Genesco’s third quarter results were met with a sharp negative market reaction, reflecting investor concerns over profitability despite meeting revenue expectations. Management identified stronger back-to-school sales at Journeys and ongoing store optimization as key drivers, but acknowledged that heightened promotional activity in the UK and headwinds from tariffs pressured gross margins. CEO Mimi Eckel Vaughn stated that Schuh faced "heightened promotional activity" while the exit of licenses in Genesco Brands Group and the impact of tariffs added further margin pressure.
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Genesco (GCO) Q3 CY2025 Highlights:
- Revenue: $616.2 million vs analyst estimates of $617.5 million (3.3% year-on-year growth, in line)
- Adjusted EPS: $0.79 vs analyst expectations of $0.86 (8.1% miss)
- Adjusted EBITDA: $26.27 million (4.3% margin, 12.3% year-on-year growth)
- Management lowered its full-year Adjusted EPS guidance to $0.95 at the midpoint, a 36.7% decrease
- Operating Margin: 2.1%, in line with the same quarter last year
- Locations: 1,245 at quarter end, down from 1,302 in the same quarter last year
- Same-Store Sales rose 3% year on year (6% in the same quarter last year)
- Market Capitalization: $256.9 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Genesco’s Q3 Earnings Call
- Mitch Kummetz (Seaport Research): asked for clarity on Journeys’ fourth quarter comp expectations. CEO Mimi Eckel Vaughn confirmed positive comps are anticipated, driven by strong store performance but moderated e-commerce, and highlighted ongoing store closures to improve productivity.
- Joseph Vincent Civello (Truist Securities): sought insight into demand trends between athletic and canvas footwear. Vaughn explained athletic styles are seeing increased year-round demand and innovation, while canvas is less in demand with limited innovation expected.
- Mantero Valentino Moreno-Cheek (Jefferies): questioned the strategy for expanding Journeys’ brand portfolio. Vaughn said diversification is key, with new brands like HOKA and Nike supporting growth, though initial volumes start small and build over time as consumer preferences evolve.
- Mantero Valentino Moreno-Cheek (Jefferies): also asked about gross margin improvement levers. Vaughn and CFO Sandra Harris cited the exit of one-time license liquidations and ongoing actions at Schuh as main drivers, while acknowledging tariffs will remain a headwind.
- Mantero Valentino Moreno-Cheek (Jefferies): inquired about marketing spend effectiveness. Vaughn noted a shift from performance to brand marketing, with campaigns like ‘Life on Loud’ and the Peyton Manning partnership aimed at boosting awareness and customer acquisition.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will track (1) the pace of recovery and margin improvement at Schuh as inventory and promotional strategies are adjusted, (2) continued progress in Journeys’ store remodel program and new brand partnerships, and (3) the impact of tariffs and completion of license liquidations on gross margins. We will also monitor the effectiveness of expanded marketing campaigns and new product introductions in driving customer traffic and sales.
Genesco currently trades at $24.01, down from $35.15 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free for active Edge members).
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