Quarterly Report for Quarter Ending May 2, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

This section discusses management's view of the financial condition, results of operations and cash flows of the Company. This section should be read in conjunction with the information contained in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026, including the Risk Factors section, and information contained elsewhere in this Quarterly Report on Form 10-Q, including the Condensed Consolidated Financial Statements and Notes to those financial statements. The results of operations for any interim period may not necessarily be indicative of the results that may be expected for any future interim period or the entire fiscal year.

Summary of Results of Operations

Our net sales increased 2.8% to $487.0 million in the first quarter of Fiscal 2027 compared to $474.0 million in the first quarter of Fiscal 2026. The net sales increase compared to last year's first quarter reflects a 2% increase in comparable sales, including a 3% increase in same store sales, other non-comparable gains and a favorable foreign exchange impact, partially offset by the impact of net store closings resulting from our ongoing footprint optimization. The Journeys Group business had a strong first quarter of Fiscal 2027 with comparable sales up 5%, driven by strength in the product assortment and other initiatives. Schuh Group comparable sales were down 9% for the first quarter of Fiscal 2027 reflecting a weaker U.K. consumer market and our decision to prioritize full-price selling. Johnston & Murphy Group comparable sales were up 7% in the first quarter of Fiscal 2027 driven by increased store and e-commerce sales driven by strength in product assortment, both apparel and footwear, as a result of increased brand awareness through marketing and social media campaigns. By segment, Journeys Group sales increased 5%, Schuh Group sales decreased 5%, Johnston & Murphy Group sales increased 6% and Genesco Brands Group sales increased 4% in the first quarter of Fiscal 2027 compared to the first quarter of Fiscal 2026. Schuh Group's sales decreased 9% on a local currency basis for the first quarter of Fiscal 2027.

Gross margin increased 3.5% to $228.9 million in the first quarter of Fiscal 2027 from $221.2 million in the first quarter of Fiscal 2026 and increased 30 basis points as a percentage of net sales from 46.7% in the first quarter of Fiscal 2026 to 47.0% in the first quarter of Fiscal 2027. The overall increase in gross margin as a percentage of net sales is due primarily to efficiencies in shipping and warehouse costs and less promotional activity across our businesses, partially offset by changes in brand mix at Journeys Group and Schuh Group.

Selling and administrative expenses in the first quarter of Fiscal 2027 increased 2.2% to $254.4 million from $249.0 million compared to the first quarter of Fiscal 2026, but decreased 30 basis points as a percentage of net sales in the first quarter of Fiscal 2027 compared to the first quarter of Fiscal 2026 from 52.5% to 52.2%. The decrease as a percentage of net sales reflects decreased selling salaries, occupancy, freight and warehouse expenses as well as ongoing cost savings initiatives, partially offset by increased performance-based incentive compensation expenses.

Operating margin was (3.2)% in the first quarter of Fiscal 2027 compared to (5.9)% in the first quarter of Fiscal 2026. The overall improvement in operating margin for the first quarter of Fiscal 2027 compared to the first quarter of Fiscal 2026 primarily reflects increased sales, increased gross margin as a percentage of net sales, decreased expenses as a percentage of net sales and a net gain in asset impairment and other charges.

The loss from continuing operations before income taxes ("pretax loss") for the first quarter of Fiscal 2027 was $15.9 million compared to $29.7 million for the first quarter of Fiscal 2026. The pretax loss for the first quarter of Fiscal 2027 included an asset impairment and other gain of $10.1 million which included a gain of $13.4 million related to payment card interchange fee litigation, partially offset by a $3.0 million charge for store restructuring, a $0.2 million charge for costs associated with information technology transformation and a $0.1 million charge for severance. Pretax loss for the first quarter of Fiscal 2026 included asset impairment and other charges of $0.3 million for severance.

We had an effective income tax rate of 6.8% and 28.5% in the first quarter of Fiscal 2027 and Fiscal 2026, respectively. The lower effective tax rate in the first quarter of Fiscal 2027 compared to the first quarter of Fiscal 2026 primarily reflects a lower expected tax rate for Fiscal 2027 versus our expectation for Fiscal 2026 as of the prior year first quarter due to the impact of the valuation allowance in certain jurisdictions combined with the income tax law changes from the OBBBA.

The net loss in the first quarter of Fiscal 2027 was $14.8 million, or $1.42 diluted loss per share, compared to a net loss of $21.2 million, or $2.02 diluted loss per share, in the first quarter of Fiscal 2026.

Critical Accounting Estimates

We discuss our critical accounting estimates in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations", in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026. We describe our significant accounting policies in Note 1, "Summary of Significant Accounting Policies", of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026. There have been no significant changes in our definition of significant accounting policies or critical accounting estimates since the end of Fiscal 2026.

Key Performance Indicators

In assessing the performance of our business, we consider a variety of performance and financial measures. The key performance indicators we use to evaluate the financial condition and operating performance of our business are comparable sales, net sales, gross margin, operating income and operating margin. These key performance indicators should not be considered superior to, as a substitute for or as an alternative to, and should be considered in conjunction with, the U.S. GAAP financial measures presented herein. These measures may not be comparable to similarly titled performance indicators used by other companies.

Comparable Sales

We consider comparable sales to be an important indicator of our current performance, and investors may find it useful as such. Comparable sales results are important to achieve leveraging of our costs, including occupancy, selling salaries, depreciation, etc. Comparable sales also have a direct impact on our total net revenue, working capital and cash. We define "comparable sales" as sales from stores open longer than one year, beginning with the first day a store has comparable sales (which we refer to as "same store sales"), and sales from websites operated longer than one year and direct mail catalog sales (which we refer to in this report as "comparable e-commerce sales"). Temporarily closed stores are excluded from the comparable sales calculation if closed for more than seven days. Expanded stores are excluded from the comparable sales calculation until the first day an expanded store has comparable prior year sales. Current year foreign exchange rates are applied to both current year and prior year comparable sales to achieve a consistent basis for comparison.

Operating Margin

Operating margin is a ratio calculated by dividing operating income (loss) by net sales. We believe operating margin provides investors with useful information related to the profitability of our business after considering all of the selling, general and administrative expenses and other operating charges incurred. We use this measure in making financial, operating and planning decisions and in evaluating our overall performance.

Results of Operations - First Quarter of Fiscal 2027 Compared to First Quarter of Fiscal 2026

Journeys Group

Net sales from Journeys Group increased 4.7% to $285.3 million in the first quarter of Fiscal 2027, compared to $272.6 million in the first quarter of Fiscal 2026. The net sales increase compared to the first quarter of Fiscal 2026 reflects a 5% increase in comparable sales, with increases in both stores and e-commerce channels, and other non-comparable gains, partially offset by a 4% decrease in the average number of stores in the first quarter of Fiscal 2027. The increased comparable sales in the first quarter of Fiscal 2027 was driven by the continued strength in Journeys Group's product assortment with brands across athletic and casual achieving healthy growth. Journeys Group's strong store performance was driven by gains in conversion and higher average transaction size in the first quarter of Fiscal 2027.

We closed 25 Journeys Group stores in the first quarter of Fiscal 2027. Journeys Group operated 940 stores at the end of the first quarter of Fiscal 2027, including 189 Journeys Kidz stores in the United States, 33 Journeys stores in Canada and 30 Little Burgundy stores in Canada, compared to 989 stores at the end of the first quarter of Fiscal 2026, including 203 Journeys Kidz stores in the United States, 34 Journeys stores in Canada and 29 Little Burgundy stores in Canada.

The 160 basis point improvement in operating margin for Journeys Group for the first quarter of Fiscal 2027 compared to the first quarter of Fiscal 2026 was primarily due to a 190 basis point decrease in selling and administrative expenses as a percentage of net sales. This improvement reflects leverage of expenses as a result of increased revenue in the first quarter of Fiscal 2027, especially selling salaries and occupancy expense, partially offset by increased marketing expense. The increase in operating margin was partially offset by a 30 basis point decrease in gross margin as a percentage of net sales, reflecting lower initial margins as a result of changes in brand mix, partially offset by lower markdowns. The decrease

in selling and administrative expenses as a percentage of net sales demonstrates the impact of our cost savings initiatives and closing underperforming stores.

Schuh Group

Net sales from Schuh Group decreased 5.4% to $90.7 million in the first quarter of Fiscal 2027 compared to $95.9 million in the first quarter of Fiscal 2026. The net sales decrease for the first quarter of Fiscal 2027 includes a 9% decrease in comparable sales, reflecting decreased e-commerce comparable sales and same store sales, and a 7% decrease in the average number of stores in the first quarter of Fiscal 2027, partially offset by a favorable impact of $3.7 million due to changes in foreign exchange rates. We prioritized more full-priced selling and controlled markdowns in Schuh Group during the first quarter of Fiscal 2027 but this pressured store traffic in an already weaker U.K. consumer market and especially affected the e-commerce channel which in particular attracts bargain seekers. Schuh Group's sales decreased 9% on a local currency basis for the first quarter of Fiscal 2027. Schuh Group operated 114 stores at the end of the first quarter of Fiscal 2027, compared to 121 stores at the end of the first quarter of Fiscal 2026.

The 130 basis point decrease in operating margin for Schuh Group for the first quarter of Fiscal 2027 compared to the first quarter of Fiscal 2026 was due to a 250 basis point increase in selling and administrative expenses as a percentage of net sales, reflecting deleverage of expenses in the first quarter of Fiscal 2027, especially selling salaries, compensation, professional fees and occupancy expense, partially offset by decreased marketing expense. The decrease in operating margin was partially offset by a 120 basis point increase in gross margin as a percentage of net sales, reflecting lower shipping and warehouse costs and decreased promotional activity, partially offset by changes in brand mix. In addition, the operating loss included an unfavorable impact of $0.4 million due to changes in foreign exchange rates compared to last year.

Johnston & Murphy Group

Johnston & Murphy Group net sales increased 5.8% to $81.3 million for the first quarter of Fiscal 2027 from $76.8 million for the first quarter of Fiscal 2026. The net sales increase for the first quarter of Fiscal 2027 includes a 7% increase in comparable sales, reflecting increased store sales, and a 4% increase in the average number of stores in the first quarter of Fiscal 2027, partially offset by decreased wholesale sales. The performance of Johnston & Murphy's product assortment, both apparel and footwear, as a result of an updated product offering and increased brand awareness through marketing and social media campaigns contributed to increased store and e-commerce sales in the first quarter of Fiscal 2027. Retail operations accounted for 75.6% of Johnston & Murphy Group's sales in the first quarter of Fiscal 2027, up from 72.8% in the first quarter of Fiscal 2026. The store count for Johnston & Murphy Group's retail operations at the end of the first quarter of Fiscal 2027 was 154 Johnston & Murphy full-price retail and factory stores, compared to 146 Johnston & Murphy full-price retail and factory stores at the end of the first quarter of Fiscal 2026.

The 120 basis point improvement in operating margin for Johnston & Murphy Group for the first quarter of Fiscal 2027 compared to the first quarter of Fiscal 2026 was primarily due to an 80 basis point increase in gross margin as a percentage of net sales due to lower markdowns, a favorable mix change due to lower wholesale sales and decreased shipping and warehouse expense, partially offset by tariff pressure. In addition, selling and administrative expenses as a percentage of net sales decreased 40 basis points for the first quarter of Fiscal 2027 compared to the first quarter of Fiscal 2026 reflecting leverage of expenses, especially marketing and freight expense, partially offset by increased performance-based incentive compensation expenses.

Genesco Brands Group

Genesco Brands Group's net sales increased 3.9% to $29.7 million for the first quarter of Fiscal 2027 from $28.6 million for the first quarter of Fiscal 2026 primarily due to increased footwear sales of Dockers and private label products, partially offset by decreased sales of Levi's as we exited that business. The license for the Levi's brand expired in May 2026.

The 150 basis point improvement in operating margin for Genesco Brands Group for the first quarter of Fiscal 2027 compared to the first quarter of Fiscal 2026 was primarily due to decreased selling and administrative expenses as a percentage of net sales. The decrease reflects leverage of expenses as a result of increased revenue in the first quarter of Fiscal 2027, especially decreased shipping and warehouse and freight expenses, partially offset by increased royalty expenses. Also contributing to the improvement in operating margin is an increase in gross margin as a percentage of net sales due to a favorable change in sales mix and the reversal of an inventory write-down related to the exit of licenses, partially offset by tariff pressure.

Corporate, Interest Expenses and Other Charges

Corporate and other expense for the first quarter of Fiscal 2027 was a gain of $0.5 million compared to an expense of $7.9 million for the first quarter of Fiscal 2026. The gain in corporate in the first quarter of Fiscal 2027 included an asset impairment and other gain of $10.1 million which included a gain from payment card interchange fee litigation, partially offset by store restructuring charges, costs associated with information technology transformation and severance. Corporate expense in the first quarter of Fiscal 2026 included asset impairment and other charges of $0.3 million for severance. The corporate expense increase, excluding asset impairment and other charges, reflects additional information technology transformation expenses and increased performance-based incentive compensation expense in the first quarter of Fiscal 2027 compared to the first quarter of Fiscal 2026.

Net interest expense decreased $1.0 million to $0.3 million in the first quarter of Fiscal 2027 compared to $1.3 million in the first quarter of Fiscal 2026 primarily reflecting decreased revolver borrowings in North America in the first quarter of Fiscal 2027 compared to the first quarter of Fiscal 2026 and increased interest income in the first quarter of Fiscal 2027 as a result of increased investments during the first quarter this year.

Liquidity and Capital Resources

Working Capital

Our business is seasonal, with our investment in working capital normally reaching peaks in the summer and fall of each year in anticipation of the back-to-school and holiday selling seasons. Historically, cash flows from operations typically have been generated principally in the fourth quarter of each fiscal year.

Reasons for the major variances in cash provided by (used in) the table above are as follows:

Cash used in operating activities was $1.7 million higher in the first three months of Fiscal 2027 compared to the first three months of Fiscal 2026, reflecting primarily the following factors:

Cash used in investing activities was $3.5 million lower for the first three months of Fiscal 2027 as compared to the first three months of Fiscal 2026 reflecting decreased capital expenditures primarily related to omni-channel capabilities and investments in retail stores.

Cash provided by financing activities was $67.3 million lower in the first three months of Fiscal 2027 as compared to the first three months of Fiscal 2026 primarily reflecting decreased net borrowings, partially offset by decreased share repurchases.

Sources of Liquidity and Future Capital Needs

We have three principal sources of liquidity: cash flow from operations, cash on hand and our credit facilities discussed in Item 8, Note 8, "Long-Term Debt", to our Consolidated Financial Statements included in our Annual Report on Form 10-K for Fiscal 2026.

As of May 2, 2026, we have borrowed $15.0 million U.S. revolver borrowings, $7.9 million (CAD $10.8 million) revolver borrowings related to GCO Canada ULC and $22.4 million (£16.5 million) related to Schuh revolver borrowings. We were in compliance with all the relevant terms and conditions of the Credit Facility and the Facility Agreement as of May 2, 2026.

We believe that cash on hand, cash provided by operations and borrowings under our Credit Facility and the Facility Agreement will be sufficient to support our liquidity needs in Fiscal 2027 and the foreseeable future.

In addition, as discussed in Item I, Note 7, "Legal Proceedings," to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, we expect to receive refunds of approximately $23 to $25 million, not including interest, related to tariffs previously collected under IEEPA. The timing of cash receipts is dependent upon the execution of the refund process by CBP and the U.S. Treasury Department.

Contractual Obligations

Our contractual obligations at May 2, 2026 increased 9% compared to January 31, 2026, primarily due to increased long-term debt and lease obligations.

Capital Expenditures

Total capital expenditures in Fiscal 2027 are expected to be approximately $65 to $70 million of which approximately 90% is for new stores and renovations and 10% is for other initiatives. We do not currently have any longer-term capital expenditures or other cash requirements other than as set forth above and in the contractual obligations table as disclosed in Item 7 of our Annual Report on Form 10-K for the fiscal year ended January 31, 2026. We also do not currently have any off-balance sheet arrangements.

Common Stock Repurchases

We did not repurchase any shares of our common stock during the first quarter of Fiscal 2027. We repurchased 604,531 shares of our common stock during the first three months of Fiscal 2026 at a cost of $12.6 million, or an average cost of $20.79 per share. We have $29.8 million remaining as of May 2, 2026 under our expanded share repurchase authorization announced in June 2023. During the second quarter of Fiscal 2027, through June 10, 2026, we have not repurchased any shares of our common stock. We continue to view share repurchases as an important component of our balanced capital allocation strategy and are committed to deploying excess capital.

Environmental and Other Contingencies

We are subject to certain loss contingencies related to environmental proceedings and other legal matters, including those disclosed in Item 1, Note 7, "Legal Proceedings", to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

New Accounting Pronouncements

Descriptions of recently issued accounting pronouncements, if any, and the accounting pronouncements adopted by us during the first quarter of Fiscal 2027 are included in Note 1 to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.