Journeys and Schuh's Q2 2026: Contradictions Emerge on Product Strategy, Store Remodels, and Market Positioning

The above is the analysis of the conflicting points in this earnings call

Date of Call: None provided

Financials Results

• Revenue: $546.0M, up 4% YOY
• EPS: $(1.14) adjusted diluted loss per share, compared to $(0.83) loss in the prior year
• Gross Margin: 45.8%, down 100 bps YOY

Guidance:

• Reiterated FY26 adjusted EPS $1.30–$1.70.
• FY revenue growth now 3%–4% (prior 1%–2%); comp sales 4%–5% (prior 2%–3%).
• FY gross margin to decline 50–60 bps YOY (prior down 20–30 bps); SG&A to leverage 80–100 bps (prior 50–70 bps).
• Capex $55–$65M; adjusted tax rate ~29%; average shares ~10.6M.
• Q3 sales up 3%–4%; gross margin deleverage 50–70 bps; SG&A leverage a little over 100 bps.
• Q3 adjusted EPS expected $0.15–$0.30 above last year.

Business Commentary:

• Strong Comps and Market Share Gain:
• Genesco reported 4% overall comps growth in Q2, marking its fourth consecutive quarter of positive comps, with Journeys experiencing a high single-digit comp increase.

• This growth was driven by strong demand for repositioned product offerings and increased marketing efforts, resulting in a double-digit comp increase in the back-to-school period.

• Product Elevation and ASP Increase:

• The company's focus on product elevation and diversification led to an increase in Journeys' average selling price (ASP), with the average transaction value rising into the double digits.

• This trend was supported by the introduction of new brands and increased product offerings, particularly in the athletic category, which resonated well with the target consumer.

• Store Performance and Remodel Strategy:

• Genesco's store comps accelerated throughout the quarter, with new store remodels (Journeys 4 point zero) showing a sales lift of over 25%.

• The successful remodel strategy was attributed to an enhanced shopping experience, better product presentation, and a modern store aesthetic that attracted both current and new customers.

• Challenges in UK Market and Schuh Performance:

• Schuh experienced a decrease in store traffic and 4% lower comps due to promotional pressure and cautious consumer behavior in the UK market.
• Efforts to improve trend with product newness and demand-driven promotions, alongside strategic inventory management, helped stabilize performance in August.

Sentiment Analysis:

• “Fourth consecutive quarter of positive comps” with revenue up 4% and comps up 4%. Journeys comps “up double digits” Q3-to-date on top of last year’s double digits. Reiterated FY EPS $1.30–$1.70 and raised revenue/comp outlook, though offset by UK promotional pressure and higher tariffs. SG&A expected to leverage 80–100 bps for the year.

Q&A:

• Question from Mitch Kummetz (Seaport Global Securities): How does the Journeys assortment and brand access/allocations today compare to last back-to-school?
  Response: Assortment is broader and deeper across casual, canvas, and athletic; six brands up double digits, higher price points, and more time to execute versus last year’s chase.

• Question from Mitch Kummetz (Seaport Global Securities): Progress on targeting a wider Journeys audience (TAM 6–7x) and impact into holiday?
  Response: Early days; after improving product, they’re scaling marketing (Life on Loud) and 4.0 remodels to reach a broader teen base, with more to come through holiday.

• Question from Mitch Kummetz (Seaport Global Securities): Confirm double-digit Journeys comps early in Q3 and two-year stack?
  Response: Yes—double-digit comps Q3-to-date on top of last year’s double-digit comps during back-to-school.

• Question from Mitch Kummetz (Seaport Global Securities): Schuh trends into July/August and merchandising margin outlook?
  Response: Comps improved in July/August aided by promotions; they’re reducing non-accretive discounting in Q3, but UK remains promotional and volatile, keeping margin pressure elevated.

• Question from Joseph Cibello (Truist Securities): How are new/reintroduced brands scaling and performing?
  Response: New brands validate key teen categories and start small before scaling; example: HOKA introduced in select stores with expansion planned.

• Question from Joseph Cibello (Truist Securities): Longer-term outlook for ticket and transactions with elevated product access?
  Response: ASPs are rising, including in athletic; consumers pay up for must-have items, and pricing will be pushed until optimal levels are reached.

• Question from Montero Morenocheek (Jefferies): Any additional insights on Journeys 4.0 remodel performance?
  Response: 55 stores remodeled with 25%+ sales lift; targeting >80 by year-end, focusing on top 250 stores and exploring larger formats to amplify growth.

• Question from Montero Morenocheek (Jefferies): Outlook for the UK market into holiday for Schuh?
  Response: Expect choppiness; focus on stronger assortments, store execution, and eliminating non-accretive discounting to maintain a full-price stance where possible.

• Question from Montero Morenocheek (Jefferies): Plans for additional licensing beyond Wrangler?
  Response: Strategy is fewer, larger licenses; Wrangler footwear launches Fall 2026 with broad category potential; near-term focus is executing this partnership.