Genesco(GCO) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported revenue of $746 million for Q4 2025, an increase of approximately 1% despite having one less week of sales compared to the previous year [33] - Adjusted EPS for the quarter was$ 3.26, up from $2.59 in the prior year, reflecting a 26% increase [11][41] - Comparable sales increased by 10%, with store sales up 6% and direct-to-consumer sales up 18% [34] - For the full year, comparable sales returned to positive territory, rising 3% [13] Business Line Data and Key Metrics Changes - Journeys led the performance with comparable sales up 14% in Q4, driven by strong full-price selling and improved product offerings [34][10] - Schuh's sales remained relatively flat in a challenging UK market, with comparable sales improving from down high single digits in Q1 to up low single digits in Q4 [22][24] - Johnson and Murphy faced headwinds with flat comparable sales in Q4, but new product introductions performed well during the holiday season [26][27] Market Data and Key Metrics Changes - The consumer environment remains choppy, with consumers showing willingness to shop during key events but retreating otherwise [8] - Digital sales for Schuh accelerated to over 40% of the business, indicating resilience in the face of market challenges [23] Company Strategy and Development Direction - The company aims to build on the momentum achieved in fiscal 2025, focusing on store improvement, investment growth, and higher productivity [29] - Key strategic pillars include accelerating digital growth, maximizing the relationship between physical and digital channels, and intensifying product innovation [55][56] - The company plans to invest in Journeys' brand positioning and customer experience, targeting a broader customer base, particularly the teen girl demographic [58][60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the start of fiscal 2026, despite navigating a fluid external environment [29] - The company expects overall comparable sales to increase by 2% to 4% in fiscal 2026, with stronger performance anticipated in the first half [46][50] - Management acknowledged challenges such as store closures and foreign exchange pressures but remains confident in the strategic positioning of the business [84][46] Other Important Information - The company closed 63 stores during the year, representing 6% of the fleet, which was accretive to operating income [37] - Capital investments in Q4 were$ 14 million, primarily directed towards retail stores and digital initiatives [43] - The company achieved a clean inventory position, up 12% from last year, as it adjusted distribution models [42] Q&A Session Summary Question: Can you elaborate on the macro environment and February's performance? - Management noted that February was a roller coaster with weather impacts but highlighted strong consumer turnout during key shopping events like Valentine's Day [75] Question: What is the outlook for Journeys' comparable sales in fiscal 2026? - Management expects positive comps for Journeys in the first half, with a focus on store optimization and a strong product assortment [82][84] Question: How will the strategic pillars impact the business this year? - Management emphasized that the strategic pillars are part of a longer-term plan, with immediate benefits expected from product elevation and customer engagement initiatives [88][90] Question: What is the margin outlook for 2026? - Management indicated that gross margins may face pressure in the first half due to product mix shifts and inflationary impacts, but they expect to recapture margins over time [106]