EXEC: Athletic Lifemodel Footwear Turns in ‘Star” Efficiency for Journeys

While sluggish gross sales of legacy athletic footwear silhouettes are miserable gross sales traits at Foot Locker and JD Sports, mall competitor, Journeys, discovered athletic way of life product pacing its optimistic gross sales efficiency within the second quarter, stated Mimi Vaughn, president and CEO of Journeys’ father or mother, Genesco Inc., on an analyst name.

Asked by an analyst about Journeys’ efficiency in and publicity to “legacy athletic silhouettes,” Vaughn stated Journeys is skirting the broader weak point within the market by having a diversified mixture of manufacturers.

“Our lifestyle athletic was the star of the quarter for us,” stated 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 feedback come as Dick’s Sporting Goods final week reported Foot Locker’s same-store gross sales fell 3.6 p.c within the second quarter. Dick’s blamed the subpar efficiency on softer gross sales of “legacy footwear silhouettes” in addition to fewer launches within the quarter and weak performances by the launches that arrived. Dick’s now expects comps on the Foot Locker enterprise to vary from flat to down 2 p.c for the yr, down from development of 1.5 p.c to three p.c underneath earlier steering.

JD Sports the prior week issued a revenue warning after reporting a 6.8 p.c decline in comparable gross sales at its North America phase, pushed by cautious client confidence, a weak job market, and a gradual interval for high-demand “hype” footwear

Genesco’s Second-Quarter Results
Genesco delivered earnings and gross sales outcomes for the second quarter that topped analyst estimates as momentum at Journeys and Johnston & Murphy offset challenges at its Schuh chain within the U.Ok. Genesco barely raised its earnings steering for the yr whereas reducing its gross sales steering because of pressures at Schuh.

In the quarter, gross sales decreased 3.0 p.c to $529.9 million, topping analysts’ consensus estimates within the vary of $527.3 to $528.4 million. The decline was anticipated given the impression of internet retailer closings, decreased licensed gross sales because of the finish of its Levi’s footwear deal because it launches a licensed Wrangler vary, a 6 p.c lower in e-commerce comparable gross sales from lowered Schuh discounting, and an unfavorable international alternate impression, partially offset by a 1 p.c enhance in same-store gross sales and better gross sales from enlarged shops.

By idea, Journeys’ comps declined 2 p.c towards a powerful 9 p.c bounce at yr in the past. Schuh’s comps tumbled 9 p.c on high of a 4 p.c year-ago decline. Johnston & Murphy’s gross sales had been up 4 p.c in contrast with a 1 p.c acquire a yr in the past.

Earnings had been boosted by the receipt of $22.5 million in tariff refunds, together with curiosity, throughout second quarter this yr associated to its branded companies underneath the International Emergency Economic Powers Act.

GAAP earnings from persevering with operations had been $3.5 million within the quarter, together with tariff refunds, in comparison with a lack of $18.5 million within the second quarter final yr. Adjusted for the exclude tariff refunds, the loss from persevering with operations in one among Genesco’s smaller quarters for the yr was $8.8 million, or 83 cents per share, in comparison with a lack of $11.7 million, or $1.14, within the second quarter final yr and considerably higher than analysts’ consensus goal of $1.37.

Gross margin within the quarter improved to 51.4 p.c, together with tariff refunds, from 45.8 p.c final yr. Adjusted gross margin this yr of 47.2 p.c elevated 140 foundation factors due primarily to much less promotional exercise and better full-price promoting at Schuh, favorable adjustments in gross sales combine, license exit profit and pricing and tariff mitigation actions throughout its branded companies.

S&A bills had been 49.0 p.c as a proportion of gross sales in comparison with 48.4 p.c final yr. Adjusted S&A bills decreased nearly $6 million however deleveraged 40 foundation factors as a p.c of gross sales to 48.8 p.c because of the gross sales decline this yr. The enhance as a proportion of gross sales primarily mirrored elevated occupancy and performance-based compensation bills, partially offset by decreased promoting salaries and advertising and marketing bills.

Excluding performance-based compensation expense, promoting and administrative bills had been solely up 10 foundation factors for the quarter this yr, reflecting value financial savings initiatives with decreased gross sales.

Genesco’s GAAP working earnings was $3.6 million, together with tariff refunds, in contrast with an working lack of $14.4 million a yr in the past. Adjusted to exclude particular objects, the working loss shrunk to $8.3 million this yr from $14.3 million final yr.

On the decision, Vaughn stated Genesco carried out “significantly better” than final yr and effectively forward of expectations with each enterprise reaching positive aspects versus plans.

Genesco has benefited in latest quarters from strikes to deliberately pull again on promotional discounting and give attention to premium, stylish informal and athletic manufacturers at Journeys.

Vaughn stated, “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 each Journeys and Johnston & Murphy continued their streak of optimistic quarterly comps regardless of continued fickle client spending.

The CEO stated, “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 p.c comp acquire at Journeys marked the chain’s eighth consecutive quarter of optimistic comparable gross sales. Both retailer and e-commerce comps had been optimistic.

Sales dipped 0.1 p.c to $317.8 million, reflecting retailer closings. Journeys had 940 places on the quarter’s shut, down from 989 on the similar time a yr in the past. The working loss at Journeys considerably shrunk to $714,000 from $5 million a yr in the past.

The enhancing top-line traits at Journeys come because the chain has moved away from relying closely on fundamental skate footwear and vulcanized merchandise by providing a broader mixture of informal and athletic types aimed toward a bigger goal of“style-led teen.” The change has been marked by expanded alternatives of Adidas, New Balance, Ugg and Birkenstock, in addition to 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,” stated Vaughn.

She stated product energy stays “broad-based” throughout franchises and types, together with way of life operating, sandals, and low-profile athletic vogue with momentum in newer manufacturers and vogue traits akin to 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 spotlight of the quarter was the newer 4.0 format, which continued to ship in extra of a 25 p.c gross sales raise. Journeys opened 25 places in Q2, bringing the whole for the yr to nearly 50.

Journeys’ lowered loss displays 180 factors of expense leverage because of the productiveness of the 4.0 codecs, continued fleet optimization, value discount actions, and a brand new strategy for promoting wage 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 forward, Vaughn stated that after gross sales slowed in the summertime months, as anticipated, following “robust” spring promoting, 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 stated Journeys’ back-to-selling benefited from its Life on Loud marketing campaign and tax-free durations, with the strongest positive aspects 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 p.c same-store decline within the second quarter displays efforts to scale back promotional promoting. Sales fell 10.0 p.c to $113.8 million. The working loss elevated to $370,000 from a lack of $11,000.

Schuh’s gross margin within the quarter improved 300 foundation factors as full-price promoting was prioritized over discounting and promotions with a full worth combine growing by 10 full proportion factors of general gross sales. Vaughn stated greater-than-expected gross margin enchancment mixed with intensive efforts to enhance the fee construction, together with six retailer closures within the quarter, promoting wage efficiencies, and digital advertising and marketing optimization amongst others drove almost flat working earnings yr over yr regardless of decrease gross sales.

In September 2025, Genesco restructured its portfolio to mix its youth-focused footwear manufacturers—Journeys, Schuh, and Little Burgundy—underneath a single entity known as the Journeys Global Retail Group, led by Journeys’ president, Andy Gray.

Schuh is specializing in decreasing its promotional cadence and increasing assortments just like the Journeys chain, though the strikes are impacting gross sales.

“This is the trade-off we said we would make at Schuh, near-term sales pressure in exchange for a healthier business,” stated 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, previously basic supervisor for EMEA area for Foot Locker, as Schuh’s president in late July, succeeding the retiring Colin Temple. Vaughn stated, “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 p.c comp marked its third straight quarter of comp positive aspects. Sales improved to $72.5 million from $68.8 million. Operating earnings reached $12.9 million towards a lack of $1.8 million because of the advantage of tariff refunds.

Vaughn stated of Johnson & Murphy’s gross sales positive aspects, “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 prolonged its partnership with Peyton Manning for 2 extra years. She stated, “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 prospects are driving Johnson & Murphy’s development from the underneath 25, 26 to 35, and 36 to 45-year-old segments. Vaughn additionally stated Johnson & Murphy is benefiting from vogue 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 largest development driver for J&M within the quarter, rising double digits, with energy from the XC Flex Pinnacle Blazers, Pants, and Knits. Footwear additionally grew, led by informal and informal athletic types just like the Ackerson, which is a “dressier, refined sneaker.”

Full-year Outlook
Vaughn stated Genesco is happy with the bottom-line outperformance delivered in Q2 and the comp acceleration seen as Q3 arrived, though she famous comparisons grew to become “more challenging” as the corporate enters the key back-to-selling interval.

“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,” stated 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 up to date outlook for the yr requires:

• Adjusted EPS to reach on the excessive finish of the vary of $2.00 to $2.40, versus the midpoint of the identical vary as outlined in earlier steering.
• Comp gross sales to be flat for the yr, in comparison with prior steering of optimistic 1 p.c to 2 p.c, reflecting higher stress at Schuh, leading to whole gross sales now down roughly 2 p.c versus prior steering of flat to down 1 p.c.
• Operating earnings, reflecting stronger gross margins, is now anticipated to be on the excessive finish of the earlier vary of $34 to $40 million, versus the prior view of the midpoint of the vary.

Guidance displays repurchases by way of August 31 and assumes no additional share repurchases for this yr and a tax fee of 30 p.c for Fiscal 2027 however because of the valuation allowance, the tax fee for the third quarter of the yr might be within the vary of roughly 7 p.c to eight p.c.

Image courtesy Genesco