• Revenue: $746 million, up approximately 1%.
• Comparable Sales: Increased 10%, with Stores up 6% and Digital up 18%.
• Gross Margin: Improved by 60 basis points.
• Operating Profit: Increased 24%.
• Adjusted EPS: $3.26, compared to last year's $2.59.
• Journeys Comparable Sales: Up 14%.
• Schuh Comparable Sales: Up 2%.
• Johnston & Murphy Comparable Sales: Flat.
• Store Closures: 64 Journeys store closures.
• Free Cash Flow: Approximately $103 million in the fourth quarter.
• Inventory: Up 12% from last year.
• Capital Expenditures: $14 million in the fourth quarter.
• Total Stores: Ended with 1,278 total stores.

• Warning! GuruFocus has detected 4 Warning Sign with GCO.

Release Date: March 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Genesco Inc (NYSE:GCO) delivered a strong finish to the year with revenue and gross margins exceeding expectations and operating profit at the high end of forecasts.
• Journeys' performance significantly outpaced the overall market, with comparable sales increasing by double digits for the second consecutive quarter.
• Digital business grew by double digits, expanding digital penetration to 25% and effectively doubling the size of this channel over the last five years.
• The company achieved its target run rate of annualized cost savings, realigning its cost base over the past two years.
• Genesco Brands Group contributed significantly to performance, with efforts to simplify the license portfolio leading to more profit despite lower sales.

Negative Points

• The consumer environment remains choppy, with consumers being selective and shopping only when there's a reason.
• Schuh faced a challenging and highly promotional declining UK footwear market, resulting in flat top-line performance and a step back in profitability.
• Johnston & Murphy faced headwinds with a slowdown in demand for men's non-athletic premium footwear, impacting sales and operating profit.
• The company is navigating a fluid external environment with uncertainties around the economy, tariffs, and other factors.
• Gross margin is expected to be down 20 to 30 basis points in fiscal '26, driven by product and channel mix shifts and the impact of exiting certain licenses.

Q & A Highlights

Q: Can you elaborate on the start of the first quarter and the impact of February's weather on sales? A: Mimi Vaughn, CEO, explained that February was challenging due to unexpected snow and cold weather in the South, affecting sales. However, strong consumer turnout during Valentine's Day and tax refund periods helped balance the month. Overall, the start of the year was positive, with consumers shopping when motivated by events.

Q: What is the outlook for Journeys' comp growth in fiscal '26, considering store closures? A: Mimi Vaughn, CEO, stated that Journeys is expected to see strong comp growth, particularly in the first half due to easier comparisons. Despite store closures, which will pressure sales, the optimization of the store fleet is expected to enhance profitability. Sandra Harris, CFO, added that overall company comps are projected to be up 2% to 4%.

Q: How will the strategic pillars impact Journeys in fiscal '26 and beyond? A: Mimi Vaughn, CEO, emphasized that Journeys is in the early stages of a strategic transformation aimed at serving a broader teen market, particularly focusing on teen girls. The strategy includes product elevation, enhanced customer engagement, and improved store experiences, which are expected to drive long-term growth.

Q: Can you provide more details on the impact of store remodels on Journeys' performance? A: Mimi Vaughn, CEO, highlighted that remodeled stores have shown significant improvements in comps, traffic, and transaction sizes. The remodels are designed to showcase premium products in an aspirational environment, with plans to remodel 70 stores this year and more in the following years.

Q: What are the expectations for gross margins and incentive compensation in fiscal '26? A: Sandra Harris, CFO, noted that gross margins will face pressure due to product mix shifts and the exit of certain licenses. However, higher average selling prices are expected to offset some of this pressure. Incentive compensation is expected to normalize, with no significant additional impact anticipated.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.