into Black Friday just to give you a sense of where we are.

I'm going to take you through I'm going to take you to October and then bring you into November and bring you to into Black Friday, just to give you a sense of where we are but starting in October.

Speaker 3: But starting in October , traffic was out there, but conversion was tough. And I think we and anybody else who sells all products and sells boots really saw that the consumer was not motivated to spend in October . They were looking, but for us, boots represent 40 to 50% of our mix in the fourth quarter. And so if your boot sales aren't coming through, then that's what made for October .

Traffic was out there, but conversion was tough and I think we and anybody else who sells fall product himself boots really saw that the consumer was not motivated to spend in October they were looking.

But for US foods represent 40% to 50% of our mix in the fourth quarter and so if you boot sales arent coming through then than that that's what made for October we saw a market change in November where with colder weather. There was a lot of good positive traffic in all of our retail concepts.

Speaker 3: We saw a market change in November where with colder weather, there was a lot of good positive traffic in all of our retail concepts.

Speaker 3: And if you were out over Black Friday, it was it was a joyful experience. I mean people were out, people were shopping in the malls. There was

And if you are out over Black Friday. It was it was a joyful experience I mean people are out people are shopping in the malls there would seem to just be pent up pent up excitement for for shopping.

Speaker 3: seem to just be pent up excitement for shopping.

Speaker 3: But what we also saw is that our brands in particular were really promotional. We were as promotional as we thought we would be over Black Friday and really in the third quarter.

But what we also saw is that our brands in particular.

We're really promotional we were as promotional as we thought we would be over black Friday and really in the third quarter, but we saw that.

Speaker 3: but we saw that the inventory build up.

The inventory buildup.

Speaker 3: from some of the slower sales and footwear over the course of the year.

Some of the slower sales in footwear over the course of the year.

Speaker 3: Some of our brands to say that they were gonna deviate from that pricing and get more promotional. Now that promotional activity worked well. It drove sales. And so with traffic and some of the promotion on the right product, there's a bifurcation in the market here, Mitch, where the must have items are flying off at full price.

Some of our brands to say that they were going to deviate from that pricing and get more promotional now that promotional activity worked well it drove it drove sales and so with traffic and some of the promotion on the right product.

There is a bifurcation in the market here match, where the must have items are flying off that full price, but anything else needs. Some encouragement in order to in order to move and so as we have evaluated that and it's a.

Speaker 3: But anything else needs some encouragement in order to move. And so as we have evaluated that, and it's a bit of a habit of not having to have not world these days within our brand world, the footwork category is lining up to be more promotional this holiday. And what you'll see in our guidance is that we are driving more sales.

A bit of a habit I have not world. These days within our brand world.

The footwear category is lining up to be more promotional this holiday and what youll see in our guidance is that we are that we are driving more sales.

Speaker 3: and that we are going to be taking a few more mark downs to be able to get there. What we're anticipating and what we're hopeful for is that this will be the final push.

And that we are going to be taking a few more markdowns to be able to get there, but we are anticipating and what we're hopeful for is that this will be the final push through the year. It is clear through the inventory overhang in the market and that we all we for sure will be able that we all as an industry will be able to start next year clean.

Speaker 6: through the year to clear through the inventory overhang in the market and that we all we for sure will be able that that we all as an industry will be able to start next year clean. That's helped.

<unk>.

Okay.

That's helpful and then you talked about.

Speaker 5: Some of the strategies at journey, I think a lot of them, you said repositioning the assortment, kind of got the impression that this was more maybe significant and kind of the typical tweaks that you guys are always making in terms of the assortment and merchandising. Again, can you maybe speak more to that? Is this what exactly are you looking to do in terms of repositioning the assortment there? What's the aim to that strategy?

Some of the some of the strategies.

Journey I think one of them you said repositioning of the assortment.

I got the impression that this is more significant than kind of a typical tweaks that you guys are.

We're always making in terms of the assortment and the merchandising.

Again could you maybe speak more to that is that what exactly are you looking to do in terms of repositioning the assortment there.

Whats the aim to that strategy.

Yeah, So Mitch we were.

Speaker 3: Mitch, we're the destination for where teens go to buy their fashion footwear. And we always have a great supply of the best items that people are, that our teens are looking for, and that our customer is looking for.

We are the destination for where teens go to buy their fashion footwear and we always have.

A great supply is the best items that people are that our teams are looking for and that our customer is looking for our customers hanging in there they are being very discerning when it comes to retail spend and the choices of what they're spending on I think that.

Speaker 3: Our customers hanging in there, they're being very discerning when it comes to retail spend and the choices of what they're spending on. You know, I think that all of the comments, and I don't know that we're deviating from our merchandising trends, but what we did see at the beginning of this year is that our consumer had a huge appetite for newness.

All of the comments and I don't know that we are deviating from from our merchandising trends, but what we did see at the beginning of this year is that our consumer had a huge appetite for newness and that's what we're chasing into and that's why we've chased into for the back part of the year and Thats what is <unk>.

Speaker 3: And that's what we're chasing into. And that's what we've chased into for the back part of the year. And that's what is driving our sales and the improvement. We're quite pleased at the improvement from where we started at the beginning of the year in journeys to the point we are right now where, you know, we're having the best results of the year and a big, big pick up. So it really is.

Driving our our sales and the improvement we are quite pleased at the improvement from where we started at the beginning of the year in journeys to the point, we are right now where we're having the best results of the year and in a big big pickup. So it really is that we're chasing into this newness.

Speaker 3: that we're chasing into this newness. We're working with our brands in order to further differentiate our assortment to have more of the must-have product, to have more exclusive and to continue to get in front of the consumer as the destination of choice.

We're working with our brands in order to further differentiate our assortment to have more of a must have product to have more exclusive and to continue to get in front of the consumer as the destination of choice.

Speaker 5: And then lastly, just in terms of the uptick and promotional activity, I mean, you did mention that boots are a large percentage of your mix in 4Q, and that the season got off to us was start. Looks like the journey's inventory is actually a good shape, but in terms of its content, you guys sitting on a few too many boots and it's part of the promotional strategy in order to kind of work through maybe some excess inventory there or is that not the case?

And then lastly, just in terms of the uptick in promotional activity I mean, you did mentioned that.

Boots or a large percentage of your mix.

<unk> and that the season got off to a slow start it looks like the journeys inventory is actually in good shape, but in terms of its content.

You guys sitting on a few too many boots and as part of the promotional strategy.

The kind of work through maybe some excess inventory there was a thought that that not the case.

Speaker 3: Yeah, I would say that we want to make sure that we have enough dry powder to be able to move on whatever items.

Yes, I would say that we want to make sure that we have enough enough dry powder, Mitch to be able to move on whatever items.

Speaker 3: that we need to move on for as the holiday unfold. And certainly, I think that we were in the third quarter and certainly over the course of November , we saw good sales in journeys. And so in spite of some of the lower boot sales, we were selling other products that the consumer was interested in buying. When we've had these...

That we need to move on for as the holiday unfolds and certainly I think that we were in the third quarter and certainly over the course of November.

We saw good sales in journeys and so in spite of some of the lower boot sales we were selling other product that the consumer was interested in buying when we've had these hold spurts at least here in <unk>.

Speaker 3: cold spurts, at least here, and as in much of the rest of the country, we've had cold spurts and it's gotten warm and cold spurts and it's gotten warm again. And in those cold spurts, we do see

Much of the rest of the country, we've had coal spurts and has gotten warm and cold person. It's gotten warm again in those cold starts we do see the.

Speaker 6: that self-rew of of of boots and we see a pickup in boots and so we know that it will be cold. We know that consumer we believe the consumer is going to be out shopping around holiday and we'll move the boot inventory that we have and then we'll take them whatever marks we need to at the end of the season.

Sell through of our boots, and we see a pickup in the and so we we.

Know that it will be cold, we know the consumer we believe the consumer is going to be out shopping around holiday and we will move the boot inventory that we have and then we will take them whatever marks we need to at the end of the season.

Thank you.

Speaker 1: Our next questions are from the line of Menterro Marano Cheek with Jeffries.

Our next questions are from the line of mentor over Anna <unk> with Jefferies. Please proceed with your questions.

Speaker 7: Hi, thank you for taking our call. I just wanted to do see if you could describe the differences between the US and UK consumers. Are there any trends really worth calling out between those two and can we click those trends to continue in the next year?

Alright, Thank you for taking our call.

To see if you could describe the differences between the U S and UK consumers there.

Or any trends really worth calling out between those two and can we expect those trends to continue into next year.

Thank you for your question.

Speaker 3: Thank you for your question. And so interestingly, the US market and the UK market have tracked from an economic point of view, similarly in terms of high inflation and the consumer having to make choices.

Interestingly the U S market and the U K market have tracked.

Yeah.

From an economic point of view similarly in terms of high inflation and the consumer having to make choices. Our shoe business has had an exceptional year has outperformed the market has moved up three places in terms of ranking in overall market share and so we've been out.

Speaker 3: Our shoe business has had an exceptional year, has outperformed the market, has moved up three places in terms of ranking in overall market share. And so we've been out, outpunching the competition.

Our punching the competition.

Speaker 3: Most recently, and so I think if you have products that the consumer wants, and if you have product that resonates with the consumer, then consumers who are making choices among items that they're spending on, you can motivate, you can motivate that purchase.

Most recently and so I think if you have products that the consumer wants and if you have product that resonates with the consumer than consumers, who are making choices among items that they are spending on you can motivate you can motivate that that that purchased what we've seen most recently.

Speaker 3: What we've seen most recently is that across the board there was a slowdown with the start of the fall selling season and we have seen a turnaround there in the US.

Is that across the board there was a slowdown with the start of the fall selling season, and we have seen a turnaround there in the U S.

Speaker 3: with really robust Black Friday sales. Our store traffic was up, stores were the great highlight of the Black Friday weekend, but altogether, the consumer in the United States was out to shop.

With a really robust black Friday sales or store traffic was up stores, where the great highlight of the Black Friday weekend.

But altogether this consumer in the United States was out to shop, we had a very strong black Friday weekend in the U K last year right now we think that the UK consumer is waiting holding out typically the U K market goes.

Speaker 3: We had a very strong Black Friday weekend in the UK last year. Right now we think that the UK consumer is waiting, holding out typically the UK market goes on sale before Christmas.

It goes on sale before Christmas, we think there may be some hold back in the UK market and that's the difference right now is that the U S.

Speaker 3: We think there may be some holdback in the UK market. And that's the difference right now, is that the US showed a lot of pickup and traffic over the Black Friday weekend and the UK, we think that there will be, the season has to unfold further.

<unk> showed a lot of.

Pickup in traffic over the Black Friday weekend and.

The U K, we think that there will be.

The season has to unfold further altogether the way the consumers acting as that they'll pay up for the must have product, but other than that they really are seeking the value that I talked about.

Speaker 3: Altogether, the way the consumers acting is that they'll pay up for the must-have product, but other than that, they really are seeking the value that I talked about.

Speaker 7: Thank you. And then another follow up. Are there any supply chain or material costs that are headed into the moment? And if they are, are there any that will turn to tail when it's next year? Thank you.

Thank you and then another follow up quick follow up.

Are there any supply chain or material costs that are headwinds at the moment and if there are any of the alternative tailwind next year. Thank you.

Yes, I would say at this point in time, we feel really good about the supply chain.

Speaker 4: Yeah, I would say at this point in time, we feel really good about the supply chain and the cost that we're gonna expect going forward. This year, we're getting a lot of relief on freight logistics costs in our branded business. And that was the big headwind last year, as well as air freight, it product ends. So we're starting to see improvement in our gross margins in our branded businesses results.

The costs that we're going to expect going forward. This year, we're getting a lot of relief on freight and logistics costs in our branded business and that was the big big headwind last year as well as air freight to get it.

Product and so we're starting to see improvement in our gross margins in our branded business as a result.

Speaker 4: of the reduced rate logistics cost. And really not ahead when it all is all the efforts we're making in our branded business from a sourcing perspective and a design and development perspective and a cost.

The reduced logistics cost and really not a headwind at all is all the efforts, we're making in our branded business from a sourcing perspective, and a design and development perspective, and a cost estimating perspective, we expect good gross margin expansion going forward from that perspective, and then on the retail business.

Speaker 4: We expect good gross margin expansion going forward from that perspective and then on the retail business

Speaker 4: You know, that we really think that we're in a good position with all our branded partners and we don't see any headwinds.

That we are.

We really think that we're in a good position with all of our branded partners and we don't see any headwinds there going forward the cost pressure that we've been facing has been around wages and so a lot of the initiatives that we are talking about is to be able to make.

Speaker 6: The cost pressure that we've been facing has been around wages. And so a lot of the initiatives that we are talking about is to be able to make our use of labor more efficient. And so in our distribution centers, we've been adding automation and that has helped to bend the curve on just overall wage increases.

Our use of labor more efficient and so in our distribution centers, we have been adding automation.

And that has helped to bend the curve on just overall wage increases in our stores. We have spent a lot of time on store time studies, where we are looking to get much more efficient within our stores take out the nonproductive hours and shift the labor into selling and we are seeing.

Speaker 3: In our stores, we have spent a lot of time on store time studies, where we are looking to get much more efficient within our stores, take out the nonproductive hours and shifts.

Speaker 7: the labor into selling and we're seeing that case of dividends. We've started on that work in journeys and in shoe we are doubling down on our efforts there but that's where we're seeing a lot of the overall cost pressure for this year that with the work we're doing we anticipate that we will make progress in this area for the coming year. Thank you, and best of luck on the last recorder. Good work.

That pay some dividends we've started on that work in journeys and schuh, we are doubling down on our efforts there, but that's where we're seeing a lot of the of the overall cost pressure for this year that with.

With the work we're doing we anticipate that we will we will we will make progress in this area for the coming year.

Thank you and best of luck I mean, once a quarter.

Thank you.

Thank you.

At this time I'll turn the floor back to me for any closing remarks.

Speaker 3: Thank you for joining us today, wishing everybody the best of the holiday season and look forward to talking with you in the new year.

Thank you for joining us today wishing everybody the best of the holiday season, and look forward to talking with you in the new year.

Speaker 1: This will conclude today's conference. You may just connect your lines at this time, but thank you for your participation.

This will conclude today's conference you may disconnect your lines at this time and thank you for your participation.