Genesco, Inc., the parent of Journeys, Schuh, and Johnston & Murphy, reported another quarter that exceeded expectations, tallying its fourth consecutive quarter of positive comparable sales growth in the second quarter.

“The momentum from the second half of last year has continued in Fiscal 2026, highlighted by Journeys’ high-single digit comp increase as our strategic plan to accelerate growth continues to gain traction,” offered company Board Chair, President and CEO Mimi Vaughn. “Our focus on product elevation, enhanced customer experience, and strengthened brand positioning is resonating with our broader target teen customer base, as we outperform the market and drive increased share.”

Net sales for the fiscal 2026 second quarter (Q2) ended August 2 increased 4 percent to $546 million, compared to $525 million in the prior-year Q2 period. The net sales increase reportedly reflects a 4 percent increase in comparable sales, including a 5 percent increase in same-store sales, a 1 percent increase in e-commerce comparable sales, and a favorable foreign exchange impact, partially offset by the impact of net store closings.

The overall sales increase of 4 percent in Q2 compared to the prior-year Q2 period was attributed to a 6 percent increase at Journeys, a 2 percent increase at Schuh, and a 5 percent increase at Genesco Brands, partially offset by a 3 percent decrease at Johnston & Murphy. On a constant currency basis, Schuh sales were down 4 percent for the second quarter this year.

Comparable Sales

Profitability and Expenses
Gross margin for the second quarter this year was 45.8 percent of sales, compared to 46.8 percent in Q2 last year. The 100 basis-point year-over-year (y/y) decrease in gross margin was said to be due primarily to increased promotional activity at Schuh and lower margins at Genesco Brands related to the exit of licenses and the impact from tariffs, partially offset by increased margins at Johnston & Murphy reflecting price increases and lower retail markdowns as well as improved costs from sourcing optimization.

Selling and administrative expenses margin for the second quarter amounted to 48.4 percent of sales in Q2, decreasing 20 basis points from 48.6 percent in Q2 last year, said to primarily reflect 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.

Genesco’s GAAP operating loss for the second quarter was $14.4 million, or 2.6 percent of sales this year, compared with a loss of $10.3 million, or 2.0 percent of sales in the second quarter last year. Adjusted for the Excluded Items in the second quarters of both Fiscal 2026 and 2025, the operating loss for the second quarter was $14.3 million this year compared to a loss of $9.3 million last year. Adjusted operating margin was a loss of 2.6 percent of sales in the second quarter of Fiscal 2026 compared to a loss of 1.8 percent in the second quarter last year.

The effective tax rate for the quarter was negative 15.0 percent in Fiscal 2026 compared to 15.2 percent in the second quarter last year. The adjusted tax rate, reflecting Excluded Items, was 26.5 percent in fiscal Q2 compared to 15.1 percent in the second quarter last year. The higher adjusted tax rate for the second quarter this year compared to the second quarter last year reportedly reflects a higher expected tax rate for Fiscal 2026 versus Fiscal 2025 due to the impact of the valuation allowance in certain jurisdictions. The divergence between the effective tax rate and the adjusted tax rate is due to income tax law changes under the OBBBA that we have excluded from the adjusted tax rate.

GAAP loss from continuing operations was $18.5 million in the second quarter, compared to a loss of $9.9 million in the second quarter last year. Adjusted for the Excluded Items, the second quarter loss from continuing operations was $11.7 million, or a loss of $1.14 per share, in Fiscal 2026, compared to a loss of $9.1 million, or a loss of 83 cents per share, in the second quarter last year.

Cash, Borrowings and Inventory
Cash as of August 2 was $41.0 million, compared with $45.9 million as of August 3, 2024. Total debt at the end of the second quarter of Fiscal 2026 was $71.0 million compared with $77.8 million at the end of last year’s second quarter.

Inventories increased 11 percent y/y, reflecting increased inventory at Journeys, Schuh and Johnston & Murphy, partially offset by decreased inventory at Genesco Brands.

Capital Expenditures and Store Activity
CapEx was $15 million in Q2, reportedly related primarily to retail stores and other initiatives.

Depreciation and amortization were $13 million in Q2.

During the quarter, the company opened nine stores and closed 12 stores. GCO ended the quarter with 1,253 stores compared with 1,314 stores at the end of the second quarter last year, or a decrease of 5 percent. Square footage was down 3 percent year-over-year.

Share Repurchases
The company did not repurchase any shares during the second quarter of Fiscal 2026. GCO currently has $29.8 million remaining on its expanded share repurchase authorization announced in June 2023.

Fiscal 2026 Outlook
For Fiscal 2026, the company:

  • Continues to expect adjusted diluted earnings per share from continuing operations in the range of $1.30 to $1.70 per diluted share, including the impact of tariffs currently in place.
  • Now expects total sales to increase by 3 percent to 4 percent year-over-year, with a comparable sales range of +4 percent to +5 percent, up from prior guidance for total sales to be +1 percent to +2 percent and comparable sales to be +2 percent to +3 percent year-over-year.
  • Guidance assumes no further share repurchases and a tax rate of 29 percent, excluding the tax impact of OBBBA.

Image courtesy Journeys Group/Geneseco, Inc.

See below for additional SGB Executive coverage of the strong Q2 for Journeys, a great start to Q3, and progress against its transformation plan:

EXEC: Journeys Group Drives Positive Comps at Genesco; CEO Updates Transformation Plan