Genesco CEO Mimi Vaughn gave further insight into the company’s plans with its Journeys business after a disappointing first quarter.
On the company’s quarterly earnings call on Thursday morning, Vaughn doubled down on the notion that excess inventory and heavily discounted athletic footwear have pushed customers to trade down from full-price footwear, following several increases due to inflation.
“I was anticipating, just as much as everyone else in the industry, that athletic discounting would subside by the time we hit mid-year and before back-to-school,” Vaughn told analysts. “But we’ve actually had a number of others within the industry who have said that discounting will continue through the balance of the year. As a result, they’ve built more markdowns in to their plans to be able to affect that clearance.”
“These are really dramatic discounts, and it’s on good products, and it’s on products that normally isn’t discounted,” the executive added. “And that’s why we think it attracts a lot of attention.”
Vaughn reminded analysts on the call that Journeys remains a “full-price business” and as a result, she feels the customer is “sitting on the sidelines.” The executive also admitted that consumers have an appetite right now for newness, and in recent times, Journeys has gravitated to core products. “It made a lot of sense because it was a safer way to play it when there were so many ups and downs in the consumer cycle,” Vaughn said.
But the executive said that newness is on the way. “Our Journeys merchants have really hustled,” Vaughn said. “They’ve moved heaven and earth to chase into some of this newness. And there are some examples of exclusive products for Journeys that we brought in that sold out, that is just newness and freshness. We’re chasing into products that we were testing, and we had good reads on. We’re shortening the cycle of being able to bring in product.”
As for what is working now, Vaughn noted that there’s a “real interest” in comfort casual shoes. “Part of what we’re seeing is this real trend in clogs,” she said. “And we’re seeing the trend in clogs across lots of different brands.”
Moving to the brand’s store strategy, Genesco CFO Thomas George told investors on the call that while the company will close more than 100 underperforming Journeys stores this year, the loss will be offset by a slate of openings. “We’re going to be down a net 78 stores for Journeys over the course of the year,” George confirmed.
George added that the new stores Journeys will open will be located off-mall and in some premium outlets, something relatively new for the retailer. Most of those will be open in time for the back half of the year, the executive said.
“We are primarily located within mall locations right now for Journeys,” Vaughn added. “We’ve got a number of street locations for Schuh, and a number of airport locations for Johnston & Murphy. So, this is really a newer initiative for us.”
As for what sparked the move to look outside of the mall for retail space, Vaughn said that in recent market research done by the company, more consumers like to go to off-mall locations multiple times per month and enjoy the convenience of shopping closer to home. “We’ve had success with a number of early off-mall locations,” the CEO said. “We’ve opened 13 of what we expect to open to be 25 off-mall stores. And these are with a larger footprint and ability to carry the full assortment of kids and adults.”
Ultimately though, Vaughn remains confident Genesco can turn Journeys around. “We have a great track record of successfully navigating times like this and have seen multiple adverse economic cycles and fashion shifts within Journeys,” Vaughn said. “We’re taking the right action to respond to the consumer environment and to drive profitability as we move forward.”