Genesco Inc. · NYSE:GCO
Genesco — Proxy Contest (June 2021)
74 slides from Genesco's proxy contest presentation, Jun 23, 2021
Slide 1: Delivering Shareholder Value Through Our Footwear Focused Strategy
Delivering Shareholder Value Through Our Footwear Focused Strategy June 2021
Slide 2: Non-GAAP Financial Measures
Non-GAAP Financial Measures We have included certain non-GAAP financial measures in this presentation in order to provide transparency to our shareholders and enable shareholders to better compare our operating performance with the operating performance of our competitors, including with those of ou
Slide 3: Executive Summary
Executive Summary Our Execution – Even During the Pandemic – Has Driven Results Generated record ~$450mm in FY2021 digital revenue, an increase of ~75% YoY by leveraging pre-pandemic investments in digital capabilities Drove record in-store conversion rates, partially offsetting reduced store traffi
Slide 4: Our Execution, Even During the Pandemic, Has Driven Results
Our Execution, Even During the Pandemic, Has Driven Results 2
Slide 5: Our Strategy Is Delivering Profitable and Sustainable Growth
Our Strategy Is Delivering Profitable and Sustainable Growth 1 Accelerate digital to grow direct-to-consumer • Optimize the mobile shopping experience and continue to eliminate points of friction • Launch new payment options and buy now, pay later services • Invest in more DC eCommerce automation •
Slide 6: Our Footwear Focused Strategy Delivered Strong Results Pre-Pandemic
Our Footwear Focused Strategy Delivered Strong Results Pre-Pandemic… (1) Strong operational execution coupled with proactive capital allocation strategy delivering outsized EPS growth, while returning over $250 million to shareholders via share repurchases (2) Equates to ~30% of shares outstanding f
Slide 7: And Also Enabled Compelling Performance Throughout the Pandemic
…And Also Enabled Compelling Performance Throughout the Pandemic We delivered strong results, while many competitors did not survive unprecedented challenges Significant sequential improvement in revenue and operating margin every quarter since pandemic began (Q1 FY2021) Strong Q4 2021 performance w
Slide 8: We Are Off To a Very Strong Start in FY2022
We Are Off To a Very Strong Start in FY2022, Even Compared to Pre-Pandemic Performance FY2022 Q1 Earnings Highlights Revenue and adjusted operating profit exceeded pre-pandemic levels, increasing 9% and 125%, respectively, over Q1 FY2020 Delivered record first quarter digital revenue and profit Digi
Slide 9: Our 1-Year and 3-Year TSR Is In-Line With Core Peers
Our 1-Year and 3-Year TSR is In-Line With Our Core Peers 3-Year Total Shareholder Return (% Return) 59% 50% (1) Footwear Retail Peers 1-Year Total Shareholder Return (% Return) 192% 190% (1) Footwear Retail Peers Source: Factset and other publicly available information as of June 11, 2021 (1) Footwe
Slide 10: Our Strategy and Allocation of Capital Will Continue Creating Greater Value
We Believe Our Strategy And Thoughtful Allocation of Capital Will Continue Creating Greater Value 8
Slide 11: Targeting Adjusted Operating Margin of 6% or More by FY2025
Where We Are Headed: Targeting An Adjusted Operating Margin of 6% or More by FY2025 Footwear focused strategy has provided a strong platform for growth and capital efficiency by driving highly profitable digital sales, reshaping the brick & mortar cost structure and growing branded 4.5% FY2020A (1)
Slide 12: A Footwear-Focused Strategy Positions Us to Be Successful
How We Will Get There: A Footwear-Focused Strategy Which Positions Us to Be Successful… From a Diversified Business to a Footwear Focused Business Genesco Portfolio as % of Sales Licensed Brands 3% 10% 46% 27% FY2018 14% (1) Branded Footwear 17% FY2020 83 Retail (1) Why Our Footwear Focused Strategy
Slide 13: A Long Term Winner in a Dynamic Retail Sector
…and a Long Term Winner in a Dynamic Retail Sector Key Themes Driving a Rapidly Evolving Sector 1 Brands increasingly focused on owned direct-to- consumer (“DTC”) distribution 2 Rapid consumer adoption of digital commerce 3 Declining mall traffic 4 Need for retailers to invest and create seamless om
Slide 14: Business Anchored Upon a Robust Direct-to-Consumer Platform
Our Business Is Anchored Upon a Robust, Direct-to-Consumer Platform Channel Breakdown ~93% Direct-to-Consumer Wholesale 7% eCommerce 25% FY2021 67% Retail Powerful DTC model driven by leading retail brands with growing digital platform Results At A Glance (1) 37.4 million Pairs of shoes sold (2) 223
Slide 15: Strong Portfolio of Brands that Resonate with Consumers
Strong Portfolio of Brands that Resonate with Consumers Retail Platform (~83% of FY2020 Net Sales) Branded Platform (~17% of FY2020 Net Sales) The des young adult and teen fashion footwear and partner of choice for leading global brands Portfolio of leading owned and licensed brands Strong Strategic
Slide 16: Meaningful Synergies Across our Footwear Focused Portfolio
We Derive Meaningful Synergies Across our Footwear Focused Portfolio Retail Vendor Scale Strategic Consumer Initiatives Insights Product Digital Insights Customer Relationship Management Digital Platform Shared Systems Shared Resources Robust DTC Platform Operational Best Practices Combined Purchasi
Slide 17: Our Six Strategic Pillars
Our Six Strategic Pillars are Designed to Deliver Sustained and Profitable Growth 1 Accelerate digital to grow direct-to-consumer • Optimize the mobile shopping experience and continue to eliminate points of friction • Launch new payment options and buy now, pay later services • Invest in more DC eC
Slide 18: Pillar 1: Accelerate Digital to Grow Direct-To-Consumer
Pillar 1: Accelerate Digital to Grow Direct-To-Consumer Genesco has leveraged significant investments in digital capabilities across the portfolio to drive growth and profits, and to adapt to current shifts in consumer shopping Digital revenue: FY2018 – FY2021 ($, in millions) $449 31% CAGR $219 $20
Slide 19: Pillar 2: Maximize Relationship Between Physical and Digital Channels
Pillar 2: Maximize the Relationship Between Physical and Digital Channels Genesco is continuing to build on its compelling omnichannel experience by strengthening its strong direct-to-consumer offerings across physical and digital channels Last Mile Innovation Investing in systems to provide real-ti
Slide 20: Pillar 3: Strengthen Customer Relationships and Brand Equity
Pillar 3: Strengthen Customer Relationships and Brand Equity By Developing Deeper Consumer Insights Connect with our target audience through relevant and authentic brand content and experiences to enhance customer engagement and maintain highly loyal followings and distinct communities around our br
Slide 21: Pillar 4: Intensify Product Innovation and Trend Insight Efforts
Pillar 4: Intensify Product Innovation and Trend Insight Efforts Trend: Demand for vegan-friendly and more sustainable products Trend: Demand for performance combined with style and comfort WATERPROOF BREATHABLE ADVANCED CUSHIONING SMART DEGREE TECHNOLOGY Trend: Shift to more casual and active-inspi
Slide 22: Pillar 5: Reshape the Cost Base to Reinvest for Future Growth
Pillar 5: Reshape the Cost Base to Reinvest for Future Growth Genesco is committed to continuing its successful retail optimization program Captured almost $45 million in two Profit Enhancement Programs (PEP) pre-pandemic plus elimination of $9 million in stranded costs from Lids divestiture $25—$30
Slide 23: Significant Free Cash Flow and a Healthy Balance Sheet
Our Strategy Has Delivered Significant Free Cash Flow and a Healthy Balance Sheet Robust Free Cash Flow Generation… Free Cash Flow (annual and cumulative) (1) ($, in millions) $438 $134 $87 $180 $37 FY2018 FY2019 FY2020 FY2021 Total mic …and Flexible Capital Structure with Strong Liquidity Liquidity
Slide 24: Investing in our Business and Returning Significant Capital to Shareholders
We are Building Long-Term Value by Investing in our Business and Returning Significant Capital to our Shareholders Investing in Future Growth… ($, in millions) $42 ~$35—~$40 $16 $30 $10 $24 ~$30 $26 $14 $20 $10 ~$5—~$10 (1) (2) FY2019 FY2020 FY2021 FY2022E New stores and remodels Omnichannel, IT, DC
Slide 25: Board's Allocation of Capital Demonstrates Prudent Stewardship
Our Board’s Allocation of Capital Demonstrates Accountability and Prudent Stewardship <1% 7% ~$1 Billion 41% FY2016 – FY2020 52% Share repo CapEx (1) Acquisitions Net Debt Repayment (2) History of investing in our business and generating strong free cash flow Over $1 billion in capital invested in t
Slide 26: We Have Assembled the Right Board and Management Team
We Have Assembled the Right Board and Management Team For Continued Success 24
Slide 27: Refreshing the Board and Management Team to Support Future Value Creation
We Have Done Much of the Hard Work of Refreshing the Board and Management Team to Support Future Value Creation Board recognized the need for a strategic transformation to address changes in retail, the increasing importance of digital and the resultant need for scale and systems efficiencies The ne
Slide 28: Our Board is Fresh, Independent and Diverse
Our Board is Fresh, Independent and Diverse (1) S&P 500 (2) Assessment Board (Consumer Sector) for Genesco Average Tenure (Years) 5 8 Favorable to Average Average Age (Years) 61 62 Favorable to Average Racial Diversity (% Diverse) 33% 21% Above Average Gender Diversity (% Female) 33% 31% Above Avera
Slide 29: Each Director Brings Highly Relevant Skills and Experience
Each Director Brings Highly Relevant Skills and Experience… Mimi Vaughn • Driving force in leading Genesco’s long-term footwear focused strategy • Instrumental in positioning Genesco to thrive during the pandemic Matthew Diamond • Developed and managed iconic and influential youth brands including “
Slide 30: Creating a Strong Board With the Expertise Genesco Needs
…Creating a Strong Board With the Expertise Genesco Needs Skills / Expertise Public Company Leadership (CEO, CFO or Public Directorships) 9 of 9 directors Senior Leadership Experience (C-Suite Executive or Equivalent) 9 of 9 directors Operations Management 5 of 9 directors Retail, Brand or Consumer
Slide 31: The Board Was Instrumental In Our Robust COVID-19 Response
The Board Was Instrumental In Our Robust COVID-19 Response Our Board held 9 extraordinary meetings during FY2021 to address the challenges COVID-19 presented to our business The Board Helped Preserve Our Financial Position… “In response to the current business environment as impacted by COVID-19, th
Slide 32: Direct Board ESG Oversight to Drive Sustainable Shareholder Value
Direct Board ESG Oversight to Drive Sustainable Shareholder Value Newly Formed ESG Subcommittee For more than 95 years, we have made it a priority to operate with high ethical standards and to serve all of our stakeholders We recently formed an ESG subcommittee under the Nominating and Governance Co
Slide 33: Corporate Culture Rooted in Diversity, Equity and Inclusion
Our Strong Corporate Culture Is Rooted in Diversity, Equity and Inclusion Our Commitment to Diversity, Equity and Inclusion We are committed to diversity, equity and inclusion: The majority of our U.S. workforce is female and racially / ethnically diverse The majority of our Board is also either gen
Slide 34: Legion's Baseless Campaign and Underqualified Nominees Would Introduce Significant Risk
We Believe Legion’s Baseless Campaign and Underqualified Nominees Would Introduce Significant Risk for Shareholders 32
Slide 35: We Repeatedly Tried To Constructively Engage With Legion
We Have Repeatedly Tried To Constructively Engage With Legion and Avoid a Proxy Contest, But Legion Has Refused We Have Taken Every Possible Action To Engage With Legion Constructively… After Legion demanded a turnover of a majority of our Board, we expressed our openness to engage and requested tha
Slide 36: Legion's Campaign Raises Serious Concerns About Their Intentions
We Believe Legion’s Campaign Raises Serious Concerns About Their Intentions 1 Legion’s Incoherent and Chaotic Strategy Legion began their campaign seeking to replace 7 of 8 directors while supporting Ms. Vaughn’s re-election the entire time, then pivoted to insisting on the retirement of Matthew Dia
Slide 37: Legion Has Not Demonstrated That It Is a Long-Term Shareholder
Legion Has Not Demonstrated That It Is a Long-Term Shareholder; Legion Exited Its Prior Genesco Position After Only 16 Months Legion’s Historical Positions in Genesco % Ownership Legion’s nominees sat on Genesco’s 5.94% 6.00% Board from April 2018 to June 2019 5.19% 5.17% 4.99% 5.00% 4.30% 4.28% 4.0
Slide 38: Legion's Nominees Lack Relevant Skills, Experience and Track Records
We Believe Legion’s Nominees Lack The Relevant Skills, Experience and Track Records To Lead Genesco Nominee Qualification Concerns Genesco’s Considerations Marjorie Bowen Short average tenure of ~1.4 years on all 8 boards she has served Many companies where she served on the board have gone bankrupt
Slide 39: Legion's Nominees Lack Relevant Skills, Experience and Track Records (Cont'd)
We Believe Legion’s Nominees Lack The Relevant Skills, Experience and Track Records To Lead Genesco (Cont’d) Nominee Qualification Concerns Genesco’s Considerations Dawn Robertson Short average board tenure of ~1.4 years on the 2 boards she served In the last 15 years, Ms. Robertson has held 9 diffe
Slide 40: Legion's Nominees Lack Relevant Skills, Experience and Track Records (Cont'd)
We Believe Legion’s Nominees Lack The Relevant Skills, Experience and Track Records To Lead Genesco (Cont’d) Legion’s ever-changing slate is a last-minute compilation of nominees Criteria Marjorie Bowen Margenett Moore-Roberts Dawn Robertson Hobart Sichel Principal Footwear Experience Public Company
Slide 41: Legion's Underqualified Nominees Compare Poorly To Directors They Seek to Replace
We Believe Legion’s Underqualified Nominees Compare Poorly To The Directors They Seek to Replace Genesco’s Current Directors Matthew Diamond Developed and managed some of the most iconic and influential youth brands including “Gossip Girl” and “Vampire Diaries” Pioneer in the eCommerce space for the
Slide 42: Legion's Slate Would Advance a Non-Existent Strategy
Legion’s Slate Would Advance… A Non-Existent Strategy Genesco’s Strategy Clearly stated, synergistic six pillar strategy to deliver sustained and profitable growth Board has core competencies aligned with our strategy to ensure our continued execution success Our new footwear focused strategy is dri
Slide 43: Our Board is the Most Compelling Choice; Vote the BLUE Proxy Card
Our Board is the Most Compelling Choice to Deliver Long-Term Value Creation to ALL Shareholders 1 Our Execution – Even During the Pandemic – Has Driven Results 2 We Believe our Strategy And Thoughtful Allocation of Capital Will Continue Creating Greater Value 3 We Have Already Assembled the Right Bo
Slide 44: Appendix: Business Strategy
Appendix: Business Strategy 42
Slide 45: We Live Our Values Everyday
We Live Our Values Everyday Our Values 1 Act with passion and compete to win 2 Treat our customers and each other with integrity, trust and respect 3 Create an unrivaled home for talent and diversity to grow and succeed 4 Never stop being curious; innovate and improve endlessly 5 Be nimble and react
Slide 46: Key Strategic Initiatives By Business
Key Strategic Initiatives By Business Retail Platform Branded Platform Licensed Brands Grow sales by retaining and building upon recent digital gains, and taking market share as industry consolidates Attracting new to file customers online (large portion of online transactions coming from new custom
Slide 47: Journeys Group Opportunity
Journeys Group Opportunity Strategic Focus Market consolidation – build upon the gains achieved during the pandemic – market disruption provides more opportunity Digital – with lowest digital penetration of our businesses, largest opportunity for growth CRM – data-driven insights from customer purch
Slide 48: Schuh Opportunity
Schuh Opportunity Strategic Focus Market consolidation – build upon the gains achieved during the pandemic – market disruption provides more opportunity Margin enhancement – increases will be driven by assortment expansion and increased penetration of private-label product Loyalty Program – FY2022 l
Slide 49: Johnston & Murphy Opportunity
Johnston & Murphy Opportunity Strategic Focus Product evolution and category expansion –continued focus on casual and casual athletic footwear and apparel Increase brand awareness – move perception of the brand and increase awareness of casual and casual athletic Digital – expand on success in this
Slide 50: Licensed Brands Opportunity
Licensed Brands Opportunity Strategic Focus Growth – capitalize on Levi’s license and “re-launch” brand, expand all brands with more value channel customers, acquire new licenses Digital – expand digital presence on 3rd party sites and through Nashville Shoe Warehouse Increase productivity and profi
Slide 51: We are a Key Partner Within the Footwear Industry
We are a Key Partner Within the Footwear Industry “We value our continued partnership with Genesco. Genesco’s portfolio of brands—Journeys and Schuh—play a strategic role connecting our brand with key consumers. Genesco’s unique retail experiences in the U.S., Canada and the U.K. elevate our brand s
Slide 52: Enduring and Distinctive Footwear Concepts Serving Young Adults and Teenagers
Enduring and Distinctive Footwear Concepts That Uniquely and Authentically Serve Young Adults and Teenagers Both Journeys and Schuh were founded in the 1980s… …and remain a destination for fashion footwear Both concepts remain relevant by constantly adapting to changes in youth culture, fashion and
Slide 53: We Realize Substantial Synergies Within Our Footwear Focused Portfolio
We Realize Substantial Synergies Within Our Footwear Focused Portfolio Synergy Example Within Our Retail Platform: Schuh Kids Based On Journeys Kidz When Genesco acquired Schuh in 2011, Schuh had no stand-alone Schuh Kids store and no dedicated Schuh Kids “shop in shop” departments or dedicated kids
Slide 54: Our Return of Capital Exceeds That of Our Peers
Our Return of Capital Exceeds That of Our Peers Return of Capital (CY2016 – CY2019) (1) 104% We have returned over 100% of our Free Cash Flow to our shareholders 82% 74% 70% 69% 69% Footwear (4) Mall-based (2) Department (3) Branded (5) Branded (6) Retail Apparel Retail Stores Footwear Apparel Sourc
Slide 55: Appendix: Board of Directors
Appendix: Board of Directors 53
Slide 56: Our Board Provides Relevant Perspectives For Our Long Term Strategy
Our Board Provides Relevant Perspectives For Our Long Term Strategy… Mimi Vaughn President, CEO and Board Chair of Genesco President, CEO and Board Chair of Genesco since 2020 In her current roles, Vaughn provides executive insight over day- to-day operations and progress towards strategy execution;
Slide 57: Dynamic and Diverse Set of Returning Board Nominees
…Driven by a Dynamic and Diverse Set of Returning Board Nominees… John Lambros President and Head of Digital Media Banking of GCA-U.S. Director at GCA, a global investment bank and public company; President and Head of Digital Media Banking of GCA-U.S. As an investment banker, currently with GCA and
Slide 58: Refreshed With Strong, Experienced Directors in 2021
…And Refreshed With Strong, Experienced Directors in 2021 Angel Martinez Former Chairman and CEO of Deckers Throughout his career, Martinez started, developed, marketed and managed numerous portfolios of brands such as UGG, Teva, HOKA, and Reebok’s Freestyle aerobic shoe, many of which became intern
Slide 59: Appendix: ESG
Appendix: ESG GE NE SCO zz a
Slide 60: Genesco's Strong Governance Practices
Genesco’s Strong Governance Practices Board Accountability, Leadership Annual director elections Annual director assessment and determination of Board leadership structure Lead Independent Director with strong role and significant governance duties, including agenda- setting and leadership of Execut
Slide 61: Genesco's Commitment to ESG
Genesco’s Commitment to ESG At Genesco, we focus on quality, diversity, integrity, and sustainability in the production, supply chain, and sale of our footwear focused products, by demonstrating the utmost respect for our employees, customers, trade partners, and communities We developed our ESG app
Slide 62: Compensation Program Rewards Profitable Growth and Returning Capital
Genesco Compensation Program Rewards Profitable Growth and Returning Capital to Shareholders Overview Annual incentives awarded based on improvements in Economic Value Added (EVA) (1) or Economic Profit (high shareholder alignment) EVA = Net Operating Profits After Tax (NOPAT) – (Total Capital Inves
Slide 63: Compensation Program Garnered Overwhelming Support From Shareholders and Proxy Advisors
Genesco Compensation Program Garnered Overwhelming Support From Shareholders and Leading Proxy Advisors ISS and Glass Lewis 2020 Proxy Advisor Pay-For-Performance analysis (1) ISS 2020 Research Report Genesco Glass Lewis 2020 Research Report Genesco Compensation program ensures shareholder alignment
Slide 64: Appendix: Legion Campaign
Appendix: Legion Campaign 62
Slide 65: Legion's 2018 Campaign Was a Serious Distraction To Our Employees
Legion’s 2018 Campaign At Genesco Was A Serious Distraction To Our Employees, Harming Our Ability to Operate Effectively Legion Negatively Impacted Employee Engagement Employee engagement is core to executing on our strategy During the term of Legion’s share ownership, Genesco’s Employee Engagement
Slide 66: Legion Has Tried to Claim Credit For Our Strategy
Legion Has Tried to Claim Credit For Our Strategy, Further Raising Concerns About Legion’s Credibility and Genesco’s Future Legion Attacked Genesco’s Strategic Divestiture of Lids… Then Attempted To Take Credit For It February 26, 2018 “… we are writing to express our disappointment with the Company
Slide 67: Appendix: GAAP to Non-GAAP Financial Reconciliation
Appendix: GAAP to Non-GAAP Financial Reconciliation 65
Slide 68: Adjustments to Reported Earnings from Continuing Operations
Adjustments to Reported Earnings from Continuing Operations Genesco Inc. Adjustments to Reported Earnings from Continuing Operations and Operating Income Fiscal Years Ended February 3, 2018, February 2, 2019 and February 1, 2020 Fiscal Year Ended February 3, 2018 February 2, 2019 February 1, 2020 Ne
Slide 69: Adjustments to Reported Earnings from Continuing Operations
Adjustments to Reported Earnings from Continuing Operations Genesco Inc. Adjustments to Reported Earnings (Loss) from Continuing Operations and Operating Income (Loss) Three Months Ended May 1, 2021, May 2, 2020 and May 4, 2019 May 1, 2021 May 2, 2020 May 4, 2019 Net of Per Share Net of Per Share Ne
Slide 70: Adjustments to Operating Income
Adjustments to Operating Income Genesco Inc. Adjustments to Operating Income Third Quarter and Fourth Quarter of Fiscal Year 2021 In Thousands Third Quarter Fourth Quarter Operating income, as reported $8,184 $62,579 Operating income as a % of sales 1.7% 9.8% Asset impairments and other adjustments:
Slide 71: Reconciliation of Cash Flow from Operations to Free Cash Flow
Reconciliation of Cash Flow from Operations to Free Cash Flow Genesco Inc. Reconciliation of Cash Flow from Operations to Free Cash Flow Fiscal Years 2017, 2018, 2019, 2020 and 2021 In Thousands Fiscal 2017 Fiscal 2018 Fiscal 2019 Fiscal 2020 Fiscal 2021 Net cash provided by operating activities, as
Slide 72: Safe Harbor Statement
Safe Harbor Statement This presentation contains forward looking statements, including those regarding the performance outlook for the Company and all other statements not addressing solely historical facts or present conditions. Forward- looking statements are usually identified by or are associate
Slide 73: Additional Information
Additional Information Important Additional Information and Where to Find It Genesco has filed a definitive proxy statement (the “Proxy Statement”) and accompanying proxy card in connection with the solicitation of proxies for the 2021 annual meeting of Genesco shareholders (the “Annual Meeting”). I
Slide 74: Genesco Press Release June 23, 2021
72 GENESCO On June 23, 2021, the Company issued the following press release. The press release was also posted by the Company to www.GenescoDrivingValue.com on June 23, 2021. GENESCO FILES INVESTOR PRESENTATION • Details Strength of Footwear Focused Strategy, Successful Track Record of Execution Tha