Good day everyone and welcome to the Genesco's Fourth Quarter Fiscal 2018 Conference Call. Just a reminder, today's call is being recorded. Participants on the call expect to make forward-looking statements. These statements reflect the participants' expectations as of today, but actual results could be different. Genesco refers you to this morning's earnings release and to the Company's SEC filings, including in the most recent 10-Q filing, for some of the factors that could cause differences from the expectations reflected in the forward-looking statements made during the call today. Participants also expect to refer to certain adjusted financial measures during the call. All non-GAAP financial measures referred to in the prepared remarks are reconciled to their GAAP counterparts in the attachments to this morning's press release and in schedules available on the Company's homepage under Investor Relations. I will now turn the call over to Bob Dennis, Genesco's Chairman, President and Chief Executive Officer. Please go ahead, sir.

Good morning and thank you for being with us. I'm joined today by our Chief Financial Officer, Mimi Vaughn. Fourth quarter adjusted earnings per share of $2.15 were in line with our expectations towards the lower end of our guidance range and flat with last year. Comps increased 1%. Tremendous results in Journeys and Johnston & Murphy were offset by difficult comps in Lids, increased promotional activity in the UK, and challenges in our licensed brands business. Fiscal 2018 adjusted earnings per share were $3.13 with flat comps for the year compared with $4.33 in fiscal 2017. While it was a very challenging year overall, the profit gap to last year improved sequentially each quarter and the gap closed in Q4. In spite of the notable changes in retail, our well-positioned businesses remain undisputed leaders in their categories and we believe they have much more potential than our results reflected this year. The strength of our concept and compelling assortments have allowed us to largely maintain our topline, but we need to do more to bring those sales to the bottom line. We have launched a major multiyear initiative to reshape the heavily fixed cost structure of our brick-and-mortar channel and counteract proper dilution of building the e-commerce channel which we will discuss with you today. From a high level, in Q4 our performance was once again defined largely by the divergence in our two biggest businesses. With its exceptional talent and experience we were confident the Journeys team would deliver strong results as the year proceeded after battling through the fashion rotation in the first half and in its usual pattern Journeys built on the momentum of back-to-school and delivered a remarkable double-digit comp gain for Q4, a meaningful improvement over Q3's positive result. Cold weather gave a boost…

Thank you, Bob. Good morning. As usual, we have posted more detailed information in our CFO commentary that you can access online at our website. The strength of Journeys and Johnston & Murphy allowed us to hold Q4 EPS flat to last year in spite of challenges elsewhere in our business. We've reduced the gap to last year's EPS that began in the first quarter in each subsequent quarter this year and finally closed it in Q4. While we had a small pickup in EPS from the tax reform benefit in January, the 53rd week in fiscal 2018 was dilutive to earnings since it fell in early February, a period of low sales for us and the impact of these two things netted each other out. Even with positive consolidated comp Q4 EPS was flat. Due to the expense of the extra week gross margin pressures specific to Schuh and licensed brands and higher e-commerce shipping and other expense. Without the impact of the extra week we were pleased that we generally maintained our overall expense leverage in spite of negative store comps. Q4 consolidated revenue increased 5% to $930 million. Excluding the extra week, the impact of exchange rates, and the sale of a small business last year revenue was relatively flat. Consolidated comps were up 1% with store comps down 1% and direct comps up 15%. While store comps were negative in total they were nicely positive for J&M and up double-digits for Journeys on the strength of the assortment and in-store execution. Direct as a percent of total retail sales in Q4 was 14% up almost 200 basis points for both the quarter and the year, demonstrating the great progress that we have driving e-commerce and pushing e-commerce to over 11% of total retail sales in fiscal…

With Mimi already providing the update on our work to reduce real estate risk and rent expense as well as a broader cost savings program and our plans to reduce capital spending, I'm going to focus on the four other key initiatives to evolve our businesses and strengthen our strategic positioning for the longer term. And much of this builds on our efforts from last year with one new area of focus. So first, we're working to improve the customer experience in all channels and to gain a single view of the customer. To be able to enhance the experience we must understand better each customer's learning and the different ways they interact with our brands in both the digital and physical worlds. Johnston & Murphy is leading Genesco in building these capabilities which is also a major focus for Journeys and Lids this year. We added this to our top priorities with the believe that by continuing to improve the customer experience we will build loyalty and better maximize each customers value to us as a result. For Journeys it is the three-pronged approach. First, we are tackling the sources of which the net customers encounter during the omnichannel and interactions with us. This approach identifies all the major pain point in stores and online such as order knockdown when tracking with the intent of bringing process and technology solutions to solve them. Next Journeys is looking to build a single view of the customer from multiple internal and external data sources and this includes gathering transactional, behavioral, and demographic information such as past purchases, shipping preferences, social preferences, promotional history, gender and location that reside our various systems and consolidating it into a unified view of the customer across Journeys. And lastly, Journeys will use this data combined…

Thank you. [Operator Instructions] And our first question we’ll hear from Erinn Murphy with Piper Jaffray.

Hi guys, this is Eric on for Erinn this morning. Thanks for taking the question. I guess first, just regarding Lids, I know you don’t have visibility yet into a potential inflection, but can you remind us historically how those kind of play out in terms of timing from when you start to see a trend happening before you can move into it and become – and it becomes material enough to sort of alter the trajectory of the business? And then secondly on Lids, it’s the improvement year-to-date you guys are seeing more reflection of just the NFL business being a smaller piece in this period, has that in trajectory with the NFL sort of change year-to-date from what it was during the second half of last year? Thanks.

So let's go backwards on your historical question. When we evaluate what went on with Lids, we can isolate a lot of the comp decline specifically to first the Cubs, then the decline in the NFL category and then thirdly, the lack of a fashion driver in the headwear business. And so, you're correct, when you get into the first quarter it begins with the Superbowl and then the NFL is done. So that trajectory is not as anywhere near as a factor that it was in the fourth quarter. So looking at headwear trends, we've had a dozen headwear trends that have recurred over the last 10 or 15 years and they come and go and they occasionally overlap. We're just in a trough right now and it's a little hard to generalize when they show up, some are prompted by an event probably wearing something that all of a sudden catches fire. Some of them emerge as what looks to be more of a fashion pump like Snapbacks got really hot and then we figured that would be a fad and that would go away and Snapbacks actually persisted for years and in fact it's become a permanent part of our store. So lot of different ways to look at it. We just are in a bit of a trough right now and so it's a little hard to be predictive about when it would happen and what it would look like, but we just rely on 20 years of history that does something generally comes along. Specifically with the NFL, we have no crystal ball. There was a lot of things going on in the last season. A lot of players were hurt, sort of a black lawn event, with how many top players were down, some of the important teams were not there. And so in our guidance we planned it up lightly, but given how the trend was last year that probably leaves some room for greater upside given how tough it was then.

Yes, one of the other things I would say is that the lead time to get product in the headwear space is shorter than in footwear. I mean, footwear is, as you can appreciate the construction, some of the last being able to get that product here we've talked in the past about that that lead time being six plus months. The headwear lead time we can actually chase into a fad and into a trend much more quickly. And so, in the past when we've seen things like Snapback come into play, we have been able to really grow our assortments more rapidly than we can on the footwear side.

And next we move onto Janine Stichter with Jefferies.

Hi, good morning. Just wanted to get some color on the comp guidance for Journeys, you saw an acceleration there in the fourth quarter and it seems like trends even got better in January, but there is significant acceleration in that the first quarter guidance. So is there anything specific you are seeing there driving that acceleration? And then kind of along the same lines on the current trends, it seems like it seems like it falls really right in your sweet spot, but we are seeing trends come and go quicker than past, so what is your expectations in the current cycle, is there anything you are doing differently in how you manage the business just like you are prepared when the trends ultimately do change again? Thank you.

In general, let me talk to a couple of the comments. As we said in the script, what we really like about where we are right now is there is more diversification amongst brands and franchises, all sort of playing off both the Classic and then the lifestyle athletic which are in Journeys sweet spot and we think that we get a good long run out of that. So with respect to the fashion cycle, the same question got put to Foot Locker last week on their call and our answer is pretty much the same. Our business is largely dependent on branded merchandise and as Mimi just noted what the lead times are, those lead times are still pretty much what they’ve been. Our vendors are working pretty hard to figure out other ways to shorten up that timeline and we're certainly there to help and do whatever we can. What we're doing in terms of playing defense against the possibility that there is a quicker pattern is just being more diversified in the store and so that we're showing a range of opportunities to our customers. And that we believe that allows us to jump on whatever get spot a little more quickly. In terms of the general guidance Mimi let me turn it to you.

So, Janine I think that it's important to look back to last year. Last year we were really trying to move and move our inventory so that we could change our assortment and as a result, we had - we cleared a lot of product in order to bring in a very large shipment in January to accelerate the fashion rotation. And so when you look at our plus 11% comp in the fourth quarter, that is against an easier comparison in the fourth quarter given everything that was going on. We have a lot of confidence in the Journeys business. There were a lot of great things that happened in the fourth quarter that we felt like it would be prudent to moderate that that look into the first part of the year because the factors were a little different than they were in the fourth quarter. And so, you can appreciate that during the peak time holiday selling periods we are able to, we are able to really drive Journeys volume. We have seen a moderation in that plus 11% comp that we think that we are tracking nicely to the 3% to 4% guidance that we have in the first half of the year.

Yes, just to finish up on this topic, one of the challenges for us is with this last fashion change that was kind of painful for us. Thankfully the team did a great job of navigating through it, but the navigation period was tough. We did some forensic work, if you will, what could you have been predictive about this change, and when you go back and use Google Trends or anything that would, you would regard as predictive resource, nothing really seemed to call the charts very effectively. And that's because if you ask a teenager right now what they think they're going to be wearing in six to nine months, they might tell you what they think it is, but it is a very fickle customer and the truth is they don't know. And so, our challenge is to try and do some of the things we were referencing on the call, touch our European exposure, touch the fact that we are a national footprint retailer so we see what's going on on the coast that might move to the middle of the country and I think we're positioned to do as good a job as anybody in being predictive of what's going on. With that said, it is a challenge for this category.

And next we'll move on to Steve Marotta with CL King and Associates.

Good morning Bob and Mimi. A couple of quick questions, as it pertains, the [indiscernible] CapEx is played at $75 million this year, could you impact that a little bit between technology investment, store refreshes and I guess a few openings and other items? And also my follow up is that historically the profitability tradeoff in incremental sales between offline and online, online obviously the incremental profitability was higher, offline incremental probability was lower because the variable costs associated with it. Does the new cost reduction program address that differential and perhaps make the incremental profitability for online a bit greater in future years?

You know Steve, we always managed to confuse you guys enormously about online and offline sales. We are profitable online and profitable offline to the same degree. The distinction is that how profitable are we on an incremental scale. And so offline when you're in a store and if you pick up 5% more sales that 5% on an incremental basis is very profitable because you've already paid the rent and you generally can service 5% more with your existing staff. When you get 5% increase online you get an increase in your expenses of picking and packing and shipping and so you're adding variable costs. But that doesn't mean one is more profitable than the other in an absolute sense. It means on the increment it's more possible, what happens is we're delighted to get more sales online because those are profitable sales, you just don't get the kind of leverage with more sales, because it's a variable cost business. And then if the shift is such that we get increases than online and we actually are flat or negative in our stores, then you're getting the deleverage of the fixed costs and that's the issue. And so when we go looking at cost, first of all everything is on the table, so there is not a line item that we're not going to take a look at, but the big opportunity is to figure out how to continue to get the store cost in line and obviously the number one item in that area is rent. So I hope that clears up that question. Let me pass it to Mimi on the CapEx.

Yes, I'm going to just pile on to the question about profitability and so our whole profit improvement program is exactly as Bob said it's focused on both the store channel and the e-commerce channel, but when you look at our store channel outside of product costs outside of merchandise costs, the rent expense, selling salary expense, and depreciation, all add up to about 80% of the cost base. And so to really make an impact in a world where we've had negative store comps and we've had negative store comps for a number of quarters, we have to be able to reshape those factors. We have set aside selling salaries, we've made a lot of progress on selling salaries by substituting part time labor to full time labor by optimizing using shopper track, but with the headwinds of minimum wage pressure and wage rate increases that we've been seeing, we don't have a lot of optimism for being able to reverse the increases that we've being in-store selling salaries. And so we're really working hard on rent and then our cost reduction program will be focused on many of the other pieces of the store cost structure. And it’s the reshaping of the store cost structure that is one of the primary motivations in our cost improvement programs. So when you look at capital expenditures and looking at the $75 million, we have been investing in upgrades to all of our major distribution centers to accommodate e-commerce and also just accommodate the growth of our businesses over the last several years. And so, some of the decrease in CapEx comes from not having to make some of those investments, it also comes from reducing the number of new store openings. We're estimating that we'll be opening 55 new stores this year versus 75 last year and 80 the year before. So, some of the reduction comes from not as many new store openings. We're still investing heavily in e-commerce and IT that represents in the neighborhood of a third of our overall capital spends. The balance is on renovations. Our belief is it's important to continue to refresh our overall our store portfolio and so we have dollars put in there for almost 200 renovations. We are spending a little bit less trying to really focus on those elements that will highlight the product, like lighting, things like that play and really making the customer feel like we have been keeping pace with and refreshing our overall fleet.

And next we'll move on to Mitch Kummetz with Pivotal Research. Q - Mitch Kummetz Yes, thanks. I just want to start, I want to ask you this question maybe in a little bit different way about channel mix. So this past year you guys were flat comp, it's minus 2 stores, I think plus 22 direct. Your comp guide for 2019 is flat to plus 2, I mean are you looking for sort of a similar kind of mix in terms of the store performance or the direct performance of ‘19 versus ’18 and if that were to happen then like so what is the impact then on the margins with that kind of a mix? And I have a follow up.

I'll let Mimi give you on the guidance breakdown specifically, but what we're doing now is being more aggressive than we've been in terms of what we need to see in terms of our rent structure in order to renew our stores. We've been quoting a lot of the success that we've had mentioned with rents, but kind of you remember, you do your rent renegotiations ahead of the renewals, so a lot of times we've renewed stuff this year and the new rent structure kicks in next year. So a large part of how we work this problem is really hammering on rents to make sure that we have a viable economic formula in the stores even with those comp numbers.

Yes, so Mitch just to compare to last year, so that's right, our store comps were down 2% last year and e-commerce comps were up 22%. And so this year we have on average seen in the neighborhood of 15% growth rate on average for e-comp. Last year it’s bumped up. We are anticipating it will be somewhat in the range of what we've seen on average, so going back to sort of that 15% range. On stores, so over the past several quarters, I think it's been seven or eight quarters, we have seen pressure in our stores and negative store comps and at that negative 2% store comp in fiscal ‘18 last year we deleveraged to the tune of about 90 basis points. That high fixed expense base that I talked about, whenever we don't get traffic, whenever we aren’t able to convert in our stores, we tend to deleverage. The other side of that is really positive that when we do get, when we are able to convert and we do are able to drive comp store sales, we see lots of nice leverage on fixed expense base. And so, for this year and thinking about guidance and reflecting the trends that we've seen, our store comp is at the high end of our range is flat, at the low end of our range is in the neighborhood minus 2% that we saw last year. Now the positive news as far as the impact on our cost reduction program is that last year when we saw 90 basis points of deleverage, this year at a minus 2% comp, we expect that we will see 50 basis points of deleverage. And so as we work at reshaping the cost, as we work at beating down rents as Bob mentioned, over time we're able to leverage in our stores at a much lower comp rate. And so for this year, I think it's going to be somewhere between 2% as we continue to bring rents down, we ought to be able to leverage at a lower level of store comps, and then when store comps become positive driven by rents, driven by pick-ups from competitor fallouts and we will be in a situation where we see very nice store economics.

We'll next move onto Laurent Vasilescu with Macquarie.

Good morning, thanks for taking my question. I wanted to follow up on the earlier question regarding the Journeys first quarter comp guidance. I think the comp guidance is 3% to 4% on a two-year stack basis suggests some decelerations, are the recent winter storms, maybe tax returns or any other factors influencing that comp guidance?

Yes, I think that again we feel very positive about the assortment for Journeys for the coming year. The winter storms certainly have been a factor, but we tend to think that those are fleeting and that they don’t impact the trend for the quarter. And so, when we look to see what the assortment is for spring, it is as we talked it’s diversified across the number of brands and the key for [indiscernible] positive store comps and we’ve seen nice positive store comps in Journeys as Journeys has come out of the fashion rotation. And I think that what you're seeing is the measure of conservatism to see how the first part of the year unfolds as far as the overall traffic and store comps for Journeys.

Yes, I'll just reiterate that, when we look at winter storms, they're very disruptive for the business but we're not sure that it actually hurts the business over the course of a quarter. The pace of tax refunds has been a little perplexing to us because the generalized data has shown that the tax refunds are kind of in the same ballpark as the pace last year. But we think the big driver is the subcategory of the earned income credit and so we're not sure we got complete visibility on that. We should be reaching the end of the tax period right now. The other factor that kicked in for Journeys which always gets in the way of visibility this time of the year is the timing of spring break. And so when the kids are out of school, we get a balance and so spring breaks are all over the board. So it’s just - it’s a little tricky in the first quarter. It's a low volume quarter and then you have all these variables that ricochet around. So I would put emphasis on the fact that it's a low volume quarter. What really matters is what we expect to see in quarters two and especially three and four.

Next we will move on to Jonathan Komp with Robert W. Baird.

Yes, hi thank you. Couple of broader topics and Bob my first one is on the in essence to pursue the sale of Lids and I understand and agree you are not going to give updates on the process, but I was hoping just more behind the rationale you could expand a little bit just on the surface, the comps are under significant pressure and the profitability is back to very low levels. So can you give more comfort why right now is the right time to pursue those actions?

Look, we think that this is a business that in the long run and up being a winner, there will be a retail brick-and-mortar presence in the licensed sports business and Lids is the biggest player there. They’ve got the scale in which to do omnichannel correctly which none of the regional guys have done. We’re seeing regional consolidation already. There is a business called Fans [ph] that a regional thing that just got sold. It looks like it got sold a bit on a distressed basis and some of those stores are closing, we just think that's a sign of things to come. We think the team is great, the leadership team is great. We have a number of reasons why we think now is good timing, even though as you know the performance in the last year wasn’t terrific, but I'm going to leave it at that.

And next we will move onto Scott Krasik with Buckingham Research Group.

Hey guys, thanks and can I try and sneak a few in here. Mimi, I know you will get it in the K, but can you just tell us what your occupancy for this year should be up or down year-over-year and then in FY ’19 as well just because of the timing when the renewal phase and what not?

Scott, I think occupancy so with the puts and takes, so the way to think about overall occupancy expenses that we have opened some new stores, we've closed a number of stores and then we're rolling in the impact of these rents decreases. So I would anticipate that for fiscal ’18 that occupancy wouldn't be that different than the year before. For fiscal ’19 it might be up a little bit just because we've opened some new stores and we haven't yet seen the – we haven't yet seen the full impact of all of these rent decreases. For fiscal ’19, we actually believe that rent will go backwards, so we see rents certainly as a percentage of sales, but also just in total dollars going backward.

And Scott, rent is a tricky thing in small box retailing. We live with much higher percent rent in a high volume store than we do in a low volume store. So I can make more money in a million dollar Journeys store at I don't know make up a number 17% than I can in a $500,000 Journeys store at 15%. So I might choose to close the $500 million store which was at 15. Keep the store at $1 million at ’17 that increases might rent as a percentage of stales when you add them up, but I'm more profitable because the $1 million store is leveraging all the other expenses much more effectively. So I wouldn't focus too much on the rent per spend. I would really focus on how well we're managing the total fleet. And as I said it’s just - the math is just a little more complicated than just simply looking at the percent, so I’m just giving you that that's all.

And that will conclude today's question-and-answer session. At this time, I would like to turn the call over to Bob Dennis for any additional or closing remarks.

Well, thank you all for joining us and we look forward to updating you in three months on how it's going. Have a good day.

And that will conclude today's call. We thank you for your participation.