Genesco Inc. reported a narrower adjusted loss per share of $0.83 for its fiscal second quarter, compared with a loss of $1.14 in the same period last year, beating Wall Street's estimate of a $1.37 loss. Revenue totaled $530 million, down 3% year-over-year but slightly above the $528.4 million forecast.
Gross margin expanded 140 basis points to 47.2%, driven by reduced discounting, improved product mix, pricing strategies, and $22 million in tariff refunds received during the quarter. Adjusted operating loss narrowed to $8 million from $14 million a year earlier, while adjusted SG&A expenses rose 40 basis points to 48.8% of sales due to lower volume, though total operating expenses fell by about $6 million.
Comparable sales declined 1% overall, with store comps up 1% and e-commerce comps down 6%. Inventory increased 8% year-over-year, primarily due to Journeys' growth initiatives and back-to-school preparations. The company operated 1,186 stores, down 67 net locations from a year ago.
Journeys posted its eighth consecutive quarter of positive comps, with lifestyle athletic leading summer performance and a mid-single-digit comp in August. The Journeys 4.0 store format continued to deliver sales lifts exceeding 25%, with 25 locations opened in Q2. The company plans to open 95 new 4.0 stores this year, targeting roughly 180 stores or 20% of its fleet.
Johnston & Murphy achieved its third straight quarter of positive comps, driven by store traffic, conversion, and higher transaction sizes. Apparel sales grew in the double digits, led by XC4 Flex Pinnacle products. The brand extended its partnership with Peyton Manning for two additional years, citing over 85% recognition among target customers and double-digit revenue growth from new customers. Plans call for opening 10 new stores in the second half of the year.
Schuh, Genesco's U.K. segment, saw gross margin improve by 300 basis points as full-price sales rose by 10 percentage points. The segment closed six stores during the quarter and named Tomas Petersson as its new president, succeeding Colin Temple, who retired after 38 years with the company.
Genesco raised its full-year adjusted diluted EPS guidance to the high end of its previously raised range of $2.00 to $2.40. Full-year total sales are now expected to decline about 2%, revised from prior guidance of down 1% to flat. Gross margin is projected to expand 60 to 80 basis points, while SG&A expenses are expected to deleverage by about 30 basis points due to lower sales and higher marketing spending. For Q3, Genesco forecasts roughly flat comps, total sales down 4% to 4.5%, and gross margin expansion of 90 to 100 basis points.
Shares of Genesco surged 10.26% in pre-market trading to $36.96, up from the previous close of $33.52. The stock has gained 35% year-to-date and 29% over the past six months, with a beta of 1.83.
