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Why Journeys' Holiday Sales Popped

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  • File photo courtesy of Journeys

Large industry footwear customer Journeys recorded robust holiday sales, and executives at parent company Genesco Inc. explained why at the ICR investor conference last week.

They also provided some interesting insight into what is happening with landlords and rents at malls.

Journeys' holiday comps rose 10% and were driven by two things, executives said.

The chain has aligned its inventory to reflect the changed fashion cycle, which moved from canvas athletic styles to retro athletic and progressive athletic styles.

And, the cold weather has helped boot and seasonal footwear sales.

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“The weather has been our friend,” Genesco CEO Robert Dennis said.

When that fashion rotation was taking place, Journeys reported negative comps. At that time, executives had said that they expected a significant pop in the business once the rotation was complete based on past experience.

That is certainly true, since in Q4 last year, Journeys comps were down 6%, so the business has accelerated a lot since then.

Holiday sales for the company’s UK-based shoe chain, Schuh, also an industry customer, were not as strong, with comps rising 1%. Overall, the UK retail market reported softer holiday sales than the U.S., executives said.

Mall Report

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The company expects many “C” malls to close in the future. In the meantime, Genesco is negotiating short term leases with very favorable rents because landlords want stores to stay open and are being flexible.

“You’d be surprised how profitable we can be in a ‘C’ mall,” Dennis said.

In fact, the company is equally as profitable on a percentage basis across A, B and C malls.

Tax Cuts

The company also commented on how they expect the lower corporate rate and tax reform in general to impact Genesco.

Not only will the company have more money to invest in its business, use for acquisitions, and return to shareholders, executives believe the company’s core consumers will have more money in their pocket to spend in stores.

“We expect it to be very favorable to us,” Chief Operating Officer Mimi Vaughn said.

 

 

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