Genesco NYSE: GCO reported first-quarter fiscal 2027 results that exceeded its expectations, with management pointing to continued momentum at Journeys, improvement at Johnston & Murphy and early benefits from efforts to reduce promotions and improve profitability across the business.
Mimi Vaughn, Genesco’s board chair, president, chief executive officer and interim chief financial officer, said the company delivered its seventh consecutive quarter of positive comparable sales. “Our beat was broad-based across sales, gross margin, and expense leverage, reflecting a high level of execution,” Vaughn said.
Revenue rose 3% to $487 million in the quarter, supported by 2% overall comparable sales growth. Store comps increased 3%, while direct comps were flat, with the company citing reduced promotional activity at Schuh as a particular drag on the online channel. Adjusted gross margin improved 30 basis points to 47%, and adjusted SG&A expense leveraged 60 basis points to 51.9% of sales.
Adjusted operating loss improved to $23.9 million from a loss of $27.9 million a year earlier. Adjusted diluted loss per share was $2.18, compared with a loss of $2.05 last year. The company said earnings per share declined despite improved operating profit because of a lower adjusted tax rate this year, tied to a valuation allowance discussed on its prior earnings call.
Journeys Drives Retail Momentum
Journeys posted a 5% comparable sales gain in the quarter, building on an 8% increase in the prior-year period. Vaughn said the banner continued to benefit from its transformation strategy, including an elevated assortment, greater focus on the “style-led teen girl,” improved store and digital experiences and the rollout of its 4.0 store format.
Vaughn said Journeys saw gains across a diversified brand base, with both athletic lifestyle and casual categories growing. She cited demand for sandals, boots, low-profile styles and lifestyle running products. Stronger full-price selling helped drive a higher average transaction size, while conversion increased by mid-single digits on top of gains last year.
The company opened 21 additional Journeys 4.0 stores in the quarter, bringing the total to 105. Vaughn said the newer store format continues to produce sales lifts above 25%. Journeys’ e-commerce business also posted double-digit gains.
During the question-and-answer session, Vaughn said Journeys’ growth was not tied to one specific trend, but rather to a broader assortment of footwear trends across brands and categories. She said low-profile styles were gaining traction, sandals had been “on fire” in spring, and female-led trends such as ballerinas and Mary Janes were also contributing.
Schuh Reset Pressures Sales
Schuh’s comparable sales declined 9% in the quarter as Genesco reduced promotions and markdowns in an effort to improve full-price selling. Vaughn said the strategy lifted average transaction size but weighed on store traffic and online demand, especially because Schuh’s digital channel attracts more bargain-focused shoppers.
Management said Schuh’s turnaround is expected to take longer than the Journeys turnaround because of a tougher U.K. consumer environment and the need to reduce reliance on discounting. Vaughn said the market is currently “athletically focused” and price-sensitive, while geopolitical pressures and the proximity of the Ukraine conflict have affected consumer sentiment.
The company closed five Schuh stores in the quarter and said it has closed 12 locations over the past 14 months as part of its effort to optimize the store base. Genesco is also working to improve product access with brands such as Nike, Adidas and ASICS, rationalize weaker brands in the assortment and reduce costs in areas including rent, selling salaries, digital marketing and procurement.
Johnston & Murphy Shows Improvement
Johnston & Murphy delivered a 7% comparable sales increase, which Vaughn described as a sharp acceleration from recent trends. She attributed the improvement to product work, pricing strategies and higher marketing and social media spending, including the brand’s campaign with Peyton Manning.
Vaughn said both apparel and footwear resonated with customers. Apparel strength included blazers and knits, while footwear benefited from updated designs and new concepts such as the Ackerson and Tyson collections. She also pointed to a consumer shift toward more refined and tailored dressing, particularly for the office.
In response to an analyst question, Vaughn said Johnston & Murphy’s momentum reflected a combination of stronger product, the Peyton Manning campaign and the broader dressing-up trend. She said brand awareness had increased, demand from new customers was up double digits and younger consumers were showing more interest in the brand.
Guidance Raised, Cost Program Announced
Genesco raised its full-year adjusted earnings per share guidance to a range of $2.00 to $2.40, up from its prior outlook. The company now expects adjusted operating income of approximately $34 million to $40 million, compared with its previous range of $32 million to $38 million.
The updated full-year outlook assumes comparable sales growth of about 1% to 2%, total sales down 1% to flat, gross margin expansion of approximately 50 to 60 basis points and a full-year tax rate of approximately 30%. The company’s outlook does not include potential tariff refunds.
For the second quarter, Genesco expects flat to slightly negative comparable sales, with negative Schuh comps offsetting positive trends at Journeys and Johnston & Murphy. Total sales are expected to decline 3% to 4%, reflecting lower Schuh sales, lost license revenue and store closures. The company expects second-quarter operating loss to be in line with or slightly worse than last year, while EPS is expected to be $0.20 to $0.30 lower, mainly because of a lower tax benefit.
Vaughn also announced a new $40 million to $50 million cost program running through fiscal 2029, aimed at structurally reducing the company’s cost base. She said initiatives include IT transformation, AI-enabled efficiencies, selling salary reductions, store labor changes, robotics and automation in distribution centers, marketing spend optimization and additional store closures.
Genesco said capital expenditures totaled $15 million in the first quarter, primarily for Journeys 4.0 remodels. The company ended the quarter with 1,208 stores after two openings and 30 closures. Inventory was up 6% from a year earlier, driven by Journeys investments in new brand development, 4.0 store expansion and key growth categories.
On tariffs, Vaughn said Genesco expects IEEPA refunds of approximately $23 million to $25 million, which have been filed for but were not included in first-quarter financials or the company’s outlook. She said the refunds apply to the branded business, where Genesco imports product directly, representing about 20% of sales.
About Genesco NYSE: GCO
Genesco Inc is a Nashville, Tennessee-based retailer, wholesaler and licensee specializing in branded footwear, headwear, apparel and accessories. Through its portfolio of retail chains, wholesale distribution channels and licensing agreements, Genesco brings a range of product offerings to consumers in North America and Europe.
The company's retail segment includes specialty chains such as Journeys, which targets fashion-focused teens and young adults in the United States and Canada, and Schuh, a footwear retailer with locations in the United Kingdom and Ireland.
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