While sluggish sales of legacy athletic footwear silhouettes are depressing sales trends at Foot Locker and JD Sports, mall competitor, Journeys, found athletic lifestyle product pacing its positive sales performance in the second quarter, said Mimi Vaughn, president and CEO of Journeys’ parent, Genesco Inc., on an analyst call.

Asked by an analyst about Journeys’ performance in and exposure to “legacy athletic silhouettes,” Vaughn said Journeys is skirting the broader weakness in the marketplace by having a diversified mix of brands.

“Our lifestyle athletic was the star of the quarter for us,” said Vaughn. “And it’s due to the fact that we are diversified across a number of different brands. And I think some of the pressure in the industry is concentrated within some individual brands.”

Vaughn’s comments come as Dick’s Sporting Goods last week reported Foot Locker’s same-store sales fell 3.6 percent in the second quarter. Dick’s blamed the subpar performance on softer sales of “legacy footwear silhouettes” as well as fewer launches in the quarter and weak performances by the launches that arrived. Dick’s now expects comps at the Foot Locker business to range from flat to down 2 percent for the year, down from growth of 1.5 percent to 3 percent under previous guidance.

JD Sports the prior week issued a profit warning after reporting a 6.8 percent decline in comparable sales at its North America segment, driven by cautious consumer confidence, a weak job market, and a slow period for high-demand “hype” footwear

Genesco’s Second-Quarter Results
Genesco delivered earnings and sales results for the second quarter that topped analyst estimates as momentum at Journeys and Johnston & Murphy offset challenges at its Schuh chain in the U.K. Genesco slightly raised its earnings guidance for the year while lowering its sales guidance due to pressures at Schuh.

In the quarter, sales decreased 3.0 percent to $529.9 million, topping analysts’ consensus estimates in the range of $527.3 to $528.4 million. The decline was expected given the impact of net store closings, decreased licensed sales due to the end of its Levi’s footwear deal as it launches a licensed Wrangler range, a 6 percent decrease in e-commerce comparable sales from reduced Schuh discounting, and an unfavorable foreign exchange impact, partially offset by a 1 percent increase in same-store sales and higher sales from enlarged stores.

By concept, Journeys’ comps declined 2 percent against a strong 9 percent jump at year ago. Schuh’s comps tumbled 9 percent on top of a 4 percent year-ago decline. Johnston & Murphy’s sales were up 4 percent compared with a 1 percent gain a year ago.

Earnings were boosted by the receipt of $22.5 million in tariff refunds, including interest, during second quarter this year related to its branded businesses under the International Emergency Economic Powers Act.

GAAP earnings from continuing operations were $3.5 million in the quarter, including tariff refunds, compared to a loss of $18.5 million in the second quarter last year. Adjusted for the exclude tariff refunds, the loss from continuing operations in one of Genesco’s smaller quarters for the year was $8.8 million, or 83 cents per share, compared to a loss of $11.7 million, or $1.14, in the second quarter last year and significantly better than analysts’ consensus target of $1.37.

Gross margin in the quarter improved to 51.4 percent, including tariff refunds, from 45.8 percent last year. Adjusted gross margin this year of 47.2 percent increased 140 basis points due primarily to less promotional activity and higher full-price selling at Schuh, favorable changes in sales mix, license exit benefit and pricing and tariff mitigation actions across its branded businesses.

S&A expenses were 49.0 percent as a percentage of sales compared to 48.4 percent last year. Adjusted S&A expenses decreased almost $6 million but deleveraged 40 basis points as a percent of sales to 48.8 percent due to the sales decline this year. The increase as a percentage of sales primarily reflected increased occupancy and performance-based compensation expenses, partially offset by decreased selling salaries and marketing expenses.

Excluding performance-based compensation expense, selling and administrative expenses were only up 10 basis points for the quarter this year, reflecting cost savings initiatives with decreased sales.

Genesco’s GAAP operating income was $3.6 million, including tariff refunds, compared with an operating loss of $14.4 million a year ago. Adjusted to exclude special items, the operating loss shrunk to $8.3 million this year from $14.3 million last year.

On the call, Vaughn said Genesco performed “significantly better” than last year and well ahead of expectations with every business achieving gains versus plans.

Genesco has benefited in recent quarters from moves to intentionally pull back on promotional discounting and focus on premium, trendy casual and athletic brands at Journeys.

Vaughn said, “Earnings improvement came from strong execution evidenced by higher gross margin recapture, more full price selling, higher ticket and conversion, better store productivity, and more disciplined expense management. This is the earnings leverage we set out to build this year, and we’re increasingly confident that it reflects positive structural improvement for a higher quality, more profitable business.”
She added that both Journeys and Johnston & Murphy continued their streak of positive quarterly comps despite continued fickle consumer spending.

The CEO said, “The consumer backdrop has not changed materially from what we described last quarter. Our customer remains selective and intentional. They shop with purpose when there’s a reason and they don’t when there’s not, and they’re willing to pay up when we deliver the right product. What continues to stand out is that compelling product and newness are winning. We have the right assortments, our customer is responding and notably buying at full price.”

Journeys Delivers Eighth Straight Quarter of Positive Comps
The 2 percent comp gain at Journeys marked the chain’s eighth consecutive quarter of positive comparable sales. Both store and e-commerce comps were positive.

Sales dipped 0.1 percent to $317.8 million, reflecting store closings. Journeys had 940 locations at the quarter’s close, down from 989 at the same time a year ago. The operating loss at Journeys significantly shrunk to $714,000 from $5 million a year ago.

The improving top-line trends at Journeys come as the chain has moved away from relying heavily on basic skate shoes and vulcanized products by offering a broader mix of casual and athletic styles aimed at a larger target of“style-led teen.” The change has been marked by expanded selections of Adidas, New Balance, Ugg and Birkenstock, as well as the reintroduction of Nike.

“Journeys’ merchant team continues to do an excellent job building on its elevated assortment across athletic and casual, achieving higher transaction size, more full-price selling, and better conversion again in the quarter,” said Vaughn.

She said product strength remains “broad-based” across franchises and brands, including lifestyle running, sandals, and low-profile athletic fashion with momentum in newer brands and fashion trends such as Mary Janes and sneaker ballerinas. She added, “Ultimately, athletic lifestyle led to growth over the summer, where Journeys demonstrated its ability to drive market leadership in several franchises important to its target teen customer.”

One highlight of the quarter was the newer 4.0 format, which continued to deliver in excess of a 25 percent sales lift. Journeys opened 25 locations in Q2, bringing the total for the year to almost 50.

Journeys’ reduced loss reflects 180 points of expense leverage due to the productivity of the 4.0 formats, continued fleet optimization, cost reduction actions, and a new approach for selling salary efficiencies. Vaughn added, “This leverage combined with more modest comp growth and roughly flat sales due to closed stores drove the nice improvement in operating income, positioning Journeys well for profit gains outside of a robust shopping peak.”

Looking ahead, Vaughn said that after sales slowed in the summer months, as expected, following “robust” spring selling, Journeys’ comps have accelerated to a mid-single-digit comp in August “on top of its second most challenging, well into the double digits, monthly 2-year stack.” She said Journeys’ back-to-selling benefited from its Life on Loud campaign and tax-free periods, with the strongest gains seen in “larger, more premium shopping centers and in major states like California and Texas.”

Schuh’s Sales Drop On Lowered Promotions
Schuh’s 9 percent same-store decline in the second quarter reflects efforts to reduce promotional selling. Sales fell 10.0 percent to $113.8 million. The operating loss increased to $370,000 from a loss of $11,000.

Schuh’s gross margin in the quarter improved 300 basis points as full-price selling was prioritized over discounting and promotions with a full price mix increasing by 10 full percentage points of overall sales. Vaughn said greater-than-expected gross margin improvement combined with extensive efforts to improve the cost structure, including six store closures in the quarter, selling salary efficiencies, and digital marketing optimization among others drove nearly flat operating income year over year despite lower sales.

In September 2025, Genesco restructured its portfolio to combine its youth-focused footwear brands—Journeys, Schuh, and Little Burgundy—under a single entity called the Journeys Global Retail Group, led by Journeys’ president, Andy Gray.

Schuh is focusing on reducing its promotional cadence and expanding assortments similar to the Journeys chain, although the moves are impacting sales.

“This is the trade-off we said we would make at Schuh, near-term sales pressure in exchange for a healthier business,” said Vaughn. “We are also making progress in product with greater access to an allocation of Adidas, Nike, Asics, Ugg, New Balance, Birkenstock, and others as part of our more elevated assortment strategy, and we expect continued improvement as part of the Journeys retail group.”

She added, “The UK consumer market remains challenged and price sensitive, which we’re observing during back-to-school right now. Against this backdrop and with our efforts to reduce discounting, we’ve said we expect the Schuh turnaround to take longer than Journeys, but we see the same opportunity to serve the style-led youth customer we’ve captured at Journeys and remain confident in our plan.”

Genesco named Tomas Petersson, formerly general manager for EMEA region for Foot Locker, as Schuh’s president in late July, succeeding the retiring Colin Temple. Vaughn said, “We have every confidence that his UK and international experience and track record growing profitable retail businesses make him the right leader to quickly build on the current progress. His skill set and experience are an exceptional fit for Schuh.”

Johnson & Murphy Marks Third Straight Quarter of Comp Gains
Johnson & Murphy’s 4 percent comp marked its third straight quarter of comp gains. Sales improved to $72.5 million from $68.8 million. Operating earnings reached $12.9 million against a loss of $1.8 million due to the benefit of tariff refunds.

Vaughn said of Johnson & Murphy’s sales gains, “Newness and improving assortments, thoughtful pricing strategies, and growing awareness driven by increased brand marketing and our Peyton Manning campaign contributed to this growth. The strength in the quarter was store-led, with traffic considerably outperforming the industry, along with improved conversion and higher transaction size. Both higher sales and better gross margins drove the profit increase in the quarter.”

Johnson & Murphy extended its partnership with Peyton Manning for two additional years. She said, “Peyton is the consummate successful aspirational J&M brand ambassador with over 85 percent recognition across our target customer base. Our post-initial campaign research showed positive trends in J&M awareness and brand appeal, with revenue from new customers growing at a double-digit rate this year and up for 10 consecutive months since the launch of the first campaign.”

Younger customers are driving Johnson & Murphy’s growth from the under 25, 26 to 35, and 36 to 45-year-old segments. Vaughn also said Johnson & Murphy is benefiting from fashion shift “not to formal dressing, but to a more refined, put-together way of dressing for work, travel, and social occasions. And that shift is right in J&M’s wheelhouse.”

Apparel was the biggest growth driver for J&M in the quarter, growing double digits, with strength from the XC Flex Pinnacle Blazers, Pants, and Knits. Footwear also grew, led by casual and casual athletic styles like the Ackerson, which is a “dressier, refined sneaker.”

Full-year Outlook
Vaughn said Genesco is pleased with the bottom-line outperformance delivered in Q2 and the comp acceleration seen as Q3 arrived, although she noted comparisons became “more challenging” as the company enters the major back-to-selling period.

“While we anticipate continued choppiness in consumer shopping for the balance of the year and lower comps in non-shopping peaks, we’ve shown that we can effectively navigate these periods,” said Vaughn. “With our outperformance to expectations, we are rolling a portion of that upside forward but are now expecting more challenging sales in the back half to take the actions needed at Schuh, given how promotional we now expect the UK footwear market to be. We also plan to invest in brand building and marketing to drive customer awareness and grow our business.”

Genesco’s updated outlook for the year calls for:

  • Adjusted EPS to arrive at the high end of the range of $2.00 to $2.40, versus the midpoint of the same range as outlined in previous guidance.
  • Comp sales to be flat for the year, compared to prior guidance of positive 1 percent to 2 percent, reflecting greater pressure at Schuh, resulting in total sales now down approximately 2 percent versus prior guidance of flat to down 1 percent.
  • Operating income, reflecting stronger gross margins, is now expected to be at the high end of the previous range of $34 to $40 million, versus the prior view of the midpoint of the range.

Guidance reflects repurchases through August 31 and assumes no further share repurchases for this year and a tax rate of 30 percent for Fiscal 2027 but due to the valuation allowance, the tax rate for the third quarter of the year will be in the range of approximately 7 percent to 8 percent.

Image courtesy Journeys/ Genesco Inc.