Genesco (NYSE: GCO) is a footwear retailer with operations in the U.S. and U.K., offering a mix of third-party and first-party brands. The company operates under three key banners: Journeys, Schuh, and Johnston & Murphy (J&M).
Journeys, which generates around 60% of Genesco’s revenues, caters primarily to teenagers in the U.S. and Canada through smaller stores. Schuh, operating in the U.K. and Ireland, targets a slightly older demographic of young adults. Meanwhile, J&M focuses on a more mature customer base, aged 35-55, with a selection of formal leather products.
Despite facing industry-wide challenges, such as declining sales and shrinking margins, Genesco stock remains operationally profitable and continues to grow year over year. In addition to its owned brands, Genesco also licenses and sells third-party brands like Levi’s, PONY, and Dockers, further diversifying its product offerings.
Key Genesco Brands and Market Segments
Genesco’s (NYSE: GCO) diverse brand portfolio allows it to target different consumer segments across age groups and regions. Its largest brand, Journeys, is tailored to teenagers in the U.S. and Canada, offering trendy footwear in smaller retail spaces, typically around 2,000 square feet. Journeys focuses on casual, third-party products that resonate with younger consumers, contributing approximately 60% of the company’s overall revenue.
In the U.K. and Ireland, Schuh serves a slightly older demographic, catering to young adults with a broader range of casual and fashion-forward footwear. Like Journeys, Schuh’s strategy relies heavily on third-party brands, but its customer base and regional focus set it apart.
Johnston & Murphy (J&M) represents the company’s more mature and formal offering. Targeting adults aged 35 to 55, J&M specializes in high-quality, formal footwear, particularly leather products, and focuses more on the first-party, in-house brands.
Beyond these three banners, the company further diversifies its product mix through licensing agreements with popular third-party brands such as Levi’s, PONY, and Dockers. This broad approach allows it to maintain a strong market presence across various age groups and preferences, even amid challenging market conditions.
Genesco Financial Performance and Initiatives
Improved profitability in the Journeys division offset pressures in Johnston & Murphy (J&M) and Schuh, presenting a strong opportunity to drive earnings per share through cost reductions and share repurchases. In the most recent quarter, consolidated revenue reached $525 million, surpassing expectations and contributing to better leverage.
The closure of select Journeys stores, which reduced the total fleet by approximately 4%, improved productivity while minimally impacting overall sales. Digital sales also grew, making up 22% of total retail sales and helping mitigate challenges in both store and wholesale channels.
Total company comparable sales declined by 2%, with store comps down 4% but digital sales up 8%. Despite margin pressures across divisions, J&M experienced a slight margin increase of 40 basis points due to inventory comparisons from the previous year. Additionally, cost-saving initiatives, including store closures and lease renegotiations, led to a 9% reduction in rent expenses on renewed leases.
With over 50% of store leases set for renewal, GCO aims to continue optimizing its real estate costs. Finally, the company repurchased 382,000 shares during the quarter and continues to focus on reducing annual costs by $45-50 million by fiscal 2025.
Holiday Product Strategy and Expectations
As the holiday season approaches, Genesco (NYSE: GCO) anticipates maintaining its momentum with a diverse product assortment that extends beyond just athletic footwear. While athletic styles have been a major contributor to back-to-school demand, the company has also seen strength in its casual offerings. This variety of brands, particularly within the casual category, has exceeded expectations, reflecting a broader consumer shift toward seasonless styles.
Although the athletic category remains a key focus, Genesco stock is preparing for the holiday season by balancing its assortment across multiple footwear styles. The boot category, which has seen a decline in recent years, is not expected to significantly boost sales, but the company has identified potential growth in certain boot brands. If these brands gain traction, they could provide an additional lift during the holiday season.
Genesco believes it has positioned its product lineup well to support positive comparable sales in the fourth quarter, relying on a blend of athletic and casual styles that are resonating with consumers. This strategic approach, combined with careful inventory planning, will allow the company to capitalize on demand through the end of the year.