Journeys Milestone: Eastward Bound

In the next five years, Journeys plans to double its international presence.

To do that, the retail chain aims to open about 100 stores in Canada, about 70 stores in the U.K. and an as-yet-undetermined number in continental Europe, all while upping its door count domestically, too.

Jim Estepa, SVP of Genesco Inc. and president and CEO of its retail group, said growth across the pond will be propelled by the Schuh Group, which Genesco purchased earlier this year for about $200 million, payable over four years.

“Now that we have another banner we can use, we can [take our stores] around the world to markets [such as] Mexico … Japan [and] India,” Estepa said. “We’ve had some really good conversations with some folks over in the Middle East about some things that we can do with either Journeys or Schuh down the road.”

Speaking to Footwear News from Scotland, where Schuh is based, CEO Colin Temple said that over the next two years, Schuh has the potential to double its number of U.K. doors from the 65 it will have by Christmas.

“We used to grow by about three to four stores a year, but certainly with our new owner we’ll get ambitious and look for a bit more growth. We do feel the U.K. can [accommodate] probably at least as many stores as we’ve got at the moment,” he said.

Schuh was founded in 1981 by entrepreneur Sandy Alexander. Temple, then a merchandiser at Woolworths, joined the firm in 1988. Two years later, a team of six, including Temple, staged a management buyout of six of the 34 stores the chain had at the time. Then, in 2004, Temple led another management buyout and the company refinanced itself.

Genesco declined to reveal financial figures about Schuh, but according to the latest available annual report on the Scottish retailer’s website, it turned over 146.5 million pounds, or $234.4 million, in the year ended March 28, 2010, and earned a net income of 8.5 million pounds, or $13.6 million. All exchange rates have been calculated for the period listed.

Schuh, which also holds the license for the Red or Dead brand, boasts a stronger e-commerce and private-label business than Journeys.

According to Temple, Schuh is underpenetrated in the U.K., which alone accounts for about 20 percent of the European market.

“We are very underrepresented down south, and London is a big opportunity for us,” he said.

He added that there could be market share up for grabs, as Schuh and Journeys both offer what he calls “affordable escapism.”

“It’s going to be a level playing field for all retailers, and if it does get choppy it will sort [the strong from the weak],” said Temple. “If you have a good operation … and are reasonably efficient in your operation, you’re still going to be standing when other people are falling to the wayside.”

Moreover, the cross-Atlantic union will result in operational synergies, according to the two companies.

Journeys is looking for tips from Schuh on how to run a better Internet business and have better product development, said Estepa. Schuh could learn how to scale its retail network at a faster rate and run smaller-format stores, said Temple.

Most important, though, both chains now have an even stronger bargaining power.

“When you put us both together, we are [worth] well over a billion dollars. For any of our key vendors, we are their No. 1 customer right now,” said Estepa.

Having mapped Journeys’ trip across the pond, Estepa is now looking north of the border. By year’s end, Journeys will have about 12 stores in Canada, and it plans to open about 100 stores over the next five years — economy and real estate conditions permitting.

“The [Canadian] mall developers have recognized Journeys [fills] a void in the marketplace there,” Estepa said. “They have approached us many times to put our stores in their malls. Our initial results have been extremely good. That will be one of our major focuses going forward.”

As for the Asian and South American markets, he added, “The world is becoming a smaller place and we don’t want to take anything off the table. [We] will [eventually have] several thousand stores all over the world.”

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