Mantero Moreno-Cheek

Mantero Moreno-Cheek asked about the next steps for expanding Journeys' brand portfolio following the Nike launch and how current momentum shapes the future growth outlook. He also inquired about the greatest opportunities to improve gross margins, identifying key levers for both near-term and long-term expansion, and sought further details on the impact of the Life On Loud and Peyton Manning marketing campaigns on conversion and traffic, as well as future ad/marketing spend.

Answer

Mimi Vaughn, Board Chair, President, and Chief Executive Officer, highlighted Journeys' strategy of diversification, introducing brands like Hoka and Saucony to build strength in new categories and manage brand rotation. She emphasized Journeys' unique value proposition and strong vendor relationships as drivers for sustained growth. Regarding gross margins, Vaughn identified three main pressures: product liquidation from the Levi's license exit (a one-time hit), tariff headwinds in wholesale (manageable over time with pricing), and promotional activity at SHU. Sandra Harris, Senior Vice President, Finance, and Chief Financial Officer, added that about half of the 100 basis point margin decline was due to license exits, with SHU making up most of the rest, and tariffs would remain a headwind. Vaughn also discussed the shift in marketing spend from performance marketing to brand marketing (e.g., Life On Loud, Peyton Manning) to build awareness and attract new customers, noting that expense management allowed for increased marketing investment.

Mantero Moreno-Cheek requested more details on the performance of the Journeys 4.0 store remodels, the outlook for the UK market and Schuh for the holiday season, and the strategy for the new Wrangler partnership and other licensing opportunities.

Answer

Mimi Vaughn, Chairman, President & CEO, reported that the 55 completed Journeys 4.0 stores are seeing a sales lift over 25% and attracting new customers, with plans for over 80 by year-end. For Schuh, she reiterated expectations for a choppy UK market, with a focus on strong product assortments and disciplined promotions. Regarding the Genesco Brands Group, she expressed excitement for the Wrangler footwear launch in Fall 2026, noting the focus is on larger, more impactful licensing opportunities.

Mantero Moreno-Cheek inquired about the Journeys store remodel program, the expected quarterly cadence of sales and earnings in fiscal '26, and the company's inventory positioning for the upcoming year.

Answer

CEO Mimi Vaughn and CFO Cassandra Harris detailed the Journeys remodel strategy, highlighting strong initial results from 16 pilot stores, including double-digit lifts in comps, traffic, and conversion. They plan 70 remodels in fiscal '26, noting the investment has a quicker payback than new stores. Regarding inventory, Mimi Vaughn stated it is in a "great position," having been intentionally rebuilt with fresh product to drive sales. Cassandra Harris reiterated that comps would be at the higher end of the 2-4% range in Q1, while total sales would be impacted by store closures and foreign exchange headwinds.

Mantero Moreno-Cheek of Jefferies asked for additional details on the holiday outlook for Journeys, specifically what product categories were underperforming, and what levers could be pulled. He also inquired about the drivers of lower gross margin and the outlook for next year, as well as the e-commerce growth opportunity for Journeys.

Answer

Mimi Vaughn, Board Chair, President and CEO, responded that Journeys is well-positioned for the holidays with a focus on scarce, "must-have" items across multiple brands to drive demand. She noted that while traditional boots have been a weaker category, the trend towards mini boots, moccasins, and seasonless items like clogs is strong. Vaughn clarified that gross margin pressure is due to a product mix shift towards lower initial margin (but higher ASP) athletic footwear, not increased promotions; in fact, Journeys was less promotional. She highlighted significant e-commerce potential, pointing to Schuh's 40% digital penetration as a benchmark compared to Journeys' current rate of under 20%.

Mantero Moreno-Cheek asked for an update on the marketing strategy for Johnston & Murphy and inquired about the key footwear trends to watch for the back-to-school season.

Answer

CEO Mimi Vaughn explained that the Johnston & Murphy marketing campaign is designed to build awareness of the brand's evolution into more casual and comfortable styles, but she stressed that new product and innovation are the primary sales drivers. Regarding back-to-school trends, Vaughn highlighted diversification across many brands and styles, noting strong consumer enthusiasm for footwear in general. She pointed to a continued shift away from vulcanized products toward more premium items with higher average selling prices, which is beneficial for Journeys.