Good day, everyone and welcome to the Genesco Third Quarter Fiscal 2020 Conference Call. Just a reminder, today's call is being recorded. I will now turn the call over to Dave Slater, Vice President of FP&A and Investor Relations. Please go ahead, sir.

Good morning, everyone and thank you for joining us to discuss our third quarter 2020 results and our full year fiscal 2020 outlook. With me on the call today are Bob Dennis, Genesco's Chairman, President and Chief Executive Officer; Mimi Vaughn, our Chief Operating Officer; and Mel Tucker, our Chief Financial Officer. 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 the Company's SEC filings, including 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 the schedules available on the Company's homepage under Investor Relations in the Quarterly Earnings section. I want to remind everyone we have posted a presentation summarizing our results and guidance that is accessible on our website. As another reminder we filed an 8-K in connection with our Q1 earnings release that contains adjusted non-GAAP fiscal '19 results by quarter for last year restated to reflect the sale of Lids Sports Group as if we never owned the business per GAAP requirements. You can find this on our website as well. Now I'd like to turn it over to Bob.

Thanks, Dave. As you saw from our earnings release issued earlier this morning, we delivered strong third quarter results and increased our full-year guidance. Before we get into a discussion of our recent performance and increase outlook, I want to take a few moments to touch on the leadership transition we announced last month. I couldn't be more pleased with the Board's decision to appoint Mimi as my successor as President and CEO. Since joining Genesco over 16 years ago, Mimi has excelled in each of her leadership roles including as Head of Corporate Strategy, Head of Shared Services, Chief Financial Officer, and most recently Chief Operating Officer. For selection as the 12th President and CEO in Genesco's 95-year history is a further step in our succession planning process, which began several years ago. As we outlined in the November 4 press release, Mimi will assume her new role on February 2, 2020 the first day of our new fiscal year. On top of this Mimi was elected to the Company's Board of Directors effectively on October 30th. Both appointments are incredibly well deserved. I look forward to supporting Mimi and the entire management team in my role as Executive Chairman as we work together to continue the positive momentum we have built since divesting Lids in February and turn our attention to delivering further value with our footwear focused strategy. Mimi will discuss the strategic direction and the specific initiatives related to the strategy in more detail on our next call. For now let me walk through the highlights. From the third quarter, from a high level our results significantly exceeded expectations as continued strength of Journeys coupled with much improved performance from Schuh, easily offset headwinds from a challenging quarter for Johnston & Murphy. The improvement in EPS…

Thanks, Bob. Good morning, everyone. As Bob said, we were very pleased with our third quarter performance. Our year-over-year profit improvement was led by Journeys with Schuh and Licensed Brands, each contributing to the improved results. Q3 exceeded our expectations with adjusted EPS growing considerably to $1.33 from $0.97 in the prior year. The year-over-year improvement was driven by the benefit of share repurchases, solid comps and improved gross margins, partially offset by some SG&A deleverage. Q3 consolidated revenue was a little under last year's level at $537 million, excluding the impact -- the impact of lower exchange rates, revenue would have been up $2 million compared to last year. Consolidated comps were up 3% with store comps up 1% and direct comps up 19%. Positive comps were offset to some extent by lower wholesale sales in the impact from closed stores. Direct as a percent of total retail sales was 11.4% in Q3, up 180 basis points, accelerating the great progress we are making driving e-commerce. Our e-commerce business is profitable and we continue to invest at attractive returns to better serve our customer in this channel. Journeys posted a solid comp increase of 4% on top of 9% last year and it's toughest two-year stack comp the date of 13%, marking its 10th consecutive quarter of increases, highlighted by both positive store comps and strong double-digit e-commerce growth. Q3 continues the trend of increases in conversion and increases in transaction size, which drove a solid comp in spite of less store traffic. Schuh posted a solid comp of 3% versus a negative 4% a year ago. On a two year stacked basis, Schuh's comp performance has improved sequentially each quarter this year, not including the impact of foreign exchange and its exit from the German market. Schuh's ,…

Thanks, Mel. As we've discussed, it's been a good start to the holidays with solid results for the Black Friday, Cyber Monday period. We feel good about our current momentum and believe we are well prepared to capitalize on the ramp and consumer spending, leading up to Christmas, while the calendar is compressed was six fewer days between Thanksgiving and Christmas compared to last year, we are confident in our team's ability to execute and we don't foresee a shorter holiday season materially affecting our business. I'll highlight elements of our plans for driving traffic and sales during our busiest selling season starting with Journeys. We kicked off last week official start to the holidays with a 360 degree seasonal lifestyle brand campaign across both owned and paid channels over the Black Friday weekend and into Cyber Week. Instead of using traditional model, this campaign features local and micro influencers and creatives in their teens and their early '20s, including two Journey store employees from the Portland and Mount Hood, Oregon area. The campaign includes a deep spend within social channels most relevant to our team consumer and features exclusive rich content that showcases Journeys varied and compelling product assortment. At the same time over Black Friday weekend, we ran a targeted promotional campaign with more robust messaging across stores, e-mail, SMS, web and social media channels. The results were very encouraging across the board. Mobile continues to dominate how our customer's shops with us online at Journeys as almost 90% of our online traffic now come through a mobile device. Mobile has experienced a sharp spike in traffic year-to-date, thanks to efficient spending across various advertising channels, which we plan to capitalize on throughout the holiday season. In addition, with the unplugging Lids from the customer service center share…

[Operator Instructions] We'll take our first question from Janine Stichter with Jefferies. Please go ahead.

Hi, good morning and congrats on the great result.

Thanks.

Thank you.

Question for Mimi. You went through a lot of different initiatives that seem like they have come more into focus since you've sold Lids and to more fully focus, footwear business. Can you kind of bucket, which ones do you think are really the most needle moving and it seems like you're already seeing some benefit from some of these initiatives. So just give us some perspective on how we should think about what are the most meaningful drivers of how you can impact the business now that you are squarely focused on footwear?

Sure, Janine. We have got really bridge set of synergies and platforms when we look across the size of our business. We like the businesses that we're in. We like the platform that combines both operating footwear, retail businesses and owning footwear brands and there is really a lot of synergy across this platform even between the retail side and the branded side of our businesses. And these synergies come in a lot to form the product and vendor synergies that we've been capitalizing on this year and it is platforms that we can leverage, and I think some of the things that we are most excited about this year are really are digital initiatives. We have had a chance to double down on our focus on digital. We have been executing across the platforms that we have updating our websites, really giving the opportunity for our customers to have a better experience online and that has paid really nice dividends.

Great, that's helpful. Thank you. And then just on Journeys, it sounds like the strength you're seeing there is pretty broad, but can you give some perspective just maybe by category, what you're seeing boots first, casual versus athletic and how we should think about the fourth quarter performance?

This is Bob. I'll start and hand it to Mimi. As you know, we're very sensitive about giving too much color on our current trend lines for extended reasons. The big news on Journeys, I think is that it is broad-based and so coming into the holiday we were benefiting from the fact that we can continue to see customers buy products for the currencies and aware now kind of mentality and sandals has long run, and that was probably aided by the weather. As we've gone into this -- we've gone through Back to School and into this holiday season, we're broadly is what we're seeing a lot of activity in boots. The athletic sector is strong, we have some very strong casual brands. And so I think that -- there's always puts and takes and so things are going up and going down, but we're overall very pleased with the assortment.

Yes, I think I would just back of what Bob said is that we are nicely diversified across brands and franchises. There is a lot of newness in what we have been selling. Fashion is always rotating. Our merchants are excited about what they're seeing as far as -- that really rates on boots, and we continue to sell nicely on both the athletic and casual side of our businesses. It's the casual side that has given us a lot of encouragement lately.

Great, thank you very much.

We'll take our next question from Jonathan Komp with Baird. Please go ahead.

Yes, hi. Thank you. Maybe just a follow-up on Journeys. I know for a while you've been talking about kind of that more difficult multi-year comparisons and the business really hasn't flowed as you cycle the tougher two year comps. So maybe just any more perspective as you get further into cycling, the higher two-year comps and the sustainability for Journeys as you look forward?

So we are really pleased with Journeys performance. If you look on a two-year stacked basis across the four quarters of this year, it was a plus one to a plus 11 to a plus 13 and then goes off even more for the fourth quarter. But against that, Journeys continues to execute and we think it's a measure of just a very deep understanding of that team customer, journeys has had tremendous success over the past couple of decades of reading and understanding and evolving with that team customer. And then does just a tremendous job of rotating the assortment to whatever that team desires. And so we believe that it's really a measure of gaining share in the marketplace that profound understanding of the consumer, coupled with a great readings and trends allows us to continue to put up really solid results.

And I would like -- this is Bob. I'd point back to something Mimi said before, particularly with we respect to Journeys is the investments in digital have helped a lot. And so as we have driven our digital presence that has been driving sales on that side of the business, we -- as you know, we refitted our DC to accommodate the faster delivery and a more efficient delivery of digital orders that's feeding us really well. The marketing that we've been doing on social, some of which Mimi just described is also really helping us. We know that our catalog continues to be a driver of traffic in the stores as well as digital sales. So the marketing efforts we're making are paying off. So I think it's a -- there is a big virtuous circle of all of these things connecting with the great assortment.

Okay, great. And this -- following up on the sales projections for this quarter and this is maybe across the banners, but just wanted to maybe clarify the color you gave quarter-to-date and I know it's noisy with the shifts, but to get to the comps guidance that you gave, you wanted 2% overall for the fourth quarter. Are you assuming catch up yet in the weeks ahead given some of those shifts or just trying to get color on how you're planning the business for the quarter?

Well, we haven't given a comp number for the quarter because as we noted it, it's -- there's huge offset in the comp. So what our teams did was -- did their very best job given the offsets of estimating what their trends would be by week, by day and as we said on the script, we are -- we're tracking to that projection. So we feel comfortable. Obviously the biggest chunk of December is yet to come. We've got a huge week out there and [indiscernible], so we're comfortable with the trend we're on right now and we think we will fair it [ph].

Yes. And I think that's right. I think that we are tracking to the overall guidance that we gave and we were pleased by the five days of Thanksgiving weekend and it is only five days. And as Bob said, there is a lot. There's a lot to come, but each one of our businesses delivered positive results on a comparable period year-over-year. We were especially pleased to see really strong results that Schuh, Journeys was strong Johnson and Murphy was positive after a challenging third quarter. So we think we're set to go into the holiday.

Okay, great. And then maybe just last one if I could, just on the stranded costs and the cost savings you're planning. Or are you signaling kind of any change in the ability to achieve those or in the timing that you expect to work down some of those costs. I just want to clarify the comments you gave around on the cost side.

So on stranded costs, we identified there was about $12 million for the cost that were allocated and shared. And when we did our restatement in fiscal '19, we were required to eliminate those costs as if they never existed. So in order for us to not deleverage, we have to remove a minimum of $9 million for the cost. And what we saw in Q3 was some deleverage, because we have not gotten all those cost out and we still see some of that deleverage in our Q4 guidance as well, but we do have a line of sight to get all of the cost out and really I think this quarter, the hard work, we're trying to remove, that is happening. We'll have a much better view of when those costs are completely out of the system on our next call. But I think right now I feel comfortable that we have a path to get there. This is just a question of when, we do expect some deleverage in Q4 as a consequence.

Yes. One positive for that is that Bob mentioned that we sell the -- sold the Lids headquarters building and that was something that we were anticipating, was going to weigh on our expenses, so that will be positive moving forward.

We'll take our next question from Sam Poser with Susquehanna. [Operator Instructions]

Good morning. Thank you for taking my questions. I just have -- I have a few one, just some cleanups. The corporate and other for the quarter was up fairly significantly, can you give us some color on that?

Yes, yes. We can get some color on that and some of that was what Mel just talked about in terms of the additional costs. This is the first quarter that we have been unplugged from Lids completely and so you see some stranded costs show up in those overall members and there are higher corporate bonuses than there were last year, just because of the great performance that we've had so far, but it's in a position to increase more bonuses.

Thank you. And then I just wanted to, within the preliminary look into next year that you provided with the approximately 9% increase in EPS, can we assume that the majority of that EPS growth would come out of the expense -- out -- it would be expense -- expense leverage or less SG&A growth? Is that a fair way to think about it?

Let's be clear about something. We did not give any guidance for next year. What we did do -- let me finish please. What we did do is we stated what the share count will be on average for the rest, for that year if we don't buy any more shares back. And the reason we were doing that is when you go through a year where you buy shares all through the year as we did this year, you're constantly changing your share count. And so what we want to get out there is, what is the estimate of the share count for next year and then what is -- how does that compare to the average share count for this year and that means a 9% difference. So put it another way, Sam. If we repeated precisely last -- this year's operating income to next year, right, so no change in anything other than share count, it's a 9% increase in EPS. We're not saying that we're guiding to a 9% increase in EPS, we're sizing the difference in the share count for you. Does that makes sense, Sam?

Count -- and you expect the share count next year -- one more time, I just want to make sure I get it all correct?

So, we expect the average shares outstanding for next year to be 14.4 million shares, this year 15.6 million, so it's a significant reduction.

We will take our next question from Mitch Kummetz with Pivotal Research. Please go ahead.

Yes, thanks for taking my questions. And Bob maybe Congrats on both of you with the leadership transition. I think I'm a little more jealous of Bob though. And then let me start with, actually, let me just start with Sam and then John's questions kind of -- I just try to understand the cost side, and really more thinking about next year and maybe you don't want to go there yet, but, so I think about the stranded costs. If I go from fiscal '20 to '21, how much does that come down. When I think about like bonuses, obviously Journeys is generally well, next year. This is, I would guess it abnormally good year for Journeys, if we sort of assume a normal year for Journeys or a normal year for corporate next year, how much can you save on the bonus side? I'm just trying to understand how and again talk about next year, maybe you don't want to go there, but I was just trying to understand how some of those things might flow into next year?

So let me likely off by saying, you're right, we don't want to go into next year yet, but we really haven't done the heavy lifting on our budgeting of the year and as you know we -- we make so much of our money in the fourth quarter that without seeing this fourth quarter, it's really hard to roll forward. We gave the share count thing because we thought if you guys intend to start to model of the year that that would be useful to you. And so we laid that out for you. The one thing that you called out, which I think there is some truth, we are going to have a solid bonus year here this year. And so there is -- that's valid and, but we're not guiding to what next year will look like.

Yes. So, just to add on to that, we, over the last couple of year as have been building back from zero bonuses. And so last year was a really good bonus year for Journeys and because it was good last year, this year is -- there is not a big build up in the Journeys bonus, but from corporate -- corporate was impacted by also Lids [ph] business last year. So for this year for the first time Corporate is able to benefit from the consolidated results for the business. And -- so I would really think of it, Mitch, as going from no bonuses to building back a usual level of bonus into the business and depending on where, how we perform next year will either maintain those same levels, we hope or go up because our bonus plan is based on overall improvement. As far as stranded cost out, this echo what Mel said and assets to Mel if there's anything additional for him to say about it. But just look carefully, stranded cost because of the peculiarities of the accounting means that those costs, we're taking out of our fiscal '19 results. And so we've got to pedal fast just to stay even. And so when Mel talked about taking out $9 million worth of cost, that's just for us to equal last year's level. If we do better than that ten we will have some pickup going forward, but the opportunity to do a lot better than that is fairly limited. So right now we're focused on just being able to match what we've already done and if we can do somewhat better than that, and that will be reflected in our statements next year.

I -- the only thing I would say and add to that was just be, given where we are in the planning process, we're right in the middle of rolling everything up and I think it'd be premature to guide to a number. Now, I feel good about the fact that we will get the stranded cost out, but the timing and then all the other puts and takes that are going on with wage pressure and debt savings, until we roll everything up, I don't think we're going to have a really good clear view. So I just would pause and can tell you that for Q4 we'll be ready to give you a good view of next year in terms of total cost.

Got it, okay. A couple of other questions. On Schuh, I'm just trying to understand how conservative you guys are being with the guidance, because obviously you're caution -- cautious on Brexit, High Street traffic all that, but Bob I think the comment you made, was that Schuh was -- does the performance was noteworthy for back-to-school? And Mel, I know you talked about some stack comps. When I look at Q3 issue was a minus 1 stack. If I look at your guidance for Q4, the high end of the guidance sort of implies a minus 7 to your stack. So I'm just trying to -- it feel like it being really conservative there and I kind of understand that, but I'm just trying to, maybe you could just add a little bit more?

Mitch, Schuh really rebounded nicely and it's very exciting for us to see that. We're very pleased with the team. They put a lot of work into making this happen. They've made some changes and some decisions and we really seem to be getting some credit for that. But it was one quarter and we've got an election coming up and so one quarter isn't enough for us to kind of say, we have basically, fundamentally changed the trends. So we're going to stay there and I guess, are we being cautious, I guess time is going to tell whether we are being cautious. We think we're being prudent, which would be a sort of a different reading of it. But we're very excited about the fact that they have an ample to show that. The other thing I'd just point out is the competition in the UK is evolving as well and so part of the benefit that we're seeing is possibly related to competitive pressures on others, elsewhere in the marketplace. The big box guys in particular have struggled and they have a meaningful footwear business. So there's lots going on and we thought it's smart given the unusual dynamics politically over there in particular to stick with what we've given to you.

Yes. Overtime, we do think Schuh is a good business. That's really great technology and great customer service proposition and their leadership team is really strong, recently augmented by a new head of product, and we also are seeing really nice success from the leadership that we put in place over some of the marketing effort. So over time, we anticipate that there will be consolidation in the market and 20 point plan is designed to improve near-term profitability and also to position Schuh well to take advantage of that market consolidation. So we expect that, that will play out over time, that's why the precise timing of which we don't specifically know yet.

And then, lastly on J&M; Bob, you mentioned you've seen some bounce back quarter-to-date, and obviously you guys are guiding to a stronger comp in Q4 than what you posted in Q3. So I was hoping you just elaborate on kind of what bounce back you've seen there?

Yes. So J&M is still a model where they reset the store for fall. So if you look at what happened in the third quarter, they were reset for fall and we were seeing those at least in Nashville, those 85 Degree Days, when it wasn't supposed to be that warm, and we could see that in the numbers. So if you look at the cadence of their business, they suffered mightily in the period, where it was really warm and they improved a bit with the weather. And then, as we noted fourth quarter has continued to show a little more strength and how the third quarter played out. There is a little bit of a sameness in the business, the athletic bottoms on a variety of offers has become the norm in the business and what we need to do now is to dig in and continue to innovate around that. Look, the other thing I'll just point out is when you get into the fourth quarter, Johnston & Murphy does a higher percentage of business in their non-footwear. And so -- and that was not as affected by some of the weather-related stuff was affected. But the non-footwear part of the assortment, has performed well and so we get the benefit of that as we go through the fourth quarter.

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

Well, thank you everyone for joining us. And our next call will be somewhere, early March, and I like you look forward to hearing it. Thank you for joining us.

And this does conclude today's call. Thank you for your participation, you may now disconnect.