Genesco updates full-year earnings outlook

US footwear retailer Genesco Inc. (Genesco) announced its financial results for the second quarter of fiscal 2027 ended August 1, 2026, reporting a 3 percent decrease in net sales to 530 million dollars compared to 546 million dollars in the second quarter of fiscal 2026.

The decline in net sales reflected strategic store closings, reduced licensed sales, a 6 percent decrease in e-commerce comparable sales stemming from reduced discounting at footwear chain Schuh, and unfavorable foreign exchange impacts. These factors were partially offset by a 1 percent increase in same-store sales and higher sales from enlarged locations.

On a segment level, net sales dropped 10 percent at UK-based Schuh, while Genesco Brands experienced a 21 percent decrease to seven million dollars. Johnston & Murphy sales expanded 5 percent, while sales at Journeys remained flat. Overall comparable sales fell 1 percent compared to the prior-year period, with store sales rising 1 percent and e-commerce sales dropping 6 percent.

“We delivered second quarter bottom line results that were significantly better than last year and well ahead of our expectations,” stated Genesco board chair, president, and chief executive officer, Mimi E. Vaughn. “The quarter provides further evidence that our Footwear First strategy is working and our momentum is building.”

Vaughn noted that back-to-school trading in the third quarter started favorably, with Journeys accelerating to mid-single-digit comparable sales in August.

Tariff refunds boost gross margin and operating results

Genesco recorded a gross margin of 51.4 percent for the second quarter, up 560 basis points from 45.8 percent in the second quarter of fiscal 2026. The improvement includes the impact of 22.5 million dollars in International Emergency Economic Powers Act (IEEPA) tariff refunds and related interest received during the period.

Adjusted gross margin improved 140 basis points to 47.2 percent, driven by reduced promotional activity at Schuh, favorable sales mix changes, license exit benefits, and pricing and tariff mitigation efforts across its branded division.

Operating income on a GAAP basis reached 3.6 million dollars, or 0.7 percent of sales, compared to an operating loss of 14.4 million dollars in the second quarter of fiscal 2026. Adjusted operating loss narrowed to 8.3 million dollars, or 1.6 percent of sales, compared to an adjusted operating loss of 14.3 million dollars, or 2.6 percent of sales, in the prior-year period.

GAAP earnings from continuing operations totaled 3.5 million dollars, or 0.32 dollars per share, up from a loss of 18.5 million dollars, or a loss of 1.79 dollars per share, in the prior-year period. On an adjusted basis, the loss from continuing operations was 8.8 million dollars, or a loss of 0.83 dollars per share, compared to a loss of 11.7 million dollars, or a loss of 1.14 dollars per share, last year.

Store footprint and updated full-year outlook Genesco opened three stores and closed 25, ending the period with 1,186 locations compared to 1,253 stores last year.

While Genesco did not buy back shares during the second quarter, it repurchased 317,503 shares during August 2026, leaving 18.8 million dollars remaining on its buyback authorization.

For the full fiscal year 2027, Genesco expects adjusted diluted earnings per share (EPS) from continuing operations at the high end of the 2.00 dollars to 2.40 dollars range; comparable sales to be flat YoY, down from previous guidance of positive 1 percent to 2 percent, with total sales down approximately 2 percent; and operating income at the high end of the 34 million dollars to 40 million dollars range.

Senior vice president, finance, and chief financial officer, Jonathan M. Collins, added: “As a result of our performance, we are raising our full-year adjusted EPS outlook to the high end of the 2.00 dollars to 2.40 dollars range, up from our previous midpoint of the same range.”

The company also highlighted an ongoing cost reduction program targeting 40 million dollars to 50 million dollars in savings through fiscal 2029, with up to 20 million dollars expected to be realized in the current fiscal year.