Genesco Q1 Sales Rise on Journeys Growth

Genesco(NYSE:GCO) reported first-quarter fiscal 2026 results on June 4, 2025, with revenue rising 4% year-over-year (YoY) to $474 million and comparable sales up 5%, driven primarily by an 8% year-over-year comparable sales increase at its Journeys banner. Management reaffirmed adjusted earnings per share (EPS) guidance of $1.30 to $1.70 for fiscal 2026 (period ending Jan. 31, 2026), citing strong cost control, aggressive tariff mitigation efforts, and continued strategic transformation in the Journeys business.

Journeys comp growth drives Genesco outperformance

The Journeys banner achieved an 8% comparable sales increase in the quarter, marking the third consecutive period of strong gains. Athletic footwear now exceeds one-third of Journeys sales, and average selling prices climbed 12% YoY. Across the company, both in-store and e-commerce channels registered mid- to high-single-digit growth.

"Journeys comps increased high-single digits as the initial phase of our strategic plan to accelerate growth extended its momentum and Journeys continued to gain market share. The consumer environment remains choppy and with recent first quarter events, this choppiness has become more pronounced. Consumers show a willingness to shop when there's a reason like we saw over Valentine's Day and Easter and retreat when there's not. And they remain quite selective. Our merchant and product teams continue to innovate and add freshness to our assortments to satisfy shoppers who are looking for must-have product and a reason to buy something new and who are passing on everything else."
-- Mimi Eckel Vaughn, Board Chair, President and Chief Executive Officer

The breadth of Journeys’ comp growth across brands and channels, alongside a 12% increase in average footwear selling prices, signals management’s successful repositioning towards higher-value, trend-responsive consumer segments.

Genesco mitigates tariff risks through supply chain actions

Despite new U.S.-China reciprocal tariffs that could add $15 million in annual costs to the branded business segment, management cited a multi-year supply chain shift that has reduced China exposure to just over 10% of total product as of the start of the year and a pathway to exit China sourcing almost completely if needed. Retail banners Schuh and Journeys, accounting for over 80% of sales, are either U.K.-domiciled or rely on diversified global brands less directly exposed to tariff headwinds.

"Over the last several years, we've been working diligently to reduce risk across our supply chain with a concerted effort to diversify our countries of production. These efforts have meaningfully paid off with dramatically lower dependence on and a path to be almost completely out of China in short order as needed. Over the last 2 months, our teams have swiftly and continuously evaluated our product lines and sourcing plans and taken aggressive action to minimize the reciprocal tariff impact. At the current rates, we estimate the reciprocal tariffs in our branded business would result in unmitigated cost increases of roughly $15 million this fiscal year. We are taking the following actions, among others, to mitigate this cost pressure, accelerating, increasing or canceling inventory to take advantage of tariff windows, further diversifying suppliers and resourcing to countries with lower tariffs, working with long-standing factory partners to reduce costs and planning for strategic price increases targeted more toward the back half of the year, coupled with demand generation investments."
-- Mimi Eckel Vaughn, Board Chair, President and Chief Executive Officer

Ongoing diversification of sourcing, targeted price increases, and close vendor collaboration suggest Genesco retains the ability to defend margins and limit tariff-driven earnings volatility, reducing long-term operational risk relative to less nimble industry peers.

Journeys 4.0 remodels boost store productivity and brand appeal

The rollout of the new “Journeys 4.0” store format, with 39 remodels completed and plans to reach 75-plus locations by year-end, has produced greater than 25% sales lifts per remodeled unit, with notable gains in new customer acquisition, traffic, and conversion rates. Focusing remodels on the chain’s highest-potential sites leverages fixed investments while driving disproportionate overall business impact.

"Our new store concept has delivered strong results and a sales lift of more than 25%. Our focus is on making the most productive stores even more productive. These stores have meaningfully better traffic, higher conversion and higher average selling prices and have been attracting a larger share of new customers. We now have 39 stores in the 4.0 format. The results have been so compelling, we've pulled forward more stores to remodel this year. By year-end, we expect to have 75-plus stores in this new format, underscoring our belief in this initiative as a cornerstone of Journeys transformation."
-- Mimi Eckel Vaughn, Board Chair, President and Chief Executive Officer

Remodeling high-potential stores with the 4.0 format is driving outsized sales growth and customer engagement, supporting the company’s broader transformation strategy and long-term earnings potential.

Looking Ahead

Management reiterated EPS guidance (non-GAAP) of $1.30 to $1.70 for fiscal 2026, forecasting comparable sales up 2% to 3% YoY and total sales growth of 1% to 2% YoY, with improved foreign exchange tailwinds partly offsetting net store closures. Gross margin is expected to decline 20% to 30% basis points. The second quarter is anticipated to remain a seasonally low period with increased SG&A deleverage, but back-to-school and holiday trading are expected to drive stronger profitability and cash flow in the second half.

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This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.