Genesco(GCO) - 2025 Q2 - Quarterly Report

Financial Performance - Net sales increased by 0.4% to $525.2 million in Q2 Fiscal 2025 compared to$ 523.0 million in Q2 Fiscal 2024, driven by a strong back-to-school sales week and an 8% increase in e-commerce comparable sales[61]. - Gross margin decreased by 1.6% to $245.6 million, with gross margin as a percentage of net sales declining from 47.7% to 46.8%[62]. - Selling and administrative expenses decreased by 1.7% to$ 255.1 million, with expenses as a percentage of net sales improving from 49.6% to 48.6%[63]. - Operating margin improved to a loss of 2.0% in Q2 Fiscal 2025 from a loss of 7.4% in Q2 Fiscal 2024, reflecting improved margins in Journeys Group and Genesco Brands Group[64]. - The pretax loss for Q2 Fiscal 2025 was $11.7 million, significantly reduced from a pretax loss of$ 41.2 million in Q2 Fiscal 2024[65]. - Net loss for Q2 Fiscal 2025 was $10.0 million, or$ 0.91 diluted loss per share, compared to a net loss of $31.7 million, or$ 2.79 diluted loss per share, in Q2 Fiscal 2024[66]. Segment Performance - Journeys Group net sales increased by 4.0% to $298.8 million, with total comparable sales decreasing by 1%[73]. - Schuh Group net sales increased by 1.4% to$ 124.6 million, while total comparable sales decreased by 2%[75]. - Johnston & Murphy Group net sales decreased by 8.7% to $71.0 million, with a 5% decrease in comparable sales[77]. - Johnston & Murphy Group reported an operating loss of$ 0.4 million in Q2 Fiscal 2025, compared to operating income of $2.7 million in Q2 Fiscal 2024[78]. - Genesco Brands Group's net sales decreased 12.6% to$ 30.7 million for Q2 Fiscal 2025 from $35.2 million in Q2 Fiscal 2024, primarily due to business repositioning[80]. Operating Income and Expenses - Operating income increased 44.4% to$ 2.7 million in Q2 Fiscal 2025 compared to $1.9 million in Q2 Fiscal 2024, driven by decreased selling and administrative expenses[81]. - Net interest expense decreased 43.6% to$ 1.3 million in Q2 Fiscal 2025 from $2.4 million in Q2 Fiscal 2024, reflecting decreased average borrowings[83]. Year-to-Date Performance - For the first six months of Fiscal 2025, net sales decreased 2.3% to$ 982.8 million compared to $1.006 billion in the first six months of Fiscal 2024, impacted by decreased comparable store sales and net store closings[84]. - Gross margin decreased 3.4% to$ 461.9 million in the first six months of Fiscal 2025, with gross margin as a percentage of net sales declining from 47.5% to 47.0%[85]. - Journeys Group's net sales decreased 0.2% to $558.3 million in the first six months of Fiscal 2025, with total comparable sales down 3%[91]. - Schuh Group's net sales increased 0.5% to$ 216.9 million in the first six months of Fiscal 2025, but operating income decreased 78.2% to $1.4 million[93]. - Johnston & Murphy Group's net sales decreased 6.3% to$ 150.2 million in the first six months of Fiscal 2025, primarily due to a 4% decrease in comparable sales[97]. - Genesco Brands' net sales decreased 18.8% to $57.3 million for the first six months of Fiscal 2025 from$ 70.6 million in the first six months of Fiscal 2024[99]. - The net loss for the first six months of Fiscal 2025 was $34.3 million, or$ 3.14 diluted loss per share, compared to a net loss of $50.6 million, or$ 4.37 diluted loss per share, in the first six months of Fiscal 2024[90]. Corporate Expenses and Cash Flow - Corporate expenses for the first six months of Fiscal 2025 were $17.5 million, down from$ 44.3 million in the same period of Fiscal 2024, primarily due to a decrease in non-cash impairment charges[102]. - Net interest expense decreased by 44.6% to $2.2 million in the first six months of Fiscal 2025 compared to$ 4.0 million in the same period of Fiscal 2024, reflecting reduced average borrowings[103]. - Cash used in operating activities was $19.1 million lower in the first six months of Fiscal 2025, driven by a$ 50.2 million increase in cash flow from changes in accounts payable[104]. - Cash used in investing activities decreased by $20.9 million in the first six months of Fiscal 2025, primarily due to reduced capital expenditures related to omni-channel capabilities[105]. Capital Expenditures and Liquidity - Total capital expenditures for Fiscal 2025 are expected to be approximately$ 52 million to $57 million, with 63% allocated for new stores and remodels[111]. - The company repurchased 381,711 shares at a cost of$ 9.3 million during the first six months of Fiscal 2025, with an average cost of $24.49 per share[112]. - As of August 3, 2024, the company had$ 75.1 million in U.S. revolver borrowings and $2.7 million related to GCO Canada ULC, remaining compliant with all credit facility terms[106]. - The company anticipates that cash on hand, cash from operations, and borrowings will be sufficient to support liquidity needs in Fiscal 2025 and the foreseeable future[108]. - Contractual obligations decreased by 1% compared to February 3, 2024, mainly due to reduced lease obligations and purchase obligations[110]. - The company expects to generate approximately$ 55 million of net tax refunds from tax strategies implemented under the CARES Act, although the timing may be extended due to an IRS audit[109].