Genesco revised its yearly guidance and is taking swift actions to mitigate the consumer shift in the marketplace after a “considerably more challenging” first quarter.
More specifically, Genesco board chair, president and CEO Mimi Vaughn, said in a statement that most of those actions will take place at the company’s Journeys banner. “Consumer demand at Journeys dropped off significantly early in the quarter and did not improve as we changed seasons in the latter part of March and into April, offsetting another quarter of record sales at Schuh and Johnston & Murphy,” Vaughn said.
In response, Vaughn noted that the company will be closing more underperforming Journeys stores, reducing its cost base further, and working to quickly refine its product assortment. The company now expects to close more than 100 Journeys stores in fiscal 2024, versus prior expectations to close 60 stores. Genesco said it anticipates up to $40 million in cost reductions, versus $20 million to $25 million prior, with $20 million realized in fiscal 2024 by these closures.
In the first quarter of fiscal 2024, the Nashville, Tenn.-based footwear company reported net sales declined 7 percent to $483 million, compared to $521 million in the same time last year.
Genesco noted that this sales decrease was driven by a 13 percent drop in store sales at Journeys Group, decreased wholesale sales and foreign exchange pressure. These losses were partially offset by a 5 percent increase in e-commerce sales and strong store performance at Schuh, up 6 percent, and Johnston & Murphy, up 16 percent, the company said.
Looking ahead, Genesco revised its full fiscal 2024 outlook. The company now expects Sales to be down 4 percent to 5 percent compared to fiscal ‘23. This guidance is down from the original expectation, which saw net sales for the year to come in flat or up 2 percent versus last year.
But despite the company’s current difficulties, Vaughn said she remains excited about the company’s future prospects and the strength of its competitive positioning.
“Having navigated multiple adverse retail cycles, our team has demonstrated a track record of success, the resilience of our business, and the ability to rebound and come out ahead,” Vaughn added. “As the leading destination for teen fashion footwear, and key partner to our brands, I feel confident that our footwear focused strategy and the strategic initiatives we are implementing will position Journeys to emerge from this period in an even stronger competitive position.”