Genesco raises FY27 profit target despite revenue slump

Genesco raises FY27 profit target despite revenue slump Sales in Johnston & Murphy grew 5% over the quarter. Credit: JHVEPhoto/Shutterstock.com. · Just Style · JHVEPhoto/Shutterstock.com. Jangoulun Singsit Mon, September 7, 2026 at 8:30 PM GMT+9 3 min read GCO +3.98% For the three months ended 1 August 2026, Nashville-based footwear retailer Genesco recorded a 3% decline in net sales to $530m.

Genesco attributed this decline to store closures, reduced licensed sales, fewer online discounts at Schuh and negative currency effects. Among the company's brands, Johnston & Murphy posted a 5% sales increase, and sales at Journeys rose 2%.

Overall, same-store sales grew by 1%, with expanded locations partially offsetting the decline in other areas.

By the end of the quarter, Genesco's store count had fallen to 1,186 from 1,253 a year prior, representing a 5% reduction in total retail space.

Despite lower sales volumes, the company also reported that adjusted gross margin improved to 47.2% from 45.8% a year earlier, citing reduced promotional activity and a stronger focus on full-price sales at Schuh as contributing factors.

Genesco also noted it received $22.5m in tariff refunds during the quarter, though these were excluded from its adjusted earnings figures.

The company's adjusted operating loss narrowed to $8.3m, compared to a $14.3m loss in the same period last year.

On a GAAP basis, operating income reached $3.6m, a turnaround from the previous year's operating loss of $14.4m.

Genesco board chair, president and CEO Mimi Vaughn said: "We delivered second quarter bottom line results that were significantly better than last year and well ahead of our expectations.

"The quarter provides further evidence that our Footwear First strategy is working and our momentum is building. Journeys and Johnston & Murphy both delivered positive comparable sales in the quarter, and earnings improvement reflected the operating leverage we set out to build, with more full-price selling aiding gross margin recapture and disciplined expense management driving the stronger performance.

"As we anticipated, the decline in sales was driven by strategic actions: store closures, our license transition, and pullback on discounting at Schuh. As we move past these shorter-term headwinds, we expect sales trends to improve, and we remain confident that the initiatives underway across our company position us for profitable growth."

For FY27, Genesco now projects that comparable sales will remain flat, a change from earlier expectations of 1% to 2% growth, due largely to ongoing challenges at Schuh.

As a result, total sales are forecast to decline by about 2%, compared to the prior guidance of flat to a 1% decrease.

Genesco's outlook for operating income, which benefits from improved margins, is now at the upper end of its earlier range of $34m to $40m.

The guidance also incorporates share repurchases made up to 31 August and does not assume additional buybacks for the rest of the year.

The full-year tax rate is expected to be 30%, though the company forecasts a third quarter rate between 7% and 8% due to the impact of a valuation allowance.

"Genesco raises FY27 profit target despite revenue slump" was originally created and published by Just Style, a GlobalData owned brand.