... Good morning, and welcome to day two of our thirty-second annual Global Retailing Conference here at GS. My name is Brooke Roach, and I cover the apparel, softlines, and brands sector here at Goldman, and I'm very pleased to introduce our next session with Genesco. Here with me today are Mimi Vaughn, Board Chair, President, and CEO, and Sandra Harris, CFO. Welcome, Mimi. Welcome, Sandra. Thank you, Brooke. Great to be here with you. Shall we run the opening video? Yep, let's just run it. Great! Well, that showed some really interesting things, including your new store format. But maybe to kick it off, you've implemented a lot of changes to the business over the last few years, and some of those strategic shifts have really started to gain traction. Can you briefly discuss the most important changes and the impact that you expect them to have this year? Sure, sure. That's a great question, and for those of you who don't know our brands, we have a branded side of our business and also a retail side of our business. Our brands, we both own brands, and we license brands through Johnston & Murphy and through Genesco Brands Group, and then we have a terrific retail business that sells all the hottest brands to really young people. We have strategically well-positioned businesses. We're coming off of a great four-quarter run with positive comp sales, led by our Journeys business that has notched high single, double-digit comps over the last four quarters and is on a run rate of about 10%, so really a lot of exciting things happening there. We really are in the early innings of our Journeys strategic repositioning and growth plans, and so we think we have a lot of growth and a lot of opportunity ahead of us, and we have the opportunity to unlock quite a lot of earnings that we haven't given up over the last few years, and so the things that are making a big difference is we did a lot of heavy lifting, Brooke. We did closures of stores, optimizing our store portfolio. We took a lot of cost out, but our biggest work in terms of just reinventing our concepts, which we've been doing across the board, has been paying off, and it's been the focus on Journeys that is the... Is a big focus, and it has been our number one priority, and we have been working a lot on overall brand for Journeys, really strengthening our assortment on brand. We've been working a lot on overall positioning with Journeys. It all starts with the fact that we see an opportunity to serve an underserved part of the market that is six to seven times bigger than who we have historically served in Journeys, and it is that teen girl with a teen girl focus, and that's a customer that is well represented on the apparel side, but not as well represented on the athletic side, and we see a real opportunity to... We've always served teens, but an opportunity to lean into a diversified assortment across casual, athletic, and canvas, and so that's been a really important part of our plan, and in addition to that, the product piece of it, we are really increasing brand awareness to serve that market. We're elevating our overall brand assortment. Our 4.0, as you saw, is our new store format, elevating the overall experience and really leaning into the power of our store network, and so all of those things have been a terrific formula for success for Journeys. That's great to hear. Before we dive a little bit deeper into the strategy and some of the changes that have happened, both at Journeys and the rest of the business, let's start with a few topical questions that we're asking nearly every company at our conference. What are your expectations for the environment in the second half of 2025 relative to your recent results? Do you expect things to be the same, better, or worse? Yeah. So, as I said, we have had quite strong performance, and where the consumer is right now is that they are very selective, number one, that they are spending their dollars very selectively. They're well-educated, so they know what they want, and they are bound and determined to get it, and if you have what they want, they are paying up, and we've seen that through much higher average selling prices. We've seen it through conversion. Customers go out, they figure out what they want, and they come in. If you have it, they'll buy it from you, and if you don't have it, they're passing you up to go on to somebody else. And, they are shopping when there's a reason to shop, and they're really going into hibernation when there isn't a reason to shop. And so we have been leveraging all of those opportunities to have the in-demand product. Newness and freshness is absolutely resonating with the consumer, and I think that will continue into the back half, and we have. We're optimistic about our opportunities for the back half, and if you play into all of those themes in terms of must-have product, newness, freshness, getting the attention of the consumer, winning market share versus any other competition, then that really is the formula that's gonna carry us into the back half. So we think it's gonna be about the same in the back half as it has been for the front. ... Are there any reasons why that would change into 2026 on the better, same, worse hypothesis? Again, the consumer is just so discriminating. There's a lot going on out there. I know you've had a lot of conversations about tariffs and where the consumer is gonna be. I think that we're optimistic into next year as well, with the same idea that it's newness, it's freshness, it's giving the consumer a reason to buy that they're gonna come and spend their dollars. You mentioned tariffs, and that's been a very hot topic in retail this year. Can you provide an update regarding your expectations for tariff impacts, both on a fiscal year and an annualized basis? How much of this do you see opportunity to mitigate over time, and how long could these actions take? Sure. So tariffs, as you know, have been very dynamic. We are shielded from big exposure because we sell other brands in our retail business, and that's about 80% of our business. And so what I'm gonna be talking about is really the 20% of our business that is our own, our own brands. And our own brands, we are quite well diversified in our sourcing. We are less than 10% dependent on China, which was the big deal to begin with. I think overall, when you look at the current tariff regime, and who knows what's gonna happen next week and next month, but the current tariff regime hits us in an unmitigated way at, to the tune of about $20 million. Our exposure is quite less than many others that are out there, and through our mitigation efforts, we're working on diversifying our sourcing. We've negotiated a lot with our factory partners. We have terrific factory partners who have we've worked with for a very long time. Diversifying our sourcing, going out and really rethinking how we can work on costing, how we can work on product, we can mitigate most of what we see this year. We think there's probably about $5 million spread across second and third quarters, are the highest, the hardest hit, but into the fourth quarter, things get a little bit better. Then into next year, time helps in terms of being able to diversify and to really rethink the product assortment, and that's very much what we're doing. Our teams have been doing a terrific job. It's a day-to-day thing. It involves a lot of visiting to our factories in Vietnam, a lot of visiting to our factories in India, a lot of pivoting to figure out what makes the most sense for here and now. But our relative exposure is less. Given that you sell a lot of other brands' products, I'm curious how those conversations with your vendors are going. Are they seeking additional margin dollars to try and offset their own tariff impact, or is price the primary mitigation lever at this point for them? And are you seeing any impacts as a result of costs or pass-through straight to the consumer? Sure. So we in our retail business sell a diversified set of global brands, both on the casual side and on the athletic side. And all of these brands are doing just what I talked about in terms of what we're doing because they understand that they want to to mitigate the impact on the consumer as much as possible. And so what our brands have done is that they have taken a look at this and have been very thoughtful and very selective about about price increases. And so it is very much if you've got hot product, hot product is gonna sell out. We work on highly allocated models. You can get what we sell other places, but you can't get it everywhere. And it's very much about allocation and about having that right product. And so our brands have been very thoughtful about how to take price increases, and they have been minimal to this point. We have seen some price increases. I think they're spreading it out across their global footprint as well. In terms of the conversation, much of any impact that we have seen so far has been translated into higher MSRPs. And you know, in terms of where we are thinking about building back our profitability, we have a lot of opportunity to build back our profitability. So the conversation we have with our brands is that we don't expect that we're gonna get any margin hit, that we don't have room in our P&L to be able to take that margin hit. But it's a very constructive, very productive set of conversations we're having. Very clear. Let's turn back to some of the exciting initiatives that you have going on at Journeys. Mm-hmm. You've delivered some very robust comp improvements of late. What are the drivers of that, and what gives you confidence that that is sustainable? Sure. Well, we think it's very sustainable. We're in very early innings of what we're seeing happening within Journeys, and it all starts, Brooke, with where we are with serving that larger customer market. And I know you've been a Journeys shopper through the ages. The beauty of our model is that we can evolve to whatever is relevant for that teen and that young consumer, and our sharp point in terms of our of strengthening our positioning has been around that teen girl. And so as we think about the product assortment, the first wave of opportunity that we had was leaning hard into the product assortment, getting more depth, getting more breadth, working with our brand partners. We typically are the number one or number two partner on the casual side. We have been growing our strength on the athletic side, and then canvas is another leg of our stool. And so when we think about where our opportunity is, it is footwear leadership in an elevated assortment, elevated beyond where we've been. And so what we've been seeing in terms of driving comps has been elevated price points, which have translated into higher ASPs. We always sold fairly robust price points on the casual side, and we have been matching that on the athletic side. And so altogether, we are appealing to this customer, this larger customer base in a more with more elevated product in a more elevated environment. And so product is really the first piece of it. The fact that we comped positive comps, and in Journeys in particular, we are looking at comping the double-digit comps that we had last year in back to school. We've had a great back to school, and we're comping double digits on top of double digits. And so I think that a lot of questions about how long can this run be? Do you have one year worth of product opportunity? Well, in fact, we are better assorted now than we were last year. Our merchants did a fantastic job of chasing very much in-demand product, and we've had a chance over the last year to build even further what that assortment represents. And so elevation of product, more breadth and depth of the leading styles. We are always introducing new brands. We're not reliant on those new brands to be able to drive our comps, but we do see that we have more opportunity within our product assortment and within our overall selling prices. The second area that we've been spending a lot of time on is that to appeal to this larger audience, we've got to get more Journeys brand awareness out there. We've been around for some time, but we have new generations of teens that we constantly have to appeal to, and so we have been investing a lot in brand awareness and in brand development. And so you will see that we are really thinking about all the touch points. If you visited our site lately, if you've visited our stores lately, you'll see very different imagery in terms of what Journeys is about, and we have very. Our team's done a great job of being able to retain the customer base that we've had, but then also reach out to this broader base of customers who we always had something for them, but they didn't really think that Journeys was a place for them to go shop. And so, the brand awareness, the updated imagery, the tying together our stores into social, into our online platform. You'll see a lot of style blogs. We're style positioned. It is for the style-led girl, and so we are talking about style. We've got a style blog. We've got a lot of vignettes about what is in fashion, what is very much on trend. And, you know, we have spent a lot of time on social content. We have this amazing, long-format content that has been on TikTok and has been in other places. It's the Jasmine series. If you all haven't seen it, you should definitely check it out. It's about a Bigfoot who works in a Journeys store, and we've had 90 million views of that content so far, and we're about to launch a fantastic new campaign, Life on Loud, and it is all about music and celebration and youth, and we're gonna take that. It's a video. It's a remix of a nineties video. It celebrates the mall, it celebrates youth, it celebrates fashion, and you know, taking that video, there are a number of influencers that are in that. The social content will multiply from that, and really just getting the word out about what Journeys is all about. That's our second pillar. Our third pillar is about an elevated environment, and so you referenced our new 4.0 store, which you all saw in the video, and that 4.0 store is something that we've had great results on. It's a cleaner aesthetic. It's a very shoppable environment. We've seen 25% plus growth in those remodeled stores. We've spent a lot of investment in our digital channel, and now we are investing within our store channel, and so those remodels have been paying off nicely as well. So broader customer group, much more elevated product, being able to shop in a terrific environment. And then the last piece is that we've always been known for our store people and our store experience, but we have been investing in training and upgrading our store people even further, and so that's paid off in tremendous conversion. So it's a multipronged, integrated strategy to take Journeys not to where we were, but to a place that Journeys has never been before. That's a lot, that's a lot of different initiatives- It's a lot. -that seem to be working. Let's dive a little deeper into the store strategy with the 4.0s, 4.0 fleet. You have just talked a little bit about some of those productivity and comp trends that you're seeing in the new fleet, but how does the upgraded store fit within the broader strategy? Mm-hmm. How are you thinking about the pace of acceleration? I know you're doing 80 this year, maybe 80 plus by year-end. Very well. I guess, can you give us an update on what your expectations are for that as you roll that out through the balance of the fleet? Sure. So, the 4.0 is probably the most visible manifestation of the new strategy, and the important part about the new strategy is that we really have to speak to the customer. And so you walk in, it's very shoppable. You see very clearly where the opportunities are across brands. We are seeing higher traffic, we're seeing better conversion, we're seeing higher average selling prices, and what's interesting is we've got much of the same assortment as we have in the rest of the store base, but yet that customer is reaching up to buy even higher average selling price product. And so the average selling prices have been better than the rest of the chain. And with such growth, it opens up opportunities for us thinking about even bigger stores. And so, can we take a $2 million store, make it a $4 million store? Can we take a $1.5 million store, make it a $3 million store? With such robust growth, it opens up opportunities for larger volume stores. Specifically around where we are with the 4.0s, we just started rolling them out, and it is the fourth generation, which is why it's called the 4.0. We started rolling them out in October of last year, so it's been a fairly short period of time. We will have over 80 rolled out this year. We're concentrating on the top 250 stores. That's where we have the highest volumes and can make the biggest impact. If you think about that, the 80 stores would represent maybe 10% of our chain, 25% of overall lift. That's a two and a half points of comp, and so we can bank that this year and then roll out the next 100 stores next year and 100 stores the following year. And so we have lots of comp drivers within the 4.0 store formats over the next couple of years, and we don't yet know how we're gonna comp the comp. One of the major objectives of the 4.0 is to attract new customers, and so we are attracting more new customers without turning off our existing customer base, and so that's a really important part of the overall strategy. You talked about attracting a new customer base. Earlier, we talked about some of the social media marketing that you're doing. Can you put it together? How many of your... What proportion of your new customers are coming in through the stores versus your online site? Mm-hmm. And then are there any demographic or interesting consumer trends that you're seeing with the consumer cohorts in your new acquisition? Mm-hmm ... consumers versus the ones that have been legacy- Mm-hmm Journeys customers? So it's early to tell that yet, and we are monitoring that, quite closely. I mean, we tend to serve, a more affluent customer within Journeys, but we have a pretty broad range of customers. And, serving the teen market, parents, a lot of times, want to be able to support what their kids want, and, kids' ability to express themselves through footwear is something that we count on happening season after season. And, so, you know, as we are thinking about new customers, it's too early to know yet because we've just rolled out this 4.0 concept. Customers are just figuring out that there's an opportunity within Journeys. The preponderance of the comp growth that we've driven so far has been with our existing customer base, and so that bodes well for us, that we've got a very strong base to be able to build on top of, and so the second pillar that I was talking about in terms of brand awareness and reaching out to a broader segment of consumers is a really important part of it. We do know that in these 4.0s, that we are attracting more new customers into the brand than we have in the rest of the store base. Online is an opportunity for us as well, but that's gonna happen really through all of the marketing opportunities that we have underway. One of the other changes that we've seen in Journeys the last few years is the new brand partnerships that you've had, such as HOKA, Saucony. Mm-hmm. Can you elaborate on the rollout of those? How many stores are some of those high-heat brands in today? What do you think that can get to- Mm-hmm, mm-hmm ... and what's the path for additional brand expansion from here? Sure. So we are constantly introducing new brands, and I think that we've talked about HOKA and Saucony as some of the more recent additions. And part of why those brands are really important is that they represent what our customer is interested in, and so our customer is really interested in lifestyle running. They're really interested in 2000s running styles. And so having that full complement, when you open a young girl's closet and you see what's in that closet, you see just a range of product from Birkenstocks to UGG to Adidas to you name it. And so being relevant is important in terms of having that full complement of brands. And so most of the brands that we introduce start smaller. They start in 50 stores, 100 stores, 200 stores, but we have incredible opportunity to scale it up through our store network. With hundreds of stores and a very vibrant online presence, we can sell a million pairs of shoes really quickly. So our merchants are very adept at being able to figure out how to scale, when to move, when to move into a brand, when to move out of a brand. It's really very much part of the Journeys secret sauce and the formula that we have. You mentioned a couple customer preference changes or the fact that customers are very interested in the 2000 sneaker trend. Can you give us a little bit of comment, commentary about what you're seeing in the back-to-school season regarding silhouette preference? Mm-hmm. What trends are you seeing, and are there any new silhouettes or categories that are starting to trend? We've had several cycles, canvas- Sure ... vulcanized, skate, et cetera. Sure. You've seen all those iterations of style, and Journeys can do everything. And we've had skate, we've had goth, we've had preppy. We've had you name it. Right now, the beauty of where we sit in footwear is it is so diversified. There are so many things that are working. I called out six brands that had double-digit performance during the second quarter that we're counting on going forward and others to be able to really continue to drive comp sales. And so consumers we've seen have been on a clog trend. They have been on a exactly 2000 runnings. We've had a great sandal season. There's been a lot of interest in sandals. We have early signs of boots performing in a way we haven't seen them perform over the last couple of seasons, and it's early, and it's summer, and it's still warm, although it's much cooler in New York these last few days. So the diversification is the thing that is the dominant theme today, and it's very brand specific, and it's very much this consumer who wants to express himself or herself differently from one day to the next. And so today, I might wake up, and I might put on my sandals. Tomorrow, I might put on my running silhouettes. The next day, I may put on my boots, and so we've got a lot to choose from, a lot to be able to, you know, to pick from, to grow and to serve our customer. We've spent the vast majority of our conversation on the momentum at Journeys- Sure. Because there is a lot going on there. Sure. But let's pivot and look at your shoe business- Mm-hmm. For a moment. Can you elaborate on recent performance there? Where are... What's driving the most traction, and what's your outlook for- or what are you seeing in the U.K. shopping environment overall? Sure. So we acquired Schuh when we went to go open Journeys stores. So for those of you who aren't familiar with Schuh, it's very much serves the same customer and has the same brand assortment. Not everything translates from one side of the Atlantic to the other, but we had a lot of success sharpening our overall focus very much for the young, 25 and under, teen and young college customer with a sharp point on that female customer. And so we had a lot of success over many years gaining market share and growing in around that customer cohort. Of late, the U.K. market has been pretty challenged. We had a couple of quarters of really nice positive growth, and in May and in June, really saw a pretty significant drop-off overall in store traffic. The themes around the consumer are the same, but they are even more discriminating, and so the brands and the styles that are resonating at Schuh are the ones that are resonating at Journeys, but there's limited interest in the rest of the assortment, and so we've got an action plan for the near term, which is to drive a lot of traffic and conversion in stores, to amp up our marketing, to really go after an even better assortment and fill in a product in the near term. But over the longer term, it's many of the items from the playbook of Journeys, which is just building into a larger opportunity of a marketplace with more elevated product, great brand partnerships, and a lot of marketing to let the customer know that we're here. Let's turn to Johnston & Murphy. Mm-hmm. What are the key drivers of incremental improvement from here? Yeah, so we've got a diversified set of customer groups that we are focused on. Johnston & Murphy has been another story of reinvention, where it's a 175 -year-old brand. It's, we believe, the longest continuously operated brand in the United States. And it's uniquely been known for its dress shoes, and the pandemic gave us an opportunity to reimagine what Johnston & Murphy is all about. We leaned heavily into casual, into more comfortable styles and products. We really created more of a lifestyle brand, where 50% of the product that we sell is non-footwear product and had lots and lots of years of growth coming out of the pandemic. Last year, we hit some headwinds in terms of just overall comp performance, and what we noted is that the product cycle and being able to develop product newness and freshness and bring that to our stores and to our online channels was even more important than ever before, and so gone are the days, Brooke, of two seasons worth of product. We found that we needed to rethink our product development process, where we had to inject more product, more freshness into the assortment on a more regular basis, and that really requires more into the innovation pipeline. It requires more opportunities for us to drop product mid-season, and so we've been spending a lot of time working on that. Our lead times are long, and so at the end of about a one-year process, we were pleased to see our comps inflect positively, and so the lineup for Johnston & Murphy is to build on this product pipeline and the innovation, and then also on just the strategic repositioning in the mind of the consumers. We think everybody knows about Johnston & Murphy because it's a 175 -year-old brand, but yet the brand awareness is relatively low, and so we've got a fantastic campaign around the 175 years young. We have been shifting a lot of our marketing spend into brand building. We have a super exciting new brand spokesperson, who will be revealed in October, you all will certainly know, who's really representative of the brand and will do our brand some just great things for our brand in terms of just building overall awareness. And so we're excited about the opportunity that Johnston & Murphy represents. That's really great. We touched a little bit about pricing earlier, but what are your expectations for the pricing of the items in your store into the back half of 2025 and into 2026? Have you seen any pushback or elasticity as a result of recent changes? And Sandra, what do you think about promotions from here? How does this inform your expectations? Yes, I'll start there. So on pricing, you know, we're taking a multitude of efforts to help offset the cost headwinds, right? And pricing is one of those. As Mimi mentioned earlier, we're doing a lot of things across our business, including negotiation with our factory suppliers, our efforts around expense reduction, and also around pricing. So what we do know is that our customer is willing to save and to buy what they want, and that's what we are focused on, and that's where we're spending our time and efforts with our 4.0 remodels, as well as our brand awareness campaigns and marketing. And so, you know, in regard to that, we think the consumer will continue to want to buy the brands that they love, and that's what we're positioning ourselves to do. you know, as far as promotional environment, we, you know, obviously are seeing that in our U.K. business right now, which is highly competitive. I think, you know, time will have to tell on all aspects of what's gonna happen. It's been a very volatile environment since April, and so I don't think any of us can really continue to predict, but what we're doing is making sure that we have the product that they really wanna buy and that they're willing to pay for. Let's keep on the line of margins, and speak a little bit about SG&A. Where do you see opportunities to drive efficiencies and cut costs further going forward, and how are you thinking about balancing that with reinvestments in growth? One question that we're asking is just your expectation for non-tariff margin drivers. Do you think they'll be better, the same, or worse into 2026? Yeah. Again, starting with 2026, I think it's highly unpredictable at this point. We've seen a lot of volatility, and what we know is that we're flexible and agile in responding to that. We have been focused over the last two years on productivity and efficiencies through our cost initiatives and programs, but as Mimi talked about, we're really investing for growth, and the growth is really important for us because we have a large fixed cost base with our stores, and we know that our consumer wants to shop in our stores. And so, you know, we believe that, you know, what we've seen through the first half, especially in our Journeys business, with the fourth consecutive quarter of positive growth, that's driving a lot of leverage in our SG&A, and we're expecting that for the full year, we're gonna grow 3%-4% and, you know, have 4%-5% comps, and as we do that, and especially do it through our store platform, we're seeing a lot of leverage in our business, so you know, we're predicting 80 basis points-100 basis points of leverage through our SG&A as we look into the back half of this year and as we continue to focus on investing for growth and things that Mimi talked about, which are our 4.0 store formats, our brand awareness campaigns. As we do that over the next few years, 100 basis points of leverage each year is gonna be meaningful to our bottom line and our operating income. Let's tie all that together with the meaningful opportunities from SG&A. What do you think is an achievable medium-term EBITDA margin for the business, both on a near and medium-term basis? What are the most important drivers? Is it, is it indeed SG&A? Yeah, I think that it's a combination of things. It's just like our strategy, right? There's many prongs to it. One of the most important things is for us to return to growth, and we're doing that, right? We've posted the fourth consecutive quarter of growth and, you know, to continue to deliver on programs and initiatives that support that growth, as Mimi talked about, we're seeing this 25% improvement in these 4.0 stores, right? So that growth is gonna help us to leverage our fixed cost base, and so all of that, combined with our intense focus on, you know, implementing programs and initiatives that help to offset the cost headwinds, is gonna be major contributors to our operating income. And so, as we look forward and go forward this year, we're expecting improvement in our operating income. As I said, 80 basis points-100 basis points. We do have some headwinds in our gross margins this year with the timing of the tariff implementations. You heard Mimi talk about, there's about $5 million there, and then some of the promotional activity in the U.K., but we're well-positioned through our investments for growth to really leverage our fixed cost base going forward. Just to add on to that, so if you think about where we sit right now, what Sandra talked about is the very strong connection between growth and. At a 3%-4% growth, we're leveraging 100 basis points. And so our plan is to continue to drive growth over the next 2-3 years and continue to add about that level of improvement to the bottom line. And 6% operating margin has been where we've been historically. That gets us to 4%. At 4%, we get close to $100 million, which drives several dollars' worth of EPS, and so a really good formula, a lot of opportunity, as I began the conversation with, to unlock significant earnings in the businesses that we have over the quite near term. That's great to hear. Mimi, Sandra, I think we're about out of time. Any final thoughts that you'd like to leave with the audience? Yeah. I think, you know, we are excited about the momentum we have in our business. We have taken our... You know, we're building on our fifth consecutive quarter of positive comp growth. We're in very early innings of the Journeys strategic growth opportunity. We see quite a lot of runway ahead of Journeys, not only in Journeys, but in the rest of our businesses. We're working hard to accomplish that, and then I think that the most important thing is really leading to significant growth in earnings and opportunity in the near term. Great. So thank you for having us. Thank you so much. Thank you. Thanks to all of the audience for tuning in.