Genesco Inc. (NYSE:GCO) saw its stock tumble 12.06% in pre-market trading on Thursday after the footwear retailer slashed its full-year outlook, overshadowing a third-quarter report that otherwise showed continued momentum in comparable sales.
For the quarter, Genesco posted adjusted earnings of $0.79 per share on revenue of $616 million—missing analyst expectations of $0.88 per share and $618.62 million in revenue. Still, comparable sales rose 3% year-over-year, marking the company’s fifth consecutive quarter of positive comps. Store sales climbed 5%, while e-commerce slipped 3%. Journeys Group, Genesco’s largest business, led the way with a strong 6% jump in comparable sales.
“We delivered another quarter of top and bottom-line growth, marking our fifth consecutive quarter of positive comparable sales increases,” said Mimi E. Vaughn, Genesco’s Board Chair, President and CEO. “The third quarter demonstrated the power of our strategic initiatives, with Journeys delivering strong double-digit comp growth during back-to-school on top of double-digit growth last year.”
Outlook cut due to Schuh weakness and softer consumer trends
The upbeat results were overshadowed by a major reduction in full-year guidance. Genesco now expects fiscal 2026 adjusted EPS of roughly $0.95—down dramatically from its prior range of $1.30 to $1.70. The company cited deeper challenges in the UK marketplace affecting its Schuh chain, as well as muted consumer spending on non-peak shopping days.
“We have materially changed our sales and margin projections for Schuh to reflect the ongoing difficult U.K. market and performance,” Vaughn said. “We have also moderated the growth assumptions for our other businesses based on the lower footwear consumer traffic and spending patterns we’ve recently witnessed on non-peak shopping days.”
Gross margin fell 100 basis points to 46.8%, pressured by lower margins at Genesco Brands Group due to tariffs and heightened promotions at Schuh. However, selling and administrative expenses improved by 140 basis points thanks to cost-saving initiatives.
Revised growth expectations
Genesco now anticipates total sales will rise about 2% for fiscal 2026, down from a previous forecast of 3% to 4%. Comparable sales growth guidance was lowered to roughly 3% from the earlier 4% to 5%.