Q1 2026 Genesco Inc Earnings Call

June 4, 2025

Okay.

Speaker Change: Good day, everyone and welcome to the Genesco first quarter fiscal 2026 conference call.

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

I'll now turn the call over to Darryl Macquarie Senior director of F. P. N. A N IR. Please go ahead Sir.

Speaker Change: Good morning, everyone and thank you for joining us to discuss our first quarter fiscal 2026 results.

Speaker Change: Participants on the call expect to make forward looking statements, reflecting our expectations as of today, but actual results could be different.

Speaker Change: <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.

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

All non-GAAP financial measures are reconciled to their GAAP counterparts in the attachments to this morning's press release.

And in schedules available on the company's website in the quarterly results section.

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

Speaker Change: With me on the call today is Mimi Vaughn Board Chair, President and Chief Executive Officer.

Sandra Harris: And Sandra Harris, Senior Vice President Finance, and Chief Financial Officer.

Speaker Change: Now I'd like to turn the call over to me.

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

Speaker Change: Following the significant momentum in last year's back half. We are pleased with our start to fiscal 'twenty six with both sales and operating income coming in nicely above our expectations and last year.

First quarter sales growth once again outpaced the industry highlighted by an overall, 5% comparable sales increase above the high end of our full year guidance range led again by strong journeys results.

Speaker Change: Our overall comps were relatively consistent for February and March April combined highlighting the strength of our assortments as we transitioned out of winter and into spring.

Speaker Change: Journeys comps increased high single digits.

The initial phase of our strategic plan to accelerate growth extended its momentum and journeys continued to gain market share.

Speaker Change: The consumer environment remains choppy and with recent first quarter events. This choppiness has become more pronounced.

Speaker Change: Consumers shallow willingness to shop when Theres, a reason like we saw over Valentines day, and Easter and retreat when there is not.

Speaker Change: And they remain quite selective our merchant and product teams continue to innovate and add freshness to our assortments to satisfy shoppers who are looking for a must have product and a reason to buy something new and who are passing on everything else.

Speaker Change: We know that in this environment. It is compelling footwear and freshness that motivate the consumer to purchase and we've taken major actions to respond to these consumer needs.

Speaker Change: First quarter results are evidence of this outstanding work with all channels posting positive growth.

Speaker Change: Comparable sales increased 5% our third consecutive positive increase with both stores up mid single digits and online up high single digits and wholesale channel growth of 5%.

Speaker Change: Journeys comps were strongly positive for the third consecutive quarter as well up 8% and schuh continued its positive comp run from Q4.

Speaker Change: Operating expense leverage of 170 basis points benefiting from our ongoing cost reduction efforts and operating income and EPS improved year over year, thanks to the higher sales and better expenses.

Speaker Change: EPS would've been <unk> better in Q1 had we not opportunistically bought back shares which will ultimately benefit the full year.

Speaker Change: Before I give more color on the quarter and our strategic growth initiatives I'd like to address the uncertainty with respect to tariffs, which I know is on everyone's minds and our actions are active mitigation efforts.

Speaker Change: We built a solid track record of successfully evolving our businesses and shown our resilience when confronted with economic consumer and fashion disruption, which we demonstrated most recently coming out of the pandemic and we are demonstrating once again with journeys right now.

Speaker Change: The traction we're achieving and the continued strength of our footwear focused strategy and initiatives give me confidence in our ability to navigate the current trade environment, while building on our recent success.

Speaker Change: In summary, we are well diversified across a number of brands, we sell we have limited and reducing exposure to China sourcing and we are implementing many actions to mitigate the impact of reciprocal tariffs.

Speaker Change: Thus, we are well positioned to navigate this.

Speaker Change: While there is some immediate impact and assuming tariffs remain close to levels, where they are today. Our teams are working hard to offset much of the impact this year.

Speaker Change: To dimension. This we need to talk about our retail business, where we buy and sell a mix of in demand brands and our branded business, where we source our own product.

Speaker Change: Retail is the largest portion of that more than 80% of sales, namely journeys and schuh.

Speaker Change: She was a quarter of this 80% and since it is U K based is largely unaffected directly by reciprocal tariffs.

Speaker Change: For journeys, our top vendors are a mix of mostly larger premium global brands with diversified sourcing.

Speaker Change: While this situation is quite dynamic and evolving to date, a limited number of our vendor partners have notified us of immediate price increases in response to reciprocal tariffs.

Speaker Change: We do expect price increases over time, but no. Our brands are working to mitigate tariff cost pressure and ensure key franchises remains stable.

Speaker Change: Brands with momentum as usual have more ability to take price and we anticipate that our partners like us we will remain flexible and respond accordingly to any changes in tariff rates versus current levels.

Speaker Change: We do not expect to absorb gross margin reductions.

Speaker Change: The biggest unknown will be the consumer response to price increases and inflationary pressure in general.

Speaker Change: We will be in constant communication with our brand partners to relay and react to this dynamic.

Speaker Change: Our experience shows that customers continue to engage and shop with us when we offer the best brands and the highly coveted footwear, they desire positioning us well to manage through this impact.

Speaker Change: Now to our branded side Johnston, <unk> Murphy, and Genesco brands group, where we source product directly.

Speaker Change: Overall for genesco, and including our retail business, we estimated at the start of the year that a little over 10% of our products are subject to China tariffs with branded representing about half of this at 5% weighted toward genesco brands.

Speaker Change: Over the last several years, we've been working diligently to reduce risks across our supply chain with a concerted effort to diversify our countries of production.

Speaker Change: These efforts have meaningfully paid off with dramatically lower dependence on and a path to be almost completely out of China in short order as needed.

Speaker Change: Over the last two months, our teams have swiftly and continuously evaluated our product lines and sourcing plans and taken aggressive action to minimize the reciprocal tariff impact.

Speaker Change: At the current rates, we estimate the reciprocal tariffs in our branded business would result in an mitigated cost increases of roughly $15 million this fiscal year.

Speaker Change: We are taking the following actions among others to mitigate this cost pressure.

Speaker Change: Accelerating increasing or canceling inventory to take advantage of tariff windows.

Speaker Change: Further diversifying suppliers and resourcing to countries with lower tariffs.

Speaker Change: Working with long standing factory partners to reduce costs and planning for strategic price increases targeted more towards the back half of the year, coupled with demand generation investments.

Speaker Change: While reciprocal tariffs have delivered considerable new challenges as I said, we see a path to offset much of the impact. This year, we are playing offense and we will capitalize on opportunities we see emerging.

Speaker Change: I want to sincerely, thank our people across our company, especially in our product and supply chain areas for working around the clock and for the tremendous efforts you have put forth I've seen you take some remarkable actions to put the company in a much better place, it's the ingenuity and determination of our highly <unk>.

Speaker Change: Experienced teams working with our valued brand and factory partners and a high level of execution that allowed us to succeed in times like this before.

Speaker Change: I am confident will again.

Speaker Change: Now for Q1 color and growth initiatives for each business starting with journeys.

Speaker Change: Our number one priority of this past year has been to improve performance of the journeys business.

Speaker Change: After bringing in a new president Chief merchant and Chief Marketing Officer. The first phase of our strategic growth plan focused on injecting the product assortment with more newness excitement and storytelling and drove a noteworthy double digit comp increase in the back half.

Speaker Change: Excited about these results along with journeys distinctive team proposition and enhanced focus on the teen girl. Our key brand partners are further stepping up in support of our strategic direction to better serve this customer through elevated product and depth.

Speaker Change: The growing strength of our assortment drove robust comps again in Q1. This comp strength was broad based with seven brands across both athletic and casual posting double digit gains.

Speaker Change: The strongest gains or with athletic brands, although athletic and casual are well balanced in journeys assortment.

Speaker Change: Balkanized or canvas footwear is still pressured.

Speaker Change: With diversification and growth of these other brands and positive consumer reaction to trends like low profile and two thousands running inspired styles. These increases are driving healthy growth overall.

Speaker Change: Journeys drove strong gains in Q1 store conversion and transaction size more than offsetting softer traffic when consumers pulled back from shopping outside of peak periods.

Speaker Change: We were pleased to see journeys comp strength strengthened through the months of the quarter.

Speaker Change: We expect the same brands and trends to drive Q2 growth and while not dependent on this to drive results. We are also excited about some new brands, we have been introducing or reintroducing at journeys as well.

Speaker Change: We have built inventory as planned and supported this growth.

Speaker Change: This inventory is high quality and we have a strong track record of working with our brand partners to manage inventory to protect margin in times of volatility.

Speaker Change: After reviewing our other businesses I'll briefly highlight the exciting initiatives that drive journeys strategic growth and transformation.

Speaker Change: Staying with retail and moving tissue.

Speaker Change: Comps increased low single digits for the second consecutive quarter benefiting from shoes work on brand and product elevation and improved access to top brands and styles.

Speaker Change: In a very challenging retail environment by sharpening its customer focus and intensifying the messaging around the brand schuh is becoming more important as a key destination for its use shopper for casual and athletic footwear.

Speaker Change: Like the U S. The U K consumer remains very selective putting pressure on the footwear category and purchases in the quarter overall.

Speaker Change: Key brands and must have styles drove conversion with the same brands. This journey is driving the business.

Speaker Change: At over 40% of sales shoes advanced digital capabilities and highly penetrated E. Commerce business remains a key channel for consumer engagement with digital sales growth outpacing stores in Q1.

Speaker Change: Additionally, the kids business continued to perform well.

Speaker Change: We are excited to build on the enhanced brand partnerships and improved product access schuh has gained so far.

Speaker Change: Through our partnership strength, we have already secured significant further improved product access with Nike and new balance with exciting new styles and iconic franchises, arriving this quarter.

Speaker Change: Turning now to Johnston <unk> Murphy after two consecutive years of record sales, resulting from <unk> strategic repositioning to a more casual and more comfortable lifestyle brand. We have been working on delivering fresh and distinctive product in response to headwinds <unk> experienced last year.

Speaker Change: While comps were down 2% in Q1, we were encouraged to see growth in store conversion and transaction size demonstrating positive consumer response to the assortment and purchase intent, especially for new product.

Speaker Change: Both full line retail stores and online comps were slightly positive offset by factory stores, where are more price sensitive customer retreated and caused larger store traffic declines.

Speaker Change: One exciting product callout that speaks to the ongoing repositioning is the success of the Anders Sneaker, which is the spring seasons best selling style.

Speaker Change: This updated and refined approach to a classic sneaker highlights <unk> ability to deliver casual lifestyle products, while staying true to its DNA.

Speaker Change: We've also enjoyed a resurgence in dress shoes with our re imagined Upton dress program Blazers, and outerwear were standouts as well.

Speaker Change: The brand continues to ramp up innovation efforts, delivering a 15% increase in new footwear constructions in the first half this year and even more freshness with a 60% increase in the back half in addition to new fabrics and design details and its apparel program.

Speaker Change: Accelerating its brand repositioning to build awareness and acquire new customers is <unk> other area of focus.

Speaker Change: This includes introducing an updated brand book this year launching a limited edition collection of shoes, and apparel and celebration of its 175th anniversary.

Speaker Change: Rolling out, it's 175 years young media campaign, and shifting marketing spend to further support brand building.

Speaker Change: New stores planned for the back half will also build brand awareness and counteract the deleverage the brand experienced from closed stores in Q1.

Speaker Change: Rounding out the branded discussion our strategy to simplify our licensed portfolio to emphasize key brands and channels continues to benefit Genesco brands group.

Speaker Change: Our efforts to improve the portfolio will be ongoing.

Speaker Change: New product is resonating with our retail partners and consumers and pull forward sales from some sunsetting licenses helped Q1 sales growth as well.

Speaker Change: It's worthwhile to now take the time to briefly highlight some of the progress we're making in our exciting journey transformation plan.

Speaker Change: While the team, especially the teen girl is well served with fashion apparel and the mall no concept other than journeys goes across athletic casual and fashion footwear for the style led team.

Speaker Change: This is the opportunity and white space, we identified to build on the traditional strengths of journeys to serve a wider teen audience interested in style and trend that is six to seven times larger than the market. We've historically served.

Speaker Change: We're focused on four key areas to achieve this and to be the destination for where this customer shops for the latest fashion footwear.

Speaker Change: First we're focused on diversification and strengthening our product leadership with best in class premium footwear brands.

Speaker Change: We've traditionally been stronger in the casual and canvas categories. A major growth driver is expansion of our premium athletic assortment.

Speaker Change: In Q1 athletic grew well into the double digits over last year and now represents more than a third of journeys footwear sales.

Speaker Change: At the same time, we continued to strengthen and expect growth from casual it's the powerful combination of all three that defines our footwear leadership.

Speaker Change: I've said premium a number of times. This strategy is about more customers and more choice product product elevation is generating stronger average selling prices highlighted by an increase of 12% in journeys Q1 average footwear, our selling prices.

Speaker Change: Second we're investing in our journeys brand, bringing our updated brand positioning to build awareness with this expanded group of teen customers.

Speaker Change: You've already seen a change in our brand platform and imagery with continuity across online and stores and style vignettes online in the journeys blog showcasing our fashion authority.

Speaker Change: We're investing further in influencers content, and social including Tictoc and long form content, one callout resonating with our core youth audience are Jasmine Bigfoot series has racked up 44 million views so far.

Speaker Change: We will be launching a fund new brand platform and campaign at back to school and investing more dollars behind it and we're thrilled with the almost 7 million loyalty members. We've added in about two years.

Speaker Change: And our third area elevating our customer experience, there's one outstanding initiative I'd like to spotlight, our new 4.0 store design success.

Speaker Change: We needed an elevated setting to attract new customers and call attention to our more premium products, while at the same time, retaining journeys energy and brand DNA.

Speaker Change: Our new store concept has delivered strong results in a sales lift of more than 25%.

Speaker Change: Our focus is on making the most productive stores even more productive.

Speaker Change: These stores have meaningfully better traffic higher conversion and higher average selling prices and have been attracting a larger share of new customers.

Speaker Change: We now have 39 stores in the four point of format. The results have been so compelling we pull forward more stores to remodel. This year by year end, we expect to have 75 plus stores in this new format underscoring our belief in this initiative as a cornerstone of journeys transformation.

Speaker Change: Fourth we're unlocking the power of our people our store teams are a key differentiator delivering exceptional service and representing the heart of the brand.

Speaker Change: Our efforts to double down on selecting and training our people have contributed to improve store conversion we've been achieving.

Speaker Change: You can see why we're so delighted with journeys evolution and the tremendous opportunity that lies ahead.

Speaker Change: In early innings in this strategic transformation with several waves of planned growth to broaden and deepen journeys consumer appeal.

Speaker Change: All that said turning now to guidance, we remain confident in our plan for journeys and our other businesses, but recognize there is now more uncertainty in the external consumer environment.

Speaker Change: In Q2, so far journeys and <unk> comps have been tracking at a similar pace to Q1, while schuh has had an offset in timing of a sale period versus last year.

Speaker Change: While we face some disruption in the second quarter in particular because of the shorter timeframes to react to tariffs given our limited China exposure and tariff mitigation efforts, we are reiterating our full year EPS guidance range of $1 30.

Speaker Change: To $1 70.

Speaker Change: Sandra will take you through the details, but we are optimistic about our ability to drive our business forward, especially in the second half during back to school and holiday when there are more reasons to shop.

Speaker Change: We have consistently capitalized on key periods driving outsized volumes during these times and plan to do so again.

Speaker Change: As the results pay off.

Speaker Change: We also plan to continue the cycle of store improvement and investment are higher growth. We still have a lot of work to recapture our peak operating profit levels, but we expect fiscal 'twenty six to be another step in the right direction.

Speaker Change: And now founder will take you through the specifics of our financial results and outlook.

Speaker Change: Thanks Neely overall.

Speaker Change: Overall, we were pleased with our first quarter performance delivering improved results compared to last year, even though the consumer environment became increasingly uncertain in April.

Speaker Change: Total revenue and comps increased in the mid single digits, we effectively leveraged SG&A and our adjusted earnings per share loss improved by <unk> <unk> year over year.

Speaker Change: Excluding the impact of opportunistic share repurchases, which were dilutive to EPS for the quarter, but are expected to be accretive over the full year.

Speaker Change: Adjusted earnings per share would have been <unk> better.

Speaker Change: Revenues for the quarter of $474 million increased approximately 4% driven by overall comp growth up 5%, our third consecutive quarter of positive comps.

Speaker Change: With store comps, improving 5% and direct comps increasing 7%.

Speaker Change: Journeys led businesses with comps up 8%, followed by Schuh up 1%, while Johnston <unk> Murphy comps declined 2%.

Speaker Change: Traffic continues to be challenging, but we are seeing improvements in conversion and average transaction size to help offset the traffic declines.

Speaker Change: The positive contribution from comps were partially offset by lower revenue due to closed stores.

Speaker Change: Adjusted gross margin for the quarter of 46, 7% declined 90 basis points compared to last year.

Speaker Change: The change in rate was primarily primarily related to an anticipated shift to higher price point, but lower margin product and both journeys and schuh due to the increased penetration of athletic styles combined with higher promotional activity issue and the pull forward of liquidation product engine ESCO brands group.

Speaker Change: Moving down the P&L.

Speaker Change: G&A expense was 52, 5% of sales 170 basis points better than the prior year and with the higher sales better than we expected.

Speaker Change: The improvement was driven by reduced occupancy and bonus expense along with cost savings initiatives across multiple areas reflective of the continued benefits from our prior year cost savings program and new reduction initiatives to continue to improve cost across our business.

Speaker Change: This favorability was partially offset by sales and marketing investments to drive growth.

Speaker Change: We continued our store optimization efforts ending the quarter with 65 net fewer stores versus a year ago.

Speaker Change: The net closures represented 5% of the fleet and 3% of total square footage, but only 1% of total revenue.

Speaker Change: In general closing these stores were accretive to operating income.

Speaker Change: For many of these stores. We have also seen positive sales transfer rates that have helped offset any operating loss impact.

Speaker Change: At journeys, we remodeled 29 stores into the new 4.0 format in the quarter, bringing the total remodels to 39 since we started the program in October.

Speaker Change: As <unk> discussed and these remodels, we've seen well above average performance in comp with gains in traffic conversion and transaction size.

Speaker Change: We will continue to optimize the fleet to better support the consumers preference to shop, both in store and online and to enhance and improve the in store experience across our fleet.

Speaker Change: The performance throughout the first quarter generated an adjusted operating loss of $28 million compared to a $30 million loss for Q1 last year, resulting in an adjusted diluted loss per share of $2 <unk> for the quarter versus a loss of $2 10 last year.

Speaker Change: As I mentioned earlier earnings per share would have been five since better if we had not opportunistically repurchase shares.

Speaker Change: And the lower share count is dilutive in our last quarter, but will be accretive for the full year.

Speaker Change: Our adjusted effective tax rate for the quarter was 26, 7% compared to 26% in the prior year.

Speaker Change: Turning now to capital allocation and the balance sheet.

Speaker Change: Free cash flow for the quarter was negative $120 million compared to negative $40 million in the same quarter last year.

Speaker Change: We have been working to improve our inventory position with hot product and new brands at journeys to meet the growth trends of the business.

Speaker Change: This year, we ended the quarter with inventories up 15% to meet consumer demand at journeys impacting our year over year cash flow comparison.

Speaker Change: We expect our inventory growth to be more in line with our sales growth in the back half of the year.

Speaker Change: Our free cash flow in the quarter is also lower due to higher capital spending this year as we continue the strategic investment in store Remodels that we began in the fourth quarter of last year.

Speaker Change: As we navigate the next few quarters, we expect positive free cash flow for the full year exceeding fiscal year 2025.

Speaker Change: Our strong balance sheet and liquidity under our revolving lines of credit provides the financial capacity to support our strategic investments.

Speaker Change: Capital investments in the first quarter were $19 million, primarily directed to retail stores and other initiatives. We opened four stores and closed 26, ending the quarter with 1256 total stores.

Speaker Change: Lastly, and as I mentioned earlier, we did opportunistically repurchased about 605000 shares of our common stock or about 5% of our shares outstanding.

Speaker Change: During the quarter at an average price of $20 79.

Speaker Change: We have $29 $8 million remaining under our current authorization.

Speaker Change: Now turning to guidance.

Speaker Change: We remain appropriately cautious considering the ongoing macroeconomic uncertainties and recent developments and global trade policy that have added complexity to our planning environment.

Speaker Change: Despite these challenges we have carefully evaluated a range of scenarios and based on the outcome of those scenarios. We are reaffirming our full year earnings per share guidance of $1 30 to $1 70.

Speaker Change: Our guidance reflects the current level of tariffs along with the impact of our mitigation strategies that may be discussed and some degree of consumer pullback.

Speaker Change: Our guidance assumes that tariff conditions do not materially worsen.

Speaker Change: Our mitigation efforts are effective and there are no significant shifts in consumer sentiment.

Speaker Change: We now expect comp sales for the year to be up 2% to 3% down somewhat from our beginning of the year guidance of up 2% to 4%.

Speaker Change: However, we now expect a total sales increase of 1% to 2% versus our previous guidance of flat to up 1% due to a more favorable pound sterling rate.

Speaker Change: Comps continue to be driven by journeys with total comps higher than the front half of the year as journeys anniversaries negative comps last year and moderating comp growth in the back half as we go against journeys strong comps last year.

Speaker Change: For our other businesses, we are now more conservative around comps based on the consumer pressure on the footwear category in the U K market for shoe and Virgin and especially for the factory channel.

Speaker Change: This comp growth is offset by roughly $30 million from the impact of net store closures and now helped by a pickup of approximately $15 million from a stronger pound sterling.

Speaker Change: By Division, we still expect journeys total fiscal year sales to be up low single digits.

Speaker Change: As mid single digit comps are partially offset by closed store volume.

Speaker Change: <unk>, we now expect total sales to be up low single digits as favorability in foreign exchange overcomes flattish comps.

Speaker Change: For <unk>, we still expect sales to be up low single digits and for Genesco brands. We now expect sales to be down high single digits as we manage through the expiration of certain licenses and navigate the wholesale landscape around the tariff situation.

Speaker Change: For gross margin, we continue to expect the year to be down 20 to 30 basis points in line with our previous guidance as the impact of tariffs are offset by our mitigation efforts and better margins in our retail businesses.

Speaker Change: We continue to expect adjusted SG&A as a percentage of sales to leverage 50 to 70 basis points as the decrease in comps and related deleverage versus our beginning of year guidance is offset largely by further cost saving initiatives. This year.

Speaker Change: In summary, we expect adjusted earnings per share to be in line with our previous expectations due to our tariff mitigation actions, including selected price increases are better than expected performance in the first quarter.

Speaker Change: FX and the lower share count from the share repurchase.

Speaker Change: Our guidance assumes no additional share repurchases, which results in approximately $10 6 million average shares outstanding for fiscal 2006, we do expect higher interest as we built inventory in the first half and we expect the tax rate to be approximately 29%.

Speaker Change: Although we are reiterating the EPS guidance for the full year the results by quarter will be different as the tariff impact outpaces, our ability to implement mitigation efforts in the near term and we expect a disproportionate effect on our branded businesses, especially genesco brands.

Speaker Change: We expect overall sales for the second quarter to be slightly better than last year, reflecting the improvement in foreign exchange.

Speaker Change: And as positive comps at journeys are partially offset by store closures.

Speaker Change: Also expect softer comps for <unk>, and schuh and lost sales related to tariffs.

Speaker Change: For the second quarter, we expect overall gross margins to be relatively flat to down a little year over year with the impact of tariffs being partially offset by mix shift in our business.

Speaker Change: For SG&A in Q2, we are pulling forward marketing investments to drive sales in the back half of the year, specifically for Johnston <unk> Murphy and shoe.

Speaker Change: Since the second quarter is a lower volume quarter. This combined with the lost sales from tariffs will result in roughly 100 to 140 basis points deleverage of SG&A in the quarter.

Speaker Change: This results in operating income that is approximately 6 million below last year or approximately 40 to 50 cents below last year in EPS.

Speaker Change: We also expect our interest cost to be higher in the second quarter than last year and generally similar to the first quarter of this year and I'd like to call out that ongoing uncertainty related to tax reform could introduce greater variability to our tax rate for the second quarter.

Speaker Change: We expect to end Q2, with approximately $10 3 million average shares outstanding for earnings per share calculations.

Speaker Change: Lower than the $10 5 million at the end of the first quarter.

Speaker Change: Looking ahead to the back half.

Speaker Change: We believe that we will have a greater ability to mitigate the impact of tariffs drive consumer demand as we get into the important back to school and holiday shopping periods and that our renewed cost reduction efforts in response to tariffs will help drive nice operating leverage to offset the second quarter results.

Speaker Change: As we move through fiscal 'twenty six I am confident in our ability to continue growing despite the headwinds leveraging our deep understanding of what our customers want and our unmatched execution capabilities.

Speaker Change: We remain focused on unlocking the considerable earnings potential that exists within our business and I'm excited about the opportunities ahead as we build on the strong foundation we've established.

Speaker Change: Operator, we're now ready to open the call to questions.

Speaker Change: Thank you will.

Speaker Change: Conducting a question and answer session.

Speaker Change: If you'd like to ask a question at this time you May press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue.

Speaker Change: You May press Star two if you would like to withdraw your question from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: One moment, please so we pull for questions.

Speaker Change: Thank you and our first question is from the line of Joseph <unk> with <unk>. Please proceed with your questions.

Speaker Change: Hey, guys. Good morning, Congrats on a great quarter.

Speaker Change: Just wanted to ask a few questions about the journey strength in.

Speaker Change: In addition to some wider assortments with existing partners. We also saw you establish some new relationships last year with some modest what brands.

Speaker Change: Can you talk about the impacts of those on the <unk> comp and give us a little more color on how scale those assortments are through footprint.

Speaker Change: Good morning, Joe Thanks for joining us this morning, and we are really excited about the momentum that we have been seeing in our journeys business.

Speaker Change: Excuse me as the result of not just great product, but the number of other efforts.

Speaker Change: I did talk about and.

Speaker Change: Part of our overall strategy as we think about our product initiatives is to show our leadership and it has to show our leadership across athletic across casual and across Kansas to meet the needs of our teen consumer.

Speaker Change: Part of what leadership means as being as having the most relevant styles.

Speaker Change: In the most relevant brands and as we think about our assortment. That's the objective as we add new product too to the brands that we already carry and so the comp in the quarter was actually driven by our existing brands, but the impactful newer brands.

Speaker Change: And we we.

Speaker Change: Got HOKA this quarter, we introduced Coca.

Speaker Change: We usually don't talk about brands, but.

Speaker Change: Since since since you asked the question Saucony was another one that we have reintroduced there really impactful in terms of our customers' reaction to the to the new offerings that help validate journeys in these categories that we haven't had historical strengthen lifestyle running is a really.

Speaker Change: Good example of a category thats important to our team consumer and our portfolio of brands shows our commitment to the category and so and the trend development. So as I said in terms of comp we typically start with a handful of stores and by handful I mean like 50 plus stores that we begin.

Speaker Change: A new brand and then we ramp that up over time and so in development of brands. It really is a start test react we were very pleased with the reaction that we saw.

Speaker Change: And then we scale up from there and we can scale quickly and we can put a lot of effort behind moving significant volume when we know it's the right time.

Speaker Change: Got it Thats very helpful. And then secondly can you just talk a little bit more about the trends for the Vulcanize product of course under pressure, but how does it compare to your expectations and what do you see for that that category moving forward.

Speaker Change: Yes.

Speaker Change: When I was talking about the overall strategy that we have in the assortment is to demonstrate great leadership.

Speaker Change: Ross.

Speaker Change: Not only Kansas, which we traditionally traditionally been known for and canvas and Balkanize, we talk about interchangeably, but also in athletic and in.

Speaker Change: In casual, which we are known for as well.

Speaker Change: Same fashion, broadening and teens embracing aqua and wearing occasions and journeys is well positioned to take advantage of this and so the results I said were really good for US we had seven brands that were up double digits on both the casual and the athletic side, and especially strong growth on the athletic side.

Speaker Change: Our new leadership in journeys has a lot of great relationships on the athletic side, we see it as an opportunity to be able to continue to build on the bulk side. We have seen pressure on balkanized, we continued to see pressure on Kansas product through the quarter, but the strength of our other <unk>.

Speaker Change: Brands the strength of the assortment is more than offsetting and has been more than offsetting that pressure over the last several quarters.

Speaker Change: Awesome. Thanks, so much.

Speaker Change: Thank you.

Speaker Change: Our next questions are from the line of Mr. Cohen with Seaport Research partners.

Speaker Change: With your questions.

Mr. Cohen: Yes, thanks for taking my questions.

Speaker Change: I've got a few but let me start with.

Speaker Change: The second quarter.

Speaker Change: Is there a Cassandra I think you said that you expect.

Speaker Change: Positive comp from journeys.

Speaker Change: Be more specific there or maybe I think in your prepared remarks.

Speaker Change: You said that journeys is tracking.

Speaker Change: Early <unk> is tracking similar to the first quarter is your guidance.

Speaker Change: Sales guidance on Q2, assuming journeys is at a high single digit comp or is there a different underlying assumption embedded in the outlook.

Mitch: Thanks for your question Mitch.

Mitch: We were pleased with journeys results during its had a plus 8% comp in the first quarter and as I said, we are tracking at about the same levels, where we were we have seen.

Mitch: Quite a lot of Choppiness out there where the consumer retreats during periods of.

Mitch: Non shopping they don't shop during times when there isn't a reason to shop and then they come in they shop and huge force in journeys capitalized on that and so we have taken that we start to anniversary stronger comps as we go through the back part of the year, we're very optimistic about.

Mitch: We're journeys business is going and Sandra talked about an overall comp for the year. So we've taken our trends and built that into the second quarter, we do still expect a V.

Mitch: Very nicely positive journeys com.

Mitch: And then Mitch just to add to the second quarter cells.

Mitch: As we spoke about we do have the favorable FX on overall sales, so thats coming into the quarter. So that is definitely.

Mitch: One of the impacts as to why we're saying, we're slightly better than last year, but I also want to remind you that positive comps at journeys that similar to what we saw in the first quarter, we have considered consumer softness continuing in our <unk> business, specifically in our factory stores and then also our shoe UK consumer.

Mitch: To have pressure on them. So those comps for journeys will be slightly mitigated by our other two businesses and overall the second quarter is just a low quarter for us and theres not a lot of reasons to shop.

Mitch: During the first quarter you have.

Mitch: Back to school are really gearing up for back to school and for holiday.

Mitch: So.

Mitch: Two more two more questions.

Mitch: On the back half for journeys, obviously backup is much more important for you guys.

Mitch: Particularly with journeys.

Mitch: You guys are going to start lapping much more difficult comparisons.

Mitch: <unk> in the third quarter.

Mitch: Talk to us about.

Mitch: What is it going to be the first of all.

Mitch: On the call are you assuming for journeys in the back half I assume something positive.

Mitch: Talk about the drivers.

Mitch: Much impact do you expect to see from the four point those stores on the backhouse.

Mitch: How does your your product access.

Mitch: Or you could go compare versus maybe a year ago that could help drive the comp and then.

Mitch: You also talked about a trend towards low profile, assuming that that continues to develop.

Mitch: Like how positive might be for.

Mitch: You guys with journeys in the back half so just maybe kind of walk through some of the drivers of the journeys in the back half as you start to lap much more difficult comparisons and then I have one last question.

Speaker Change: Mitch that's a lot of questions that lesser lesser let's get started here.

Mitch: Our.

Speaker Change: We know we are lapping more difficult comparisons for journeys, but youll have to go back to the past several years and we have a lot of opportunity. The most important thing I'll say is that our strategy is geared at serving a much broader market at 6% to seven times bigger we see an opportunity to serve this teen girl really.

Speaker Change: Well in a way that nobody else is doing and so that is just a cornerstone of this strategy not only are we serving a broader market, but we're also serving the customer with more premium product and so if you think about that you think about more customers do you think about more premium product that drives.

Mitch: It's of opportunity for growth.

Mitch: The first phase of our overall journeys program was to inject the assortment with a lot better product we knew that the customer preferences, we are changing and so that's what our merchant team and Chris Ann Taylor.

Mitch: Led to let that happen in the back part of the year and of course, we're benefiting in the front part of the year, but we're not finished out we're going to continue to build on our overall product assortment I talked a little bit about the new brands that we have that we have introduced we're not counting on those.

Mitch: What we're counting on is.

Mitch: More allocation better allocation of product that we're currently selling and so strengthening further our product leadership again, we've just begun strengthening our inventory position differentiating in our scale across these number of in demand brands and building our longer term strategic partnerships.

Mitch: This isn't necessarily we've got one year worth of growth that is we've started in one place and will continue to build on that so product product product in this first phase.

Mitch: In addition to that.

Mitch: <unk>.

Mitch: The plans for the strategic plans to grow journeys are centered.

Mitch: Right back around what I started with which is to serve that customer and to let that customer know that we have.

Mitch: We welcome them into journeys and so we've invested in the journeys brand I talked about the marketing initiatives and I think the best representation of where we are headed is our four stores and that speaks to the consumer at the visible representation of the fact that we have changed the assortment elevated the <unk>.

Mitch: Opportunity for that consumer and we are.

Mitch: That store refresh is paying great dividends we've.

Mitch: We've moved quickly.

Mitch: <unk> remodeled 39 stores and expect to do 75, plus this year, which is more than 10% of our portfolio. We think we can get about.

Mitch: About 50 or close to 50% of our portfolio done and over the next three or so years and so the results there have been fantastic, we're up 25% plus in those stores and that's just another wave of growth and so when you think about the plan that we've put together the first phase.

Mitch: <unk> is about product.

Mitch: Then all of these other initiatives kick in to drive the awareness of what the journeys brand is all about and to bring new customers into the brand and then just to continue to serve them with great product.

Mitch: That's helpful. Thank you and then lastly.

Mitch: You mentioned that the consumer continues to be very focused on kind of must have key items.

Mitch: And you also made a comment similar to the effect.

Mitch: The brands with the most momentum are the ones that are probably best positioned to take price.

Mitch: So when you think about your business and maybe some price increases come your way.

Mitch: But what percent of your business.

Mitch: As kind of a must have key items and how confident are you that pricing prices increase on some of those products that the consumer will be pretty willing to spend more to get what they want.

Mitch: And that's it for me thanks.

Mitch: Yes, so typically when we talk about <unk>.

Mitch: Items that we're talking about just.

Mitch: A specific.

Mitch: A specific model.

Mitch: I think what I'm talking about key items now I'm, just really talking about brands key brands and key franchises. So we have a lot to pick from Mitch in terms of where our consumer is going again the momentum across.

Mitch: A range of brands has been good.

Mitch: Really being able to satisfy what needs. The customer has what brands are looking for which styles. They are looking for and it's not just one style, but it's multiple styles.

Mitch: Is really what we are focused on and so.

Mitch: We have seen in prior times when the customer gets squeezed that the customer gravitate toward lower price point product and they're not doing it this time around and they are stretching up to buy what they want and so you asked about price increases we haven't heard a lot.

Mitch: Yet from our brand partners about price increases we expect we will hear some about that but I think that it is the in demand brands that have more opportunity.

Mitch: To take price and the less demand brands don't so our brands are our working carefully through where opportunities are and where they aren't I think there is.

Mitch: Really high awareness, but there's a lot of price sensitivity in the market and everyone is treading cautiously here.

Mitch: Great. Thanks again.

Mitch: Yeah.

Mitch: Thank you.

Speaker Change: Next question is from the line of Corey Carlo with Jefferies. Please proceed with your question.

Corey Carlo: Great Thanks, and good morning.

Corey Carlo: Amy.

Corey Carlo: I was curious to get your perspective on.

Corey Carlo: <unk>.

Corey Carlo: M&A in the footwear and footwear retail landscape does that.

Corey Carlo: Cause you to think differently at all about.

Corey Carlo: <unk>.

Corey Carlo: The space is your competition.

Corey Carlo: And maybe some of your key brand partners.

Mitch: Corey Thanks for joining us this morning, and thanks for the question.

Mitch: So there has been some M&A activity and certainly in the footwear landscape and it's largely been focused on more of the performance athletic side and more of the performance side and there has been consolidation in general there I think when you think about what we do we talked about being.

Mitch: Strengthening our positioning with the teen with a style led team who is interested in a diversified assortment across athletic and they use athletic for lifestyle purposes, we're really lifestyle driven so it's about lifestyle for us it's about style it's about.

Mitch: About being able to offer the assortment across a number of different categories and so we're quite we're positioned quite differently from a place where much of that activity has has been taking place and we feel great about the opportunity in journeys the opportunity to serve more customers with the strategies that I have been talking.

Mitch: About.

Mitch: That's great.

Mitch: And then just on the gross margin I was curious if you could.

Mitch: Maybe talk a little bit more about the.

Mitch: The impacts in the quarter and maybe perhaps what what sticks and then how you think about.

Mitch: Between balancing price increases versus.

Mitch: Cost absorption as it relates to tariffs for the full year.

Mitch: So are we had called out that we had expected that if you remember we were have been shifting out of canvas product too.

Mitch: Two.

Mitch: In athletic more of an athletic assortment and the margin profile is different between Kansas canvas has the best margin profile, but the athletic part of the assortment has the highest price points and so we are getting more gross margin dollars. So it's not necessarily a bad tradeoff here.

Mitch: So we had called that out in terms of we expected the pressure until we anniversary that in the first half of the year and so that really was the largest driver around gross margin and we expect that that will let off of that through the back part of the year. We do an saundra did call out that we have some one time unusual hits.

Mitch: In the second quarter in particular, but we're working hard because of tariffs and we're working hard to offset that and so we think that structurally there isn't there isn't anything that over the longer term will be affecting gross margins beyond what I just mentioned in terms of balancing price increases versus cost.

Mitch: Option I did say that we are not expecting to get any to take any gross margin.

Mitch: Any gross margin impact as a result of tariffs we are working with our brand partners. There. We are in a place where we are rebuilding journeys overall.

Mitch: Margins, our story and we're in the process of rebuilding and and in rebuilding we've got an eye on overall profitability and so we're again working with our brands to make the best decisions in this in this area and Corey a little more color around the quarter on the margin I also just want.

Mitch: To call out like it did in the script that we did have a really strong quarter for genesco brands grew but it was a pull on our margins as we pulled forward that liquidation product.

Mitch: And then our second quarter margins I, just want to remind everybody that we did already have in our guidance.

Mitch: First round of tariffs and say that adding the additional round of tariffs combined with the mitigation efforts that maybe you talked about and a shift as we have less sales in Q2 related to the genesco brands business, both for lower sales on tariffs as well as the pull forward in Q1 is the impact of the Q2 margins.

Mitch: Got it and then just lastly on inventory.

Mitch: They're a way to breakdown what was price versus units in the first quarter and then how does that shape throughout the remainder of the year.

Mitch: Do you so much.

Mitch: Yeah.

Mitch: This was not yet a factor in Q1 I think tariffs went in place we are already selling inventory in Q1 that we had on hand before tariffs really came into b. So you can.

Mitch: You can know that.

Mitch: Our asps are up pretty significantly and so there is a tradeoff between asps and units and we're trying to hit our sales plan and we think that our inventory is in really good shape. It is up because we were at pretty low low levels of inventory last year, we had.

Mitch: That's sold through rationalized a lot of the journeys inventory to keep it clean and so we were down 20%. When we started the year last year and so there is a buildup to be able to support the sales momentum and so we feel like we've got the.

Mitch: We've got the inventory that we need and our partners work with US no matter sort of what happens through the course of the year to help us to manage inventory in a really positive way.

Speaker Change: Great. Thank you so much.

Mitch: Thank you.

Speaker Change: Thank you I'll now hand, the call back to management for closing remarks.

Speaker Change: Thank you for joining us we look forward to speaking with you again on our next quarter's earnings.

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

Speaker Change: [music].

Speaker Change: Good day, everyone and welcome to the Genesco first quarter fiscal 2026 conference call.

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

Speaker Change: I'll now turn the call over to Darryl Macquarie Senior director of F. P. N. A N IR. Please go ahead Sir.

Speaker Change: Good morning, everyone and thank you for joining us to discuss our first quarter fiscal 2026 results.

Speaker Change: Participants on the call expect to make forward looking statements, reflecting our expectations as of today, but actual results could be different.

Speaker Change: <unk> refers you to this morning's earnings release, and the company's SEC filings, including its most recent 10-K and 10-Q filings for some of the factors that could cause differences from the expectations reflected in the forward looking statements made today.

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

Speaker Change: non-GAAP financial measures are reconciled to their GAAP counterparts in the attachments to this morning's press release.

Speaker Change: And in schedules available on the company's website in the quarterly results section.

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

Speaker Change: With me on the call today is Mimi Vaughn Board Chair, President and Chief Executive Officer.

Sandra Harris: And Sandra Harris, Senior Vice President Finance, and Chief Financial Officer.

Mimi Vaughn: Now I'd like to turn the call over to Mimi.

Mimi Vaughn: Thanks, Daryl good morning, everyone and thank you for joining us.

Mimi Vaughn: Following the significant momentum in last year's back half. We are pleased with our start to fiscal 'twenty six with both sales and operating income coming in nicely above our expectations and last year.

Mimi Vaughn: First quarter sales growth once again outpaced the industry highlighted by an overall, 5% comparable sales increase above the high end of our full year guidance range led again by strong journeys results.

Mimi Vaughn: Our overall comps were relatively consistent for February and March April combined highlighting the strength of our assortments as we transitioned out of winter and into spring.

Mimi Vaughn: <unk> comps increased high single digits as the initial phase of our strategic plan to accelerate growth extended its momentum and journeys continued to gain market share.

Mimi Vaughn: The consumer environment remains choppy and with recent first quarter events. This choppiness has become more pronounced consumers' show a willingness to shop when Theres. A reason like we saw over Valentines day, and Easter and retreat when Theres not.

Mimi Vaughn: And they remain quite selective our merchant and product teams continue to innovate and add freshness to our assortments to satisfy shoppers who are looking for a must have product and a reason to buy something new and who are passing on everything else.

Mimi Vaughn: We know that in this environment. It is compelling footwear and freshness that motivate the consumer to purchase and we've taken major actions to respond to these consumer needs.

Mimi Vaughn: First quarter results are evidence of this outstanding work with all channels posting positive growth comparable sales increased 5% our third consecutive positive increase with both stores up mid single digits and online up high single digits and wholesale channel growth of 5%.

Mimi Vaughn: Journeys comps were strongly positive for the third consecutive quarter as well up 8% and schuh continued its positive comp run from Q4.

Mimi Vaughn: Operating expense leverage of 170 basis points benefiting from our ongoing cost reduction efforts and operating income and EPS improved year over year, thanks to the higher sales and better expenses.

Mimi Vaughn: <unk> would have been <unk> <unk> better than Q1 had we not opportunistically bought back shares which will ultimately benefit the full year.

Mimi Vaughn: Before I give more color on the quarter and our strategic growth initiatives I'd like to address the uncertainty with respect to tariffs, which I know is on everyone's minds and our actions are there active mitigation efforts.

Mimi Vaughn: We've built a solid track record of successfully evolving our businesses and shown our resilience when confronted with economic consumer and fashion disruption, which we demonstrated most recently coming out of the pandemic and we are demonstrating once again with journeys right now.

Mimi Vaughn: The traction we are achieving and the continued strength of our footwear focused strategy and initiatives give me confidence in our ability to navigate the current trade environment, while building on our recent success.

Mimi Vaughn: In summary, we are well diversified across a number of brands, we sell we have limited and reducing exposure to China sourcing and we are implementing many actions to mitigate the impact of reciprocal tariffs. Thus we are well positioned to navigate this.

Mimi Vaughn: While there is some immediate impact and assuming tariffs remain close to levels, where they are today. Our teams are working hard to offset much of the impact this year.

Mimi Vaughn: To dimension. This we need to talk about our retail business, where we buy and sell a mix of in demand brands and our branded business, where we source our own product.

Mimi Vaughn: Retail is the largest portion of that more than 80% of sales, namely journeys and schuh.

Mimi Vaughn: She was a quarter of this 80% and since it is UK based is largely unaffected directly by reciprocal tariffs.

Mimi Vaughn: For journeys, our top vendors are a mix of mostly larger premium global brands with diversified sourcing.

Mimi Vaughn: While this situation is quite dynamic and evolving to date, a limited number of our vendor partners have notified us of immediate price increases in response to reciprocal tariffs.

Mimi Vaughn: We do expect price increases over time, but no. Our brands are working to mitigate tariff cost pressure and ensure key franchises remains stable.

Mimi Vaughn: Brands with momentum as usual have more ability to take price and we anticipate that our partners like us we will remain flexible and respond accordingly to any changes in tariff rates versus current levels.

Mimi Vaughn: We do not expect to absorb gross margin reductions.

Mimi Vaughn: The biggest unknown will be the consumer response to price increases and inflationary pressure in general.

Mimi Vaughn: We will be in constant communication with our brand partners to relay and react to this dynamic or.

Mimi Vaughn: Our experience shows that customers continue to engage and shop with us when we offer the best brands and the highly coveted footwear, they desire positioning us well to manage through this impact.

Mimi Vaughn: Now to our branded side Johnston, <unk> Murphy, and Genesco brands group, where we source product directly.

Mimi Vaughn: Overall for genesco, and including our retail business, we estimated at the start of the year that a little over 10% of our products are subject to China tariffs with branded representing about half of this at 5% weighted toward genesco brands.

Mimi Vaughn: Over the last several years, we've been working diligently to reduce risks across our supply chain with a concerted effort to diversify our countries of production.

Mimi Vaughn: These efforts have meaningfully paid off with dramatically lower dependence on and a path to be almost completely out of China in short order as needed.

Mimi Vaughn: Over the last two months, our teams have swiftly and continuously evaluated our product lines and sourcing plans and taken aggressive action to minimize the reciprocal tariff impact.

Mimi Vaughn: At the current rates, we estimate the reciprocal tariffs in our branded business would result in an mitigated cost increases of roughly $15 million this fiscal year.

Mimi Vaughn: We are taking the following actions among others to mitigate this cost pressure.

Mimi Vaughn: Accelerating increasing or canceling inventory to take advantage of tariff windows.

Mimi Vaughn: Further diversifying suppliers and resourcing to countries with lower tariffs.

Mimi Vaughn: Working with longstanding factory partners to reduce costs and planning for strategic price increases targeted more towards the back half of the year, coupled with demand generation investments.

Mimi Vaughn: While reciprocal tariffs have delivered considerable new challenges as I said, we see a path to offset much of the impact. This year, we are playing offense and we will capitalize on opportunities we see emerging.

Mimi Vaughn: I want to sincerely, thank our people across our company, especially in our product and supply chain areas for working around the clock and for the tremendous efforts you've put forth I've seen and you you take some remarkable actions to put the company in a much better place.

Mimi Vaughn: It's the ingenuity and determination of our highly experienced teams working with our valued brand and factory partners and a high level of execution that allowed us to succeed in times like this before and I'm confident we'll again.

Speaker Change: Now for Q1 color and growth initiatives for each business starting with journeys.

Mimi Vaughn: Our number one priority of this past year has been to improve performance of the journeys business after bringing in a new president Chief merchant and Chief Marketing Officer. The first phase of our strategic growth plan focused on injecting the product assortment with more newness excitement and storytelling and drove a noteworthy double digit comp increase.

Mimi Vaughn: <unk> in the back half.

Mimi Vaughn: Excited about these results along with journeys distinctive <unk> proposition and enhanced focus on the teen girl. Our key brand partners are further stepping up in support of our strategic direction to better serve this customer through elevated product and depth.

Mimi Vaughn: The growing strength of our assortment drove robust comps again in Q1. This comp strength was broad based with seven brands across both athletic and casual posting double digit gains.

Mimi Vaughn: The strongest gains or with athletic brands, although athletic and casual are well balanced in journeys assortment.

Mimi Vaughn: Balkanized or canvas footwear is still pressured but with diversification and growth of these other brands and positive consumer reaction to trends like low profile and two thousands running inspired styles. These increases are driving healthy growth overall.

Mimi Vaughn: Journeys drove strong gains in Q1 store conversion and transaction size more than offsetting softer traffic when consumers pulled back from shopping outside of peak periods.

Mimi Vaughn: We were pleased to see journeys comp strength strengthened through the months of the quarter.

Mimi Vaughn: We expect the same brands and trends to drive Q2 growth and while not dependent on this to drive results. We are also excited about some new brands, we have been introducing or reintroducing at journeys as well.

Mimi Vaughn: We have built inventory as planned and supported this growth.

Mimi Vaughn: This inventory is high quality and we have a strong track record of working with our brand partners to manage inventory to protect margin in times of volatility.

Mimi Vaughn: After reviewing our other businesses I'll briefly highlight the exciting initiatives that drive journeys strategic growth and transformation.

Mimi Vaughn: Staying with retail and moving tissue.

Mimi Vaughn: Comps increased low single digits for the second consecutive quarter.

Mimi Vaughn: Benefits from shoes work on brand and product elevation and improved access to top brands and styles.

Mimi Vaughn: In a very challenging retail environment by sharpening its customer focus and intensifying the messaging around the brand schuh is becoming more important as a key destination for its youth shopper for casual and athletic footwear.

Mimi Vaughn: Like the U S. The U K consumer remains very selective putting pressure on the footwear category and purchases in the quarter overall.

Mimi Vaughn: Key brands and must have styles drove conversion with the same brands as journeys driving the business.

Mimi Vaughn: At over 40% of sales shoes advanced digital capabilities and highly penetrated E. Commerce business remains a key channel for consumer engagement with digital sales growth outpacing stores in Q1.

Mimi Vaughn: Additionally, the kids business continued to perform well.

Mimi Vaughn: We are excited to build on the enhanced brand partnerships and improved product access schuh has gained so far.

Mimi Vaughn: Through our partnership strength, we have already secured significant further improved product access with Nike new balance with exciting new styles and iconic franchises, arriving this quarter.

Mimi Vaughn: While comps were down 2% in Q1, we were encouraged to see growth in store conversion and transaction size demonstrating positive consumer response to the assortment and purchase intent, especially for new product.

Mimi Vaughn: Both full line retail stores and online comps were slightly positive offset by factory stores, where are more price sensitive customer retreated and caused larger store traffic declines.

Mimi Vaughn: One exciting product callout that speaks to the ongoing repositioning is the success of the Anders Sneaker, which is the spring seasons best selling styles.

Mimi Vaughn: This updated and refined approach to a classic sneaker highlights <unk> ability to deliver casual lifestyle products, while staying true to its DNA.

Mimi Vaughn: We've also enjoyed a resurgence in dress shoes with our re imagined Upton dress program Blazers, and outerwear were standouts as well.

Mimi Vaughn: The brand continues to ramp up innovation efforts, delivering a 15% increase in new footwear constructions in the first half this year and even more freshness with a 60% increase in the back half in addition to new fabrics and design details and its apparel program.

Mimi Vaughn: Accelerating its brand repositioning to build awareness and acquire new customers is <unk> other area of focus.

Mimi Vaughn: This includes introducing an updated brand book this year launching a limited edition collection of shoes, and apparel and celebration of its 175th anniversary.

Mimi Vaughn: Rolling out, it's 175 years young media campaign, and shifting marketing spend to further support brand building.

Mimi Vaughn: New stores planned for the back half will also build brand awareness and counteract the deleverage the brand experienced from closed stores in Q1.

Mimi Vaughn: Rounding out the branded discussion our strategy to simplify our license portfolio to emphasize key brands and channels continues to benefit Genesco brands group.

Mimi Vaughn: Our efforts to improve the portfolio will be ongoing.

Mimi Vaughn: New product is resonating with our retail partners and consumers and pull forward sales from some sunsetting licenses helped Q1 sales growth as well.

Mimi Vaughn: It's worthwhile to now take the time to briefly highlight some of the progress we're making in our exciting journey transformation plan.

Mimi Vaughn: While the team, especially the teen girl is well served with fashion apparel and the mall no concept other than journeys goes across athletic casual and fashion footwear for the style led team.

Mimi Vaughn: This is the opportunity and white space, we identified to build on the traditional strengths of journeys to serve a wider teen audience interested in style and trend that is six to seven times larger than the market. We have historically served.

Mimi Vaughn: We're focused on four key areas to achieve this and to be the destination for where this customer shops for the latest fashion footwear.

Mimi Vaughn: First we're focused on diversification and strengthening our product leadership with best in class premium footwear brands.

Mimi Vaughn: We've traditionally been stronger in the casual and canvas categories. A major growth driver is expansion of our premium athletic assortment.

Mimi Vaughn: In Q1 athletic grew well into the double digits over last year and now represents more than a third of journeys footwear sales.

Mimi Vaughn: At the same time, we continued to strengthen and expect growth from casual it's the powerful combination of all three that defines our footwear leadership.

Mimi Vaughn: I've said premium a number of times. This strategy is about more customers and more choice product product elevation is generating stronger average selling prices highlighted by an increase of 12% in journeys Q1 average footwear, our selling prices.

Mimi Vaughn: Second we're investing in our journeys brand, bringing our updated brand positioning to build awareness with this expanded group of teen customers.

Mimi Vaughn: You've already seen a change in our brand platform and imagery with continuity across online and stores and style vignettes online in the journeys blog showcasing our fashion authority.

Mimi Vaughn: We're investing further in influencers content, and social including tick tock and long form content, one callout resonating with our core youth audience are Jasmine Bigfoot series has racked up 44 million views so far.

Mimi Vaughn: We will be launching a fund new brand platform and campaign at back to school and investing more dollars behind it and we're thrilled with the almost 7 million loyalty members. We've added in about two years.

Mimi Vaughn: And our third area elevating our customer experience, there's one outstanding initiative I'd like to spotlight, our new 4.0 store design success.

Mimi Vaughn: We needed an elevated setting to attract new customers and call attention to our more premium products, while at the same time, retaining journeys energy and brand DNA.

Mimi Vaughn: Our new store concept has delivered strong results in a sales lift of more than 25%.

Mimi Vaughn: Our focus is on making the most productive stores even more productive.

Mimi Vaughn: These stores have meaningfully better traffic higher conversion and higher average selling prices and have been attracting a larger share of new customers.

Mimi Vaughn: We now have 39 stores in the four point out format. The results have been so compelling we've pulled forward more stores to remodel. This year by year end, we expect to have 75 plus stores in this new format underscoring our belief in this initiative as a cornerstone of journeys transformation.

Mimi Vaughn: Fourth we're unlocking the power of our people our store teams are a key differentiator delivering exceptional service and representing the heart of the brand our efforts to double down on selecting and training. Our people have contributed to improved store conversion we've been achieving.

Mimi Vaughn: You can see why we're so delighted with journeys evolution and the tremendous opportunity that lies ahead. We're in early innings in this strategic transformation with several waves of planned growth to broaden and deepen journeys consumer appeal.

Mimi Vaughn: All that said turning now to guidance, we remain confident in our plan for journeys and our other businesses, but recognize there is now more uncertainty in the external consumer environment.

Mimi Vaughn: In Q2, so far journeys and GM comps have been tracking at a similar pace to Q1, while schuh has had an offset in timing of the sale period versus last year.

Mimi Vaughn: While we face some disruption in the second quarter in particular because of the shorter timeframes to react to tariffs given our limited China exposure and tariff mitigation efforts, we are reiterating our full year EPS guidance range of $1 30 to.

Mimi Vaughn: To $1 70.

Sandra Harris: Sandra will take you through the details, but we're optimistic about our ability to drive our business forward, especially in the second half during back to school and holiday when there are more reasons to shop.

Mimi Vaughn: We have consistently capitalized on key periods driving outsized volumes during these times and plan to do so again.

Mimi Vaughn: As the results pay off.

Mimi Vaughn: We also plan to continue the cycle of store improvement and investment are higher growth. We still have a lot of work to recapture our peak operating profit levels, but we expect fiscal 'twenty six to be another step in the right direction.

Speaker Change: And now founder will take you through the specifics of our financial results and outlook.

FOUNDER: Thanks Avi overall.

Speaker Change: Total revenue and comps increased in the mid single digits, we effectively leveraged SG&A and our adjusted earnings per share loss improved by five year over year.

Speaker Change: Excluding the impact of opportunistic share repurchases, which were dilutive to EPS for the quarter, but are expected to be accretive over the full year adjusted earnings per share would have been <unk> better.

Speaker Change: Revenues for the quarter of $474 million increased approximately 4%.

Speaker Change: Driven by overall comp growth up 5%, our third consecutive quarter of positive comps.

Speaker Change: With store comps, improving 5% and direct comps increasing 7%.

Speaker Change: Journeys led businesses with comps up 8% followed by schuh up 1%.

Speaker Change: Johnson Murphy comps declined 2%.

Speaker Change: Traffic continues to be challenging, but we are seeing improvements in conversion and average transaction size to help offset the traffic declines.

Speaker Change: The positive contribution from comps were partially offset by lower revenue due to closed stores.

Speaker Change: Adjusted gross margin for the quarter of 46, 7% declined 90 basis points compared to last year.

Speaker Change: Moving down the P&L.

Speaker Change: G&A expense was 52, 5% of sales 170 basis points better than the prior year and with the higher sales better than we expected.

Speaker Change: This favorability was partially offset by sales and marketing investments to drive growth.

Speaker Change: We continued our store optimization efforts ending the quarter with 65 net fewer stores versus a year ago.

Speaker Change: The net closures represented 5% of the fleet and 3% of total square footage, but only 1% of total revenue.

Speaker Change: In general closing these stores were accretive to operating income.

Speaker Change: For many of these stores. We are also seeing positive sales transfer rates that have helped offset any operating loss impact.

Speaker Change: At journeys, we remodeled 29 stores into the new 4.0 format in the quarter, bringing the total remodels to 39 since we started the program in October.

Speaker Change: As maybe discussed and these remodels, we've seen well above average performance in comp with gains in traffic conversion and transaction size.

Speaker Change: As I mentioned earlier earnings per share would have been five since better if we had not opportunistically repurchase shares.

Speaker Change: And the lower share count is dilutive in our last quarter that will be accretive for the full year.

Speaker Change: Our adjusted effective tax rate for the quarter was 26, 7% compared to 26% in the prior year.

Speaker Change: Turning now to capital allocation and the balance sheet.

Speaker Change: Free cash flow for the quarter.

Speaker Change: Was negative $120 million compared to negative $40 million in the same quarter last year.