[Fiscal 2026 Second Quarter Highlights](index=1&type=section&id=Fiscal%202026%20Second%20Quarter%20Highlights) Genesco exceeded expectations with positive comparable sales, though GAAP and Non-GAAP EPS declined [Key Financial Metrics](index=1&type=section&id=Key%20Financial%20Metrics) Genesco exceeded expectations with 4% net sales growth and positive comparable sales, despite lower GAAP and Non-GAAP EPS Q2 FY26 Key Financial Metrics | Metric | Q2 FY26 | Q2 FY25 | | :---------------- | :------ | :------ | | GAAP EPS | ($1.79) | ($0.91) | | Non-GAAP EPS | ($1.14) | ($0.83) | | Net Sales | $546 million | $525 million | | Comparable Sales | +4% | -2% | | Journeys Comp Sales | +9% | -1% | [Management Commentary](index=1&type=section&id=Management%20Commentary) Management noted Journeys' strong comparable sales, raising revenue outlook while reiterating adjusted EPS guidance - Journeys achieved **high-single digit comparable sales increase**, driven by a strategic plan focused on product elevation, enhanced customer experience, and strengthened brand positioning, outperforming the market and increasing share[2](index=2&type=chunk) - The back-to-school season in the third quarter started very well, with Journeys showing positive comparable sales growth over last year's positive comps[2](index=2&type=chunk) - The company is raising its full-year revenue outlook due to Journeys' strong year-to-date performance, which is expected to offset additional gross margin pressure from higher tariffs and a promotional U.K. marketplace, while reiterating full-year adjusted EPS guidance of **$1.30 to $1.70**[4](index=4&type=chunk) [Second Quarter Fiscal 2026 Financial Performance](index=2&type=section&id=Second%20Quarter%20Fiscal%202026%20Financial%20Performance) Net sales grew 4% driven by comparable sales, but gross margin and operating income declined [Net Sales and Comparable Sales](index=2&type=section&id=Net%20Sales%20and%20Comparable%20Sales) Net sales rose 4% to $546 million, driven by a 4% comparable sales increase led by Journeys Group's 9% growth [Overall Sales Performance](index=2&type=section&id=Overall%20Sales%20Performance) Q2 FY26 net sales increased 4% to $546 million, driven by 4% comparable sales growth, including 5% same-store sales Q2 FY26 Sales Performance Overview | Metric | Q2 FY26 | Q2 FY25 | Change | | :-------------------------- | :------ | :------ | :----- | | Net Sales | $546 million | $525 million | +4% | | Comparable Sales | +4% | (2)% | +6% pts| | Same Store Sales | +5% | (4)% | +9% pts| | Comparable E-commerce Sales | +1% | 8% | -7% pts| [Comparable Sales by Group](index=2&type=section&id=Comparable%20Sales%20by%20Group) Journeys Group achieved 9% comparable sales growth, offsetting declines or minimal increases in other segments Q2 FY26 Comparable Sales by Group | Group | 2QFY26 Comparable Sales | 2QFY25 Comparable Sales | | :---------------------- | :---------------------- | :---------------------- | | Journeys Group | 9% | (1)% | | Schuh Group | (4)% | (2)% | | Johnston & Murphy Group | 1% | (5)% | | Total Genesco | 4% | (2)% | - The overall 4% sales increase was driven by a 6% increase at Journeys, 2% at Schuh, and 5% at Genesco Brands, partially offset by a 3% decrease at Johnston & Murphy[6](index=6&type=chunk) [Gross Margin](index=2&type=section&id=Gross%20Margin) Gross margin decreased 100 bps to 45.8%, impacted by Schuh promotions and Genesco Brands' tariffs, partially offset by Johnston & Murphy Q2 Gross Margin Performance | Metric | Q2 FY26 | Q2 FY25 | Change (bps) | | :---------- | :------ | :------ | :----------- | | Gross Margin | 45.8% | 46.8% | -100 | - The decrease in gross margin was primarily due to increased promotional activity at Schuh and lower margins at Genesco Brands (related to license exits and tariffs), partially offset by increased margins at Johnston & Murphy (from price increases, lower retail markdowns, and sourcing optimization)[7](index=7&type=chunk) [Selling and Administrative Expenses](index=3&type=section&id=Selling%20and%20Administrative%20Expenses) Selling and administrative expenses decreased 20 bps to 48.4% of sales, driven by lower occupancy costs, despite increased marketing Q2 Selling and Administrative Expenses | Metric | Q2 FY26 | Q2 FY25 | Change (bps) | | :-------------------------------- | :------ | :------ | :----------- | | Selling and Administrative Expenses | 48.4% | 48.6% | -20 | - The decrease in selling and administrative expenses as a percentage of sales primarily reflects decreased occupancy and other expenses, partially offset by increased marketing expense and an unfavorable comparison to a credit for certain non-income taxes last year[8](index=8&type=chunk) [Operating Loss](index=3&type=section&id=Operating%20Loss) GAAP operating loss widened to $14.4 million (2.6% of sales) in Q2 FY26, with adjusted operating loss also increasing Q2 Operating Loss Summary | Metric | Q2 FY26 | Q2 FY25 | | :-------------------- | :-------- | :-------- | | GAAP Operating Loss | ($14.4 million) | ($10.3 million) | | GAAP Operating Margin | -2.6% | -2.0% | | Adjusted Operating Loss | ($14.3 million) | ($9.3 million) | | Adjusted Operating Margin | -2.6% | -1.8% | [Income Tax Expense](index=3&type=section&id=Income%20Tax%20Expense) Effective tax rate was -15.0% in Q2 FY26; adjusted tax rate rose to 26.5% due to higher expected rate and valuation allowance Q2 Income Tax Rates | Metric | Q2 FY26 | Q2 FY25 | | :---------------- | :------ | :------ | | Effective Tax Rate | -15.0% | 15.2% | | Adjusted Tax Rate | 26.5% | 15.1% | - The higher adjusted tax rate for Q2 FY26 compared to Q2 FY25 reflects a higher expected tax rate for Fiscal 2026 due to the impact of the valuation allowance in certain jurisdictions. The divergence between effective and adjusted tax rates is due to income tax law changes under the OBBBA[10](index=10&type=chunk) [Loss from Continuing Operations](index=3&type=section&id=Loss%20from%20Continuing%20Operations) GAAP loss from continuing operations increased to $18.5 million ($1.79 per share), with adjusted loss also widening to $11.7 million Q2 Loss from Continuing Operations | Metric | Q2 FY26 | Q2 FY25 | | :-------------------------------- | :-------- | :-------- | | GAAP Loss from Continuing Operations | ($18.5 million) | ($9.9 million) | | GAAP EPS from Continuing Operations | ($1.79) | ($0.91) | | Adjusted Loss from Continuing Operations | ($11.7 million) | ($9.1 million) | | Adjusted EPS from Continuing Operations | ($1.14) | ($0.83) | [Financial Position and Capital Activities](index=3&type=section&id=Financial%20Position%20and%20Capital%20Activities) Cash and debt decreased, while inventories rose 11% year-over-year, driven by Journeys, Schuh, and Johnston & Murphy [Cash, Borrowings and Inventory](index=3&type=section&id=Cash%2C%20Borrowings%20and%20Inventory) Cash and total debt decreased, while inventories increased 11% year-over-year, driven by Journeys, Schuh, and Johnston & Murphy Cash, Borrowings and Inventory (YoY) | Metric | Aug 2, 2025 | Aug 3, 2024 | Change | | :---------- | :---------- | :---------- | :----- | | Cash | $41.0 million | $45.9 million | -10.7% | | Total Debt | $71.0 million | $77.8 million | -8.7% | | Inventories | $501.0 million | $450.2 million | +11.3% | - The **11% year-over-year increase in inventories** reflects higher inventory levels at Journeys, Schuh, and Johnston & Murphy, partially offset by a decrease at Genesco Brands[12](index=12&type=chunk) [Capital Expenditures and Store Activity](index=4&type=section&id=Capital%20Expenditures%20and%20Store%20Activity) Q2 FY26 capital expenditures were $15 million, with 9 stores opened and 12 closed, resulting in a 5% YoY store count decrease Q2 Capital Expenditures and Store Activity | Metric | Q2 FY26 | | :-------------------------- | :------ | | Capital Expenditures | $15 million | | Depreciation & Amortization | $13 million | | Stores Opened | 9 | | Stores Closed | 12 | | Total Stores (End of Q2) | 1,253 | | YoY Store Count Change | -5% | | YoY Square Footage Change | -3% | [Share Repurchases](index=4&type=section&id=Share%20Repurchases) No shares were repurchased in Q2 FY26, leaving $29.8 million available on the share repurchase authorization - **No shares were repurchased** during the second quarter of Fiscal 2026[14](index=14&type=chunk) - The company has **$29.8 million remaining** on its expanded share repurchase authorization announced in June 2023[14](index=14&type=chunk) [Fiscal 2026 Outlook](index=4&type=section&id=Fiscal%202026%20Outlook) Genesco raised full-year sales and comparable sales outlooks, while reiterating adjusted diluted EPS guidance of $1.30 to $1.70 Fiscal 2026 Outlook Update | Metric | New FY26 Guidance | Prior FY26 Guidance | | :------------------------------------ | :---------------- | :------------------ | | Total Sales Growth | Up 3% to 4% | Up 1% to 2% | | Comparable Sales Growth | Up 4% to 5% | Up 2% to 3% | | Adjusted Diluted EPS (Continuing Ops) | $1.30 to $1.70 | $1.30 to $1.70 | - Guidance assumes no further share repurchases and a tax rate of 29% excluding the tax impact of OBBBA[15](index=15&type=chunk) [Corporate Information](index=5&type=section&id=Corporate%20Information) Provides investor relations details, safe harbor statements, company overview, and contact information [Investor Relations and Presentations](index=5&type=section&id=Investor%20Relations%20and%20Presentations) Detailed Q2 results and presentations are available on the investor relations website, including upcoming conference calls and webcasts - Detailed financial commentary and a supplemental financial presentation of second-quarter results are available on the company's website in the investor relations section[16](index=16&type=chunk) - A live conference call was scheduled for August 28, 2025, at 7:30 a.m. (Central time), accessible via the company's website[16](index=16&type=chunk) - Genesco's management team will present at the Goldman Sachs 32nd Annual Global Retailing Conference on September 4, 2025, at 8:55 a.m. (Eastern Time), with an audio webcast available[17](index=17&type=chunk) [Safe Harbor Statement](index=5&type=section&id=Safe%20Harbor%20Statement) This statement cautions that forward-looking results may differ materially due to market, economic, and operational risks, with no obligation to update - The release contains forward-looking statements regarding future sales, earnings, operating income, gross margins, expenses, capital expenditures, depreciation and amortization, tax rates, store openings and closures, and cost reductions[18](index=18&type=chunk) - Actual results could vary materially from expectations due to factors such as weakness in store traffic, tariffs, ability to pass on price increases, operational restrictions, promotional activity, supply chain disruptions, fuel costs, foreign exchange rates, civil disturbances, and economic conditions[18](index=18&type=chunk)[19](index=19&type=chunk) - Genesco undertakes no obligation to publicly release revisions to these forward-looking statements to reflect events or circumstances after the date of the release or the occurrence of unanticipated events[20](index=20&type=chunk) [About Genesco Inc.](index=7&type=section&id=About%20Genesco%20Inc.) Genesco Inc. is a footwear-focused company operating over 1,250 retail stores and e-commerce sites across distinct brands like Journeys and Johnston & Murphy - Genesco Inc. (NYSE: GCO) is a footwear-focused company with distinctively positioned retail and lifestyle brands and proven omnichannel capabilities, operating over 1,250 retail stores and branded e-commerce websites[21](index=21&type=chunk) - Key brands include Journeys, Little Burgundy, and Schuh (serving teens, kids, young adults in U.S., Canada, U.K.), Johnston & Murphy (premium footwear, apparel, accessories for affluent men and women in U.S., Canada), and Genesco Brands Group (licensed lifestyle footwear under brands like Wrangler, Dockers, Starter, PONY)[21](index=21&type=chunk) - Founded in 1924, Genesco is based in Nashville, Tennessee[21](index=21&type=chunk) [Contacts](index=7&type=section&id=Contacts) Provides contact information for Genesco's financial and media inquiries - Financial Contact: Sandra Harris, SVP Finance, Chief Financial Officer, (615) 367-7578, SHarris2@genesco.com[22](index=22&type=chunk) - Media Contact: Claire S. McCall, (615) 367-8283, cmccall@genesco.com[22](index=22&type=chunk) [Unaudited Financial Statements](index=8&type=section&id=Unaudited%20Financial%20Statements) Presents detailed unaudited financial statements including operations, balance sheets, and segment performance [Condensed Consolidated Statements of Operations (Q2)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20%28Q2%29) Presents unaudited condensed consolidated statements of operations for Q2 FY26 and FY25, detailing sales, margins, expenses, and net loss Condensed Consolidated Statements of Operations (Q2, in thousands) | Metric | Q2 FY26 (Aug 2, 2025) | Q2 FY25 (Aug 3, 2024) | | :------------------------------------ | :-------------------- | :-------------------- | | Net sales | $545,965 | $525,188 | | Gross margin | $249,949 (45.8%) | $245,639 (46.8%) | | Selling and administrative expenses | $264,265 (48.4%) | $255,135 (48.6%) | | Operating loss | ($14,440) (-2.6%) | ($10,274) (-2.0%) | | Loss from continuing operations | ($18,456) (-3.4%) | ($9,929) (-1.9%) | | Net Loss | ($18,471) (-3.4%) | ($9,992) (-1.9%) | | Diluted loss per share | ($1.79) | ($0.91) | [Condensed Consolidated Statements of Operations (Six Months)](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20%28Six%20Months%29) Provides unaudited condensed consolidated statements of operations for the six months ended August 2, 2025, and August 3, 2024 Condensed Consolidated Statements of Operations (Six Months, in thousands) | Metric | Six Months FY26 (Aug 2, 2025) | Six Months FY25 (Aug 3, 2024) | | :------------------------------------ | :---------------------------- | :---------------------------- | | Net sales | $1,019,938 | $982,785 | | Gross margin | $471,130 (46.2%) | $461,920 (47.0%) | | Selling and administrative expenses | $513,300 (50.3%) | $502,966 (51.2%) | | Operating loss | ($42,585) (-4.2%) | ($42,402) (-4.3%) | | Loss from continuing operations | ($39,668) (-3.9%) | ($34,217) (-3.5%) | | Net Loss | ($39,698) (-3.9%) | ($34,339) (-3.5%) | | Diluted loss per share | ($3.82) | ($3.14) | [Sales/Earnings Summary by Segment (Q2)](index=11&type=section&id=Sales%2FEarnings%20Summary%20by%20Segment%20%28Q2%29) Details Q2 FY26 and FY25 sales and operating income (loss) by segment: Journeys, Schuh, Johnston & Murphy, and Genesco Brands Sales/Earnings Summary by Segment (Q2, in thousands) | Segment | Q2 FY26 Sales | Q2 FY25 Sales | Q2 FY26 Operating Income (Loss) | Q2 FY25 Operating Income (Loss) | | :--------------------- | :------------ | :------------ | :------------------------------ | :------------------------------ | | Journeys Group | $318,189 | $298,846 | ($4,999) | ($11,151) | | Schuh Group | $126,595 | $124,561 | ($11) | $7,339 | | Johnston & Murphy Group| $68,789 | $71,037 | ($1,782) | ($403) | | Genesco Brands Group | $32,392 | $30,744 | $653 | $2,672 | | Net Sales | $545,965 | $525,188 | | | | Total Operating Loss | | | ($14,440) | ($10,274) | [Sales/Earnings Summary by Segment (Six Months)](index=13&type=section&id=Sales%2FEarnings%20Summary%20by%20Segment%20%28Six%20Months%29) Provides segment-wise sales and operating income (loss) breakdown for the six months ended August 2, 2025, and August 3, 2024 Sales/Earnings Summary by Segment (Six Months, in thousands) | Segment | Six Months FY26 Sales | Six Months FY25 Sales | Six Months FY26 Operating Income (Loss) | Six Months FY25 Operating Income (Loss) | | :--------------------- | :-------------------- | :-------------------- | :-------------------------------------- | :-------------------------------------- | | Journeys Group | $590,823 | $558,291 | ($20,282) | ($29,973) | | Schuh Group | $222,510 | $216,910 | ($6,142) | $1,443 | | Johnston & Murphy Group| $145,628 | $150,244 | ($1,282) | $1,952 | | Genesco Brands Group | $60,977 | $57,340 | $1,351 | $1,686 | | Net Sales | $1,019,938 | $982,785 | | | | Total Operating Loss | | | ($42,585) | ($42,402) | [Condensed Consolidated Balance Sheets](index=14&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents unaudited condensed consolidated balance sheets as of August 2, 2025, and August 3, 2024, detailing assets, liabilities, and equity Condensed Consolidated Balance Sheets (in thousands) | Metric | August 2, 2025 | August 3, 2024 | | :-------------------- | :------------- | :------------- | | Cash | $40,989 | $45,855 | | Inventories | $501,008 | $450,187 | | Total current assets | $645,891 | $606,720 | | Total Assets | $1,421,925 | $1,383,751 | | Total current liabilities | $414,355 | $395,663 | | Long-term debt | $57,677 | $77,839 | | Equity | $506,372 | $532,622 | | Total Liabilities and Equity | $1,421,925 | $1,383,751 | [Store Count Activity](index=15&type=section&id=Store%20Count%20Activity) Details store openings and closings by group (Journeys, Schuh, Johnston & Murphy) and total retail store count for various periods Store Count Activity (Total Retail Stores) | Group | Balance 02/03/24 | Open | Close | Balance 08/02/25 | | :---------------------- | :--------------- | :--- | :---- | :--------------- | | Journeys Group | 1,063 | 10 | 92 | 984 | | Schuh Group | 122 | 5 | 7 | 120 | | Johnston & Murphy Group | 156 | 7 | 14 | 149 | | Total Retail Stores | 1,341 | 22 | 113 | 1,253 | [Comparable Sales (Detailed)](index=15&type=section&id=Comparable%20Sales%20%28Detailed%29) Detailed comparable sales performance by group and channel, including same-store and e-commerce sales for Q2 and six months Comparable Sales Performance by Group and Channel | Metric | Q2 FY26 | Q2 FY25 | Six Months FY26 | Six Months FY25 | | :-------------------------- | :------ | :------ | :-------------- | :-------------- | | Journeys Group | 9% | -1% | 9% | -3% | | Schuh Group | -4% | -2% | -2% | -4% | | Johnston & Murphy Group | 1% | -5% | 0% | -4% | | Total Comparable Sales | 4% | -2% | 5% | -3% | | Same Store Sales | 5% | -4% | 5% | -6% | | Comparable E-commerce Sales | 1% | 8% | 4% | 6% | [Non-GAAP Financial Reconciliations](index=16&type=section&id=Non-GAAP%20Financial%20Reconciliations) Reconciles GAAP to adjusted financial metrics, detailing non-recurring items and tax impacts [Adjustments to Reported Loss from Continuing Operations (Q2)](index=16&type=section&id=Adjustments%20to%20Reported%20Loss%20from%20Continuing%20Operations%20%28Q2%29) Reconciles Q2 GAAP loss from continuing operations to adjusted loss, detailing adjustments for severance, impairments, and OBBBA tax impacts Q2 Adjustments to Loss from Continuing Operations (in thousands, except per share) | Metric | Q2 FY26 (Aug 2, 2025) | Q2 FY25 (Aug 3, 2024) | | :-------------------------------------- | :-------------------- | :-------------------- | | Loss from continuing operations, as reported | ($18,456) ($1.79/share) | ($9,929) ($0.91/share) | | Severance (net of tax) | $88 ($0.00/share) | $512 ($0.05/share) | | OBBBA Tax Impact (net of tax) | $6,849 ($0.66/share) | — | | Adjusted loss from continuing operations | ($11,708) ($1.14/share) | ($9,131) ($0.83/share) | | Adjusted tax rate | 26.5% | 15.1% | [Adjustments to Reported Loss from Continuing Operations (Six Months)](index=17&type=section&id=Adjustments%20to%20Reported%20Loss%20from%20Continuing%20Operations%20%28Six%20Months%29) Reconciles six-month GAAP loss from continuing operations to adjusted loss, outlining similar adjustments as the quarterly reconciliation Six Months Adjustments to Loss from Continuing Operations (in thousands, except per share) | Metric | Six Months FY26 (Aug 2, 2025) | Six Months FY25 (Aug 3, 2024) | | :-------------------------------------- | :---------------------------- | :---------------------------- | | Loss from continuing operations, as reported | ($39,668) ($3.82/share) | ($34,217) ($3.13/share) | | Distribution model transition (net of tax) | — | $1,327 ($0.12/share) | | Severance (net of tax) | $273 ($0.03/share) | $755 ($0.07/share) | | OBBBA Tax Impact (net of tax) | $6,849 ($0.66/share) | — | | Adjusted loss from continuing operations | ($33,238) ($3.20/share) | ($32,062) ($2.93/share) | | Adjusted tax rate | 26.6% | 23.2% | [Adjustments to Reported Operating Income (Loss) and Gross Margin (Q2)](index=18&type=section&id=Adjustments%20to%20Reported%20Operating%20Income%20%28Loss%29%20and%20Gross%20Margin%20%28Q2%29) Details Q2 adjustments to reported operating income (loss) and gross margin, including severance, asset impairments, and transition charges Q2 Adjustments to Operating Income (Loss) and Gross Margin (in thousands) | Metric | Q2 FY26 Operating Loss (Reported) | Q2 FY26 Operating Loss (Adjusted) | Q2 FY25 Operating Loss (Reported) | Q2 FY25 Operating Loss (Adjusted) | | :-------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total Operating Loss | ($14,440) | ($14,316) | ($10,274) | ($9,327) | | % of sales | -2.6% | -2.6% | -2.0% | -1.8% | | Adjusted EBITDA | | ($842) | | $3,842 | | Gross margin, as reported | $249,949 (45.8%) | $249,949 (45.8%) | $245,639 (46.8%) | $245,808 (46.8%) | [Adjustments to Reported Operating Income (Loss) and Gross Margin (Six Months)](index=19&type=section&id=Adjustments%20to%20Reported%20Operating%20Income%20%28Loss%29%20and%20Gross%20Margin%20%28Six%20Months%29) Reconciles six-month reported operating income (loss) and gross margin, including adjustments for distribution model transition and impairments Six Months Adjustments to Operating Income (Loss) and Gross Margin (in thousands) | Metric | Six Months FY26 Operating Loss (Reported) | Six Months FY26 Operating Loss (Adjusted) | Six Months FY25 Operating Loss (Reported) | Six Months FY25 Operating Loss (Adjusted) | | :-------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Total Operating Loss | ($42,585) | ($42,170) | ($42,402) | ($39,296) | | % of sales | -4.2% | -4.1% | -4.3% | -4.0% | | Adjusted EBITDA | | ($15,303) | | ($12,890) | | Gross margin, as reported | $471,130 (46.2%) | $471,130 (46.2%) | $461,920 (47.0%) | $463,670 (47.2%) | [Adjustments to Forecasted Earnings from Continuing Operations (FY26)](index=20&type=section&id=Adjustments%20to%20Forecasted%20Earnings%20from%20Continuing%20Operations%20%28FY26%29) Reconciles forecasted FY26 GAAP earnings from continuing operations to adjusted forecasted earnings, including asset impairments and other adjustments FY26 Adjustments to Forecasted Earnings from Continuing Operations (in millions, except per share) | Metric | High Guidance FY26 | Low Guidance FY26 | | :------------------------------------- | :----------------- | :---------------- | | Forecasted earnings from continuing operations | $17.1 ($1.62/share) | $12.6 ($1.19/share) | | Asset impairments and other adjustments | $0.8 ($0.08/share) | $1.2 ($0.11/share) | | Adjusted forecasted earnings from continuing operations | $17.9 ($1.70/share) | $13.8 ($1.30/share) | | Forecasted tax rate | ~29% | ~29% |

Financial Performance - Net sales increased by 3.6% to $474.0 million in Q1 Fiscal 2026 compared to $457.6 million in Q1 Fiscal 2025, driven by a 5% increase in comparable sales[47] - Gross margin rose by 2.3% to $221.2 million, but as a percentage of net sales, it decreased from 47.3% to 46.7%[48] - Selling and administrative expenses increased by 0.5% to $249.0 million, but decreased as a percentage of net sales from 54.2% to 52.5%[49] - Operating margin improved to (5.9)% in Q1 Fiscal 2026 from (7.0)% in Q1 Fiscal 2025, reflecting decreased expenses as a percentage of net sales[50] - The pretax loss narrowed to $29.7 million in Q1 Fiscal 2026 from $33.1 million in Q1 Fiscal 2025[51] - Net loss for Q1 Fiscal 2026 was $21.2 million, or $2.02 diluted loss per share, compared to a net loss of $24.3 million, or $2.23 diluted loss per share, in Q1 Fiscal 2025[53] Segment Performance - Journeys Group net sales increased by 5.1% to $272.6 million, with an 8% increase in comparable sales[59] - Schuh Group net sales rose by 3.9% to $95.9 million, benefiting from a 1% increase in comparable sales[64] - Johnston & Murphy Group net sales decreased by 3.0% to $76.8 million, primarily due to a 2% decrease in comparable sales[66] - Genesco Brands Group's net sales increased by 7.5% to $28.6 million in Q1 Fiscal 2026, driven primarily by increased sales of Levi's footwear[68] Tax and Expenses - The effective income tax rate increased to 28.5% in Q1 Fiscal 2026 from 26.7% in Q1 Fiscal 2025[52] - Johnston & Murphy Group's operating margin decreased by 230 basis points to reflect increased selling and administrative expenses as a percentage of net sales in Q1 Fiscal 2026 compared to Q1 Fiscal 2025[67] - Genesco Brands Group's operating margin improved by 610 basis points to 2.4% in Q1 Fiscal 2026, attributed to decreased selling and administrative expenses and improved gross margin[69] - Corporate and other expenses decreased to $7.9 million in Q1 Fiscal 2026 from $8.8 million in Q1 Fiscal 2025, reflecting lower professional fees and performance-based compensation[70] Cash Flow and Capital Expenditures - Cash used in operating activities increased by $67.3 million in Q1 Fiscal 2026 compared to Q1 Fiscal 2025, totaling $101.0 million[73] - Cash used in investing activities rose by $12.5 million in Q1 Fiscal 2026, reflecting increased capital expenditures related to retail store investments[74] - Cash provided by financing activities increased by $83.1 million in Q1 Fiscal 2026, driven by higher net borrowings[75] - Total capital expenditures for Fiscal 2026 are expected to be approximately $50-$65 million, with 70% allocated for new stores and renovations[82] Share Repurchase - Genesco repurchased 604,531 shares of common stock at a cost of $12.6 million during Q1 Fiscal 2026, with $29.8 million remaining under the share repurchase authorization[83] Interest Expense - Net interest expense rose by 50.4% to $1.3 million in Q1 Fiscal 2026, primarily due to increased average borrowings[71]

Core Insights - Moretus Research provides high-quality equity research focused on U.S. public markets, aiming to deliver clarity, conviction, and alpha for serious investors [1] - The research methodology emphasizes a structured, repeatable framework to identify companies with durable business models and mispriced cash flow potential [1] - Valuation practices are based on sector-relevant multiples tailored to each company's business model, emphasizing comparability and simplicity [1] Research Focus - Moretus Research targets underappreciated companies that are undergoing structural changes or temporary dislocations, where disciplined analysis can yield asymmetric returns [1] - The research combines rigorous fundamental analysis with a judgment-driven process, avoiding noise and overly complex forecasting [1] - The firm aims to elevate the standard for independent investment research by providing actionable insights and a strong filter for relevant information in equity analysis [1]

Group 1 - Genesco Inc. reported Q1 '26 earnings results, indicating a mixed quarter performance [1] - Journeys showed good comparable sales, but gross profit did not increase due to rising footwear prices [1] Group 2 - The investment approach focuses on operational aspects and long-term earnings potential rather than market-driven dynamics [1] - The strategy emphasizes holding companies for the long term, with a small fraction being considered for buy recommendations [1]

Financial Data and Key Metrics Changes - The company reported total revenue of $474 million for the first quarter, an increase of approximately 4% year-over-year, driven by a 5% growth in comparable sales, marking the third consecutive quarter of positive comps [34][35] - Adjusted gross margin for the quarter was 46.7%, a decline of 90 basis points compared to the previous year, primarily due to a shift towards higher price point but lower margin products [35] - Adjusted earnings per share loss improved by $0.05 year-over-year, with an adjusted diluted loss per share of $2.05 for the quarter compared to a loss of $2.10 last year [38][42] Business Line Data and Key Metrics Changes - Journeys led the business with comparable sales up 8%, while Schuh saw a 1% increase, and Johnston and Murphy experienced a 2% decline in comps [34][35] - The company noted that all channels posted positive growth, with store comps improving by 5% and direct comps increasing by 7% [34][36] - Schuh's digital capabilities and e-commerce business remained a key channel, with digital sales growth outpacing store sales in Q1 [19] Market Data and Key Metrics Changes - The consumer environment was described as choppy, with consumers showing a willingness to shop during specific events like Valentine's Day and Easter, but retreating during quieter periods [5][6] - The UK consumer remains selective, impacting the footwear category and overall purchases [19] Company Strategy and Development Direction - The company is focused on diversifying its product offerings and strengthening its leadership in premium athletic footwear, with a significant increase in athletic sales contributing to overall growth [25][26] - The strategic growth plan for Journeys includes enhancing product assortments, improving customer experience through store remodels, and leveraging brand partnerships [24][29] - The company is actively mitigating tariff impacts by diversifying suppliers and sourcing from countries with lower tariffs, aiming to reduce dependence on China [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current trade environment and emphasized the importance of compelling footwear and freshness to motivate consumer purchases [8][9] - The company reaffirmed its full-year EPS guidance range of $1.30 to $1.70, despite acknowledging increased uncertainty in the external consumer environment [42][43] - Management highlighted the importance of the back-to-school and holiday shopping periods for driving sales and expressed optimism about the second half of the fiscal year [30][42] Other Important Information - The company ended the quarter with 1,256 total stores, having closed 26 stores and opened 4, resulting in a net reduction of 65 stores year-over-year [40] - Free cash flow for the quarter was negative $120 million, impacted by higher capital spending and inventory growth to meet consumer demand [39][40] Q&A Session Summary Question: Can you talk about the impacts of new athletic brand relationships on Q1 comps? - Management noted that existing brands drove the comp, but new brands like HOKA and Saucony had a positive impact, validating Journeys' position in lifestyle running [50][51] Question: How did the vulcanized product category perform? - Management acknowledged pressure on vulcanized products but stated that strength in other brands offset this pressure [53][54] Question: What are the expectations for Journeys in the back half of the year? - Management indicated that while they are lapping more difficult comparisons, they are optimistic about serving a broader market and continuing to strengthen product leadership [67][70] Question: How does the company view recent M&A activity in the footwear landscape? - Management expressed confidence in their positioning, focusing on lifestyle-driven offerings for the teen market, which differs from the performance-focused M&A activity [78][79] Question: What are the expectations regarding gross margins and price increases? - Management discussed the shift towards athletic products impacting margins but emphasized that they do not expect to absorb gross margin reductions due to tariffs [80][81]

Financial Data and Key Metrics Changes - The company reported total revenue of $474 million for Q1 2026, an increase of approximately 4% year-over-year, driven by a 5% growth in comparable sales, marking the third consecutive quarter of positive comps [30][31] - Adjusted gross margin for the quarter was 46.7%, a decline of 90 basis points compared to the previous year, primarily due to a shift towards higher price point but lower margin products [32] - SG&A expenses were 52.5% of sales, improving by 170 basis points year-over-year, driven by reduced occupancy and bonus expenses along with cost-saving initiatives [33] Business Line Data and Key Metrics Changes - Journeys led the business with comparable sales up 8%, while Schuh saw a 1% increase, and Johnston and Murphy experienced a 2% decline in comps [30][31] - Journeys' strong performance was attributed to a strategic focus on product assortment and brand partnerships, resulting in double-digit gains across several brands [14][23] - Schuh's comps increased due to improved brand access and digital capabilities, with over 40% of sales coming from e-commerce [18] Market Data and Key Metrics Changes - The consumer environment remains choppy, with consumers showing willingness to shop during key events but retreating during quieter periods [5][28] - The UK consumer market is under pressure, impacting Schuh's performance, while Johnston and Murphy faced challenges in factory store traffic [19][28] Company Strategy and Development Direction - The company is focused on diversifying its product offerings and strengthening its brand partnerships, particularly in the athletic category, to capture a broader teen market [22][23] - The strategic growth plan for Journeys includes enhancing product assortment, elevating customer experience through new store designs, and increasing brand awareness through marketing initiatives [26][68] - The company is actively mitigating tariff impacts by diversifying suppliers and adjusting inventory strategies [12][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current trade environment and emphasized the importance of compelling footwear and freshness to drive consumer purchases [7][10] - The company reiterated its full-year EPS guidance of $1.3 to $1.7, acknowledging ongoing macroeconomic uncertainties and the impact of tariffs [38][39] - Management expects positive comps for Journeys in Q2, despite challenges in other business segments [56][58] Other Important Information - The company ended the quarter with a negative free cash flow of $120 million, attributed to higher capital spending and inventory growth to meet consumer demand [36][37] - The company repurchased approximately 605,000 shares during the quarter, representing about 5% of its outstanding shares [37] Q&A Session Summary Question: Can you talk about the impacts of new athletic brand relationships on Q1 comp? - Management noted that existing brands drove the comp, but new brands like HOKA and Saucony had a positive impact, validating Journeys' position in lifestyle running [46][48] Question: How did vulcanized product trends compare to expectations? - Management acknowledged pressure on vulcanized products but stated that strength in other brands offset this pressure [50][51] Question: What is the guidance for Journeys in Q2? - Management indicated that Journeys is tracking similarly to Q1, with expectations for a positive comp, despite challenges in other segments [56][58] Question: What are the drivers for Journeys in the back half of the year? - Management highlighted the focus on product assortment, store remodels, and marketing initiatives as key drivers for growth [60][68] Question: How does the company view recent M&A activity in the footwear landscape? - Management stated that the company is positioned differently from competitors focused on performance athletic, emphasizing lifestyle and style-driven strategies [77][78] Question: What are the impacts on gross margin and balancing price increases? - Management explained that the shift to athletic products has affected margins, but they are working with brand partners to manage costs and maintain profitability [79][80]

Company Performance - Genesco reported a quarterly loss of $2.05 per share, slightly better than the Zacks Consensus Estimate of a loss of $2.09, and an improvement from a loss of $2.10 per share a year ago, indicating an earnings surprise of 1.91% [1] - The company posted revenues of $473.97 million for the quarter ended April 2025, surpassing the Zacks Consensus Estimate by 2.33% and showing an increase from year-ago revenues of $457.6 million [2] - Over the last four quarters, Genesco has exceeded consensus EPS estimates three times and topped consensus revenue estimates three times as well [2] Stock Outlook - Genesco shares have declined approximately 47.7% since the beginning of the year, contrasting with the S&P 500's gain of 1.5% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.81 on revenues of $531.05 million, while for the current fiscal year, the estimate is $1.47 on revenues of $2.34 billion [7] Industry Context - The Retail - Apparel and Shoes industry, to which Genesco belongs, is currently ranked in the bottom 35% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Genesco's stock performance [5]

Financial Performance - Sales reached $474 million, a 4% increase compared to Q1 FY2025, with e-commerce accounting for 23% of retail sales[8] - GAAP EPS improved by $0.20 compared to Q1 FY2025, while Non-GAAP EPS improved by $0.05[8] - Gross margin decreased by 60 basis points compared to Q1 FY2025, with Non-GAAP gross margin down by 90 basis points[8] - SG&A expenses were $249 million, representing 52.5% of sales, a leverage of 170 basis points compared to Q1 FY2025[8] - Comparable sales increased by 5%, with stores up mid-single digits and e-commerce up high single digits[9] Segment Performance - Journeys' comparable sales increased by 8%[9] - Wholesale channel experienced a growth of 5%[9] - Journeys accounted for 58% of Q1 FY26 net sales[54] - Schuh accounted for 20% of Q1 FY26 net sales[54] - Johnston & Murphy Group accounted for 16% of Q1 FY26 net sales[54] - Genesco Brands Group accounted for 6% of Q1 FY26 net sales[54] Outlook - The company reiterates its full-year EPS outlook of $1.30 to $1.70, inclusive of current tariffs[9, 59]

Financial Performance - Net sales for Q1 FY26 were $474 million, a 4% increase compared to $458 million in Q1 FY25[6] - Comparable sales increased by 5%, with e-commerce sales up 7% and same-store sales up 5%[4] - GAAP EPS was ($2.02) and Non-GAAP EPS was ($2.05), compared to GAAP EPS of ($2.22) and Non-GAAP EPS of ($2.10) in the previous year[4] - Net sales for Q1 2025 were $473.973 million, a 3.0% increase from $457.597 million in Q1 2024[25] - Operating loss for Q1 2025 was $28.145 million, an improvement from a loss of $32.128 million in Q1 2024[25] - Net loss for Q1 2025 was $21.227 million, compared to a net loss of $24.347 million in Q1 2024, resulting in a basic loss per share of $2.02[25] Store Operations - The company opened 4 stores and closed 26 stores, ending the quarter with 1,256 stores, a 5% decrease from the previous year[15] - The company closed 26 stores in Q1 2025, resulting in a total of 1,256 retail stores[31] Margins and Expenses - Gross margin for Q1 FY26 was 46.7%, down from 47.3% in Q1 FY25, primarily due to changes in brand mix and promotional activity[9] - Selling and administrative expenses decreased by 170 basis points to 52.5% of sales compared to the previous year[10] - Gross margin decreased to 46.7% in Q1 2025 from 47.3% in Q1 2024, with a gross margin charge of $1.6 million related to a distribution model transition[25] - Reported gross margin for Q1 2025 was $221.181 million, representing 46.7% of sales, compared to $216.281 million and 47.3% in Q1 2024[40] - Adjusted gross margin for Q1 2025 was $221.181 million, or 46.7% of sales, down from $217.862 million and 47.6% in Q1 2024[40] Debt and Assets - Total debt increased to $121 million, up from $59.4 million year-over-year, primarily due to a 15% increase in inventories[14] - Total current assets increased to $633.314 million in Q1 2025 from $508.040 million in Q1 2024[29] - Total assets grew to $1.404591 billion in Q1 2025, compared to $1.307417 billion in Q1 2024[29] Future Projections - The company expects adjusted diluted EPS for FY26 to be in the range of $1.30 to $1.70, factoring in current tariffs[5] - Forecasted earnings from continuing operations for Fiscal 2026 range from $12.5 million ($1.17 per share) to $17.0 million ($1.61 per share) net of tax[42] - Adjusted forecasted earnings from continuing operations for Fiscal 2026 are estimated at $13.8 million ($1.30 per share) to $18.0 million ($1.70 per share) net of tax[42] - The forecasted tax rate for Fiscal 2026 is approximately 29%[42] - The share count for Fiscal 2026 reflects 10.6 million shares, including common stock equivalents[42] Share Repurchase - The company repurchased 604,531 shares for $12.6 million during the quarter, with $29.8 million remaining on its share repurchase authorization[16] Tax Rate - The effective tax rate for Q1 FY26 was 28.5%, compared to 26.7% in the same quarter last year[12]

Core Viewpoint - The market anticipates Genesco (GCO) will report a year-over-year decline in earnings despite an increase in revenues for the quarter ended April 2025, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - Genesco is expected to report a quarterly loss of $2.14 per share, reflecting a year-over-year change of -1.9%, while revenues are projected to be $463.91 million, up 1.4% from the previous year [3]. - The consensus EPS estimate has been revised down by 7.74% over the last 30 days, indicating a reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that Genesco's Most Accurate Estimate is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -2.80%, suggesting a bearish outlook from analysts [12]. - Despite the negative Earnings ESP, Genesco holds a Zacks Rank of 2, complicating predictions of an earnings beat [12]. Historical Performance - In the last reported quarter, Genesco was expected to post earnings of $3.31 per share but delivered $3.26, resulting in a surprise of -1.51% [13]. - Over the past four quarters, Genesco has beaten consensus EPS estimates three times [14]. Market Reaction Factors - An earnings beat or miss may not solely dictate stock price movement, as other factors can influence investor sentiment [15]. - Betting on stocks expected to beat earnings expectations can increase the odds of success, making it important to check Earnings ESP and Zacks Rank before quarterly releases [16].