Genesco Inc. Reports $18.9 Million Net Loss in Third Quarter of Fiscal 2025

Genesco Inc. reported a net loss of $18.9 million, or $1.76 per diluted share, for the third quarter of Fiscal 2025, compared to a net income of $6.5 million, or $0.60 per diluted share, in the same period last year. The company's net sales increased by 2.9% to $596.3 million, up from $579.3 million in the third quarter of Fiscal 2024. This growth was driven by a 6% increase in comparable sales, which included a 15% rise in e-commerce sales and a 4% increase in same-store sales. However, the company faced challenges, including a $17 million negative impact from shifting back-to-school sales into the second quarter and net store closures.

For the first nine months of Fiscal 2025, Genesco's net sales decreased slightly by 0.4% to $1.579 billion, down from $1.586 billion in the prior year. The decline was attributed to decreased comparable store sales and wholesale sales, partially offset by a 9% increase in e-commerce comparable sales. The Journeys Group and Schuh Group each saw a 1% increase in sales, while Johnston & Murphy Group sales fell by 5% and Genesco Brands Group sales decreased by 10%. The overall gross margin for the first nine months decreased to 47.3% from 47.7% in the previous year, reflecting increased promotional activity and changes in product mix.

Operationally, Genesco operated 1,302 retail stores across the U.S., Puerto Rico, Canada, the U.K., and the Republic of Ireland as of November 2, 2024. The company closed 12 Journeys Group stores during the third quarter and anticipates closing up to ten more by the end of the fiscal year. The company’s e-commerce segment continues to be a significant growth area, accounting for 17% of total sales for the Journeys Group in the third quarter. The Schuh Group's e-commerce business also remains vital, representing over 40% of its sales.

In terms of strategic developments, Genesco has focused on enhancing its product offerings, particularly in the Journeys Group, which saw an 11% increase in comparable sales due to improved product assortment. The Johnston & Murphy Group launched new products that positively impacted conversion rates and transaction sizes, although it faced challenges in the men's premium footwear market. The company has also been actively managing its costs, with selling and administrative expenses slightly decreasing as a percentage of net sales due to cost-saving initiatives and the closure of underperforming stores.

Looking ahead, Genesco's management expressed caution regarding the retail environment, citing inflationary pressures and a selective consumer base. The company has recorded a full valuation allowance against its U.S. deferred tax assets, reflecting uncertainty about realizing these benefits in the near term. Despite these challenges, Genesco remains committed to its strategic initiatives, including investments in omni-channel capabilities and product diversification, as it navigates the evolving retail landscape.