Dive Brief:
- Genesco plans to close more than 100 Journeys stores this year, up from its previous estimate of 60 locations, the company stated in its Q1 earnings. By closing more stores, the company expects to save up to $40 million, higher than the $20 million to $25 million it previously estimated.
- Genesco’s net sales dipped 7% in the first quarter to $483 million, driven by a decrease of 13% at Journeys. The Journeys Group also reported a drop in comparable sales of 14% from the year prior.
- The company has opened 13 off-mall Journeys locations out of 25 pilot stores it has planned, Genesco CEO Mimi Vaughn said on an Thursday earnings call with analysts.
Dive Insight:
Amid declining sales, Genesco is shifting the store presence of Journeys away from malls.
“We still have work to do, but we are so far encouraged by the early reads and believe this initiative will represent a key element in Journeys’ growth moving forward,” Vaughn said.
Consumers were expected to seek more casual footwear this year, but some retailers in the category have not seen a rise in sales as discretionary spending takes a hit. Alongside Genesco, Foot Locker reported an 11.4% drop in Q1 sales. In light of this, the retailer revised its annual guidance to reflect a possible decline in sales of between 6.5% and 8%.
Vaughn partially attributed the decline in demand for Journeys’ products to inflation woes, lower tax refunds and discounted athletic products readily available in the market. As a result, its stores saw lower traffic and lower demand for multiple key styles this year, Vaughn said. However, the retailer saw greater demand for Journeys’ new lineup of products compared to its core products, an uptick that was greater than it typically sees.
“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 a statement. “In response, we are taking swift actions to mitigate the consumer shift in the marketplace, including closing more underperforming Journeys stores, reducing our cost base further, and working to quickly refine our product assortment.”
The company revised its fiscal 2024 outlook, with sales forecast to be down 4% to 5%, or 5% to 6% excluding the 53rd week of the year.
Genesco sells footwear and accessories in over 1,400 retail stores and is parent company to Journeys, Little Burgundy, Schuh, and Johnston & Murphy, among other brands.
