Mimi Vaughn (CEO, Genesco Inc) shares lessons from a proxy fight

Thank you. Really great to be with you here today.

Yeah, sure. So we are almost a 100-year-old company, and the story of Genesco is a story of reinvention. We started as a footwear manufacturing company a little bit after the turn of the century, reinvented ourselves to be a seller of our own brands, reinvented ourselves to be a seller of other people's brands. And if you look back at the time we're in right now, you're going to see a time of incredible transformation, really being ready for the digital age. So you mentioned our stores, but we have a huge e-commerce business. It's almost a $500 million, a half a billion dollar business. So we're spending a lot of time on that. We're spending a lot of time on the omnichannel experience where who doesn't like buying something online and returning in stores? We're spending a lot of time about making that a seamless experience. We're spending a lot of time thinking about how to make the customer experience as great in the digital world as it is in the physical world. So it's an incredible time to be a consumer. Technology is transforming our industry as it is every other industry, and it's just wonderful to be a consumer and take advantage of that these days.

So you know, we embarked upon a new strategy leading into the pandemic, the footwear focus strategy, that is built around six pillars that have a lot to do with digital and a lot to do with omnichannel, a lot to do with consumer insights and data and really understanding the consumer in more profound ways. And leading into the pandemic, there were a number of things that were really important. It was a very dark day when you close all of your stores across all of your geographies and 85% of your revenue is off with no end in sight. So we did a lot of great things in our company to be able to turn the business around. We first of all, the most important thing was the care and well-being of our people and our customers. That was of utmost importance. We could not have operated our stores and our distribution centers and our online without taking care of our people, and our customers would not have shopped with us had they not thought that they would be in a safe environment. So that was number one, and our COVID task force helped to put that together. The next thing is that we really revved up online. We had been investing for a number of years and making sure we had a great set of capabilities, and boy did we test it during the pandemic. We grew our e-commerce, our digital business, by 75%. Our business is very profitable, so that was very accretive to the bottom line. The next thing that we did is we reopened our stores, often on the first day that we were allowed to in many jurisdictions. And I remember walking through malls. We were one of the very few stores that were open at that time, but our people did an amazing job and were really ready to reopen our stores. It made a huge difference for us. Our ability to execute well was a game changer. And the last thing we did is make a commitment to inventory. And we had to be committed to inventory because who knew we were going to rebound, have an economic rebound that has really been unprecedented. So at the end of the day, our people did amazing things. They were so tenacious, so innovative in terms of how they tackle this pandemic. And did things like couldn't go to China, so they stayed up all night and made studios within our company so that they could interact with China and got terrific technology to help us to be able to do the QA on our footwear. So our people made all the difference at the end of the day. And here we are today coming out of the pandemic and being able to really capitalize on the opportunities to grab market share and to really accelerate the progress that we wanted to make in a much shorter period of time.

They did.

I learned a lot from that process. Retail, because we're going through such incredible transformation right now, has attracted a lot of activism. So I learned from that process, number one, you never want to have a proxy fight if you can have a meeting of the minds. That is the best answer for your shareholders. And we worked hard to listen to all of our shareholders, and this one in particular, and strove to get a meeting of the minds, and we weren't able to. So this was all about: did we have the right strategy and did we have the right board to drive results? And that's what shareholders care about at the end of the day. They care about results. And we had gone through implementing this new strategy pre-pandemic, and it really helped us through the pandemic, and we were executing well post-pandemic. Our most recent quarter was a record quarter, and we got stronger and stronger in each of the quarters through the pandemic. So at the end of the day, we took our story to our shareholders and had a resounding endorsement of our strategy and of our board because we were driving results. I had a chance to sit with most of our major shareholders, and yes, they care about where we're going, but I also learned that they care a lot about the environment, about society, and about our governance. So ESG is a real thing, particularly among our index holders. And I had a great learning experience about the things that we have a good story to tell there. So we had a lot of opportunity to tell that story. And then the last thing I would say that I learned is that we learned as an organization how important it is to communicate with your people about what's going on in a situation where they don't really understand all the moving parts and pieces. But it was through that communication that we kept our organization focused and executing so that we could have the record quarter that we delivered while all of this was going on.

Absolutely. So I got some advice from Jim Estepa, who ran one of our biggest businesses and retired. And I was talking to him one day about a problem that I was trying to solve, and he was trying to help me think through it. And he looked at me and he said, 'Well, you can't solve this problem.' Like, 'Jim, what are you talking about? I can't solve this problem?' I said. He said, 'You can't solve this problem. It's too big. But what you can do is you can move mountains by motivating people.' And what he really meant by that is that I had to solve this problem through people. I had to give them the vision of what we were trying to do and solve the problem through people. And he was right. In that situation, he was especially right during COVID because we had to let everybody know what an urgent situation it was for our whole company, and every part of our company had to be firing on all cylinders in order for us to manage through the pandemic and continue to manage through the pandemic because it's still going on, and to turn the business around in the way we needed to. We went from being down 44% in revenue in the first quarter of last year and losing $70 million to actually being a little bit under our pre-pandemic level of sales in the fourth quarter and making more money than we had the year before. So it really was because of the strength of the people who allowed such incredible things to happen for us.

Absolutely.