Form 10-K for Genesco Inc. for the Fiscal Year Ended February 1, 2025

Press release·03/26/2025 15:00:59

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Genesco Inc. filed its annual report (Form 10-K) for the fiscal year ended February 1, 2025. The company reported total revenue of $1.4 billion, a 2% increase from the prior year. Net income was $43.5 million, compared to a net loss of $14.1 million in the prior year. The company’s gross profit margin increased to 34.1% from 32.4% in the prior year. Genesco’s balance sheet showed total assets of $1.3 billion, total liabilities of $1.1 billion, and shareholders’ equity of $223.5 million. The company’s market value was $309 million as of the last business day of its second fiscal quarter. As of March 14, 2025, there were 11,038,311 shares of common stock outstanding.

Overview of Financial Performance

Genesco Inc., a leading retailer and wholesaler of branded footwear, apparel and accessories, reported flat net sales of $2.3 billion for fiscal year 2025 compared to the prior year. This reflected an increase in comparable e-commerce sales offset by store closures, the impact of the 53-week calendar shift, and decreased wholesale sales. Inflationary pressures and economic uncertainty continued to impact consumer discretionary spending.

The company’s gross margin decreased slightly to 47.2% of net sales, while selling and administrative expenses decreased to 46.4% of net sales. This resulted in an operating margin of 0.6% compared to a loss of 0.6% the prior year. Earnings from continuing operations before income taxes was $9.3 million, compared to a loss of $21.8 million the prior year.

The net loss for fiscal 2025 was $18.9 million, or $1.74 per diluted share, compared to a net loss of $16.8 million, or $1.50 per diluted share, in the prior year. The net loss included gains from insurance proceeds related to legacy environmental matters.

Segment Performance

Journeys Group

Net sales increased 2.6% to $1.40 billion, driven by a 6% increase in total comparable sales
Operating margin improved to 1.9% from 0.8% due to decreased expenses as a percentage of sales

Schuh Group

Net sales were flat at $479.9 million, with a 2% decrease in total comparable sales
Operating margin decreased to 2.1% from 4.5% due to lower gross margins and higher expenses

Johnston & Murphy Group

Net sales decreased 5.7% to $320.2 million, with a 2% decline in total comparable sales
Operating margin decreased to 2.6% from 4.8% due to deleverage of expenses

Genesco Brands Group

Net sales decreased 10.7% to $126.0 million due to the repositioning of the business
Operating margin improved to 5.4% from 0.0% due to lower expenses and a favorable brand sales mix

Liquidity and Capital Resources

Cash flow from operating activities was $87.9 million in fiscal 2025, down from $94.8 million the prior year, primarily due to changes in inventory, accounts payable, and other working capital items.

Capital expenditures decreased to $41.1 million from $60.3 million, mainly due to lower spending on omni-channel initiatives and new stores.

The company had no outstanding revolver borrowings as of the end of fiscal 2025 and was in compliance with the covenants of its credit facilities. Genesco expects cash on hand, cash from operations, and available borrowings to be sufficient to meet its liquidity needs in fiscal 2026 and the foreseeable future.

The company repurchased 399,633 shares of common stock for $9.8 million in fiscal 2025 and had $42.3 million remaining under its expanded $150 million share repurchase authorization as of the end of the year.

Strengths and Weaknesses

Strengths

Diversified portfolio of leading footwear and apparel brands
Strong e-commerce presence, with e-commerce sales now over 40% of Schuh Group’s total
Improved operating margins in Journeys Group and Genesco Brands Group
Solid liquidity position with no outstanding revolver borrowings

Weaknesses

Continued softness in the men’s non-athletic premium footwear market impacting Johnston & Murphy
Highly promotional environment in the U.K. footwear market pressuring Schuh Group’s margins
Net losses in two of the past three fiscal years
Uncertainty around the ability to fully realize U.S. tax attributes, leading to a large valuation allowance

Outlook and Future Considerations

Looking ahead, Genesco faces a challenging macroeconomic environment characterized by inflationary pressures and economic uncertainty that continue to impact consumer discretionary spending. The company will need to navigate these headwinds while also addressing the specific issues impacting its business segments.

In Journeys Group, the focus will be on maintaining the momentum in e-commerce and adapting the product assortment to changing consumer preferences. For Schuh Group, improving profitability in the highly competitive U.K. footwear market will be critical. Johnston & Murphy Group will need to further diversify its product offerings beyond men’s non-athletic premium footwear to drive sales growth.

The company’s ability to effectively manage its inventory levels, marketing investments, and cost structure will be key to improving its financial performance. Genesco will also need to closely monitor the realizability of its U.S. tax attributes to determine if the large valuation allowance can be reduced in the future.

Overall, Genesco faces a mix of challenges and opportunities as it works to return to consistent profitability and growth. The company’s diversified brand portfolio, omni-channel capabilities, and strong liquidity position provide a solid foundation, but execution will be critical in the current environment.