Genesco Earnings Call Insights: Comp Improvement and Incremental Gains
Scott Krasik – BB&T Capital Markets: Bob, good to see the sequential improvement in the Lids comps, can you drill down a little bit more on the categories that you’re seeing the improvement in? Then secondly to the fact that you had a little bit of excess inventory in some of these categories mean that you’re expecting an even better comp improvement and if so, why?
Robert J. Dennis – Chairman, President and CEO: A lot of the orders get placed further back and so, our expectations for comps, as we went through the fourth quarter, obviously came down, but we brought in what we brought in and we can adjust the inventory with future receipts. Then as Jim Gulmi mentioned, the excess inventory sits in basically Yankee hats and Cub hats and product that we think doesn’t have mark down risk. So, we’re not very worried about it. The mix of the business, Scott, hasn’t changed that much. So, the improvement has come across the board, and we are doing a really big business in Snapbacks. We got more price competitive within the fourth quarter near the end of it, and we’ve maintained that position. So that has allowed us to continue to do a lot of business in that category. It’s a very fast category and as Jim noted, our percent of sales for Snaps are much higher than the percent of inventory, and so we feel like we’re in a very good position there, but there really hasn’t been a big move other than the tests we’ve done with a number of the fitted categories we brought in the new programs and the freshness I think has helped the business a little bit. But we are anxious to see if we can get more traction on those fitted programs and actually take share from Snaps. The customer right now is still all over Snaps.
Scott Krasik – BB&T Capital Markets: Do you have any – I was glad to hear you say that the competition maybe has abated a little bit. Is there any belief on your side that that’s permanent, if so why?
Robert J. Dennis – Chairman, President and CEO: Not sure, Scott. Our team thinks that a lot of them look for holiday items and so it was brought into those stores as a holiday item. In some instances and this is not across the board but I think the vendors recognized that (over) distribution carries a little bit of risk. So that can be a factor. Then also we got more aggressive on price. So we made it a little more difficult. The thing that you have to realize in the hat business and maybe they also woke up to this is, that part of the hat business is fast and that most of those non-traditional guys are not set up for fast fashion. So we are freshening up that cabinet on a regular basis and they if did one big buy, they probably saw a deterioration in their sell-throughs because what was fresh at the beginning wasn’t very fresh at the end…
Scott Krasik – BB&T Capital Markets: Then just one last one on Journeys. Some of the off mall retailers, the family retailers seem to have reported a little better result than you guys last quarter and in some of the same categories. There’s a lot of talk about the young adult unemployment rates, the teen unemployment rates. Do you have any belief that your customer is just more pressured buying the same thing and how does that play out for back-to-school in your mind?
Robert J. Dennis – Chairman, President and CEO: Well the teen unemployment rate has been a problem for more than a year. So we’ve been lapping that for a couple of times. So I don’t think it becomes new news, to the extent that, that impeded purchasing by the kids, that’s already – that trend’s already there. The challenge for Journeys always is making sure that for our customer, we’ve got fresh and new and that we’re in the key brands, and we are. We’ve seen a very nice improvement in the business in May, on top of a positive comp in March and April. So we still have what the kids are looking for and we’re pretty confident that we’re in pretty good shape to achieve what we really have out there as modest comps. We’re not expecting the big numbers we’ve posted the last two years.
Sam Poser – Sterne Agee: Jim, can you tell us what the incremental value of that week moving from that last week of the second quarter is versus – that incremental gain of that week, what comping that is relative to the week that you lost at the beginning of the quarter?
James S. Gulmi – SVP, Finance and CFO: Yeah Sam, it’s in the range of probably 3% or 4%.
Sam Poser – Sterne Agee: Can you give us the dollar of what that is because – can you give us the dollar variance of that?
James S. Gulmi – SVP, Finance and CFO: It’s somewhere in the range of $15 million to $20 million…
Sam Poser – Sterne Agee: Then, do you think you’ve worked through the mix issues Bob, at Schuh and you had spoken some time ago about potential growth of that business outside of the U.K., where do you stand with that right now?
Robert J. Dennis – Chairman, President and CEO: Well, I’ll do the second one. We continue to examine what the possibilities, are. We’re not in a position to move – these guys, they still have their plates full with all the opportunity that they’re pursuing in the U.K. but we continue to both think and look and analyze what options might be for their next step up in growth. That’s really all I can say to that right now. On your first question, Sam, when you talk about mix issues at Schuh, I’m not sure exactly what you’re referencing.
Sam Poser – Sterne Agee: Well, you mentioned that it was traffic but also there was some margin. It was mentioned in the press release, there was some margin issues having to do with the mix over there, some adjustment in the mix. I just wanted to understand what that was.
Robert J. Dennis – Chairman, President and CEO: Yeah look, it’s simple Sam, we adhere to our vendors, suggested retail and not all vendors are the same in terms of the margin structure that that provides and so when certain brands gain a lot of share, it can shift the gross margin by 10 or 20 basis points. It’s not a huge thing.
Sam Poser – Sterne Agee: Then Jim, lastly, I assume that you can get a lot more leverage in the second quarter even on a lower comp than you can on the third and a higher comp, because of the shift. Am I thinking about that correctly?
James S. Gulmi – SVP, Finance and CFO: Well, we obviously get added contribution improved contribution on the incremental sales and as I said earlier incremental sales from the shift is $15 million to $20 million. So, there will be a higher margin contribution from that.
Robert J. Dennis – Chairman, President and CEO: But the other thing Sam, keep in mind that the offset to that is, in terms of the way our year-over-year bonus accruals affect business it is likely that the swing in the first quarter will be the biggest one of all, just because we booked a lot of bonus first quarter last year. That’s a pretty big factor when we look at our SG&A, leverage…
Sam Poser – Sterne Agee: But I mean taking that out of that scenario you’re going to – you are basically going to – I mean you are going to lose that $15 million to $20 million in the third quarter. So and that would – and those – so relative to one and other the flow through on a lower comp, if the comp was flat both quarters you would leverage the comp in Q2 and delever it significantly in Q3, correct?
Robert J. Dennis – Chairman, President and CEO: If you just move that money not a lot of expense moves with the sales. So it is a straight flow-through equation that says the profits off of those sales pretty much move from third quarter to second quarter. You’re correct about that before you get into the bonus thing.
James S. Gulmi – SVP, Finance and CFO: But as Bob said earlier that there also is in the – this year the bonus accrual adjustment was the greatest by far in the first quarter. So that is in fact going the other way. To answer your question we are getting to this, I think is that, yes, we do expect to get some leverage in the second quarter and third actually, a little bit in the third.
Robert J. Dennis – Chairman, President and CEO: That’s because the comparisons are – that has to do with the easier comparisons too.
James S. Gulmi – SVP, Finance and CFO: And for the comp increasing potentially.
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