Genesco Inc. Reports 3% Net Sales Decline in Q2 of Fiscal 2027

Genesco Inc. reported a net sales decline of 3.0% for the second quarter of Fiscal 2027, totaling $529.9 million compared to $546.0 million in the same period last year. The decrease was attributed to net store closures, a 6% drop in e-commerce comparable sales, and reduced sales in the Genesco Brands Group due to exiting certain licenses. However, the company noted a 1% increase in same-store sales and higher sales from expanded stores, particularly within the Journeys Group, which saw a 2% rise in comparable sales, building on a 5% gain from the previous year.

The company's gross margin improved by 8.9% to $272.1 million, increasing as a percentage of net sales from 45.8% to 51.4%. This improvement was largely driven by $21.8 million in tariff refunds, reduced promotional activity, and a shift towards higher full-price selling. Selling and administrative expenses decreased by 1.8% to $259.6 million, although they rose as a percentage of net sales due to the overall sales decline. Operating income for the quarter was $3.6 million, a significant turnaround from a loss of $14.4 million in the prior year.

In terms of strategic developments, Genesco has been optimizing its store footprint, resulting in a net reduction of 67 stores over the past year. The company operated 1,186 retail locations as of August 1, 2026, including stores in the U.S., Puerto Rico, Canada, and the U.K. The company also signed a multi-year licensing agreement with Kontoor Brands, Inc. to design and distribute footwear under the Wrangler brand, with the first collection expected to launch in Fall 2026.

Operationally, the Journeys Group reported flat sales at $317.8 million, while the Schuh Group experienced a 10.1% decline in sales to $113.8 million, reflecting a strategic shift towards full-price selling. The Johnston & Murphy Group saw a 5.5% increase in sales to $72.5 million, benefiting from improved product assortments and marketing efforts. The Genesco Brands Group's sales fell by 20.8% to $25.7 million, primarily due to the exit from the Levi's business.

Looking ahead, Genesco anticipates continued challenges in the retail environment, including potential impacts from consumer spending patterns and market conditions. The company remains focused on enhancing its product offerings and optimizing its operations to drive profitability. The outlook for the remainder of Fiscal 2027 includes expectations for improved gross margins and a commitment to maintaining liquidity through operational cash flows and available credit facilities.