UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended August 1, 2026
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to
Commission File No. 1-3083
Genesco Inc.
(Exact name of registrant as specified in its charter)
Tennessee
62-0211340
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
535 Marriott Drive
37214
Nashville,
(Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (615) 367-7000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $1.00 par value
GCO
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer; an accelerated filer; a non-accelerated filer; a smaller reporting company; or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒
As of August 28, 2026, there were 10,820,152 shares of the registrant's common stock outstanding.
INDEX
Part I. Financial Information
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets - August 1, 2026, January 31, 2026 and August 2, 2025
4
Condensed Consolidated Statements of Operations - Three and Six Months ended August 1, 2026 and August 2, 2025
5
Condensed Consolidated Statements of Comprehensive Income (Loss) - Three and Six Months ended August 1, 2026 and August 2, 2025
6
Condensed Consolidated Statements of Cash Flows - Six Months ended August 1, 2026 and August 2, 2025
7
Condensed Consolidated Statements of Equity - Three and Six Months ended August 1, 2026 and August 2, 2025
8
Notes to Condensed Consolidated Financial Statements
9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
17
Item 3. Quantitative and Qualitative Disclosures about Market Risk
26
Item 4. Controls and Procedures
Part II. Other Information
27
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
28
Item 5. Other Information
Item 6. Exhibits
29
Signature
30
2
cautionary notice regarding forward-looking statements
Statements in this Quarterly Report on Form 10-Q include certain forward-looking statements, which include statements regarding our intent, belief or expectations and all statements other than those made solely with respect to historical fact. Actual results could differ materially from those reflected by the forward-looking statements in this Quarterly Report on Form 10-Q and a number of factors may adversely affect the forward-looking statements and our future results, liquidity, capital resources or prospects. These include, but are not limited to, adjustments to projections reflected in forward-looking statements, including those resulting from weakness in store, e-commerce and shopping mall traffic, restrictions on operations imposed by government entities and/or landlords, and limitations on our ability to adequately staff and operate stores. Differences from expectations could also result from store closures and effects on the business as a result of the level of consumer spending on our merchandise and interest in our brands and in general; the level and timing of promotional activity necessary to maintain inventories at appropriate levels; our ability to pass on price increases to our customers; the imposition of tariffs (including the timing and amount thereof) on products imported by us or our vendors as well as the ability and costs to move production of products in response to tariffs; our ability to obtain from suppliers products that are in-demand on a timely basis and effectively manage disruptions in product supply or distribution, including disruptions as a result of pandemics or geopolitical events, including disruptions near crucial trade routes; unfavorable trends in fuel costs, foreign exchange rates, foreign labor and material costs, and other factors affecting the cost of products; a disruption in shipping or increase in cost of our imported products, and other factors affecting the cost of products; our dependence on third-party vendors and licensors for the products we sell; store closures and effects on the business as a result of civil disturbances; our ability to renew our license agreements; impacts of the ongoing geopolitical conflicts around the world including without limitation, the conflict with Iran; other sources of market weakness in the locations in which we operate; the effectiveness of our omni-channel initiatives; costs associated with proxy contest; costs associated with changes in minimum wage and overtime requirements; wage pressures; labor shortages; the effects of inflation; the evolving regulatory landscape related to our use of social media; weakness in the consumer economy and retail industry; competition and fashion trends in our markets, including trends with respect to the popularity of casual and dress footwear; any failure to increase sales at our existing stores, given our high fixed expense cost structure, and in our e-commerce businesses; risks related to the potential for terrorist events; changes in buying patterns by significant wholesale customers; changes in consumer preferences; our ability to continue to complete and integrate acquisitions; our ability to expand our business and diversify our product base; impairment of goodwill in connection with acquisitions; payment related risks that could increase our operating cost, expose us to fraud or theft, subject us to potential liability and disrupt our business; and changes in the timing of holidays or in the onset of seasonal weather affecting period-to-period sales comparisons. Additional factors that could cause differences from expectations include the ability to secure allocations to refine product assortments to address consumer demand; the ability to renew leases in existing stores and control or lower occupancy costs, to open or close stores in the number and on the planned schedule, and to conduct required remodeling or refurbishment on schedule and at expected expense levels; our ability to realize anticipated cost savings, including rent savings; our ability to realize anticipated cost savings in connection with the restructuring of our information technology functions; amount and timing of share repurchases; our ability to make our occupancy costs more variable; our ability to achieve expected digital gains and gain market share; deterioration in the performance of individual businesses or of our market value relative to our book value, resulting in impairments of fixed assets, operating lease right of use assets or intangible assets or other adverse financial consequences and the timing and amount of such impairments or other consequences; unexpected changes to the market for our shares or for the retail sector in general; costs and reputational harm as a result of disruptions in our business or information technology systems either by security breaches and incidents or by potential problems associated with the implementation of new or upgraded systems or as the result of the restructuring of our information technology functions; risks that our efforts to integrate AI into our business operations may not be successful and could result in reputational harm and /or liability; changes in tax laws and tax rates and our ability to realize any anticipated tax benefits in both the amount and timeframe anticipated; and the cost and outcome of litigation, investigations, environmental matters and other disputes that involve us. For a full discussion of risk factors, see Part II, Item 1A, "Risk Factors" of this Quarterly Report on Form 10-Q.
Readers are cautioned not to place undue reliance on forward-looking statements as such statements speak only as of the date they were made and involve risks and uncertainties that could cause actual events or results to differ materially from the events or results described in the forward-looking statements. The most important factors which could cause our actual results to differ from our forward-looking statements are set forth in our description of risk factors in Part I, Item 1A contained in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026 which should be read in conjunction with the risk factors in Part II, Item 1A and the forward-looking statements in this Quarterly Report on Form 10-Q. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update any forward-looking statement.
The events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. As a result, our actual results may differ materially from the results contemplated by these forward-looking statements.
We maintain a website at www.genesco.com where investors and other interested parties may obtain, free of charge, press releases and other information as well as gain access to our periodic filings with the Securities and Exchange Commission (“SEC”). The information contained on this website should not be considered to be a part of this or any other report filed with or furnished to the SEC.
3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Genesco Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
Assets
August 1, 2026
January 31, 2026
August 2, 2025
Current Assets:
Cash and cash equivalents
$
57,133
105,405
40,989
Accounts receivable, net of allowances of $1,867 at August 1, 2026,
$2,377 at January 31, 2026 and $2,745 at August 2, 2025
39,716
39,825
54,322
Inventories
539,670
433,878
501,008
Prepaids and other current assets
39,773
39,408
49,572
Total current assets
676,292
618,516
645,891
Property and equipment, net
242,315
237,656
238,626
Operating lease right of use assets
523,777
472,815
475,221
Goodwill
9,186
9,459
9,336
Other intangibles
27,136
27,867
27,408
Deferred income taxes
249
389
Other noncurrent assets
25,278
26,416
25,054
Total Assets
1,504,233
1,392,978
1,421,925
Liabilities and Equity
Current Liabilities:
Accounts payable
216,726
156,735
193,016
Current portion - long-term debt
—
13,275
Current portion - operating lease liabilities
108,694
119,216
123,106
Other accrued liabilities
101,335
100,391
84,958
Total current liabilities
426,755
376,342
414,355
Long-term debt
15,798
3,379
57,677
Long-term operating lease liabilities
459,420
398,788
395,186
Other long-term liabilities
45,285
47,425
48,335
Total liabilities
947,258
825,934
915,553
Commitments and contingent liabilities
Equity
Non-redeemable preferred stock
835
Common equity:
Common stock, $1 par value:
Authorized: 80,000,000 shares
Issued common stock
11,606
11,277
11,285
Additional paid-in capital
349,135
343,889
337,552
Retained earnings
251,894
265,790
212,977
Accumulated other comprehensive loss
(38,638
)
(36,890
(38,420
Treasury shares, at cost (488,464 shares)
(17,857
Total equity
556,975
567,044
506,372
Total Liabilities and Equity
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended
Six Months Ended
Net sales
529,858
545,965
1,016,883
1,019,938
Cost of sales
257,741
296,016
515,847
548,808
Gross margin
272,117
249,949
501,036
471,130
Selling and administrative expenses
259,557
264,265
513,960
513,300
Asset impairments and other, net
8,943
124
(1,164
415
Operating income (loss)
3,617
(14,440
(11,760
(42,585
Other components of net periodic benefit cost
247
148
484
328
Interest, net
(28
1,459
237
2,798
Earnings (loss) from continuing operations before income taxes
3,398
(16,047
(12,481
(45,711
Income tax expense (benefit)
(84
2,409
(1,157
(6,043
Earnings (loss) from continuing operations
3,482
(18,456
(11,324
(39,668
Loss from discontinued operations, net of tax
(3
(15
(11
(30
Net Earnings (Loss)
3,479
(18,471
(11,335
(39,698
Basic earnings (loss) per common share:
Continuing operations
0.33
(1.79
(1.08
(3.82
Discontinued operations
0.00
Net earnings (loss)
Diluted earnings (loss) per common share:
0.32
Weighted average shares outstanding:
Basic
10,537
10,294
10,483
10,394
Diluted
10,917
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
Other comprehensive income:
Postretirement liability adjustments
172
84
347
193
Foreign currency translation adjustments
(1,418
196
(2,095
6,811
Total other comprehensive income (loss)
(1,246
280
(1,748
7,004
Comprehensive Income (Loss)
2,233
(18,191
(13,083
(32,694
Condensed Consolidated Statements of Cash Flows
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization
26,430
26,867
22
477
Impairment of long-lived assets
25
34
Share-based compensation expense
5,575
5,912
Other
1,498
700
Changes in working capital and other assets and liabilities:
Accounts receivable
33
(5,076
(107,384
(70,146
(605
51,719
60,335
25,165
432
(5,461
Other assets and liabilities
(1,423
(5,186
Net cash used in operating activities
(26,397
(14,693
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(31,743
(33,580
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facility
135,546
251,276
Payments on revolving credit facility
(122,941
(180,710
Shares repurchased related to share repurchase plan
(12,566
Shares repurchased related to taxes for share-based awards
(2,561
(1,159
Change in overdraft balances
121
(1,955
Additions to deferred financing costs
(116
Net cash provided by financing activities
10,049
54,886
Effect of foreign exchange rate fluctuations on cash
(181
369
Net increase (decrease) in cash and cash equivalents
(48,272
6,982
Cash and cash equivalents at beginning of period
34,007
Cash and cash equivalents at end of period
Supplemental information:
Interest paid
1,096
2,517
Income taxes paid (received)
(2,080
(56,162
Condensed Consolidated Statements of Equity
Non-RedeemablePreferredStock
CommonStock
AdditionalPaid-InCapital
RetainedEarnings
AccumulatedOtherComprehensiveLoss
TreasuryShares
TotalEquity
Balance February 1, 2025
11,773
331,756
265,887
(45,424
546,970
(21,227
Other comprehensive income
6,724
2,994
Restricted stock issuance
141
(141
Restricted shares withheld for taxes
(36
36
(664
Shares repurchased
(11,961
(5
1
Balance May 3, 2025
11,268
334,651
232,035
(38,700
522,232
2,918
45
(45
Excise taxes related to repurchases of common stock
(92
(24
24
(495
(4
Balance August 2, 2025
Balance January 31, 2026
(14,814
Other comprehensive loss
(502
2,814
410
(410
(73
73
(2,106
(22
23
Balance May 2, 2026
11,592
346,389
248,870
(37,392
552,437
Net earnings
2,761
35
(35
(13
13
(455
(8
(1
Balance August 1, 2026
Notes to Condensed Consolidated Financial Statements (unaudited)
Note 1
Summary of Significant Accounting Policies
Basis of Presentation
These Condensed Consolidated Financial Statements should be read in conjunction with our Consolidated Financial Statements and Notes for Fiscal 2026, which are contained in our Annual Report on Form 10-K as filed with the SEC on March 25, 2026. The Condensed Consolidated Financial Statements and Notes contained in this report are unaudited but reflect all adjustments, including normal recurring adjustments, necessary for a fair presentation of the results for the interim periods of the fiscal year ending January 30, 2027 ("Fiscal 2027") and of the fiscal year ended January 31, 2026 ("Fiscal 2026"), both of which are 52-week fiscal years. All subsidiaries are consolidated in the Condensed Consolidated Financial Statements. All significant intercompany transactions and accounts have been eliminated. The results of operations for any interim period are not necessarily indicative of results for the full year. The Condensed Consolidated Financial Statements and the related Notes have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and notes required by U.S. Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. The Condensed Consolidated Balance Sheet as of January 31, 2026 has been derived from the audited financial statements at that date.
Nature of Operations
Genesco Inc. and its subsidiaries (collectively the "Company", "Genesco," "we", "our", or "us") business includes the sourcing and design, marketing and distribution of footwear, apparel and accessories through retail stores in the U.S., Puerto Rico and Canada primarily under the Journeys®, Journeys Kidz®, Little Burgundy® and Johnston & Murphy® banners and under the Schuh® banner in the United Kingdom (“U.K.”) and the Republic of Ireland (“ROI”); through e-commerce websites including the following: journeys.com, journeyskidz.com, journeys.ca, littleburgundyshoes.com, schuh.co.uk, schuh.ie, schuh.eu, johnstonmurphy.com and nashvilleshoewarehouse.com as well as the Johnston & Murphy catalog. We also source, design, market and distribute footwear, apparel and accessories at wholesale, primarily under our Johnston & Murphy brand, the licensed Dockers® brand, the licensed Wrangler® brand, and other brands that we license for footwear. At August 1, 2026, we operated 1,186 retail stores in the U.S., Puerto Rico, Canada, the U.K. and the ROI.
During the three and six months ended August 1, 2026 and August 2, 2025, we operated four reportable business segments (not including corporate): (i) Journeys Group, comprised of the Journeys, Journeys Kidz and Little Burgundy retail footwear chains and e-commerce operations; (ii) Schuh Group, comprised of the Schuh retail footwear chain and e-commerce operations; (iii) Johnston & Murphy Group, comprised of Johnston & Murphy retail operations, e-commerce operations and wholesale distribution of products under the Johnston & Murphy brand; and (iv) Genesco Brands Group, comprised of the licensed Dockers and Wrangler brands, as well as other brands we license for footwear. During Fiscal 2026, we signed a multi-year licensing agreement with Kontoor Brands, Inc. to design, source, market and distribute footwear under the Wrangler® brand ("Wrangler"). We expect to launch the first Wrangler footwear collection in the Fall of calendar year 2026.
Selling and Administrative Expenses
Wholesale costs of distribution are included in selling and administrative expenses on the Condensed Consolidated Statements of Operations in the amount of $1.9 million and $2.6 million for the second quarters of Fiscal 2027 and Fiscal 2026, respectively, and $3.9 million and $5.3 million for the first six months of Fiscal 2027 and Fiscal 2026, respectively.
Retail occupancy costs recorded in selling and administrative expenses were $73.9 million and $73.0 million for the second quarters of Fiscal 2027 and Fiscal 2026, respectively, and $148.0 million and $146.4 million for the first six months of Fiscal 2027 and Fiscal 2026, respectively.
Advertising Costs
Advertising costs included in selling and administrative expenses were $28.7 million and $30.8 million for the second quarters of Fiscal 2027 and Fiscal 2026, respectively, and $54.2 million and $55.0 million for the first six months of Fiscal 2027 and Fiscal 2026, respectively.
Vendor Allowances
Vendor reimbursements of cooperative advertising costs recognized as a reduction of selling and administrative expenses were $2.9 million and $3.6 million for the second quarters of Fiscal 2027 and Fiscal 2026, respectively, and $6.2 million and $7.2 million for the first six months of Fiscal 2027 and Fiscal 2026, respectively.
Summary of Significant Accounting Policies, Continued
During the first six months of each of Fiscal 2027 and Fiscal 2026, our cooperative advertising reimbursements received were not in excess of the costs incurred.
Income Taxes
We continue to maintain a valuation allowance against our U.S. net deferred tax assets. Given our recent earnings and anticipated future profitability, management believes it is reasonably possible that sufficient positive evidence may become available within the next twelve months to support the release of a significant portion of the valuation allowance. Any such release would result in a non-cash income tax benefit in the period of release. The exact timing and amount of any release will depend on our actual operating results and management's assessment of all available positive and negative evidence.
Recent Tax Legislation
On July 4, 2025, H.R. 1, a bill to provide for reconciliation pursuant to title II of H. Con. Res. 14, informally known as the One Big Beautiful Bill Act ("OBBBA"), which includes several measures affecting corporations and other business entities, was signed into law. Among these measures, the OBBBA modifies and permanently extends certain expiring provisions of the 2017 Tax Cuts and Jobs Act (“TCJA”), including the restoration of 100% bonus depreciation, which was scheduled to phase out in 2027 under the TCJA. The OBBBA also permits immediate expensing of research and development expenditures previously capitalized under the TCJA and modifies various components of the international tax framework. The OBBBA has multiple effective dates, with some provisions taking effect in 2025 and others phased in through 2027. In accordance with Accounting Standards Codification (“ASC”) 740, “Income Taxes,” we recognized effects of the OBBBA during the second quarter of Fiscal 2026 for the provisions enacted at that point in time. For the fiscal year ended January 31, 2026, we had a material decrease in both the current tax liability and the effective income tax rate as a result of the enactment of income tax law changes under the OBBBA and their interaction with our valuation allowance in the United States.
New Accounting Pronouncements
We continuously monitor and review all current accounting pronouncements and standards from the Financial Accounting Standards Board of U.S. GAAP for applicability to our operations and financial reporting. As of August 1, 2026, there were no new pronouncements or interpretations, other than those disclosed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026, that had or were expected to have a significant impact on our financial reporting.
Note 2
Goodwill and Other Intangible Assets
The changes in the carrying amount of goodwill for the Journeys Group segment were as follows:
TotalGoodwill
Balance, January 31, 2026
Effect of foreign currency exchange rates
(273
Balance, August 1, 2026
Other intangibles by major classes were as follows:
Trademarks
Customer Lists
Total
Jan. 31, 2026
Gross other intangibles
25,766
26,214
6,587
6,611
400
32,753
33,225
Accumulated amortization
(5,217
(4,958
(400
(5,617
(5,358
Net Other Intangibles
1,370
1,653
10
Note 3
Wholesale finished goods
67,189
68,976
Retail merchandise
472,481
364,902
Total Inventories
Note 4
Fair Value
Fair Value of Financial Instruments
The carrying amounts and fair values of our financial instruments at August 1, 2026 and January 31, 2026 are:
CarryingAmount
FairValue
North American Revolver Borrowings
9,059
8,957
3,362
U.K. Revolver Borrowings
6,739
6,727
Total Long-Term Debt
15,684
Debt fair values were determined using a discounted cash flow analysis based on current market interest rates for similar types of financial instruments and would be classified in Level 2 within the fair value hierarchy.
As of August 1, 2026, we had $7.1 million of investments held and used which were measured using Level 1 inputs within the fair value hierarchy.
Note 5
Long-Term Debt
The revolver borrowings outstanding under the Fourth Amended and Restated Credit Agreement dated as of January 31, 2018, as amended January 16, 2026, between us, certain of our subsidiaries, the lenders party thereto and Bank of America, N.A. as agent (the "Credit Facility") as of August 1, 2026 included (i) no U.S. revolver borrowings and (ii) $9.1 million (CAD $12.7 million) revolver borrowings related to GCO Canada ULC. In addition, we had revolver borrowings outstanding by and between Schuh and Lloyds Bank PLC (the "Facility Agreement") of $6.7 million (£5.0 million) as of August 1, 2026. We were in compliance with all the relevant terms and conditions of the Credit Facility and Facility Agreement as of August 1, 2026. Excess availability under the Credit Facility was $316.9 million at August 1, 2026.
Note 6
Earnings Per Share
Weighted-average number of shares used to calculate earnings per share are as follows:
(Shares in thousands)
Weighted-average number of shares - basic
Common stock equivalents
380
-
Weighted-average number of shares - diluted
11
Earnings Per Share, Continued
Common stock equivalents of 0.1 million shares are excluded for the three months ended August 2, 2025, and 0.3 million shares and 0.2 million shares are excluded for the first six months ended August 1, 2026 and August 2, 2025, respectively, due to the loss from continuing operations in those periods.
We did not repurchase any shares of our common stock during the second quarter and first six months of Fiscal 2027. We repurchased 604,531 shares of our common stock during the first six months of Fiscal 2026 at a cost of $12.6 million, or an average cost of $20.79 per share. As of August 1, 2026, we had $29.8 million remaining under our expanded share repurchase authorization announced in June 2023. During the third quarter of Fiscal 2027, through September 9, 2026, we have repurchased 317,503 shares of our common stock at a cost of $11.0 million, or an average cost of $34.65 per share. As of September 9, 2026, we have $18.8 million remaining under our expanded share repurchase authorization.
Note 7
Legal Proceedings and Other Matters
Environmental Matters
The Company has legacy obligations including environmental monitoring and reporting costs related to: (i) a 2016 Consent Judgment entered into with the United States Environmental Protection Agency involving the site of a knitting mill operated by a former subsidiary from 1965 to 1969 in Garden City, New York; and (ii) a 2010 Consent Decree with the Michigan Department of Natural Resources and Environment relating to our former Volunteer Leather Company facility in Whitehall, Michigan. We do not expect that future obligations related to either of these sites will have a material effect on our consolidated financial condition or results of operations.
Accrual for Environmental Contingencies
Related to all outstanding environmental contingencies, we had accrued $1.9 million as of August 1, 2026, $1.9 million as of January 31, 2026 and $2.0 million as of August 2, 2025. All such provisions reflect our estimates of the most likely cost (undiscounted, including both current and noncurrent portions) of resolving the contingencies, based on facts and circumstances as of the time they were made. There is no assurance that relevant facts and circumstances will not change, necessitating future changes to the provisions. Such contingent liabilities for discontinued operations are included in other accrued liabilities and other long-term liabilities on the accompanying Condensed Consolidated Balance Sheets because they relate to former facilities operated by us. We have made pretax accruals for certain of these contingencies which were not material for the second quarter of Fiscal 2027 or Fiscal 2026. These charges are included in loss from discontinued operations, net of tax in the Condensed Consolidated Statements of Operations and represent changes in estimates.
In addition to the matters specifically described in this Note, we are a party to other legal and regulatory proceedings and claims arising in the ordinary course of our business. While management does not believe that our liability with respect to any of these other matters is likely to have a material effect on our Condensed Consolidated Financial Statements, legal proceedings are subject to inherent uncertainties, and unfavorable rulings could have a material adverse impact on our Condensed Consolidated Financial Statements.
Interchange Fee Settlement
In February 2026, we entered into settlement agreements to resolve credit card interchange fee litigation matters in which we were a plaintiff. During the first quarter of Fiscal 2027, as a result of these lump-sum settlements, we received $13.4 million (net of legal fees) related to payment card interchange fee litigation. This gain is reflected in asset impairments and other, net on the Consolidated Statement of Operations in our Condensed Consolidated Financial Statements.
IEEPA Tariff Refunds
On February 20, 2026, the U.S. Supreme Court issued a ruling striking down certain tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). Subsequently, on March 4, 2026, the U.S. Court of International Trade ordered U.S. Customs and Border Protection (“CBP”) to liquidate all non-final entries without regard to IEEPA duties and to refund amounts previously collected, including applicable interest. Additionally, on April 20, 2026, CBP launched Phase 1 of the new Consolidated Administration and Processing of Entries
12
Legal Proceedings and Other Matters, Continued
tool in the Automated Commercial Environment portal, creating a process for submitting IEEPA refund claims. We successfully submitted our refund claim in the first quarter of Fiscal 2027. During the second quarter of Fiscal 2027, we received tariff refunds related to our branded businesses, excluding interest, of $21.8 million. The accounting for the IEEPA tariff refund reflects the original treatment of the underlying tariff costs. As such, we recognized a reduction in cost of sales in our Condensed Consolidated Statement of Operations in our Condensed Consolidated Financial Statements. In addition, we received $0.7 million of interest income related to the tariff refunds in the second quarter of Fiscal 2027. The interest income was recognized within interest, net in our Condensed Consolidated Statement of Operations in our Condensed Consolidated Financial Statements.
Note 8
Business Segment Information
Our reportable segments are based on management’s organization of the segments in order to make operating decisions and assess performance along types of products sold. Journeys Group and Schuh Group sell primarily branded products from other companies while Johnston & Murphy Group and Genesco Brands Group sell primarily our owned and licensed brands. Our chief operating decision maker ("CODM") is our President and Chief Executive Officer. The CODM assesses performance of and allocates resources to each business segment based on segment results without allocating corporate expenses. These corporate expenses include corporate overhead, bank fees, interest expense, interest income, goodwill impairment, asset impairment charges and other, including severance, insurance gains, major litigation and major lease terminations. Reconciling items between segment operating income (loss) and earnings (loss) from continuing operations consist of unallocated corporate expenses. The CODM uses segment operating income (loss) as a measure of profit or loss.
Three Months Ended August 1, 2026
JourneysGroup
SchuhGroup
Johnston& MurphyGroup
Genesco Brands Group
Consolidated
Net sales to external customers(1)
317,836
113,820
72,541
25,661
Cost of sales(2)
164,083
66,082
19,202
8,374
154,467
48,108
40,393
8,676
Segment operating income (loss)
(714
(370
12,946
8,611
20,473
Unallocated selling and administrative expenses
7,913
Asset impairments and other(3)
Operating income
Interest, net(4)
Earnings from continuing operations before income taxes
(1) Net sales in North America and in the U.K., which includes the ROI, accounted for 79% and 21%, respectively, of our net sales in the second quarter of Fiscal 2027.
(2) Includes a $13.3 million gain for the refund of tariffs in Johnston & Murphy Group and an $8.5 million gain for the refund of tariffs in the Genesco Brands Group in the second quarter of Fiscal 2027.
(3) Asset impairments and other includes a $6.9 million charge for costs related to proxy contest, a $1.0 million charge for other legal matters, a $0.4 million charge for costs associated with information technology transformation, a $0.5 million charge for severance and other restructuring and $0.1 million for store restructuring in Journeys Group.
(4) Includes $0.7 million of interest income related to tariff refunds in the second quarter of Fiscal 2027.
Business Segment Information, Continued
Reportable Segment Total
Corporate& Other
Total assets at quarter end(1)
855,148
219,213
211,390
52,127
1,337,878
166,355
7,836
2,059
2,010
345
12,250
933
13,183
10,799
2,636
2,819
16,271
56
16,327
(1) Of our $766.1 million of long-lived assets as of August 1, 2026, $91.5 million and $19.0 million relate to long-lived assets in the U.K. and Canada, respectively.
Three Months Ended August 2, 2025
318,189
126,595
68,789
32,392
162,761
77,412
31,631
24,212
160,427
49,194
38,940
7,527
(4,999
(1,782
653
(6,139
8,177
Asset impairments and other(2)
Operating loss
Loss from continuing operations before income taxes
(1) Net sales in North America and in the U.K., which includes the ROI, accounted for 77% and 23%, respectively, of our net sales for the second quarter of Fiscal 2026.
(2) Asset impairments and other includes a $0.1 million charge for severance.
766,666
220,416
196,781
69,603
1,253,466
168,459
8,334
2,129
1,692
346
12,501
973
13,474
7,697
2,345
4,367
64
14,473
209
14,682
(1) Of our $713.8 million of long-lived assets as of August 2, 2025, $95.3 million and $16.1 million relate to long-lived assets in the U.K. and Canada, respectively.
14
Six Months Ended August 1, 2026
603,159
204,522
153,851
55,351
311,134
119,574
56,324
28,815
304,294
92,305
83,074
16,763
(12,269
(7,357
14,453
9,773
4,600
17,524
(1) Net sales in North America and in the U.K., which includes the ROI, accounted for 80% and 20%, respectively, of our net sales for the first six months of Fiscal 2027.
(2) Includes a $13.3 million gain for the refund of tariffs in Johnston & Murphy Group and an $8.5 million gain for the refund of tariffs in the Genesco Brands Group for the first six months of Fiscal 2027.
(3) Asset impairments and other includes a $13.4 million gain related to payment card interchange fee litigation, partially offset by a $6.9 million charge for costs related to proxy contest, a $3.1 million charge for store restructuring, including $3.0 million in Journeys Group and $0.1 million in Schuh Group, a $1.0 million charge for other legal matters, a $0.6 million charge for costs associated with information technology transformation and a $0.6 million charge for severance and other restructuring.
(4) Includes $0.7 million of interest income related to tariff refunds in the first six months of Fiscal 2027.
15,796
4,071
4,000
694
24,561
1,869
20,670
5,346
5,578
44
31,638
105
31,743
15
Six Months Ended August 2, 2025
590,823
222,510
145,628
60,977
302,276
135,150
67,333
44,049
308,829
93,502
79,577
15,577
(20,282
(6,142
(1,282
1,351
(26,355
15,815
(1) Net sales in North America and in the U.K., which includes the ROI, accounted for 78% and 22%, respectively, of our net sales for the first six months of Fiscal 2026.
(2) Asset impairments and other includes a $0.4 million charge for severance.
16,583
4,053
3,480
688
24,804
2,063
18,102
5,974
9,008
140
33,224
356
33,580
16
This section discusses management’s view of the financial condition, results of operations and cash flows of the Company. This section should be read in conjunction with the information contained in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026, including the Risk Factors section, and information contained elsewhere in this Quarterly Report on Form 10-Q, including the Condensed Consolidated Financial Statements and Notes to those financial statements. The results of operations for any interim period may not necessarily be indicative of the results that may be expected for any future interim period or the entire fiscal year.
Summary of Results of Operations
Our net sales decreased 3.0% to $529.9 million in the second quarter of Fiscal 2027 compared to $546.0 million in the second quarter of Fiscal 2026. The net sales decrease compared to last year's second quarter reflects the impact of net store closings resulting from our ongoing footprint optimization, decreased sales in Genesco Brands Group as we exited licenses, a 6% decrease in e-commerce comparable sales reflecting our prioritization of full-price selling at Schuh Group and an unfavorable foreign exchange impact, partially offset by a 1% increase in same store sales and higher sales from enlarged stores. The Journeys Group business had a strong second quarter of Fiscal 2027 with comparable sales up 2% on top of a 5% comparable gain last year, driven by strength in the product assortment and other initiatives. Schuh Group comparable sales were down 9% for the second quarter of Fiscal 2027 reflecting our decision to prioritize full-price selling over discounts and promotions. Johnston & Murphy Group also had a strong second quarter of Fiscal 2027 with comparable sales up 4% in the second quarter of Fiscal 2027 driven by increased store sales due to new and improved product assortments, both in apparel and footwear, benefitting from brand awareness through marketing and social media campaigns. By segment, Journeys Group sales were flat, Schuh Group sales decreased 10%, Johnston & Murphy Group sales increased 5% and Genesco Brands Group sales decreased 21% or $6.7 million in the second quarter of Fiscal 2027 compared to the second quarter of Fiscal 2026. Schuh Group's sales decreased 10% on a local currency basis for the second quarter of Fiscal 2027.
Gross margin increased 8.9% to $272.1 million in the second quarter of Fiscal 2027 from $249.9 million in the second quarter of Fiscal 2026 and increased 560 basis points as a percentage of net sales from 45.8% in the second quarter of Fiscal 2026 to 51.4% in the second quarter of Fiscal 2027. The overall increase in gross margin as a percentage of net sales in the second quarter of Fiscal 2027 is due primarily to tariff refunds of $21.8 million, less promotional activity and higher full-price selling at Schuh Group, favorable changes in sales mix, the license exit benefit and tariff mitigation actions across our branded businesses.
Selling and administrative expenses in the second quarter of Fiscal 2027 decreased 1.8% to $259.6 million from $264.3 million compared to the second quarter of Fiscal 2026. Selling and administrative expenses increased 60 basis points as a percentage of net sales in the second quarter of Fiscal 2027 compared to the second quarter of Fiscal 2026 from 48.4% to 49.0% as a result of the sales decline. The increase as a percentage of net sales reflects increased occupancy and performance-based compensation expense, partially offset by decreased selling salaries, marketing expenses and other ongoing cost savings initiatives.
Operating margin was 0.7% in the second quarter of Fiscal 2027 compared to (2.6)% in the second quarter of Fiscal 2026. The overall improvement in operating margin for the second quarter of Fiscal 2027 compared to the second quarter of Fiscal 2026 primarily reflects increased gross margin as a percentage of net sales, partially offset by a net loss of $8.9 million in asset impairment and other charges and deleverage in expenses as a percentage of net sales.
Earnings from continuing operations before income taxes (“pretax earnings”) for the second quarter of Fiscal 2027 was $3.4 million compared to a loss from continuing operations before income taxes ("pretax loss") of $16.0 million for the second quarter of Fiscal 2026. Pretax earnings for the second quarter of Fiscal 2027 included an asset impairment and other charge of $8.9 million which included a $6.9 million charge for costs related to proxy contest, a $1.0 million charge for other legal matters, a $0.4 million charge for costs associated with information technology transformation, a $0.5 million charge for severance and other restructuring and a $0.1 million charge for store restructuring. The pretax loss for the second quarter of Fiscal 2026 included asset impairment and other charges of $0.1 million for severance.
We had an effective income tax rate of (2.5)% and (15.0)% in the second quarter of Fiscal 2027 and Fiscal 2026, respectively. The higher effective tax rate in the second quarter of Fiscal 2027 compared to the second quarter of Fiscal 2026 is primarily a result of the impact of the OBBBA in the second quarter of Fiscal 2026 which did not have a recurring impact in the second quarter of Fiscal 2027, as well as the impact of the valuation allowance in certain jurisdictions on our effective tax rate as a result of changes in the mix of earnings and losses among jurisdictions.
Net earnings in the second quarter of Fiscal 2027 were $3.5 million, or $0.32 diluted earnings per share, compared to a net loss of $18.5 million, or $1.79 diluted loss per share, in the second quarter of Fiscal 2026.
Critical Accounting Estimates
We discuss our critical accounting estimates in Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations", in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026. We describe our significant accounting policies in Note 1, "Summary of Significant Accounting Policies", of the Notes to Consolidated Financial Statements included in our Annual Report on
Form 10-K for the fiscal year ended January 31, 2026. There have been no significant changes in our definition of significant accounting policies or critical accounting estimates since the end of Fiscal 2026.
Key Performance Indicators
In assessing the performance of our business, we consider a variety of performance and financial measures. The key performance indicators we use to evaluate the financial condition and operating performance of our business are comparable sales, net sales, gross margin, operating income and operating margin. These key performance indicators should not be considered superior to, as a substitute for or as an alternative to, and should be considered in conjunction with, the U.S. GAAP financial measures presented herein. These measures may not be comparable to similarly titled performance indicators used by other companies.
Comparable Sales
We consider comparable sales to be an important indicator of our current performance, and investors may find it useful as such. Comparable sales results are important to achieve leveraging of our costs, including occupancy, selling salaries, depreciation, etc. Comparable sales also have a direct impact on our total net revenue, working capital and cash. We define "comparable sales" as sales from stores open longer than one year, beginning with the first day a store has comparable sales (which we refer to as "same store sales"), and sales from websites operated longer than one year and direct mail catalog sales (which we refer to in this report as "comparable e-commerce sales"). Temporarily closed stores are excluded from the comparable sales calculation if closed for more than seven days. Expanded stores are excluded from the comparable sales calculation until the first day an expanded store has comparable prior year sales. Current year foreign exchange rates are applied to both current year and prior year comparable sales to achieve a consistent basis for comparison.
Operating Margin
Operating margin is a ratio calculated by dividing operating income (loss) by net sales. We believe operating margin provides investors with useful information related to the profitability of our business after considering all of the selling, general and administrative expenses and other operating charges incurred. We use this measure in making financial, operating and planning decisions and in evaluating our overall performance.
Results of Operations – Second Quarter of Fiscal 2027 Compared to Second Quarter of Fiscal 2026
Journeys Group
%Change
(dollars in thousands)
$317,836
$318,189
(0.1)%
153,753
155,428
(1.1)%
% of sales
48.4%
48.8%
(3.7)%
48.6%
50.4%
$(714)
$(4,999)
85.7%
Operating margin
(0.2)%
(1.6)%
Net sales from Journeys Group were essentially flat at $317.8 million in the second quarter of Fiscal 2027 compared to $318.2 million in the second quarter of Fiscal 2026. Journeys net sales for the second quarter of Fiscal 2027 reflects a 2% increase in comparable sales, with increases in both stores and e-commerce channels, and higher sales from enlarged stores, offset by a 5% decrease in the average number of stores in the second quarter of Fiscal 2027. The increased comparable sales in the second quarter of Fiscal 2027 was driven by the strong performance of our 4.0 store remodels and other initiatives as well as elevated product assortment across athletic and casual, achieving higher average transaction size and more full-price selling.
We closed 17 Journeys Group stores in the second quarter of Fiscal 2027. Journeys Group operated 924 stores at the end of the second quarter of Fiscal 2027, including 176 Journeys Kidz stores in the United States, 33 Journeys stores in Canada and 30 Little Burgundy stores in Canada, compared to 984 stores at the end of the second quarter of Fiscal 2026, including 200 Journeys Kidz stores in the United States, 33 Journeys stores in Canada and 30 Little Burgundy stores in Canada.
The 140 basis point improvement in operating margin for Journeys Group for the second quarter of Fiscal 2027 compared to the second quarter of Fiscal 2026 was primarily due to a 180 basis point decrease in selling and administrative expenses as a percentage of net sales. This
18
improvement reflects leverage of expenses in the second quarter of Fiscal 2027, especially decreased selling salaries, marketing expense and other expenses and demonstrates the impact of our productivity efforts, cost savings initiatives and closing underperforming stores. The increase in operating margin was partially offset by a 40 basis point decrease in gross margin as a percentage of net sales, reflecting lower initial margins as a result of changes in brand mix, partially offset by lower markdowns.
Schuh Group
$113,820
$126,595
(10.1)%
47,738
49,183
(2.9)%
41.9%
38.9%
(2.2)%
42.3%
$(370)
$(11)
NM
(0.3)%
(0.0)%
Net sales from Schuh Group decreased 10.1% to $113.8 million in the second quarter of Fiscal 2027 compared to $126.6 million in the second quarter of Fiscal 2026. The net sales decrease for the second quarter of Fiscal 2027 includes a 9% decrease in comparable sales, reflecting decreased e-commerce comparable sales and same store sales, a 7% decrease in the average number of stores in the second quarter of Fiscal 2027 and an unfavorable impact of $0.6 million due to changes in foreign exchange rates. We prioritized more full-priced selling over discounts and promotions in Schuh Group during the second quarter of Fiscal 2027 but this pressured sales in stores and online and especially affected the e-commerce channel which in particular attracts bargain seekers. Schuh Group's sales decreased 10% on a local currency basis for the second quarter of Fiscal 2027. Schuh Group operated 109 stores at the end of the second quarter of Fiscal 2027, compared to 120 stores at the end of the second quarter of Fiscal 2026.
The 30 basis point decrease in operating margin for Schuh Group for the second quarter of Fiscal 2027 compared to the second quarter of Fiscal 2026 was due to a 340 basis point increase in selling and administrative expenses as a percentage of net sales, reflecting deleverage of expenses in the second quarter of Fiscal 2027, as a result of lower revenue. The decrease in operating margin was partially offset by a 300 basis point increase in gross margin as a percentage of net sales, reflecting decreased promotional activity and more full-priced selling.
Johnston & Murphy Group
$72,541
$68,789
5.5%
53,339
37,158
43.5%
73.5%
54.0%
3.7%
55.7%
56.6%
$12,946
$(1,782)
17.8%
(2.6)%
Johnston & Murphy Group net sales increased 5.5% to $72.5 million for the second quarter of Fiscal 2027 from $68.8 million for the second quarter of Fiscal 2026. The net sales increase for the second quarter of Fiscal 2027 includes a 4% increase in comparable sales, reflecting increased store sales, a 3% increase in the average number of stores in the second quarter of Fiscal 2027 and increased wholesale sales, partially offset by decreased e-commerce comparable sales reflecting fewer catalog drops. The performance of Johnston & Murphy's product assortment, both apparel and footwear, as a result of new and improved product offerings and increased brand awareness through marketing and social media campaigns contributed to increased store sales in the second quarter of Fiscal 2027. Retail operations accounted for 83.0% of Johnston & Murphy Group's sales in the second quarter of Fiscal 2027, up from 82.3% in the second quarter of Fiscal 2026. The store count for Johnston & Murphy Group's retail operations at the end of the second quarter of Fiscal 2027 was 153 Johnston & Murphy full-price retail and factory stores, compared to 149 Johnston & Murphy full-price retail and factory stores at the end of the second quarter of Fiscal 2026.
19
The significant improvement in operating margin for Johnston & Murphy Group for the second quarter of Fiscal 2027 compared to the second quarter of Fiscal 2026 was primarily due to increased gross margin as a percentage of net sales from 54.0% last year to 73.5% in the second quarter this year reflecting tariff refunds of $13.3 million for the Johnston & Murphy Group, tariff mitigation actions, a favorable mix change due to lower wholesale sales and decreased shipping and warehouse expense, partially offset by increased retail markdowns. In addition, selling and administrative expenses as a percentage of net sales decreased 90 basis points for the second quarter of Fiscal 2027 compared to the second quarter of Fiscal 2026 reflecting leverage of expenses, especially marketing and credit card expense, partially offset by increased performance-based incentive compensation expense, selling salaries and occupancy expense.
$25,661
$32,392
(20.8)%
17,287
8,180
111.3%
67.4%
25.3%
15.3%
33.8%
23.2%
$8,611
$653
33.6%
2.0%
Genesco Brands Group's net sales decreased 20.8% to $25.7 million for the second quarter of Fiscal 2027 from $32.4 million for the second quarter of Fiscal 2026 primarily due to decreased sales of Levi's as we exited that business, partially offset by increased footwear sales of Dockers.
The improvement in operating margin for Genesco Brands Group for the second quarter of Fiscal 2027 compared to the second quarter of Fiscal 2026 was primarily due to increased gross margin as a percentage of net sales from 25.3% last year to 67.4% in the second quarter this year reflecting tariff refunds of $8.5 million for the Genesco Brands Group, tariff mitigation efforts, higher closeout sales in the second quarter of Fiscal 2026 related to the exit of certain licenses and a favorable change in sales mix. Selling and administrative expenses increased as a percentage of net sales from 23.2% last year to 33.8% in the second quarter this year. The increase reflects deleverage of expenses as a result of decreased revenue in the second quarter of Fiscal 2027, especially increased performance-based compensation expense, other compensation expenses and royalty expense.
Corporate, Interest Expenses and Other Charges
Corporate and other expense for the second quarter of Fiscal 2027 was $16.9 million compared to $8.3 million for the second quarter of Fiscal 2026. Corporate expense in the second quarter of Fiscal 2027 included asset impairment and other charges of $8.9 million which included costs related to proxy contest, legal and other matters, costs associated with information technology transformation, severance and other restructuring and store restructuring. Corporate expense in the second quarter of Fiscal 2026 included asset impairment and other charges of $0.1 million for severance. The corporate expense decrease, excluding asset impairment and other charges, primarily reflects decreased compensation expense partially offset by additional information technology transformation expenses in the second quarter of Fiscal 2027 compared to the second quarter of Fiscal 2026.
Net interest decreased $1.5 million from $1.5 million in the second quarter of Fiscal 2026 to essentially zero net interest in the second quarter of Fiscal 2027 primarily reflecting decreased revolver borrowings in North America in the second quarter of Fiscal 2027 compared to the second quarter of Fiscal 2026 and increased interest income in the second quarter of Fiscal 2027 as a result of $0.7 million in interest income on tariff refunds during the second quarter this year.
20
Results of Operations – First Six Months of Fiscal 2027 Compared to First Six Months of Fiscal 2026
Our net sales were flat at $1.0 billion in the first six months of Fiscal 2027 compared to the first six months of Fiscal 2026. Net sales for the first six months this year reflects 67 net fewer stores than a year ago resulting from our ongoing footprint optimization, a 3% decrease in e-commerce comparable sales reflecting our prioritization of full-price selling at Schuh Group, and decreased wholesale sales primarily due to license exits, offset by a 2% increase in same store sales, higher sales from enlarged stores and a favorable foreign exchange impact. The Journeys Group business had a strong first six months of Fiscal 2027 with comparable sales up 3% on top of a 9% increase last year, driven by strength in the product assortment and other initiatives. Schuh Group comparable sales were down 9% for the first six months of Fiscal 2027 reflecting our decision to prioritize full-price selling. Johnston & Murphy Group also had a strong first six months with comparable sales up 5% in the first six months of Fiscal 2027, driven by increased store sales due to strength in product assortment, both in apparel and footwear, benefitting from increased brand awareness through marketing and social media campaigns. By segment, Journeys Group sales increased 2%, Schuh Group sales decreased 8%, Johnston & Murphy Group sales increased 6% and Genesco Brands Group sales decreased 9% in the first six months of Fiscal 2027 compared to the first six months of Fiscal 2026. Schuh Group's sales decreased 9% on a local currency basis for the first six months of Fiscal 2027.
Gross margin increased 6.3% to $501.0 million in the first six months of Fiscal 2027 from $471.1 million in the first six months of Fiscal 2026 and increased 310 basis points as a percentage of net sales from 46.2% in the first six months of Fiscal 2026 to 49.3% in the first six months of Fiscal 2027. The overall increase in gross margin as a percentage of net sales is due primarily to increased wholesale gross margin reflecting tariff refunds, less promotional activity and higher full-price selling at Schuh Group and favorable changes in sales mix.
Selling and administrative expenses in the first six months of Fiscal 2027 were essentially flat at $514.0 million compared to $513.3 million in the first six months of Fiscal 2026, but increased 20 basis points as a percentage of net sales in the first six months of Fiscal 2027 compared to the first six months of Fiscal 2026 from 50.3% to 50.5%. The increase as a percentage of net sales reflects increased performance-based compensation expense and costs associated with information technology transformation, partially offset by decreased selling salaries and other expenses as a result of our ongoing cost savings initiatives.
Operating margin was (1.2)% in the first six months of Fiscal 2027 compared to (4.2)% in the first six months of Fiscal 2026. The overall improvement in operating margin for the first six months of Fiscal 2027 compared to the first six months of Fiscal 2026 primarily reflects increased gross margin as a percentage of net sales and a net gain in asset impairment and other charges, partially offset by a small increase in selling and administrative expenses as a percentage of net sales.
The pretax loss for the first six months of Fiscal 2027 was $12.5 million compared to $45.7 million for the first six months of Fiscal 2026. The pretax loss for the first six months of Fiscal 2027 included an asset impairment and other gain of $1.2 million which included a gain of $13.4 million related to payment card interchange fee litigation, partially offset by a $6.9 million charge for costs related to proxy contest, a $3.1 million charge for store restructuring, a $1.0 million charge for other legal matters, a $0.6 million charge for costs associated with information technology transformation and a $0.6 million charge for severance and other restructuring. The pretax loss for the first six months of Fiscal 2026 included asset impairment and other charges of $0.4 million for severance.
We had an effective income tax rate of 9.3% and 13.2% in the first six months of Fiscal 2027 and Fiscal 2026, respectively. The lower effective tax rate in the first six months of Fiscal 2027 compared to the first six months of Fiscal 2026 primarily reflects a lower estimated annual effective tax rate for Fiscal 2027 versus our expectation for Fiscal 2026 as of the prior year first six months due to the impact of the valuation allowance in certain jurisdictions and changes in the mix of earnings and losses among jurisdictions.
The net loss in the first six months of Fiscal 2027 was $11.3 million, or $1.08 diluted loss per share, compared to a net loss of $39.7 million, or $3.82 diluted loss per share, in the first six months of Fiscal 2026.
21
2.1
%
292,025
288,547
1.2
48.4
48.8
(1.5
)%
50.5
52.3
39.5
(2.0
(3.4
Net sales from Journeys Group increased 2.1% to $603.2 million in the first six months of Fiscal 2027, compared to $590.8 million in the first six months of Fiscal 2026. The net sales increase compared to the first six months of Fiscal 2026 reflects a 3% increase in comparable sales, with increases in both stores and e-commerce channels, and higher sales from enlarged stores, partially offset by a 5% decrease in the average number of stores in the first six months of Fiscal 2027. The increased comparable sales in the first six months of Fiscal 2027 was driven by the strong performance of our 4.0 store remodels and other initiatives as well as the continued strength in Journeys Group's product assortment with brands across athletic and casual achieving healthy growth.
The 140 basis point improvement in operating margin for Journeys Group for the first six months of Fiscal 2027 compared to the first six months of Fiscal 2026 was primarily due to a 180 basis point decrease in selling and administrative expenses as a percentage of net sales. This improvement reflects leverage of expenses in the first six months of Fiscal 2027, especially selling salaries and demonstrates the impact of our productivity efforts, cost savings initiatives and closing underperforming stores. The increase in operating margin was partially offset by a 40 basis point decrease in gross margin as a percentage of net sales, reflecting lower initial margins as a result of changes in brand mix, partially offset by lower markdowns.
(8.1
84,948
87,360
(2.8
41.5
39.3
(1.3
45.1
42.0
(19.8
(3.6
Net sales from Schuh Group decreased 8.1% to $204.5 million in the first six months of Fiscal 2027 compared to $222.5 million in the first six months of Fiscal 2026. The net sales decrease for the first six months of Fiscal 2027 includes a 9% decrease in comparable sales, reflecting decreased e-commerce comparable sales and same store sales, and a 7% decrease in the average number of stores in the first six months of Fiscal 2027, partially offset by a favorable impact of $3.0 million due to changes in foreign exchange rates. We prioritized more full-priced selling with less discounts and promotions in Schuh Group during the first six months of Fiscal 2027 but this pressured sales in stores and online and especially affected the e-commerce channel which in particular attracts bargain seekers. Schuh Group's sales decreased 9% on a local currency basis for the first six months of Fiscal 2027.
The 80 basis point decrease in operating margin for Schuh Group for the first six months of Fiscal 2027 compared to the first six months of Fiscal 2026 was due to a 310 basis point increase in selling and administrative expenses as a percentage of net sales, reflecting deleverage of expenses in the first six months of Fiscal 2027 as a result of lower revenue. The decrease in operating margin was partially offset by a 220 basis point increase in gross margin as a percentage of net sales, reflecting decreased promotional activity and more full-priced selling and lower shipping
and warehouse expense. In addition, the operating loss included an unfavorable impact of $0.4 million due to changes in foreign exchange rates compared to the first six months of Fiscal 2026.
5.6
97,527
78,295
24.6
63.4
53.8
4.4
54.0
54.6
9.4
(0.9
Johnston & Murphy Group net sales increased 5.6% to $153.9 million for the first six months of Fiscal 2027 from $145.6 million for the first six months of Fiscal 2026. The net sales increase for the first six months of Fiscal 2027 includes a 5% increase in comparable sales, reflecting increased store sales, and a 3% increase in the average number of stores in the first six months of Fiscal 2027, partially offset by decreased wholesale sales. The performance of the Johnston & Murphy Group product assortment, both apparel and footwear, as a result of new and improved product offerings and increased brand awareness through marketing and social media campaigns contributed to increased sales in the first six months of Fiscal 2027. Retail operations accounted for 79.1% of Johnston & Murphy Group's sales in the first six months of Fiscal 2027, up from 77.3% in the first six months of Fiscal 2026.
The significant improvement in operating margin for Johnston & Murphy Group for the first six months of Fiscal 2027 compared to the first six months of Fiscal 2026 was primarily due to increased gross margin as a percentage of net sales from 53.8% in the first six months last year to 63.4% in the first six months this year reflecting tariff refunds of $13.3 million for the Johnston & Murphy Group, a favorable mix change due to lower wholesale sales and decreased shipping and warehouse expense. In addition, selling and administrative expenses as a percentage of net sales decreased 60 basis points for the first six months of Fiscal 2027 compared to the first six months of Fiscal 2026 reflecting leverage of expenses, especially decreased marketing expense, partially offset by increased performance-based incentive compensation expense.
(9.2
26,536
16,928
56.8
47.9
27.8
7.6
30.3
25.5
17.7
2.2
Genesco Brands Group's net sales decreased 9.2% to $55.4 million for the first six months of Fiscal 2027 from $61.0 million for the first six months of Fiscal 2026 primarily due to decreased sales of Levi's as we exited that business, partially offset by increased footwear sales of Dockers and private label products.
The improvement in operating margin for Genesco Brands Group for the first six months of Fiscal 2027 compared to the first six months of Fiscal 2026 was primarily due to increased gross margin as a percentage of net sales from 27.8% in the first six months last year to 47.9% in the first six months this year reflecting tariff refunds of $8.5 million for the Genesco Brands Group, tariff mitigation efforts, higher closeout sales in the first six months of Fiscal 2026 related to the exit of certain licenses and a favorable change in sales mix. Selling and administrative expenses increased as a percentage of net sales from 25.5% in the first six months last year to 30.3% in the first six months this year. The increase reflects
deleverage of expenses as a result of decreased revenue in the first six months of Fiscal 2027, especially increased royalty expense, performance-based compensation expense and other compensation expense, partially offset by decreased shipping and warehouse and freight expenses.
Corporate and other expense for the first six months of Fiscal 2027 was $16.4 million compared to $16.2 million for the first six months of Fiscal 2026. Corporate expenses in the first six months of Fiscal 2027 included an asset impairment and other gain of $1.2 million which included a gain from payment card interchange fee litigation, partially offset by costs related to proxy contest, other legal matters, store restructuring charges, costs associated with information technology transformation and severance and other restructuring. Corporate expense in the first six months of Fiscal 2026 included asset impairment and other charges of $0.4 million for severance. The corporate expense increase, excluding asset impairment and other charges, reflects additional information technology transformation expenses and increased performance-based incentive compensation expense, partially offset by lower professional fees and other expenses in the first six months of Fiscal 2027 compared to the first six months of Fiscal 2026.
Net interest decreased $2.6 million to $0.2 million in the first six months of Fiscal 2027 compared to $2.8 million in the first six months of Fiscal 2026 primarily reflecting decreased revolver borrowings in North America in the first six months of Fiscal 2027 compared to the first six months of Fiscal 2026 and increased interest income in the first six months of Fiscal 2027 as a result of $0.7 million in interest income on tariff refunds and increased investments during the first six months this year.
Liquidity and Capital Resources
Working Capital
Our business is seasonal, with our investment in working capital normally reaching peaks in the summer and fall of each year in anticipation of the back-to-school and holiday selling seasons. Historically, cash flows from operations typically have been generated principally in the fourth quarter of each fiscal year.
Cash flow changes:
Increase(Decrease)
(in thousands)
$(26,397)
$(14,693)
$(11,704)
(31,743)
(33,580)
1,837
(44,837)
(181)
(550)
$(48,272)
$6,982
$(55,254)
Reasons for the major variances in cash provided by (used in) the table above are as follows:
Cash used in operating activities was $11.7 million higher in the first six months of Fiscal 2027 compared to the first six months of Fiscal 2026, reflecting primarily the following factors:
Cash used in investing activities was $1.8 million lower for the first six months of Fiscal 2027 as compared to the first six months of Fiscal 2026 reflecting decreased capital expenditures primarily related to omni-channel capabilities, partially offset by increased investments in retail stores.
Cash provided by financing activities was $44.8 million lower in the first six months of Fiscal 2027 as compared to the first six months of Fiscal 2026 primarily reflecting decreased net borrowings, partially offset by decreased share repurchases.
Sources of Liquidity and Future Capital Needs
We have three principal sources of liquidity: cash flow from operations, cash on hand and our credit facilities discussed in Item 8, Note 8, "Long-Term Debt", to our Consolidated Financial Statements included in our Annual Report on Form 10-K for Fiscal 2026.
As of August 1, 2026, we have borrowed $9.1 million (CAD $12.7 million) revolver borrowings related to GCO Canada ULC and $6.7 million (£5.0 million) related to Schuh revolver borrowings. We were in compliance with all the relevant terms and conditions of the Credit Facility and the Facility Agreement as of August 1, 2026.
We believe that cash on hand, cash provided by operations and borrowings under our Credit Facility and the Facility Agreement will be sufficient to support our liquidity needs in Fiscal 2027 and the foreseeable future.
In addition, as discussed in Item 1, Note 7, “Legal Proceedings,” to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, we received tariff refunds of $21.8 million, not including interest, related to tariffs previously collected under IEEPA.
Contractual Obligations
Our contractual obligations at August 1, 2026 increased 13% compared to January 31, 2026, primarily due to increased lease obligations and long-term debt.
Capital Expenditures
Total capital expenditures in Fiscal 2027 are expected to be approximately $65 to $70 million of which approximately 95% is for new stores and renovations and 5% is for other initiatives. We do not currently have any longer-term capital expenditures or other cash requirements other than as set forth above and in the contractual obligations table as disclosed in Item 7 of our Annual Report on Form 10-K for the fiscal year ended January 31, 2026. We also do not currently have any off-balance sheet arrangements.
Common Stock Repurchases
We did not repurchase any shares of our common stock during the second quarter and first six months of Fiscal 2027. We repurchased 604,531 shares of our common stock during the first six months of Fiscal 2026 at a cost of $12.6 million, or an average cost of $20.79 per share. We had $29.8 million remaining as of August 1, 2026 under our expanded share repurchase authorization announced in June 2023. During the third quarter of Fiscal 2027, through September 9, 2026, we have repurchased 317,503 shares of our common stock at a cost of $11.0 million, or an average cost of $34.65 per share. As of September 9, 2026, we have $18.8 million remaining under our expanded share repurchase authorization. We continue to view share repurchases as an important component of our balanced capital allocation strategy and are committed to deploying excess capital.
Environmental and Other Contingencies
We are subject to certain loss contingencies related to environmental proceedings and other legal matters, including those disclosed in Item 1, Note 7, "Legal Proceedings", to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
Descriptions of recently issued accounting pronouncements, if any, and the accounting pronouncements adopted by us during the second quarter of Fiscal 2027 are included in Note 1 to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
We incorporate by reference the information regarding market risk appearing in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “Financial Market Risk” in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026. There have been no material changes to our exposure to market risks from those disclosed in the Annual Report on Form 10-K for the fiscal year ended January 31, 2026.
Evaluation of Disclosure Controls and Procedures
We have established disclosure controls and procedures designed to ensure that information required to be disclosed by us, including our consolidated subsidiaries, in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is made known to the officers who certify our financial reports and to other members of senior management. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving desired objectives.
Based on their evaluation as of August 1, 2026, the principal executive officer and principal financial officer of the Company have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) were effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within time periods specified in SEC rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our second quarter of Fiscal 2027 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
We incorporate by reference the information regarding legal proceedings in Item 1, Note 7, “Legal Proceedings”, to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
Reference is made to the factors set forth under the caption “Cautionary Notice Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q and other risk factors described in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026, which are incorporated herein by reference. There have not been any material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended January 31, 2026.
You should carefully consider these risk factors, all or any of which could materially affect our business, financial condition or future results. The risks described in this report and in our Annual Report are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
Repurchases (shown in thousands except share and per share amounts):
ISSUER PURCHASES OF EQUITY SECURITIES
Period
(a) TotalNumber ofSharesPurchased
(b) AveragePricePaidper Share
(c) TotalNumber ofSharesPurchased as Partof PubliclyAnnouncedPlans orPrograms
(d) MaximumNumber(or ApproximateDollar Value)of Shares thatMay Yet BePurchasedUnder thePlans orPrograms
May 2026
5-3-26 to 5-30-26 (1)
29,755
June 2026
5-31-26 to 6-27-26 (1)
5-31-26 to 6-27-26 (2)
12,017
36.34
July 2026
6-28-26 to 8-1-26 (1)
6-28-26 to 8-1-26 (2)
502
36.76
12,519
36.36
(1) In February 2022, a $100.0 million share repurchase program was approved by the Board of Directors and announced in February 2022, and in June 2023, the Board of Directors approved an additional $50.0 million for share repurchases. We expect to implement the balance of the repurchase program through purchases made from time to time either in the open market or through private transactions, in accordance with the regulations of the SEC and other applicable legal requirements. The timing and amount of any shares repurchased under the program will depend on a variety of factors, including price, corporate and regulatory requirements, capital availability, and other market conditions. The repurchase program may be limited, temporarily paused, or terminated by our Board of Directors at any time without prior notice.
(2) These shares represent shares withheld from vested restricted stock to satisfy the minimum withholding requirement for federal and state taxes.
Insider Trading Arrangements
During the second quarter of Fiscal 2027, no director or officer (as defined in Section 16 of the Exchange Act) of the Company adopted or terminated any "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" (in each case, as defined in Item 408 (a) and (c) of Regulation S-K).
Exhibit Index
10.1*
Transition Agreement, dated as of August 5, 2026, by and between the Company and Parag D. Desai.
31.1
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101
The following materials from Genesco Inc.'s Quarterly Report on Form 10-Q for the quarter ended August 1, 2026, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at August 1, 2026, January 31, 2026 and August 2, 2025, (ii) Condensed Consolidated Statements of Operations for each of the three and six months ended August 1, 2026 and August 2, 2025, (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) for each of the three and six months ended August 1, 2026 and August 2, 2025, (iv) Condensed Consolidated Statements of Cash Flows for the six months ended August 1, 2026 and August 2, 2025, (v) Condensed Consolidated Statements of Equity for each of the three and six months ended August 1, 2026 and August 2, 2025, and (vi) Notes to the Condensed Consolidated Financial Statements.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*Certain terms of this agreement have been redacted in accordance with Regulation S-K Item 601 (b) (10).
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
By:
/s/ Jonathan M. Collins
Jonathan M. Collins
Senior Vice President - Finance and Chief Financial Officer
Date: September 10, 2026