I keep thinking about the Journeys Adidas issue.
Journeys is a huge industry footwear customer with 846 stores in the U.S. and Canada. It has outperformed much of the market during the challenging retail environment and strives to differentiate itself from the athletic footwear retailers at the mall.
Journeys’ parent company Genesco dropped a bombshell on its earnings conference call Sept. 1: Journeys had underestimated the hotness of a fashion athletic brand (sources say it’s Adidas) for the key back-to-school season.
While Journeys is carrying the brand, it didn’t have the breadth it needed to keep up with the overwhelming demand in the market.
That miss was so bad, or Adidas is so hot, that Journeys’ same-stores sales turned negative and Genesco was forced to lower its earnings outlook for the year. Journeys will not be able to get the product it needs until the spring season, executives said.
At first this puzzled me because I thought I saw a decent presentation of Adidas at Journeys for back to school.
Then someone suggested I go to a Foot Locker store. It was an “Aha” moment.
Foot Locker had a massive Adidas section with about 95 shoes in different colors and styles. From what I’ve been told, it’s not just one Adidas style that is hot. It’s several, and this section covers all the bases, including Stan Smith, Superstars and Ultra Boost.
By comparison, Journeys’ presentation looks small. Unfortunately, Journeys is likely competing with Foot Locker’s Adidas assortment in nearly every mall Journeys operates in.
Foot Locker has 1,088 stores in the U.S. in Canada. I would guess that not every store has 95 styles and colors of Adidas, but most likely have more Adidas inventory than Journeys.
After the earnings call, Genesco’s stock took a huge hit. On Aug. 31, the day before the call, Genesco stock closed at $72.64. On Sept. 1, the day of the call, the stock closed at $48.79, a 32% decline.
The stock price has climbed back a bit and is trading at $49.90 this morning.
It’s amazing that a brand trend could have that much of an impact on one company.
