For footwear group Genesco, the pandemic has been a period of change. For one, the company came under new leadership in February 2020, when Mimi Vaughn was named CEO, becoming the first women to hold that role in Genesco’s 100-year history.
During a fireside chat with FDRA president and CEO Matt Priest at the CEO Summit on Aug. 3, Vaughn said that prior to the pandemic, more than 85 percent of Genesco’s revenue came from stores. Without this channel during store closures, the company—which includes retailers Journeys and Schuh, the Johnston & Murphy brand and licensed footwear labels like Levi’s and Dockers—lost $90 million in the first half of 2020.
However, Genesco came close to breaking even by the end of that year, and profitability grew by 50 percent year-over-year last year. Contributing to this turnaround were store reopenings in May 2020, “aggressive” inventory positions and lease negotiations. Another aspect that propelled the company was the evolution and growth in its brands—including licensed labels. E-commerce has also grown 75 percent, and has proven a profitable channel.
“The fun thing about being in the industry that we’re in is it’s ever changing and ever evolving,” Vaughn said. “This is an incredibly transformative time because we are making our companies right for the digital age and to serve the digitally native customer.”
Guided by its large portion of Gen Z clientele, Genesco’s strategy includes integrating physical and digital, gathering consumer insights and innovating on product.
The Gen Z audience—along with other generations—also cares about environmental, social and corporate governance. Genesco has established a cross-departmental ESG task force and an ESG subcommittee within its board of directors to take action on these topics.
Vaughn admitted that among the ESG pillars, “environment is where we have the largest gap and where we had and continue to have the most work to do.” Taking steps in this direction, the company recently conducted a carbon assessment of its North American operations and is working on setting environmental goals. Genesco also has initiatives in the pipeline to reduce the impact within product, packaging and facilities.
With a diverse customer base, Genesco’s workforce is also diverse. Seventy percent of employees are women, and two-thirds of staff are non-white. More than 50 percent of Genesco’s board is also diverse, across gender and racial identities.
“It’s important for our leadership team, for our company, for our brands and our management to be able to relate to our consumers,” she said, adding that having “different voices” improves decision-making.
Vaughn also noted that inclusivity is important to Gen Z. As an example of its own inclusivity, Genesco has featured individuals with disabilities in its advertising.
The company’s social endeavors also extend into the community. One realization has been the need for sharing information on its social actions. “We never thought it was important to talk about it, we just thought it was important to do it,” Vaughn said. “So we were walking the walk, and we decided that we needed to talk the talk, because people didn’t know about it.”
Following the shift to remote work early in the pandemic, Genesco has now adapted to a hybrid model. It moved into a new headquarters in Nashville that is designed for this mix, allowing employees to see each other and interact when in the office. “As much as we do a great job trying to build community online, it’s really more effective to do it in person, and it builds culture,” she said.
During her tenure, Vaughn has also navigated activist investor Legion Partners’ attempt to shake up its board. In the end, shareholders voted for the nine existing directors in July 2021, leaving the board intact. While a proxy contest is an “incredibly intense experience,” this led to some positives, including giving Vaughn the opportunity to talk to Genesco’s passive shareholders—or investment management firms—about strategy and ESG. The company’s sales in 2021 were 36 percent higher than 2020 figures and 10 percent over 2019.
“We had to think about how we were going to go through this, and yet insulate our people from the distraction,” Vaughn said. “And really through those efforts, we were allowed to have the year that we had last year.”
