Good day everyone and welcome to the Genesco's First Quarter Fiscal 2019 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-K 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 in the quarterly results section. I'll 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. Our first quarter results for the company in total were in the range of our expectations. We experienced continued strength in our U.S footwear businesses and improving, although still negative, trends at Lids following a difficult fourth quarter. Journeys, in particular, delivered a robust comp sales gain and significantly improved profitability. Johnston & Murphy began the year with accelerating comp sales and a strong profit improvement as well. While across the Atlantic, a number of headwinds pressured Schuh's performance to start the year. In total, comps decreased 1% with stores down 2% and e-commerce up 10%, building on our strong track record of e-commerce growth averaging double-digit increases over the last nine years. First quarter adjusted earnings per share was negative $0.06 compared to adjusted earnings per share of positive $0.06 a year-ago, a strong improvement in Journeys, and Johnston & Murphy were more than offset by the challenges at Lids and Schuh. As you know, the first quarter for Genesco is typically a low volume one with monthly comps shaped by the timing of tax refunds and the Easter holiday. From a merchandise perspective, sales are heavily influenced by how far winter stretches into the fiscal New Year and when spring finally arrives. After major shifts last year to a later February tax refunds, followed the same cadence this year, with the timing and levels of refunds aligning closely resulting in little impact year-over-year. A cold snowy March allowed us to extend the boot season which along with an earlier Easter, led to strong comp results for the month. While April sales were affected early on by the Easter offset momentum on both sides of the Atlantic picked up during…

Thank you, Bob. Good morning. As usual, we have posted more detailed information in our CFO commentary you can access online at our Web site. We’ve also posted a new brief presentation that summarizes our results and guidance, which you can find there as well. The strong performance of Journeys and Johnston & Murphy offset in part the declines in our other businesses in Q1. While results across all our U.S retail businesses were better than expected, this was eclipsed by the significant turn in Schuh's business. Even with improved gross margins, SG&A expense delevered and impacted the bottom line due to the negative store comps and our largely fixed store expense base, which is especially difficult to manage down in this low volume first quarter. Q1 consolidated revenue was flat at $645 million. Excluding the impact of exchange rates, revenue would have decreased by 1%. Consolidated comps were down 1% with store comps down 2% and direct comps up 10%. Although store comps were negative in total, they were nicely positive for Journeys and J&M. Direct as a percent of total retail sales in Q1 was 11%, up almost 100 basis points demonstrating again the tremendous progress we have made driving e-commerce sales in our business. Journeys posted significantly improved sales and profits. Comps were positive 6% marking the fourth consecutive quarter of increases. The business performed well across multiple dimensions, highlighted by meaningfully year-over-year growth in-store traffic and improved average ticket size. This was driven by a combination of more boot sales and higher priced fashion athletic products and sandal, which together delivered higher footwear ASPs. Considerably stronger conversion and higher average ticket size in stores plus strong digital sales generated Johnston and Murphy's positive 7% comp. Sales of both footwear and non-footwear were up propelled by J&M'…

Thank you. [Operator Instructions] And our first question will come from Pamela Quintiliano with SunTrust.

Great. Congratulation, guys, on the execution and thanks for all the detail. So just had one quick one first on traffic. Sorry if I missed this, but although you were pressured, was it above or below the overall mall levels, specifically, Journeys and Lids?

So, Pam, when you look at Journeys, Journeys was actually above the mall levels. Journeys is positive with traffic, the mall levels are -- were still for the first quarter negative. Lids has been facing traffic challenges, so Lids is actually below the level of mall traffic.

And Pam, you know our interpretation of that obviously is we’ve got Journeys very much on trend and their traffic comparisons were against the period when they were less on trend. And then the opposite is true at Lids, so there is the overall traffic trend in malls, which continues to be slightly negative. But Journeys is outrunning that one and Lids is slipping a little bit behind at the moment.

Well, and the thing that we remind you of is that even with the traffic trends that we're seeing in malls these days, we are seeing higher conversion. What the customer is doing these days is they’re doing all of their window shopping and using their digital devices to determine what they want to buy prior to coming into the store and prior to coming to the mall. So we're actually seeing particularly in Johnston & Murphy some very nice conversion increases, which along with the ticket size is what has been driving their very nice comp.

And we will now move to Janine Stichter with Jefferies.

Hi. Good morning. I just want to dig a little bit more into the Journeys business. Can you give us just some color on how you would compare the level of either vendor concentration or product category concentration to prior positive comp cycles? And then, any thoughts on how you see the current fashion cycle evolving. How long you think it will kind of stay in this cycle that seems to be playing very well to Journeys' sweet spot? Thank you.

Yes. So in terms of the concentration, it's -- we continue to, first of all assort the store to give the customer what they want. We have seen with the retro athletic trend and with the fashion trend in athletic be an opportunity to diversify beyond the concentration that we had in the last fashion cycle. So we are feeling pretty okay about the concentration at the moment. In terms of the fashion cycle, that’s a big wildcard. We feel like we are in a good spot for this year. We see the brands coming in and refreshing the look that they are providing our customers in a way that reinforces newness inside of what the current overall trend is. So we're feeling it’s pretty good if you look at the history, we’ve had two, three, four year runs with these fashion trends. There have been concerns that social media shortens that. Right now we feel like we’re on a very good trend and as I said we feel pretty confident about the rest of the year.

And our next question will come from Jonathan Komp with Baird.

Yes, hi. Thank you. I want to just clarify, Mimi, first on Q2, when you said it would be difficult to make a profit, you called out some other headwinds. So I just wanted to clarify what those other headwinds were specifically? And then bigger picture question, just on the -- going back to the Journeys sales trends, I think last year, comps turned positive around April. So I want to get your thoughts on the business sustaining pretty positive levels and even accelerating here quarter to date against what it looks to be tougher compares and how that factors with your outlook ahead?

Jon, I will take the first one and then hand it over to Bob to answer your second question. But in terms of the second quarter, so you will just have to think a little bit about our business. The first and second quarters are very low volume quarters, until we get into back-to-school and the third quarter and in holiday in the fourth quarter, we are at smaller sales levels and therefore it's difficult to leverage our fixed expense base. And so we'll take staffing down to 1% in stores, we’ve got the same rent in May that we have in December, and so we're doing all we can to manage our expense base. And so the headwinds, specifically that I was referring to are that we still expect that Lids' comps will be negative in the second quarter and while we didn't initially anticipate that Schuh's comps would be negative, we now just given the experience we had in the first quarter have taken their comps and guided their comps to be negative in Q2. We are very encouraged by what we're seeing in both Journeys and in Johnston & Murphy, but in such a low volume quarter the combination of those negative comps from those couple of businesses is what we would describe as a headwind.

I will just first add on to that one. The other thing that we’re experiencing in our business, which has been going on for years is the expansion of our digital business and the negative comps in our stores, which we’ve repeatedly said is dilutive. So over many years what has happened is our operating margin is not what it used to be. We want to see it start to climb back up, but while we’re at a lower operating margin the quarters that take the real hit are the first and second quarters, because we have very little flexibility on costs given that those are -- that the stores in particular are fixed cost machines for the first two quarters before we start ramping up our labor for back-to-school and Christmas. On your question with regards to the improving comps at Lids -- at Journeys, you are correct, last year they improved meaningfully in every quarter. And so when you look at our projections for this year, we are bringing the expectations for Journeys comps down a little bit every quarter. The best way to probably understand it, though, is I would encourage you to go back and look at a 3-year stack, because when you look at some of strong comps from last year much of last year's strong comp was a rebound from the weak comp the year before that. And so you really have to go back in history to understand the shape of the comp and I would encourage you to go back -- I won't go through all the numbers here, but go back and look at a 3-year stack to get a feel for what we’re doing with our expectations.

And we will now hear from Mitch Kummetz with Pivotal Research Group.

Yes. Thanks for taking my questions. Bob, I was hoping to get a little bit more color on Lids, just in terms of the quarter and then the outlook over the next quarter or so. So, your negative 7%, is there any way you can kind of parse out or give some color between sort of the headwear side of it versus Locker Room and Clubhouse? Can you talk about the impact of Cubs and NFL on the quarter? I know it was less this quarter than last. I don’t know if it was meaningfully less. And then, on MLB, it sounds like MLB is doing well. Can you say if that’s actually comping positive, and can you kind of speak to how that business ramps as a percentage of Lids' sales as you go into the second quarter versus the first quarter?

Yes, let me give you some general themes and then I will ask Mimi to give you more specifics. The headwear business has gotten a little more difficult for us. It's -- ballpark, we do two-thirds of our business in headwear and about a third in the Locker Room business. And so the headwear business, because we’re just searching for that next fashion trends, it has been more challenged than it has been in a while. The Locker Room business on a trend basis is actually getting a little better, it's not as negative as it was. Underneath that there's a lot of stuff, which is just the nature of the licensed sports business. So, for example, last year we had the International World Series in which we did a lot of business and so we missed that this year. Cubs, obviously, the tail end of the Cubs was going on right now, a year-ago the excitement of the new season after winning the championship. Then we have some good things. The Yankees doing as well as they are, that’s our number one team, and -- so the Yankees are terrific for the business. And so, when the Yankees are doing well, MLB is doing well. For detail, Mimi?

Yes. So, Mitch, just specifically around your question in the first quarter, Lids stores just given the headwinds Bob described, their comps weren't that different than the Locker Room stores. And as we’ve said we're very excited to be getting into baseball season because baseball is our number one league in the first quarter. It's still our number one league in the second quarter. It becomes even bigger and then the impact of baseball starts to trail off in the third quarter with the start of football season. And so, so far our Clubhouse business in particular has been on fire because the Yankees has been on fire. And so that’s been a very nice tailwind that has been driving the Clubhouse business and really the Lids business overall.

And our next question will come from Laurent Vasilescu with Macquarie.

Good morning and thanks for taking my question. And thank you, Mimi, for the color on the cadence of earnings between the first half and the second half of the year. Regarding the shift of the important week from the third quarter into the second quarter, could you possibly quantify the shift in EPS for that week? And then, secondly, any directional color on where gross margins could go for the second quarter would be great.

I will just make the one comment. We don’t give quarterly guidance because of all the moving parts that I just finished describing, particularly in the Lids business. This is just another example of moving part. And so, with that said, let me hand it over to Mimi.

Yes. I think that I know that it's a tricky week and it's tricky in particular because it's such a big back-to-school week. It might not be as impactful in other businesses. So just on the basis of last year, Laurent, if you look at the dollar amount of business that we would end up shifting from the third quarter to the second quarter, if you shift about $20 million that should take care of the shift, and then you can work whatever your flow-throughs are to be able to flow-through the right amounts. As I said, we feel like there is some positive opportunity for gross margin this year. We saw gross margin up 30 basis points in the first quarter. We also think that there is stronger opportunity in the back part of the year for that gross margin lift, only because we have more opportunity to do business than both with back-to-school and with holiday.

And once again we will hear from Pamela Quintiliano with SunTrust.

Hey, guys. Thanks for taking up my follow-up question. Just a quick one on the online business. Can you talk about if that trended above or below your expectations, and just any granularity by division during the quarter?

In general, we continue to deliver a double-digit gain. We are pleased with that and it's sort of been in the ballpark of our expectations. In terms of specific business units, Mimi?

Yes. So, Pam, we are not breaking out specific business units anymore just because comps -- online comps are just so integrated with store comps these days. But we were up 10% against really a phenomenal up. I think we were up close to 30% last year in the first quarter. So a little bit of the lower comp this first quarter I think is against a very strong compare from last year. Journeys business, especially have been comping strongly on the direct side. Journeys, some of our other businesses are more penetrated, and so there's been lots of opportunity for Journeys to grow quickly because of some of the investments they have been making.

And Pam, this is going to get over time a little trickier for us to discuss and for you to analyze in the sense that the world is blurring in terms of what’s an online sale. If you have a person who comes online, but is buying from you, because they have the chance to pick it up in the store, you have to give credit in a way for both digital and the existence of that store for having closed that sale. And so I think increasingly we and others in the retail space will be just talking about comps. And then try to give some color about how much digital is helping comp, but it won't be strictly defined to what the digital sale was, which we have heretofore defined as a sale that is made on somebody else's device.

Yes. And just remind you that we run our e-commerce businesses to be profitable, so we're happy to take e-commerce sales to the extent that the customer wants to make those sales, but the other thing that we've been delighted about is the strength of the store business for both Journeys and Johnston & Murphy, because the positive store comps and the cost reductions that we have implemented and a strong direct business that makes for a good formula for profitability.

And our next question will come from Erinn Murphy with Piper Jaffray.

Great, thanks. Good morning. And I apologize, I have been bouncing around on calls. So hopefully these haven't been asked, but I guess firstly, back to Lids. Footlocker mentioned a week ago that their customers seem to be purchasing, sort of wearing less hats in general. Could you just talk about from a trend perspective, A, how you feel your customers are? And then from a trend perspective, any visibility on potential headwear fashions yet?

Erinn, we did cover that on the call, just the main theme is there's a dearth of fashion excitement in the headwear space right now, which is hitting the category, hence Footlocker's comments. And right now what we're doing is testing a lot of different things, working very closely with our vendors to create more excitement and explore possibilities for the next trend. But we're not having great predictive -- we’re not predicting when the next trend is going to appear.

And with no further questions, I’d like to turn the call back over to management for any additional or closing remarks.

Thank you everyone for joining us and we look forward to having a conversation with you at the end of the second quarter. Have a good day.

And once again that does conclude our call for today. Thank you for your participation. You may now disconnect.