Genesco (NYSE:GCO) reported fourth-quarter fiscal 2026 results that management said exceeded expectations, capped by a strong holiday finish and momentum heading into fiscal 2027. On the company’s earnings call, CEO Mimi Vaughn said demand patterns remained “selective and intentional,” with shoppers engaging heavily during key moments such as the peak holiday weeks and pulling back in between.
Fourth-quarter results: strong comps and improved profitability
CFO Sandra Harris said Genesco delivered fourth-quarter revenue of $800 million, up 7% year-over-year, with comparable sales rising 9% (stores up 9% and direct up 8%). Harris characterized the quarter as the company’s “strongest quarterly comp performance of the year across both channels,” coming in its highest-volume quarter and on top of strong results last year.
Adjusted gross margin declined 90 basis points in the quarter, which management attributed primarily to increased promotional activity at Schuh, along with tariff pressure and channel-mix changes at Genesco Brands. Harris said Journeys and Johnston & Murphy saw strong full-price selling that “mostly offset” brand-mix shifts and tariff pressures.
Brand performance: Journeys leads; Schuh pressured by promotions
All businesses posted positive comparable sales in the quarter, led by Journeys, where comps increased 12% on top of 14% growth in the year-ago quarter. Vaughn said Journeys benefited from “just the right assortments” and strong store execution, citing exceptional conversion over the holidays and higher transaction size. She highlighted strong demand for casual footwear and boots, along with continued progress building athletic as a year-round category.
Vaughn also said Journeys grew total customers in December and January and continued to gain market share. The company’s 4.0 store format was again highlighted as a performance driver. Genesco ended fiscal 2026 with more than 84 Journeys 4.0 locations, which Vaughn said continue to outperform the fleet. In the Q&A, Vaughn said the 4.0 stores have been “comping 25% plus” and cited stronger traffic, conversion, selling prices, and new customer acquisition relative to the broader chain.
At Schuh, comps rose 3%, though both Vaughn and Harris emphasized that performance was achieved through aggressive promotions in a “highly promotional and competitive” U.K. retail environment. Vaughn said price sensitivity drove consumers to seek bargains, and the company chose to exit the year with clean inventory. Harris noted that e-commerce penetration at Schuh exceeded 50% of sales in the quarter, which she said reflected value-driven online behavior in that market.
At Johnston & Murphy, comps increased 2% and improved sequentially through the quarter. Vaughn said apparel and accessories performed well, supported by a renewed product focus and faster innovation cycles, including a refresh of the Icon quarter-zip program as well as growth in knits and blazers. She added that the Peyton Manning partnership launched just before the fourth quarter and drove engagement and traffic, with momentum continuing into the first quarter alongside increased “return to work” and interest in dressing up.
Genesco Brands Group remained in a transition year. Vaughn said the tail end of license exits—including Levi’s—and tariff impacts weighed on results. Management said the portfolio has been simplified in preparation for a Wrangler footwear launch in the fall.
Store fleet actions, cash flow, and leadership update
Harris said Genesco ended the quarter with 42 net fewer stores than a year ago, representing about a 3% reduction in the fleet and 2% reduction in square footage. She said closing those locations was accretive to operating income and often resulted in sales transfers to other stores.
The company generated $164 million of free cash flow in the fourth quarter and nearly $84 million for the full year, ending the year in a positive net cash position. Harris said inventories were up modestly year-over-year due to a deliberate investment in key Journeys items, while Schuh inventories were lower on a constant-currency basis due to promotional sell-through, and Genesco Brands inventories declined significantly due to license-exit sell-offs.
On capital allocation, Harris said Genesco did not repurchase shares in the fourth quarter but repurchased about 600,000 shares earlier in the year (about 5% of shares outstanding at that time). She said $29.8 million remained under the current authorization.
Vaughn also announced that Harris will be departing the company. Vaughn said Genesco has begun an active search for a successor and that she will assume the role of interim CFO during the transition.
Fiscal 2027 guidance: modest comp growth, flattish sales, higher earnings
Harris outlined fiscal 2027 guidance calling for comparable sales to increase about 1% to 2%, but total sales to range from down 1% to flat, reflecting the impact of planned net store closures and the ongoing wind-down of licensing revenue at Genesco Brands. She quantified those offsets as approximately $30 million in sales from planned net store closures and roughly $30 million from license exits.
By division, management expects:
- Journeys: low single-digit sales growth, with comp growth partially offset by store closures.
- Schuh: mid-single-digit sales decline, reflecting store closures and a deliberate reduction in promotions to recover margin.
- Johnston & Murphy: mid-single-digit sales growth, helped by new stores and wholesale expansion.
- Genesco Brands: sales decline due to the timing gap between the Levi’s wind-down and the Wrangler launch later in the year.
Harris said gross margin is expected to improve 50 to 60 basis points, driven by reduced promotional activity at Schuh and by lapping prior-year liquidation at Genesco Brands. She also discussed tariff expectations, saying that although unmitigated exposure is expected to rise due to a full-year impact, mitigation actions such as pricing and sourcing adjustments are expected to limit the net negative operating income impact to about $5 million to $10 million, which is already included in guidance.
For the year, Genesco guided to adjusted operating income of $32 million to $38 million and adjusted EPS of $1.90 to $2.30. Guidance assumes no share repurchases and an average share count of about 10.9 million. The company expects a full-year effective tax rate of about 30%, but Harris cautioned that quarterly tax rates will be volatile due to a valuation allowance and the company’s seasonal earnings profile, with a low effective rate in the first three quarters and a fourth-quarter true-up.
Strategic priorities: “Footwear First,” more Journeys 4.0 stores, Schuh reset
Vaughn said the company is evolving its strategy to “Footwear First,” built around four growth drivers: curating winning product, elevating retail and consumer brands, delivering exceptional consumer experiences, and building teams—while continuing to focus on cost structure improvements to return toward historical profitability levels.
For Journeys, Vaughn reiterated the focus on becoming the destination for the “style-led teen,” particularly the teen girl, and said the company plans to more than double the 4.0 store count by adding “another 80+” locations in fiscal 2027. She said about two-thirds of those are remodels, with the remainder consisting of relocations to larger footprints and some new stores. The company also plans to test an expanded 4.0 concept at Journeys Kidz.
For Schuh, Vaughn said the near-term priority is a profitability reset through reducing discounting, optimizing the store fleet, and pursuing additional cost actions such as selling salary and rent reductions, alongside “quick wins” in experience and marketing.
In the Q&A, Vaughn said Journeys was tracking mid-single-digit comps quarter-to-date in February, despite weather disruptions, but she noted the company is not forecasting a mid-single-digit comp for the full year. She also said the company is not anticipating growth in the canvas category for fiscal 2027, while noting continued relevance for the customer due to its more accessible price point.
About Genesco (NYSE:GCO)
Genesco Inc is a Nashville, Tennessee-based retailer, wholesaler and licensee specializing in branded footwear, headwear, apparel and accessories. Through its portfolio of retail chains, wholesale distribution channels and licensing agreements, Genesco brings a range of product offerings to consumers in North America and Europe.
The company’s retail segment includes specialty chains such as Journeys, which targets fashion-focused teens and young adults in the United States and Canada, and Schuh, a footwear retailer with locations in the United Kingdom and Ireland.
