Genesco Benefited From Athletic to Casual Shift in Q1
Genesco shares are up after the company posted stronger than expected earnings for the first quarter.
The footwear firm behind Journeys, Johnston & Murphy and Schuh brands saw first quarter net sales of $521 million, down 3% from last year but up 5% over 2020. GAAP earnings per share from continuing operations were $0.37.
Shares of Genesco were up almost 10% as of Thursday afternoon.
In a call with investors, Genesco CEO Mimi Vaughn attributed the company’s quarterly results to a “footwear-focused strategy,” strong connections with consumers, and an “ability to successfully evolve with the ever-changing fashion desires of our consumers.”
Specifically, Vaughn highlighted an overarching shift from athletic to casual styles, which has been a theme across Genesco’s geographies and brands.
“Casual continued its climb as a larger percentage of the business in Q1, showcasing the current diversity of team fashion trends with particular strength in some of the newer brands in the Journeys assortment,” Vaughn said.
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According to Vaughn, brands in the “casual” category have better profit margins than some top athletic brands, which makes this trend favorable from a business perspective. Within Journeys, a focus on casual also differentiates the chain from its competitors in the athletic space.
Even the Johnson & Murphy brand, which has historically been known for its dress styles, has pivoted to include more casual styles focused on comfort.
“Our Johnson & Murphy customer team has done an extraordinary job through the course of the pandemic, taking advantage of the opportunity to pivot harder into more casual, more comfortable product,” Vaughn said, highlighting technical features such as comfort foam and a flexible outsole.
The same trend has been notable in the company’s Schuh banner, which operates 122 store locations across the U.K. Revenues were up 35% over last year, driven by pent-up demand from prior closures in the U.K. as well as a strong inventory position. Schuh also saw improved levels of store traffic and a shift towards comfort versus athletic styles.
“Like Journeys, Schuh strength is in its ability to deliver the fashion brands desired by Schuh’s consumer and Schuh similarly is capitalizing on the shift to casual, which is driving a larger portion of its sales,” Vaughn said.
In Q1, Schuh launched its first-ever loyalty program, the Schuh Club, which records online and store purchases for each customer to allow for a more personalized shopping experience. Already, Vaughn said Schuh Club members are spending an average 12% more per order than nonmembers.
