Genesco Inc.

Go ahead, sir. Good morning, everyone, and thank you for joining us to discuss our fourth quarter fiscal 25 results. Participants on the call expect to make forward-looking statements reflecting our expectations as of today, but actual results could be different. Genesco refers you to this morning's earnings release and the company's SEC filings, including its most recent 10-K and 10-Q filings, for some of the factors that could cause differences from the expectations reflected in the forward-looking statements made today. Participants also expect to refer to certain adjusted financial measures during the call. All non-GAAP financial measures are reconciled to their GAAP counterparts in the attachments to this morning's press release and in schedules available on the company's website in the quarterly results section. We have also posted a presentation summarizing our results here as well. With me on the call today is Mimi Vaughn, Board Chair, President, and Chief Executive Officer, and Sondra Harris, Senior Vice President, Finance, and Chief Financial Officer. Now, I'd like to turn the call over to Mimi.

Thanks, Daryl. Good morning, everyone, and thank you for joining us. We were pleased to deliver a very strong finish to the year, highlighted by revenue and gross margins that exceeded our expectations and operating profit at the high end of our forecast. Our performance was driven by journeys, as the initial phase of our strategic plan to accelerate growth continued to gain traction, and journeys' performance far outpaced the overall market. These results underscore the team's outstanding execution of our near-term initiatives and the strong consumer positioning and resilience of the journeys business. On the whole, the consumer environment remains choppy. Consumers continue to show a willingness to shop when there's a reason, like we saw during the holidays, and retreat when there's not. And they remain quite selective. In response, we continue to innovate and add freshness to our assortments to satisfy shoppers who are looking for must-have products and a reason to buy something new and passing on everything else. We've taken major actions to evolve in response to the substantial changes in consumer shopping behavior. We've also demonstrated a strong track record of successfully evolving each of our businesses, emerging even stronger when confronted with economic and consumer disruption. The fourth quarter is evidence of this, with comparable sales increasing 10%, with both stores up mid-single digits and digital up high teens. Journeys comps accelerating and increasing double digits for the second consecutive quarter, and comp trends at SHU and J&M improving sequentially. Gross margins expanding 60 basis points driven by strong full-price selling. Operating profit increasing 24%, even with a shift of an important week out of the quarter. And adjusted EPS of $3.26 compared to last year's $2.59. Sandra will walk through our year-over-year comparisons in more detail, but I want to remind everyone that Q4 last year had an extra week due to the 53rd week in the retail calendar. Adjusting for this extra week, the shift of this high-volume week out of the fourth quarter into the third this year, total sales would have been up 7% versus the 1% we reported. In terms of the full year, it's incredibly encouraging to look back and see we accomplished priorities we outlined at the start of fiscal 25 and that our work led to improved results as the year progressed. For fiscal 25, comparable sales returned to positive territory, rising 3%. Total sales were at the high end of our guidance range, even as we closed more stores than initially planned. and EPS came in at the higher end of our range and was up meaningfully versus fiscal 24. Journeys turnaround was our number one priority as we started the year. Like the fourth quarter, our annual performance was led by Journeys along with Strength in Digital following a multi-year investment cycle in this channel and meaningful progress against several growth initiatives. Some important highlights for the year include We grew our digital business by double digits, expanding our digital penetration to 25%, effectively doubling the size of this profitable channel over the last five years to over a half a billion dollars. We significantly grew membership in our loyalty programs to achieve the important milestone of over 10 million members, allowing us to hook our data analytics and CRM programs into this first-party data to drive repeat purchases and increase customer value going forwards. We further leveraged the interaction between stores and online, accelerating buy online, pick up in store since implementing it a year ago to a peak of almost 20% of Journey's online sales in December. We positioned the business for better productivity and profitability with 64 Journey store closures as we reshape our footprint to align with the shopping patterns of today's consumers. and we achieved our target run rate of annualized cost savings in connection with the work over the last two years, realigning our cost base. We're really proud of the strides we've made driving improvements in the business. We still have a lot of work to do to recapture the operating profit we gave back over the past couple of years, but fiscal 25 was a step in the right direction. Now for more color on our individual businesses. Starting with Journeys, Fiscal 25 was the tale of two halves. Our focus in the first half was on the initial phase of Journey's strategic growth plan. We onboarded a new president, Andy Gray, and a new chief product officer at the beginning of the year who collectively brought strong merchant backgrounds, excellent vendor relationships, and expertise in brand building and product innovation, adding to the strong team in place. This phase centered on injecting the product assortment with more newness, excitement, and storytelling to drive an inflection in Journey's comps. The team did an amazing job quickly adding significant newness across several casual and athletic brands. Our key brand partners, very enthusiastic about Journey's unique team customer proposition, stepped up with tremendous support of our strategic direction to better serve this customer with a spotlight on the teen girl through elevated assortments and depth. Fueled by improvement in the product offering and the visual reset of our stores, among other actions, comps improved sequentially from Q1 to Q2, turning positive in July. The plan for the second half was to build on this strong product momentum, coupled with increasing investment in the Journeys brand and elevating the customer experience to deliver improved results during the important back-to-school and holiday seasons. We added an exceptional marketing leader as the new Chief Marketing Officer at Journeys at this time to further augment our leadership. After turning positive in July, Journeys' comps accelerated, increasing double digits in both Q3 and Q4, highlighting the immediate and meaningful impact this first set of changes has had on the business. In the fourth quarter specifically, increased allocations and bets on key footwear brands and styles paid big dividends and fueled strong full price selling throughout the holiday quarter, delivering double digit comps both in stores and online. Positive traffic and meaningfully higher ASPs helped drive these results. Both casual and athletic brand sales were up, and after a couple of years of declines, the boot category leveled off. Congratulations to Andy and the rest of the Journeys team on this outstanding performance. Staying with retail and moving to SHU, after back-to-back years of record sales and market share gains, in fiscal 25, SHU's top line remained relatively flat in a very challenging and highly promotional declining UK footwear market. Comp trends recovered as the year progressed, improving from down high single digits in Q1 to to up low single digits in Q4. This inflection was driven in large part by digital sales, which have remained resilient in the face of tough market conditions, accelerating high single digits to over 40% of the business. SHU was compelled, especially in Q4, to buy a portion of its sales through discounting to match the promotional stance of its competition. The team worked hard in response to the top-line softness to manage expenses despite wage pressure and store deleverage, but it wasn't enough to offset the lower store sales and gross margin pressures, and profitability took a step backwards in fiscal 25. Despite the challenging backdrop, according to Kantar, SHU maintained the number 10 position overall in the UK footwear market, picking up share and moving up two places in ranking in the youth market, becoming more important as a key destination for this youth shopper for casual and athletic footwear. With the promotional activity, SHU's inventory is also in a clean position as we start the new year. Now, turning to our branded business, starting with Johnston & Murphy, similar to SHU, after years of growth and strong comps and two consecutive years of record sales, J&M faced headwinds this past year. These earlier records resulted from the team's success at reimagining J&M from its heritage as a dress shoe brand to a more comfortable, more casual lifestyle brand with products completely redefined for today's more casual dressing. This year, however, overall demand in the market for men's non-athletic premium footwear slowed at a high single-digit pace. Despite the slowdown, J&M continues to make inroads with more casual footwear and in apparel and accessories like outerwear and leather goods, which now represent about half of the direct-to-consumer sales. Like our other businesses, J&M sales trends improved in the second half versus the first, with flat comps in Q4 representing the best quarterly performance of the year. New product introductions performed very well during the holiday season, selling through at full price, and driving transaction value and gross margins higher year over year. This helped offset lower traffic levels across all channels to deliver higher operating profit in Q4, despite a decline in sales and operating profit declines earlier in the year. Wrapping up the branded discussion, we achieved notable success with the repositioning of Genesco Brands Group. Efforts to simplify the licenses portfolio to emphasize key brands and channels means lower sales in the short term but considerably more profit, which was the case in both our Q4 and full-year results. Genesco Brands Group was a significant contributor to our performance this year, and I'd like to congratulate and thank Rick Higgins and the GBG team. Now turning to our outlook for fiscal 26. We are pleased with our start to the year. And although we are navigating a very fluid external environment, we plan to build on the comp and earnings momentum we achieved this past year, and in general, shift to a cycle of store improvement and investment for growth and higher productivity. We expect positive comps overall, with higher comps in the first half as we anniversary journeys negative compares, with total sales growth being offset to some extent by continued store footprint optimization and foreign exchange pressure. Like this year, we expect our improvement to come from better overall productivity, especially in the higher volume back half when we can more meaningfully impact the bottom line, even with lower top line growth. All of this starts and ends with our amazing and talented people. Our unmatched ability to reinvent ourselves, evolve, and grow over the years with a deep understanding of what our customer wants is our true competitive advantage and real cause for celebration as we bring our 100th anniversary year as a company to a close. Before passing the call, I'd like to thank you all for your tremendous efforts and dedication, which paves the way for further exciting growth and progress ahead. Sandra will now cover the financial results for the fourth quarter and details of our outlook for the coming year, after which I'll provide more specifics on the key initiatives that will drive our businesses forward.

Thanks, Mimi. Overall for the quarter, we grew revenue, including comps up double digits, improved our gross margin, leveraged SG&A, and delivered adjusted EPS of $3.26, 67 cents higher than last year. finishing the year at the higher end of our guidance range and achieving consensus for the full year adjusted EPS of 94 cents. Revenue of $746 million was up approximately 1%, with one less week of sales in the current quarter and fewer stores. The increase in revenue was attributable to total company comps up 10%, with stores up 6%, and direct comps up 18%, with all measures showing sequential quarterly improvement throughout the year. All of the businesses delivered improved comps in the quarter, led by journeys up 14%. J&M, even with traffic shortfalls, had flat comps, and shoe comps were up 2%, driven by e-commerce and promotions. The positive contribution from comps were partially offset by lower revenue due to closed stores and the impact of the 53rd week shift. For the year, the 53rd week negatively impacted sales by 25 million, whereas the impact on the fourth quarter was approximately 15 million higher due to the shift of key retail weeks between the quarters. Overall, gross margin improved 60 basis points compared to last year. Journey's gross margin was higher by 60 basis points on fewer markdowns. J&M improved by 90 basis points on strong full-price selling and better cost. And Genesco Brands Group delivered higher gross profit dollars on lower sales and improved gross margin. The continued promotional environment in the UK resulted in 170 basis points of lower gross margin in our shoe business. Moving down the P&L, SG&A expense was 40.5% of sales, 60 basis points better than the prior year. The improvement was from better occupancy costs and various cost savings initiatives that were partially offset by increased marketing investment to drive sales, as well as from the rebuilding of our bonus expense. We continued our store optimization efforts, ending the quarter with 63 net fewer stores versus a year ago. which was an increase over the 46 that we had previously anticipated. The closures overall represented 6% of the fleet, 5% of the square footage, but only 2% of sales. And closing these stores was accretive to operating income. For many of these stores, we have also seen positive sales transfer rates that have helped offset any operating income loss impact. For the 16 new 4.0 Journeys remodels, open since we started the program in October, we've seen well above average performance in comp, traffic, conversion, and transaction size. We will continue to optimize the fleet to better support the consumer's preference to shop both in-store and online, and to enhance and improve the in-store experience across our fleet. In addition to the four wall savings related to right-sizing the fleet, we have achieved the higher end of our target run rate range of 45 to 50 million of total expense savings before reinvestment through the cost reduction program that began in fiscal 24. The savings were from reduced rent, optimizing cost in warehouse freight and logistics, and labor and other procurement efficiencies. The strong performance throughout the fourth quarter resulted in adjusted operating income of $47.9 million compared to $38.5 million for fourth quarter last year. This all resulted in adjusted diluted earnings per share of $3.26 for the quarter versus $2.59 last year. Turning now to capital allocation in the balance sheet. We generated approximately $103 million of free cash flow in the fourth quarter ending the year in a positive net cash position. We ended the year with clean inventories, up 12% from last year, as we changed distribution models in our Genesco Brands Group that resulted in overall cost savings, and as we rebuilt inventories and positioned journeys to have more of the key items that consumers are seeking, a strategy that paid off in the fourth quarter. Our strong cash flow, balance sheet, and liquidity under our evolving line of credit provides the financial capacity to support all of our strategic efforts. Capital investments in the fourth quarter were $14 million, primarily directed to retail stores and our digital and omni-channel initiatives. We opened four stores in the quarter and closed 28, ending with 1,278 total stores. Lastly, We didn't repurchase any shares during the quarter, but brought back 3% over the year, and our current authorization remains at $42 million. Over the past six years, we've repurchased almost 50% of our outstanding shares. Now, turning to guidance. We're excited about our momentum in the back half of fiscal 25 and look forward to continuing to build upon that in fiscal 26 as we transition during this year toward investing for growth with a main focus on journeys. While reducing costs will continue to be important as we rebuild operating income, we must drive the top line to reverse the deleverage on our largely fixed expense base in recent years. In this transition year, the bottom line grows more than the top line as store optimization and closures offset positive comps. We expect overall comp sales for fiscal 2026 to be up 2% to 4%, driven by journeys, with total comps higher in the front half of the year as journeys' anniversaries negative comps last year, and we are more conservative about comps than our other businesses. This comp growth is offset by roughly $30 million from the impact of net store closures and approximately $14 million from a weaker pound sterling. leading to total sales growth of flat to up 1%. We do expect first quarter comps to be at the higher end of our annual range due to the easier compares to last year. By division, total year in sales compared to last year are expected to be a low single-digit increase for journeys. For SHU, we expect slightly positive comps, but sales to be down low single digits, largely as a result of the FX headwinds. For Johnston & Murphy, we expect total sales to be up low single digits. And for Genesco Brands, we expect sales to be down low single digits as we manage through the expiration of certain licenses. For gross margin, we expect the year to be down 20 to 30 basis points. This is driven by lower margins at Genesco Brands as we clear inventory related to the exit of licenses, product mix at Journeys, and channel mix at Johnston & Murphy. partially offset by improvement at SHU after a year of heightened promotional activity. We do expect more pressure on gross margins in the first quarter, almost double as compared to the remainder of the year, largely due to product mix shift at journeys. With regard to tariffs, we estimate that only about 15% or less of our fiscal 26 cost of goods sold are exposed to China, and our gross margin outlook includes and incorporates the higher tariffs that are currently in place for China and elsewhere. We expect SG&A expenses as a percent of sales to leverage 50 to 70 basis points, which is largely driven by our store fleet optimization and cost-saving efforts over the past two years, partially offset by the operational investments to grow our businesses. We expect a similar trend in the first quarter. Overall, we expect higher year-over-year sales growth in the first half with less growth and profitability, as leverage in SG&A is not enough to offset the gross margin pressures. As we enter the higher sales volume back half of the year, we expect that year-over-year profitability accelerates from better productivity, lower occupancy, and and operating expenses associated with the fleet optimization and the anniversary of the incentive comp. This results in a fiscal year earnings per share range of $1.30 to $1.70, with only a few cents of EPS improvement in the first half, paired with more upside in the back half, primarily in the fourth quarter. We expect total capital spend of between 50 and 65 million led by investments in store remodels to fuel Journey's growth, of which we are planning approximately 70 remodels or 7% of the Journey's fleet. The plan also includes capital to invest in new stores and remodels for Johnston & Murphy as we see market conditions improve. Finally, we will continue to invest in technology to enhance our customer experience and drive sales growth. particularly in our digital channel. Our guidance assumes no additional share repurchases, resulting in a fiscal 26 average share count of approximately 11.3 million, and we expect the tax rate to be approximately 29%. The tax rate reflects higher volatility associated with the valuation allowance for deferred tax assets, which are contingent upon operating earnings in our various regions. In closing, As we look to fiscal 26, we will continue to reshape each of our businesses and invest in the top line to drive overall leverage as we look to rebuild the company to historical profitability levels and further unlock value for our shareholders. I will now turn it back over to Mimi.