Genesco Q2 Earnings Beat Expectations Amid Journeys Momentum, Weakness in U.K. and Portfolio Resets

Genesco (NYSE:GCO) reported Q2 CY2025 revenue of $546mln, up 4% YoY, and a non-GAAP loss of $1.14 per share, beating analysts' estimates. The company's Journeys business saw sustained comp growth, while weakness in the U.K. market and margin pressures weighed on profitability. Management reiterated full-year guidance and highlighted strategic initiatives, such as store remodels and new marketing campaigns, to drive growth.

Genesco Inc. (NYSE: GCO) reported its second-quarter fiscal 2025 (Q2 CY2025) results, showing mixed performance with a 4% year-over-year (YoY) increase in revenue to $546 million, beating analysts' estimates. The company's non-GAAP loss per share was $1.14, also exceeding expectations.

Revenue Growth and Segment Performance

Revenue growth was driven by a 9% increase in comparable sales for the Journeys Group, which accounted for a significant portion of the company's overall sales. However, the U.K. market, represented by the Schuh Group, continued to face challenges, with a 1% YoY sales increase (constant currency basis) masking underlying pressures. The Johnston & Murphy Group, which operates in the premium footwear segment, saw a 9% decline in sales.

Operating Performance and Cost Management

Despite the revenue growth, Genesco faced margin pressures, with gross margins declining due to higher tariffs and promotional activities in the U.K. market. The company's operating loss narrowed to $10.3 million, down from $38.6 million in Q2 CY2024, reflecting cost-cutting measures and store closures. The company plans to close up to 50 stores by the end of fiscal 2025, aiming to achieve $45–$50 million in annualized cost savings.

Strategic Initiatives and Outlook

Genesco's management highlighted several strategic initiatives to drive growth, including store remodels, new marketing campaigns, and the expansion of its digital and omnichannel capabilities. The company also announced a new collaboration with Wrangler for premium footwear, which is expected to launch in 2026.

Full-Year Guidance

Genesco reiterated its full-year adjusted EPS guidance of $0.60 to $1.00 for fiscal 2025. The company also raised its full-year revenue outlook, reflecting the strong performance of the Journeys Group. However, management acknowledged near-term uncertainty around tariff rates and consumer demand.

Investment Implications

Genesco's Q2 CY2025 results suggest a transition phase rather than a full recovery. The company's cost discipline, store optimization, and digital investments are laying the groundwork for long-term stability. However, execution risks remain, particularly in sustaining Journeys' momentum and delivering on the Wrangler partnership.

Conclusion

Genesco's fiscal Q2 CY2025 earnings report is a mixed but instructive signal. The company has made meaningful strides in reducing costs, optimizing its store footprint, and refocusing on its core strengths. However, the path to profitability remains fraught with challenges, particularly in its non-Journeys segments and the broader retail environment. For long-term investors, Genesco represents a high-conviction opportunity if its strategic reforms can be executed effectively.

References:
[1] https://www.genesco.com/news-releases/news-release-details/genesco-inc-reports-fiscal-2026-second-quarter-results