Retail footwear veteran Genesco Inc. is shuttering more than two dozen underperforming stores as part of a broader effort to reduce its physical footprint, cut overhead and improve overall profitability.

The Nashville-based parent company of Journeys, Johnston & Murphy and U.K.-based Schuh closed 25 retail stores during its second quarter of fiscal 2027. Combined with three new openings, the net reduction brought its total store fleet down to 1,186 — a 5% drop in total retail space compared with the same period last year. The closures were led by teen retailer Journeys with 17, followed by Schuh with six and Johnston & Murphy with two.

The move fits a wider pattern across the footwear and apparel sector, where mall-based chains have been shrinking store counts for years as shopping shifts online and leases come up for renewal. Journeys, which has historically relied heavily on mall locations, has been paring its fleet as part of that broader pullback in physical retail.

Genesco says the reduced square footage reflects a deliberate operational pivot. Net sales fell 3% to $530 million, but management pointed to store closures, reduced promotional discounting and license transitions as intentional moves that traded top-line revenue for healthier margins. The smaller store count, along with a disciplined pull-back on price cuts, helped adjusted gross margins expand 140 basis points to 47.2%.

Flagship brand Journeys posted a 2% gain in comparable sales, marking its eighth consecutive quarter of growth, while Johnston & Murphy comparable sales rose 4%. Genesco also strengthened its balance sheet, cutting total debt from $71 million a year ago to $15.8 million.

Beyond closing doors, the retailer is aggressively targeting operational costs. A company-wide efficiency push — fueled by store remodeling, automation and AI integration — is projected to deliver savings of between $40 million and $50 million through fiscal 2029. The use of AI and automation in retail operations has become increasingly common across the industry as companies look to contain labor and supply chain costs.

Strong back-to-school demand lifted Journeys' sales to mid-single-digit growth in August, prompting Genesco to raise its full-year adjusted earnings guidance to the high end of its $2 to $2.40 per share range. The 25 store closures represent a tactical trim, exchanging sheer scale for a leaner, higher-margin operation. Whether the strategy sustains margin gains will depend on comparable sales holding up through the key holiday shopping quarter, and on further fleet reductions as additional leases come due.

Source: Fox Business