UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended ~~July 29,~~October 28, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from to

Commission File No. 1-3083

Genesco Inc.

(Exact name of registrant as specified in its charter)


Tennessee		62-0211340
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

	535 Marriott Drive	37214
Nashville,	Tennessee	(Zip Code)
(Address of principal executive offices)

Registrant's telephone number, including area code: (615) 367-7000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 par value	GCO	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer; an accelerated filer; a non-accelerated filer; a smaller reporting company; or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

As of ~~August 25,~~November 24, 2023, there were ~~11,505,683~~11,489,017 shares of the registrant's common stock outstanding.

INDEX



Part I. Financial Information
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets - ~~July 29,~~October 28, 2023, January 28, 2023 and ~~July 30,~~October 29, 2022	4
Condensed Consolidated Statements of Operations - Three and ~~Six~~Nine Months ended ~~July 29,~~October 28, 2023 and ~~July 30,~~October 29, 2022	5
Condensed Consolidated Statements of Comprehensive Income (Loss) - Three and ~~Six~~Nine Months ended ~~July 29,~~October 28, 2023 and ~~July 30,~~October 29, 2022	6
Condensed Consolidated Statements of Cash Flows - ~~Six~~Nine Months ended ~~July 29,~~October 28, 2023 and ~~July 30,~~October 29, 2022	7
Condensed Consolidated Statements of Equity - Three and ~~Six~~Nine Months ended ~~July 29,~~October 28, 2023 and ~~July 30,~~October 29, 2022	8
Notes to Condensed Consolidated Financial Statements	9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	1615
Item 3. Quantitative and Qualitative Disclosures about Market Risk	2422
Item 4. Controls and Procedures	2422
Part II. Other Information	2523
Item 1. Legal Proceedings	2523
Item 1A. Risk Factors	2523
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	2523
Item 5. Other Information	2523
Item 6. Exhibits	2624
Signature	2725

cautionary notice regarding forward-looking statements

Statements in this Quarterly Report on Form 10-Q include certain forward-looking statements, which include statements regarding our intent, belief or expectations and all statements other than those made solely with respect to historical fact. Actual results could differ materially from those reflected by the forward-looking statements in this Quarterly Report on Form 10-Q and a number of factors may adversely affect the forward-looking statements and our future results, liquidity, capital resources or prospects. These include, but are not limited to, adjustments to projections reflected in forward-looking statements, including those resulting from weakness in store and shopping mall traffic, restrictions on operations imposed by government entities and/or landlords, changes in public safety and health requirements and limitations on our ability to adequately staff and operate stores. Differences from expectations could also result from our ability to obtain from suppliers products that are in-demand on a timely basis and effectively manage disruptions in product supply or distribution, including disruptions as a result of pandemics or geopolitical events; the level of consumer spending on our merchandise and interest in our brands and in general; the level and timing of promotional activity necessary to maintain inventories at appropriate levels; our ability to pass on price increases to our customers; the timing and amount of any share repurchases by us; the imposition of tariffs on products imported by us or our vendors as well as the ability and costs to move production of products in response to tariffs; unfavorable trends in fuel costs, foreign exchange rates, foreign labor and material costs; a disruption in shipping or increase in cost of our imported products, and other factors affecting the cost of products; our dependence on third-party vendors and licensors for the products we sell; our ability to renew our license agreements; ~~the effects of the British decision to exit the European Union,~~ impacts of the Russia-Ukraine war, and other sources of market weakness in the U.K. and the Republic of Ireland; the effectiveness of our omni-channel initiatives; costs associated with changes in minimum wage and overtime requirements; wage pressure in the U.S. and the U.K.; labor shortages; the effects of inflation; the evolving regulatory landscape related to our use of social media; the establishment and protection of our intellectual property; weakness in the consumer economy and retail industry; competition and fashion trends in our markets, including trends with respect to the popularity of casual and dress footwear; any failure to increase sales at our existing stores, given our high fixed expense cost structure, and in our e-commerce businesses; risks related to the potential for terrorist events; store closures and effects on the business as a result of civil disturbances; changes in buying patterns by significant wholesale customers; changes in consumer preferences; our ability to continue to complete and integrate acquisitions; our ability to expand our business and diversify our product base; impairment of goodwill in connection with acquisitions; payment related risks that could increase our operating cost, expose us to fraud or theft, subject us to potential liability and disrupt our business; retained liabilities associated with divestitures of businesses including potential liabilities under leases as the prior tenant or as a guarantor of certain leases; and changes in the timing of holidays or in the onset of seasonal weather affecting period-to-period sales comparisons. Additional factors that could cause differences from expectations include ~~our~~the ability to secure allocations to refine product assortments to address consumer demand; the ability to renew leases in existing stores and control or lower occupancy costs, to open or close stores in the number and on the planned schedule, and to conduct required remodeling or refurbishment on schedule and at expected expense levels; our ability to realize anticipated cost savings, including rent savings; our ability to make our occupancy costs more variable, realize any anticipated tax benefits in both the amount and timeframe anticipated, and achieve expected digital gains and gain market share; deterioration in the performance of individual businesses or of our market value relative to our book value, resulting in impairments of fixed assets, operating lease right of use assets or intangible assets or other adverse financial consequences and the timing and amount of such impairments or other consequences; unexpected changes to the market for our shares or for the retail sector in general; our ability to meet our sustainability, stewardship, emission and diversity, equity and inclusion related ESG projections, goals and commitments; costs and reputational harm as a result of disruptions in our business or information technology systems either by security breaches and incidents or by potential problems associated with the implementation of new or upgraded systems, and the cost and outcome of litigation, investigations, disputes and environmental matters that involve us. For a full discussion of risk factors, see Item 1A, "Risk Factors".

Readers are cautioned not to place undue reliance on forward-looking statements as such statements speak only as of the date they were made and involve risks and uncertainties that could cause actual events or results to differ materially from the events or results described in the forward-looking statements. The most important factors which could cause our actual results to differ from our forward-looking statements are set forth in our description of risk factors in Item 1A contained in our Annual Report on Form 10-K for the fiscal year ended January 28, 2023, which should be read in conjunction with the forward-looking statements in this Quarterly Report on Form 10-Q. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update any forward-looking statement.

The events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. As a result, our actual results may differ materially from the results contemplated by these forward-looking statements.

We maintain a website at www.genesco.com where investors and other interested parties may obtain, free of charge, press releases and other information as well as gain access to our periodic filings with the Securities and Exchange Commission (“SEC”). The information contained on this website should not be considered to be a part of this or any other report filed with or furnished to the SEC.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

Genesco Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share amounts)


Assets	July 29, 2023			January 28, 2023			July 30, 2022			October 28, 2023			January 28, 2023			October 29, 2022
Current Assets:
Cash and cash equivalents	$	37,416		$	47,990		$	44,939		$	21,691		$	47,990		$	32,113
Accounts receivable, net of allowances of $4,536 at July 29, 2023,
$3,710 at January 28, 2023 and $5,335 at July 30, 2022		50,351			40,818			42,782
Accounts receivable, net of allowances of $4,836 at October 28, 2023,
$3,710 at January 28, 2023 and $5,910 at October 29, 2022											56,934			40,818			48,670
Inventories		491,118			458,017			507,236			516,735			458,017			563,490
Prepaids and other current assets		45,983			25,844			99,455			43,350			25,844			37,575
Total current assets		624,868			572,669			694,412			638,710			572,669			681,848
Property and equipment, net		244,090			233,733			220,742			245,009			233,733			221,207
Operating lease right of use assets		476,715			470,991			491,412			459,524			470,991			483,403
Non-current prepaid income taxes		55,028			54,111			—			55,632			54,111			52,319
Goodwill		9,717			38,123			38,523			9,283			38,123			37,903
Other intangibles		27,952			27,430			27,506			26,442			27,430			26,208
Deferred income taxes		30,623			28,563			4,519			33,163			28,563			12,168
Other noncurrent assets		25,766			30,806			22,606			25,168			30,806			21,937
Total Assets		1,494,759			1,456,426			1,499,720			1,492,931			1,456,426			1,536,993
Liabilities and Equity
Current Liabilities:
Accounts payable		166,504			144,998			226,779			186,683			144,998			223,404
Current portion - long-term debt											—			—			3,484
Current portion - operating lease liabilities		137,369			134,458			135,571			134,850			134,458			136,294
Other accrued liabilities		78,707			81,327			80,266			75,631			81,327			82,193
Total current liabilities		382,580			360,783			442,616			397,164			360,783			445,375
Long-term debt		131,544			44,858			48,872			128,163			44,858			85,904
Long-term operating lease liabilities		403,413			401,113			413,416			387,347			401,113			413,096
Other long-term liabilities		44,203			42,706			34,283			43,299			42,706			33,275
Total liabilities		961,740			849,460			939,187			955,973			849,460			977,650
Commitments and contingent liabilities											—			—			—
Equity
Non-redeemable preferred stock		812			815			818			812			815			817
Common equity:
Common stock, $1 par value:
Common stock, $1 par value:
Authorized: 80,000,000 shares
Issued common stock		11,996			13,089			13,557			11,991			13,089			13,101
Additional paid-in capital		313,019			305,260			298,010			316,206			305,260			301,692
Retained earnings		263,081			346,870			307,929			269,576			346,870			307,921
Accumulated other comprehensive loss		(38,032	)		(41,211	)		(41,924	)		(43,770	)		(41,211	)		(46,331	)
Treasury shares, at cost (488,464 shares)		(17,857	)		(17,857	)		(17,857	)
Treasury shares, at cost (488,464 shares)											(17,857	)		(17,857	)		(17,857	)
Total equity		533,019			606,966			560,533			536,958			606,966			559,343
Total Liabilities and Equity	$	1,494,759		$	1,456,426		$	1,499,720		$	1,492,931		$	1,456,426		$	1,536,993

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Genesco Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	July 29, 2023			July 30, 2022			July 29, 2023			July 30, 2022			October 28, 2023			October 29, 2022			October 28, 2023			October 29, 2022
Net sales	$	523,027		$	535,332		$	1,006,359		$	1,056,080		$	579,315		$	603,788		$	1,585,674		$	1,659,868
Cost of sales		273,507			281,018			528,031			550,322			300,890			309,981			828,921			860,303
Gross margin		249,520			254,314			478,328			505,758			278,425			293,807			756,753			799,565
Selling and administrative expenses		259,520			245,103			511,017			488,584			267,474			267,734			778,491			756,318
Goodwill impairment		28,453			—			28,453			—			—			—			28,453			—
Asset impairments and other, net		174			129			482			(154	)		99			—			581			(154	)
Operating income (loss)		(38,627	)		9,082			(61,624	)		17,328			10,852			26,073			(50,772	)		43,401
Other components of net periodic benefit cost		148			50			240			148			148			50			388			198
Interest expense, net		2,383			405			4,034			702			2,207			906			6,241			1,608
Earnings (loss) from continuing operations before income taxes		(41,158	)		8,627			(65,898	)		16,478			8,497			25,117			(57,401	)		41,595
Income tax expense (benefit)		(9,526	)		976			(15,391	)		3,858			1,908			4,693			(13,483	)		8,551
Earnings (loss) from continuing operations		(31,632	)		7,651			(50,507	)		12,620			6,589			20,424			(43,918	)		33,044
Loss from discontinued operations, net of tax		(33	)		(8	)		(48	)		(30	)		(50	)		(48	)		(98	)		(78	)
Net Earnings (Loss)	$	(31,665	)	$	7,643		$	(50,555	)	$	12,590		$	6,539		$	20,376		$	(44,016	)	$	32,966

Basic earnings (loss) per common share:
Continuing operations	$	(2.79	)	$	0.60		$	(4.36	)	$	0.98		$	0.60		$	1.68		$	(3.87	)	$	2.61
Discontinued operations		0.00			0.00			(0.01	)		0.00			0.00			0.00			(0.01	)		0.00
Net earnings (loss)	$	(2.79	)	$	0.60		$	(4.37	)	$	0.98		$	0.60		$	1.68		$	(3.88	)	$	2.61

Diluted earnings (loss) per common share:
Continuing operations	$	(2.79	)	$	0.59		$	(4.36	)	$	0.96		$	0.60		$	1.66		$	(3.87	)	$	2.56
Discontinued operations		0.00			0.00			(0.01	)		(0.01	)		0.00			(0.01	)		(0.01	)		0.00
Net earnings (loss)	$	(2.79	)	$	0.59		$	(4.37	)	$	0.95		$	0.60		$	1.65		$	(3.88	)	$	2.56

Weighted average shares outstanding:
Basic		11,344			12,813			11,581			12,887			10,898			12,138			11,353			12,637
Diluted		11,344			13,009			11,581			13,189			10,972			12,326			11,353			12,901

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Genesco Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands)


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	July 29, 2023			July 30, 2022			July 29, 2023			July 30, 2022			October 28, 2023			October 29, 2022			October 28, 2023			October 29, 2022
Net earnings (loss)	$	(31,665	)	$	7,643		$	(50,555	)	$	12,590		$	6,539		$	20,376		$	(44,016	)	$	32,966
Other comprehensive income (loss):
Postretirement liability adjustments, net of tax		62			13			91			63			62			13			153			76
Foreign currency translation adjustments		2,643			(1,712	)		3,088			(5,579	)		(5,800	)		(4,420	)		(2,712	)		(9,999	)
Total other comprehensive income (loss)		2,705			(1,699	)		3,179			(5,516	)
Total other comprehensive loss														(5,738	)		(4,407	)		(2,559	)		(9,923	)
Comprehensive Income (Loss)	$	(28,960	)	$	5,944		$	(47,376	)	$	7,074		$	801		$	15,969		$	(46,575	)	$	23,043

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Genesco Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)


	Six Months Ended						Nine Months Ended
	July 29, 2023			July 30, 2022			October 28, 2023			October 29, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)	$	(50,555	)	$	12,590		$	(44,016	)	$	32,966
Adjustments to reconcile net earnings (loss) to net cash used in
operating activities:
Depreciation and amortization		23,119			21,229			35,449			31,901
Deferred income taxes		(1,576	)		(3,075	)		(3,929	)		(10,728	)
Goodwill impairment		28,453			—			28,453			—
Impairment of long-lived assets		482			542			581			542
Share-based compensation expense		7,925			6,788			11,107			10,464
Other		686			413			1,225			999
Changes in working capital and other assets and liabilities:
Accounts receivable		(9,623	)		(3,753	)		(16,958	)		(10,224	)
Inventories		(30,237	)		(234,018	)		(61,086	)		(293,904	)
Prepaids and other current assets		(19,901	)		(28,510	)		(17,718	)		33,133
Accounts payable		23,394			71,258			44,551			70,312
Other accrued liabilities		(1,076	)		(46,638	)		(3,454	)		(45,194	)
Other assets and liabilities		3,774			(21,037	)		2,255			(64,237	)
Net cash used in operating activities		(25,135	)		(224,211	)		(23,540	)		(243,970	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(35,298	)		(29,005	)		(49,738	)		(39,845	)
Proceeds from asset sales		87			—			87			—
Net cash used in investing activities		(35,211	)		(29,005	)		(49,651	)		(39,845	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facility		244,452			62,000			365,416			212,086
Payments on revolving credit facility		(158,405	)		(27,375	)		(282,083	)		(136,375	)
Shares repurchased related to share repurchase plan		(32,027	)		(56,329	)		(32,027	)		(77,470	)
Shares repurchased related to taxes for share-based awards		(2,205	)		(3,875	)		(2,249	)		(3,942	)
Change in overdraft balances		(2,707	)		4,841			(1,847	)		4,052
Other		—			2			(12	)		2
Net cash provided by (used in) financing activities		49,108			(20,736	)		47,198			(1,647	)
Effect of foreign exchange rate fluctuations on cash		664			(1,634	)		(306	)		(2,950	)
Net decrease in cash and cash equivalents		(10,574	)		(275,586	)		(26,299	)		(288,412	)
Cash and cash equivalents at beginning of period		47,990			320,525			47,990			320,525
Cash and cash equivalents at end of period	$	37,416		$	44,939		$	21,691		$	32,113
Supplemental information:
Interest paid	$	3,380		$	504		$	5,711		$	1,276
Income taxes paid		3,813			25,718			5,487			33,941
Cash paid for amounts included in measurement of operating lease liabilities		86,747			101,687			130,468			135,116
Operating lease assets obtained in exchange for new operating lease liabilities		84,643			41,137			111,105			71,598

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Genesco Inc. and Subsidiaries

Condensed Consolidated Statements of Equity

(In thousands)


	Non- Redeemable Preferred Stock			Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Shares			Total Equity			Non- Redeemable Preferred Stock			Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Shares			Total Equity
Balance January 29, 2022	$	827		$	14,256		$	291,444		$	350,206		$	(36,408	)	$	(17,857	)	$	602,468		$	827		$	14,256		$	291,444		$	350,206		$	(36,408	)	$	(17,857	)	$	602,468
Net earnings		—			—			—			4,947			—			—			4,947			—			—			—			4,947			—			—			4,947
Other comprehensive loss		—			—			—			—			(3,817	)		—			(3,817	)		—			—			—			—			(3,817	)		—			(3,817	)
Share-based compensation expense		—			—			3,239			—			—			—			3,239			—			—			3,239			—			—			—			3,239
Restricted stock issuance		—			78			(78	)		—			—			—			—			—			78			(78	)		—			—			—			—
Shares repurchased		—			(104	)		—			(6,396	)		—			—			(6,500	)		—			(104	)		—			(6,396	)		—			—			(6,500	)
Other		(9	)		(13	)		23			—			—			—			1			(9	)		(13	)		23			—			—			—			1
Balance April 30, 2022		818			14,217			294,628			348,757			(40,225	)		(17,857	)		600,338			818			14,217			294,628			348,757			(40,225	)		(17,857	)		600,338
Net earnings		—			—			—			7,643			—			—			7,643			—			—			—			7,643			—			—			7,643
Other comprehensive loss		—			—			—			—			(1,699	)		—			(1,699	)		—			—			—			—			(1,699	)		—			(1,699	)
Share-based compensation expense		—			—			3,549			—			—			—			3,549			—			—			3,549			—			—			—			3,549
Restricted stock issuance		—			239			(239	)		—			—			—			—			—			239			(239	)		—			—			—			—
Shares repurchased		—			(826	)		—			(44,596	)		—			—			(45,422	)		—			(826	)		—			(44,596	)		—			—			(45,422	)
Restricted shares withheld for taxes		—			(72	)		72			(3,875	)		—			—			(3,875	)		—			(72	)		72			(3,875	)		—			—			(3,875	)
Other		—			(1	)		—			—			—			—			(1	)		—			(1	)		—			—			—			—			(1	)
Balance July 30, 2022	$	818		$	13,557		$	298,010		$	307,929		$	(41,924	)	$	(17,857	)	$	560,533		$	818		$	13,557		$	298,010		$	307,929		$	(41,924	)	$	(17,857	)	$	560,533
Net earnings																							—			—			—			20,376			—			—			20,376
Other comprehensive loss																							—			—			—			—			(4,407	)		—			(4,407	)
Share-based compensation expense																							—			—			3,676			—			—			—			3,676
Restricted shares withheld for taxes																							—			(2	)		2			(67	)		—			—			(67	)
Shares repurchased																							—			(451	)		—			(20,317	)		—			—			(20,768	)
Other																							(1	)		(3	)		4			—			—			—			—
Balance October 29, 2022																						$	817		$	13,101		$	301,692		$	307,921		$	(46,331	)	$	(17,857	)	$	559,343


	Non- Redeemable Preferred Stock			Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Shares			Total Equity			Non- Redeemable Preferred Stock			Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Shares			Total Equity
Balance January 28, 2023	$	815		$	13,089		$	305,260		$	346,870		$	(41,211	)	$	(17,857	)	$	606,966		$	815		$	13,089		$	305,260		$	346,870		$	(41,211	)	$	(17,857	)	$	606,966
Net loss		—			—			—			(18,890	)		—			—			(18,890	)		—			—			—			(18,890	)		—			—			(18,890	)
Other comprehensive income		—			—			—			—			474			—			474			—			—			—			—			474			—			474
Share-based compensation expense		—			—			3,772			—			—			—			3,772			—			—			3,772			—			—			—			3,772
Restricted stock issuance		—			234			(234	)		—			—			—			—			—			234			(234	)		—			—			—			—
Restricted shares withheld for taxes		—			(13	)		13			(449	)		—			—			(449	)		—			(13	)		13			(449	)		—			—			(449	)
Shares repurchased		—			(255	)		—			(8,915	)		—			—			(9,170	)		—			(255	)		—			(8,915	)		—			—			(9,170	)
Other		(3	)		(3	)		6			(78	)		—			—			(78	)		(3	)		(3	)		6			(78	)		—			—			(78	)
Balance April 29, 2023		812			13,052			308,817			318,538			(40,737	)		(17,857	)		582,625			812			13,052			308,817			318,538			(40,737	)		(17,857	)		582,625
Net loss		—			—			—			(31,665	)		—			—			(31,665	)		—			—			—			(31,665	)		—			—			(31,665	)
Other comprehensive income		—			—			—			—			2,705			—			2,705			—			—			—			—			2,705			—			2,705
Share-based compensation expense		—			—			4,153			—			—			—			4,153			—			—			4,153			—			—			—			4,153
Restricted stock issuance		—			40			(40	)		—			—			—			—			—			40			(40	)		—			—			—			—
Shares repurchased		—			(1,006	)		—			(21,851	)		—			—			(22,857	)		—			(1,006	)		—			(21,851	)		—			—			(22,857	)
Restricted shares withheld for taxes		—			(72	)		72			(1,756	)		—			—			(1,756	)		—			(72	)		72			(1,756	)		—			—			(1,756	)
Other		—			(18	)		17			(185	)		—			—			(186	)		—			(18	)		17			(185	)		—			—			(186	)
Balance July 29, 2023	$	812		$	11,996		$	313,019		$	263,081		$	(38,032	)	$	(17,857	)	$	533,019		$	812		$	11,996		$	313,019		$	263,081		$	(38,032	)	$	(17,857	)	$	533,019
Net earnings																							—			—			—			6,539			—			—			6,539
Other comprehensive loss																							—			—			—			—			(5,738	)		—			(5,738	)
Share-based compensation expense																							—			—			3,182			—			—			—			3,182
Restricted shares withheld for taxes																							—			(1	)		1			(44	)		—			—			(44	)
Other																							—			(4	)		4			—			—			—			—
Balance October 28, 2023																						$	812		$	11,991		$	316,206		$	269,576		$	(43,770	)	$	(17,857	)	$	536,958

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Genesco Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

Note 1

Summary of Significant Accounting Policies

Basis of Presentation

These Condensed Consolidated Financial Statements should be read in conjunction with our Consolidated Financial Statements and Notes for Fiscal 2023, which are contained in our Annual Report on Form 10-K as filed with the SEC on March 22, 2023. The Condensed Consolidated Financial Statements and Notes contained in this report are unaudited but reflect all adjustments, including normal recurring adjustments, necessary for a fair presentation of the results for the interim periods of the fiscal year ending February 3, 2024 ("Fiscal 2024"), which is a 53-week year, and of the fiscal year ended January 28, 2023 ("Fiscal 2023"). All subsidiaries are consolidated in the Condensed Consolidated Financial Statements. All significant intercompany transactions and accounts have been eliminated. The results of operations for any interim period are not necessarily indicative of results for the full year. The Condensed Consolidated Financial Statements and the related Notes have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and notes required by U.S. Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. The Condensed Consolidated Balance Sheet as of January 28, 2023 has been derived from the audited financial statements at that date.

Nature of Operations

Genesco Inc. and its subsidiaries (collectively the "Company", "Genesco," "we", "our", or "us") business includes the sourcing and design, marketing and distribution of footwear and accessories through retail stores in the U.S., Puerto Rico and Canada primarily under the Journeys®, Journeys Kidz®, Little Burgundy® and Johnston & Murphy® banners and under the Schuh® banner in the United Kingdom (“U.K.”) and the Republic of Ireland (“ROI”); through ~~catalogs and~~ e-commerce websites including the following: journeys.com, journeyskidz.com, journeys.ca, littleburgundyshoes.com, schuh.co.uk, schuh.ie, schuh.eu, johnstonmurphy.com, johnstonmurphy.ca, nashvilleshoewarehouse.com and dockersshoes.com as well as catalogs. We also source, design, market and distribute footwear and accessories at wholesale, primarily under our Johnston & Murphy brand, the licensed Levi's® brand, the licensed Dockers® brand, the licensed G.H. Bass® brand and other brands that we license for footwear. At ~~July 29,~~October 28, 2023, we operated ~~1,375~~1,360 retail stores in the U.S., Puerto Rico, Canada, the U.K. and the ROI.

During the three and ~~six~~nine months ended ~~July 29,~~October 28, 2023 and ~~July 30,~~October 29, 2022, we operated four reportable business segments (not including corporate): (i) Journeys Group, comprised of the Journeys, Journeys Kidz and Little Burgundy retail footwear chains and e-commerce operations; (ii) Schuh Group, comprised of the Schuh retail footwear chain and e-commerce operations; (iii) Johnston & Murphy Group, comprised of Johnston & Murphy retail operations, e-commerce operations and wholesale distribution of products under the Johnston & Murphy brand; and (iv) Genesco Brands Group, comprised of the licensed Dockers, Levi's, and G.H. Bass brands, as well as other brands we license for footwear.

Selling and Administrative Expenses

Wholesale costs of distribution are included in selling and administrative expenses on the Condensed Consolidated Statements of Operations in the amount of $~~2.5~~3.1 million and $~~3.1~~3.7 million for the ~~second~~third quarters of Fiscal 2024 and Fiscal 2023, respectively, and $~~6.0~~9.1 million and $~~5.8~~9.5 million for the first ~~six~~nine months of Fiscal 2024 and Fiscal 2023, respectively.

Retail occupancy costs recorded in selling and administrative ~~expense~~expenses were $~~76.4~~75.5 million and $~~75.8~~77.5 million for the ~~second~~third quarters of Fiscal 2024 and Fiscal 2023, respectively, and $~~152.8~~228.3 million and $~~154.3~~231.8 million for the first ~~six~~nine months of Fiscal 2024 and Fiscal 2023, respectively.

Advertising Costs

Advertising costs were $~~28.1~~33.6 million and $~~28.0~~31.3 million for the ~~second~~third quarters of Fiscal 2024 and Fiscal 2023, respectively, and $~~51.7~~85.3 million and $~~50.1~~81.4 million for the first ~~six~~nine months of Fiscal 2024 and Fiscal 2023, respectively.

Vendor Allowances

Vendor reimbursements of cooperative advertising costs recognized as a reduction of selling and administrative expenses were $~~1.9~~2.5 million and $~~3.5~~5.0 million for the ~~second~~third quarters of Fiscal 2024 and Fiscal 2023, respectively, and $~~6.6~~9.1 million and $~~6.7~~11.7 million for the first ~~six~~nine months of Fiscal 2024 and Fiscal 2023, respectively. During the first ~~six~~nine months of each of Fiscal 2024 and Fiscal 2023, our cooperative advertising reimbursements received were not in excess of the costs incurred.

Genesco Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

Note 1

Summary of Significant Accounting Policies, Continued

New Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU No. 2023-07, "Segment Reporting (Topic 280)". This update provides, among other things, enhanced segment disclosure requirements including disclosures about significant segment expenses. ASU No. 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. We plan to adopt ASU No. 2023-07 on the effective date and do not ~~currently~~expect the adoption to have ~~any new~~a material impact on our Consolidated Financial Statements.

We continuously monitor and review all current accounting pronouncements ~~pending adoption.~~and standards from the FASB of U.S. GAAP for applicability to our operations and financial reporting. As of October 28, 2023, there were no other new pronouncements or interpretations that had or were expected to have a significant impact on our financial reporting.

Note 2

Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill by segment were as follows:


(In thousands)	Journeys Group		Genesco Brands Group			Total Goodwill			Journeys Group			Genesco Brands Group			Total Goodwill
Balance, January 28, 2023	$	9,662	$	28,461		$	38,123		$	9,662		$	28,461		$	38,123
Impairment		—		(28,453	)		(28,453	)		—			(28,453	)		(28,453	)
Effect of foreign currency exchange rates		55		(8	)		47			(379	)		(8	)		(387	)
Balance, July 29, 2023	$	9,717	$	—		$	9,717
Balance, October 28, 2023									$	9,283		$	—		$	9,283

Goodwill Valuation (Genesco Brands Group)

Due to an ongoing dispute with a Genesco Brands Group licensor regarding renewal of their current license in the normal course which has not yet been resolved and based on the requirements of ASC 350, “Intangibles - Goodwill and Other,” we identified indicators of impairment in the second quarter of Fiscal 2024. When indicators of impairment are present on an interim basis, we must assess whether it is "more likely than not" (i.e., a greater than 50% chance) that an impairment has occurred. Due to the identified indicators of impairment in the second quarter of Fiscal 2024, we determined that it was "more likely than not" that an impairment had occurred and performed a full valuation of our Togast reporting unit. Consistent with our annual valuation, our analyses included preparing an income approach and a market approach model. These updated models utilize financial forecasts which exclude cash flows for the disputed license beyond completion of the current contract term. Based upon the results of these analyses, we concluded the goodwill attributed to Togast was fully impaired. As a result, the Company recorded a non-cash impairment charge of $28.5 million in the second quarter of Fiscal 2024.

Other intangibles by major classes were as follows:


	Trademarks				Customer Lists						Other						Total						Trademarks				Customer Lists						Other						Total
(In thousands)	Jul. 29, 2023		Jan. 28, 2023		Jul. 29, 2023			Jan. 28, 2023			Jul. 29, 2023			Jan. 28, 2023			Jul. 29, 2023			Jan. 28, 2023			Oct. 28, 2023		Jan. 28, 2023		Oct. 28, 2023			Jan. 28, 2023			Oct. 28, 2023			Jan. 28, 2023			Oct. 28, 2023			Jan. 28, 2023
Gross other intangibles	$	24,882	$	24,077	$	6,525		$	6,475		$	400		$	400		$	31,807		$	30,952		$	23,514	$	24,077	$	6,445		$	6,475		$	400		$	400		$	30,359		$	30,952
Accumulated amortization		—		—		(3,455	)		(3,122	)		(400	)		(400	)		(3,855	)		(3,522	)		—		—		(3,517	)		(3,122	)		(400	)		(400	)		(3,917	)		(3,522	)
Net Other Intangibles	$	24,882	$	24,077	$	3,070		$	3,353		$	—		$	—		$	27,952		$	27,430		$	23,514	$	24,077	$	2,928		$	3,353		$	—		$	—		$	26,442		$	27,430

Genesco Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

Note 3

~~Asset Impairments and Other Charges~~

~~We recorded pretax charges of $0.2~~ ~~million and $0.5~~ ~~million in the second quarter and first six months of Fiscal 2024, respectively, for asset impairments.~~

~~Asset impairment and other charges for the second quarter and first six months of Fiscal 2023 were not considered material.~~

~~Note 4~~

Inventories


(In thousands)	July 29, 2023		January 28, 2023		October 28, 2023		January 28, 2023
Wholesale finished goods	$	75,222	$	84,209	$	61,571	$	84,209
Retail merchandise		415,896		373,808		455,164		373,808
Total Inventories	$	491,118	$	458,017	$	516,735	$	458,017

Note 54

Fair Value

Fair Value of Financial Instruments

The carrying amounts and fair values of our financial instruments at ~~July 29,~~October 28, 2023 and January 28, 2023 are as follows:


Fair Values
(In thousands)	July 29, 2023				January 28, 2023				October 28, 2023				January 28, 2023
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
U.S. Revolver Borrowings	$	123,192	$	122,653	$	30,000	$	30,219	$	122,101	$	122,465	$	30,000	$	30,219
U.K. Revolver Borrowings		8,352		8,332		14,858		14,864		6,062		6,064		14,858		14,864
Total Long-Term Debt	$	131,544	$	130,985	$	44,858	$	45,083	$	128,163	$	128,529	$	44,858	$	45,083

Debt fair values were determined using a discounted cash flow analysis based on current market interest rates for similar types of financial instruments and would be classified in Level 2 within the fair value hierarchy.

As of ~~July 29,~~October 28, 2023, we have $~~1.3~~0.8 million of long-lived assets held and used which were measured using Level 3 inputs within the fair value hierarchy. As of ~~July 29,~~October 28, 2023, we have $~~6.1~~5.8 million of investments held and used which were measured using Level 1 inputs within the fair value hierarchy.

~~Genesco Inc. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

Note 65

Earnings Per Share

Weighted-average number of shares used to calculate earnings per share are as follows:


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
(Shares in thousands)	July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022		October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Weighted-average number of shares - basic		11,344		12,813		11,581		12,887		10,898		12,138		11,353		12,637
Common stock equivalents		-		196		-		302		74		188		-		264
Weighted-average number of shares - diluted		11,344		13,009		11,581		13,189		10,972		12,326		11,353		12,901

Common stock equivalents of ~~46,000~~ ~~shares and~~ ~~142,000~~120,000 shares are excluded for the ~~three months and six~~nine months ended ~~July 29,~~October 28, 2023 ~~respectively,~~ due to the loss from continuing operations ~~for each period~~ because to do so would be anti-dilutive.

We ~~repurchased~~did ~~1,006,295~~not repurchase any shares during the ~~second~~third quarter of Fiscal ~~2024 at a cost of $22.9~~ ~~million, or $22.71~~ ~~per share, and~~2024. We repurchased 1,261,295 shares during the first ~~six~~nine months of Fiscal 2024 at a cost of $32.0 million, or $25.39 per share. We have $52.1 million remaining as of ~~July 29,~~October 28, 2023 under our expanded share repurchase authorization announced in June 2023. We repurchased ~~826,034~~451,343 shares during the ~~second~~third quarter of Fiscal 2023 at a cost of $~~45.4~~20.8 million, or $~~54.99~~46.01 per share, and repurchased ~~928,929~~1,380,272 shares during the first ~~six~~nine months of Fiscal 2023 at a cost of $~~51.9~~72.7 million, or $~~55.90~~52.66 per share. We accrued $4.8 million of share repurchases in the fourth quarter of Fiscal 2022 due to timing of the cash settlement which is included on the ~~Condensed Consolidated Statements of Cash Flows for the six months ended July 30, 2022, offset by a $0.4~~ ~~million accrual of share repurchases in the second quarter of Fiscal 2023. During the third quarter of Fiscal 2024, through September 6, 2023, we have~~ no~~t repurchased any shares.~~

~~Note 7~~

~~Long-Term Debt~~

(In thousands)

July 29, 2023

January 28, 2023

U.S. revolver borrowings

$
123,192

$
30,000

U.K. revolver borrowings

8,352

14,858

Total long-term debt

131,544

44,858

Current portion

—

—

Total Noncurrent Portion of Long-Term Debt

$
131,544

$
44,858

~~The revolver borrowings outstanding under the Credit Facility as of July 29, 2023 included $120.4~~ ~~million U.S. revolver borrowings, $8.4~~ ~~million (£6.5~~ ~~million) related to Genesco (UK) Limited and $2.8~~ ~~million (C$3.7~~ million) related to Genesco Canada ULC. We were in compliance with all the relevant terms and conditions of the Credit Facility and Facility Agreement as of July 29, 2023. Excess availability under the Credit Facility was $~~193.0~~ ~~million at July 29, 2023.~~

1211

Genesco Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

Note 5

Earnings Per Share, Continued

Condensed Consolidated Statements of Cash Flows for the nine months ended October 29, 2022. During the fourth quarter of Fiscal 2024, through December 6, 2023, we have not repurchased any shares.

Note 6

Long-Term Debt


(In thousands)	October 28, 2023		January 28, 2023
U.S. revolver borrowings	$	122,101	$	30,000
U.K. revolver borrowings		6,062		14,858
Total long-term debt		128,163		44,858
Current portion		—		—
Total Noncurrent Portion of Long-Term Debt	$	128,163	$	44,858

The revolver borrowings outstanding under the Credit Facility as of October 28, 2023 included $117.2 million U.S. revolver borrowings and $4.9 million (C$6.8 million) related to GCO Canada ULC. In addition, revolver borrowings outstanding under the Facility Agreement were $6.1 million (£5.0 million). We were in compliance with all the relevant terms and conditions of the Credit Facility and Facility Agreement as of October 28, 2023. Excess availability under the Credit Facility was $203.4 million at October 28, 2023.

Note 87

Legal Proceedings

Environmental Matters

The Company has legacy obligations including environmental monitoring and reporting costs related to: (i) a 2016 Consent Judgment entered into with the United States Environmental Protection Agency involving the site of a knitting mill operated by a former subsidiary from 1965 to 1969 in Garden City, New York; and (ii) a 2010 Consent Decree with the Michigan Department of Natural Resources and Environment relating to our former Volunteer Leather Company facility in Whitehall, Michigan. We do not expect that future obligations related to either of these sites will have a material effect on our consolidated financial condition or results of operations.

Accrual for Environmental Contingencies

Related to all outstanding environmental contingencies, we had accrued $1.6 million as of October 28, 2023, $1.7 million as of ~~July 29, 2023 and~~ January 28, 2023 and $1.4 million ~~accrued~~ as of ~~July 30,~~October 29, 2022. All such provisions reflect our estimates of the most likely cost (undiscounted, including both current and noncurrent portions) of resolving the contingencies, based on facts and circumstances as of the time they were made. There is no assurance that relevant facts and circumstances will not change, necessitating future changes to the provisions. Such contingent liabilities are included in the liability arising from provision for discontinued operations on the accompanying Condensed Consolidated Balance Sheets because they relate to former facilities operated by us. We have made pretax accruals for certain of these contingencies which were not material for the ~~second~~third quarter of Fiscal 2024 or Fiscal 2023. These charges are included in loss from discontinued operations, net in the Condensed Consolidated Statements of Operations and represent changes in estimates.

In addition to the matters specifically described in this Note, we are a party to other legal and regulatory proceedings and claims arising in the ordinary course of our business. While management does not believe that our liability with respect to any of these other matters is likely to have a material effect on our condensed consolidated financial statements, legal proceedings are subject to inherent uncertainties, and unfavorable rulings could have a material adverse impact on our condensed consolidated financial statements.

Note 98

Commitments

As part of our Genesco Brands Group business, we have a commitment to Samsung C&T America, Inc. (“Samsung”) related to the ultimate sale and valuation of inventories owned by Samsung. If product is sold below Samsung’s cost, we are required to pay to Samsung the difference between the sales price and its cost. At ~~July 29,~~October 28, 2023, the inventory owned by Samsung had a historical cost of $~~18.5~~14.4 million. As of ~~July 29,~~October 28, 2023, we believe that we have appropriately accounted for any differences between the fair value of the Samsung inventory and Samsung's historical cost.

1312

Genesco Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

Note 109

Business Segment Information

Three Months Ended July 29, 2023

(In thousands)
Journeys
Group

Schuh
Group

Johnston
& Murphy
Group

Genesco Brands Group

Corporate
& Other

Consolidated

Sales
$
287,275

$
122,799

$
77,788

$
35,461

$
—

$
523,323

Intercompany sales

—

—

(3
)

(293
)

—

(296
)
Net sales to external customers(1)

287,275

122,799

77,785

35,168

—

523,027

Segment operating income (loss)

(14,878
)

8,416

2,666

1,851

(8,055
)

(10,000
)
Goodwill impairment(2)

—

—

—

—

28,453

28,453

Asset impairments and other(3)

—

—

—

—

174

174

Operating income (loss)

(14,878
)

8,416

2,666

1,851

(36,682
)

(38,627
)
Other components of net periodic benefit cost

—

—

—

—

148

148

Interest expense, net

—

—

—

—

2,383

2,383

Earnings (loss) from continuing operations before income taxes
$
(14,878
)
$
8,416

$
2,666

$
1,851

$
(39,213
)
$
(41,158
)
Total assets (4)
$
769,844

$
218,913

$
187,379

$
56,977

$
261,646

$
1,494,759

Depreciation and amortization

7,810

1,624

1,137

201

1,061

11,833

Capital expenditures

11,193

3,845

2,097

623

305

18,063

~~(1)~~ ~~Net sales in North America and in the United Kingdom, which includes the Republic of Ireland, accounted for~~ 77~~% and~~ 23~~%, respectively, of our net sales in the second quarter of Fiscal 2024.~~

~~(2)~~ ~~Goodwill impairment of $28.5~~ ~~million is related to Genesco Brands Group.~~

~~(3)~~ ~~Asset impairments and other includes a $0.2~~ ~~million charge for asset impairments in Journeys Group.~~

~~(4)~~ ~~Of our $720.8~~ ~~million of long-lived assets, $94.4~~ ~~million and $14.7~~ ~~million relate to long-lived assets in the U.K. and Canada, respectively.~~


Three Months Ended July 30, 2022
Three Months Ended October 28, 2023
(In thousands)	Journeys Group		Schuh Group		Johnston & Murphy Group		Genesco Brands Group			Corporate & Other			Consolidated			Journeys Group		Schuh Group		Johnston & Murphy Group			Genesco Brands Group			Corporate & Other			Consolidated
Sales	$	321,332	$	101,518	$	74,818	$	37,881		$	—		$	535,549		$	349,367	$	118,129	$	81,414		$	32,907		$	—		$	581,817
Intercompany sales		—		—		—		(217	)		—			(217	)		—		—		(3	)		(2,499	)		—			(2,502	)
Net sales to external customers(1)		321,332		101,518		74,818		37,664			—			535,332			349,367		118,129		81,411			30,408			—			579,315
Segment operating income (loss)		9,222		2,094		3,212		685			(6,002	)		9,211			11,975		5,484		2,706			(1,560	)		(7,654	)		10,951
Asset impairments and other (2)		—		—		—		—			129			129			—		—		—			—			99			99
Operating income (loss)		9,222		2,094		3,212		685			(6,131	)		9,082			11,975		5,484		2,706			(1,560	)		(7,753	)		10,852
Other components of net periodic benefit cost		—		—		—		—			50			50			—		—		—			—			148			148
Interest expense, net		—		—		—		—			405			405			—		—		—			—			2,207			2,207
Earnings (loss) from continuing operations before income taxes	$	9,222	$	2,094	$	3,212	$	685		$	(6,586	)	$	8,627		$	11,975	$	5,484	$	2,706		$	(1,560	)	$	(10,108	)	$	8,497
Total assets (3)	$	811,860	$	201,859	$	170,713	$	74,561		$	240,727		$	1,499,720		$	798,968	$	213,036	$	185,179		$	52,170		$	243,578		$	1,492,931
Depreciation and amortization		6,973		1,532		1,057		217			899			10,678			8,078		1,566		1,365			265			1,056			12,330
Capital expenditures		4,333		1,755		1,903		384			5,233			13,608			8,235		3,380		1,975			710			140			14,440

(1) Net sales in North America and in the ~~United Kingdom,~~U.K., which includes the ~~Republic of Ireland,~~ROI, accounted for 8180% and 1920%, respectively, of our net sales ~~for~~in the ~~second~~third quarter of Fiscal ~~2023.~~2024.

(2) Asset impairments and other includes a $0.1 million charge for asset impairments ~~included~~ in ~~Genesco Brands~~Journeys Group.

(3) Of our $~~712.2~~704.5 million of long-lived assets, $~~93.7~~87.9 million and $~~21.5~~12.9 million relate to long-lived assets in the U.K. and Canada, respectively.


Three Months Ended October 29, 2022
(In thousands)	Journeys Group		Schuh Group		Johnston & Murphy Group		Genesco Brands Group			Corporate & Other			Consolidated
Sales	$	380,619	$	104,809	$	79,614	$	40,661		$	—		$	605,703
Intercompany sales		—		—		—		(1,915	)		—			(1,915	)
Net sales to external customers(1)		380,619		104,809		79,614		38,746			—			603,788
Operating income (loss)		27,083		5,912		3,494		(1,927	)		(8,489	)		26,073
Other components of net periodic benefit cost		—		—		—		—			50			50
Interest expense, net		—		—		—		—			906			906
Earnings (loss) from continuing operations before income taxes	$	27,083	$	5,912	$	3,494	$	(1,927	)	$	(9,445	)	$	25,117
Total assets (2)	$	841,021	$	206,996	$	193,039	$	72,586		$	223,351		$	1,536,993
Depreciation and amortization		6,849		1,485		1,092		214			1,032			10,672
Capital expenditures		4,638		2,405		1,719		370			1,708			10,840

(1) Net sales in North America and in the U.K., which includes the ROI, accounted for 83% and 17%, respectively, of our net sales for the third quarter of Fiscal 2023.

(2) Of our $704.6 million of long-lived assets, $89.3 million and $18.5 million relate to long-lived assets in the U.K. and Canada, respectively.

Genesco Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

Note 109

Business Segment Information, Continued


Six Months Ended July 29, 2023
Nine Months Ended October 28, 2023
(In thousands)	Journeys Group			Schuh Group		Johnston & Murphy Group			Genesco Brands Group			Corporate & Other			Consolidated			Journeys Group			Schuh Group		Johnston & Murphy Group			Genesco Brands Group			Corporate & Other			Consolidated
Sales	$	559,465		$	215,904	$	160,418		$	71,325		$	—		$	1,007,112		$	908,832		$	334,033	$	241,832		$	104,232		$	—		$	1,588,929
Intercompany sales		—			—		(6	)		(747	)		—			(753	)		—			—		(9	)		(3,246	)		—			(3,255	)
Net sales to external customers(1)		559,465			215,904		160,412			70,578			—			1,006,359			908,832			334,033		241,823			100,986			—			1,585,674
Segment operating income (loss)		(33,240	)		6,626		7,472			1,819			(15,366	)		(32,689	)		(21,265	)		12,110		10,178			259			(23,020	)		(21,738	)
Goodwill impairment(2)		-			-		-			-			28,453			28,453			-			-		-			-			28,453			28,453
Asset impairments and other(3)		—			—		—			—			482			482			—			—		—			—			581			581
Operating income (loss)		(33,240	)		6,626		7,472			1,819			(44,301	)		(61,624	)		(21,265	)		12,110		10,178			259			(52,054	)		(50,772	)
Other components of net periodic benefit cost		—			—		—			—			240			240			—			—		—			—			388			388
Interest expense, net		—			—		—			—			4,034			4,034			—			—		—			—			6,241			6,241
Earnings (loss) from continuing operations before income taxes	$	(33,240	)	$	6,626	$	7,472		$	1,819		$	(48,575	)	$	(65,898	)	$	(21,265	)	$	12,110	$	10,178		$	259		$	(58,683	)	$	(57,401	)
Depreciation and amortization	$	15,157		$	3,185	$	2,257		$	404		$	2,116		$	23,119		$	23,235		$	4,751	$	3,622		$	669		$	3,172		$	35,449
Capital expenditures		24,212			5,996		3,302			1,078			710			35,298			32,447			9,376		5,277			1,788			850			49,738

(1) Net sales in North America and in the ~~United Kingdom,~~U.K., which includes the ~~Republic of Ireland,~~ROI, accounted for 79% and 21%, respectively, of our net sales in the first ~~six~~nine months of Fiscal 2024.

(2) Goodwill impairment of $28.5 million is related to Genesco Brands Group.

(3) Asset impairments and other includes a $~~0.5~~0.6 million charge for asset impairments in Journeys Group.


Six Months Ended July 30, 2022
Nine Months Ended October 29, 2022
(In thousands)	Journeys Group		Schuh Group			Johnston & Murphy Group		Genesco Brands Group			Corporate & Other			Consolidated			Journeys Group		Schuh Group		Johnston & Murphy Group		Genesco Brands Group			Corporate & Other			Consolidated
Sales	$	635,777	$	189,677		$	145,834	$	85,781		$	—		$	1,057,069		$	1,016,396	$	294,486	$	225,448	$	126,442		$	—		$	1,662,772
Intercompany sales		—		—			—		(989	)		—			(989	)		—		—		—		(2,904	)		—			(2,904	)
Net sales to external customers(1)		635,777		189,677			145,834		84,792			—		$	1,056,080			1,016,396		294,486		225,448		123,538			—		$	1,659,868
Segment operating income (loss)		24,152		(652	)		3,762		4,478			(14,566	)	$	17,174			51,235		5,260		7,256		2,551			(23,055	)	$	43,247
Asset impairments and other(2)		—		—			—		—			(154	)		(154	)		—		—		—		—			(154	)		(154	)
Operating income (loss)		24,152		(652	)		3,762		4,478			(14,412	)		17,328			51,235		5,260		7,256		2,551			(22,901	)		43,401
Other components of net periodic benefit cost		—		—			—		—			148			148			—		—		—		—			198			198
Interest expense		—		—			—		—			702			702			—		—		—		—			1,608			1,608
Earnings (loss) from continuing operations before income taxes	$	24,152	$	(652	)	$	3,762	$	4,478		$	(15,262	)	$	16,478		$	51,235	$	5,260	$	7,256	$	2,551		$	(24,707	)	$	41,595
Depreciation and amortization	$	14,211	$	3,122		$	2,179	$	478		$	1,239		$	21,229		$	21,060	$	4,607	$	3,271	$	692		$	2,271		$	31,901
Capital expenditures		10,901		3,873			3,809		663			9,759			29,005			15,539		6,278		5,528		1,033			11,467			39,845

(1) Net sales in North America and in the ~~United Kingdom,~~U.K., which includes the ~~Republic of Ireland,~~ROI, accounted for 82% and 18%, respectively, of our net sales for the first ~~six~~nine months of Fiscal 2023.

(2) Asset impairments and other includes a $0.5 million charge for asset impairments, which includes $0.2 million in Journeys Group, $0.2 million in Schuh Group and $0.1 million in Genesco Brands Group, partially offset by a $0.7 million gain on the termination of the pension plan.

1514

Item 2. 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 28, 2023, 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 decreased ~~2.3%~~4.1% to ~~$523.0~~$579.3 million in the ~~second~~third quarter of Fiscal 2024 compared to ~~$535.3~~$603.8 million in the ~~second~~third quarter of Fiscal 2023. The sales decrease compared to last year's ~~second~~third quarter was driven by decreased store sales in Journeys Group and decreased wholesale sales in Genesco Brands Group, partially offset by ~~a 14%~~an 8% increase in comparable e-commerce sales ~~and strong store performance at Schuh and Johnston & Murphy~~for the total Company and a ~~$3.1~~$7.8 million favorable impact in sales due to changes in foreign exchange rates. Warmer weather in October muted initial demand and delayed the start of the selling season for fall product and our branded businesses were impacted by disruptions related to the implementation of a new ERP system. In addition, ongoing inflationary pressures and economic uncertainty continued to impact discretionary spending behavior. Journeys Group sales decreased ~~11%~~8% and Genesco Brands Group sales decreased 7%22%, or an aggregate of $8.3 million, while Schuh Group sales increased ~~21%~~13% and Johnston & Murphy Group sales increased 4%2% for the ~~second~~third quarter of Fiscal 2024 compared to the ~~second~~third quarter of Fiscal 2023. Schuh's sales increased ~~17%~~5% on a local currency basis for the ~~second~~third quarter of Fiscal 2024. Total comparable sales decreased 2%4% for the ~~second~~third quarter of Fiscal 2024, with same store sales down 6%7% and comparable direct sales up ~~14%~~8%.

Gross margin decreased ~~1.9%~~5.2% to ~~$249.5~~$278.4 million in the ~~second~~third quarter of Fiscal 2024 from ~~$254.3~~$293.8 million in the ~~second~~third quarter of Fiscal 2023 and decreased as a percentage of net sales from 48.7% to 48.1%, reflecting decreased gross margin as a percentage of net sales in Journeys Group and Johnston & Murphy Group, partially offset by increased gross margin as a percentage of net sales in Schuh Group and Genesco Brands Group. The overall decrease in gross margin as a percentage of net sales reflects increased promotional activity at Journeys, including introductory coupons for its new loyalty program, more normalized markdowns and closeouts at Johnston & Murphy and increased shipping and warehouse expense in all retail businesses, reflecting increased warehouse costs and higher e-commerce penetration, partially offset by increased gross margin at Schuh reflecting reduced duties and freight from its new Ireland based distribution center as well as a more elevated product mix, and increased gross margin at Genesco Brands reflecting supply chain efficiencies and price increases.

Selling and administrative expenses in the third quarter of Fiscal 2024 were flat on a dollar basis compared to the third quarter of Fiscal 2023 but increased as a percentage of net sales from ~~47.5%~~44.3% to 47.7%, reflecting increased gross margin as a percentage of net sales in all of our operating business units except Journeys Group. The overall increase in gross margin as a percentage of net sales reflects an elevated product mix and assortment and reduced duties as a result of opening an Ireland based distribution center at Schuh, decreased air freight at Johnston & Murphy and supply chain efficiencies at Genesco Brands, partially offset by increased markdowns at Journeys.

~~Selling and administrative expenses in the second quarter of Fiscal 2024 increased 5.9% and increased as a percentage of net sales from 45.8% to 49.6%~~46.2%, reflecting increased expenses as a percentage of net sales in all of our operating business units except ~~Schuh~~Johnston & Murphy Group. The overall increase in expenses as a percentage of net sales reflects the deleverage of expenses, especially compensation, marketing and depreciation expenses, as a result of decreased revenue in the ~~second~~third quarter of Fiscal 2024. The increase in expense was primarily related to a prior year reversal of performance-based compensation expense, along with increased compensation expense and higher IT expenses to drive technology initiatives in the second quarter of Fiscal 2024.

Operating margin was ~~(7.4%)~~1.9% in the ~~second~~third quarter of Fiscal 2024 compared to ~~1.7%~~4.3% in the ~~second~~third quarter of Fiscal 2023 reflecting decreased operating margin in ~~Journeys Group and Johnston & Murphy Group, partially offset by improved~~all of our operating ~~margin in Schuh Group and Genesco Brands Group.~~business units. The decrease in operating margin for the ~~second~~third quarter this year compared to the ~~second~~third quarter last year was impacted by decreased net sales, decreased gross margin as a percentage of sales and increased expenses as percentage of net sales. ~~In addition, operating margin~~

Earnings from continuing operations before income taxes (“pretax earnings”) for the ~~second~~third quarter of Fiscal 2024 was $8.5 million compared to $25.1 million for the third quarter of Fiscal 2023. Pretax earnings for the third quarter of Fiscal 2024 included ~~a non-cash goodwill~~asset impairment ~~charge~~and other charges of ~~$28.5 million.~~$0.1 million for asset impairments.

~~Due to~~We recorded an ~~ongoing dispute with a Genesco Brands Group licensor regarding renewal~~effective income tax rate of ~~their current license~~22.5% and 18.7% in the normal course which has not yet been resolved and based on the requirements of ASC 350, we identified indicators of impairment in the second quarter of Fiscal 2024. When indicators of impairment are present on an interim basis, we must assess whether it is "more likely than not" (i.e., a greater than 50% chance) that an impairment has occurred. Due to the identified indicators of impairment in the secondthird quarter of Fiscal 2024 ~~we determined that it was "more likely than not" that an impairment had occurred~~ and performed a full valuation of our Togast reporting unit. Based upon the results of these analyses, we concluded the goodwill attributed to Togast was fully impaired and recorded a non-cash impairment charge of $28.5 millionFiscal 2023, respectively. The higher tax rate for the ~~second~~third quarter this year compared to the third quarter last year reflectsthat we are no longer subject to a valuation allowance in certain jurisdictions.

Net earnings in the third quarter of Fiscal ~~2024.~~

~~The effective income tax rate increased from 11.3% in the second quarter of Fiscal 2023 to 23.1% in the second quarter of Fiscal 2024. Diluted loss~~2024 were $6.5 million, or $0.60 diluted earnings per share, ~~from continuing operations was $2.79~~compared to $20.4 million, or $1.65 diluted earnings per share in the ~~second quarter of Fiscal 2024 compared to diluted earnings per share from continuing operations of $0.59 per share in the second~~third quarter of Fiscal 2023.

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 28, 2023. 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 28, 2023. There have been no other significant changes in our definition of significant accounting policies or critical accounting estimates since the end of Fiscal 2023.

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, cash and working capital. 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 direct 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. We have disclosed comparable sales for the ~~second~~third quarter and first ~~six~~nine months of Fiscal 2024 and the ~~second~~third quarter of Fiscal 2023 but did not disclose comparable sales for the first ~~six~~nine months of Fiscal 2023 due to the impact of the COVID-19 pandemic and related extensive store closures during the first quarter of Fiscal 2022. We believe that overall sales is a more meaningful metric during the first ~~six~~nine months of Fiscal 2023.

Results of Operations – ~~Second~~Third Quarter of Fiscal 2024 Compared to ~~Second~~Third Quarter of Fiscal 2023

Our net sales decreased 2.3% to $523.0 million in the second quarter of Fiscal 2024 compared to $535.3 million in the second quarter of Fiscal 2023. The sales decrease compared to last year's second quarter was driven by decreased store sales in Journeys Group and decreased wholesale sales, partially offset by a 14% increase in comparable e-commerce sales and strong store performance at Schuh and Johnston & Murphy and a $3.1 million favorable impact in sales due to changes in foreign exchange rates. Journeys Group sales decreased 11% and Genesco Brands Group sales decreased 7% while Schuh Group sales increased 21% and Johnston & Murphy Group sales increased 4% for the second quarter of Fiscal 2024 compared to the second quarter of Fiscal 2023. Schuh's sales increased 17% on a local currency basis for the second quarter of Fiscal 2024. Total comparable sales decreased 2% for the second quarter of Fiscal 2024, with same store sales down 6% and comparable direct sales up 14%.

Gross margin decreased 1.9% to $249.5 million in the second quarter of Fiscal 2024 from $254.3 million in the second quarter of Fiscal 2023 but increased as a percentage of net sales from 47.5% to 47.7%, reflecting increased gross margin as a percentage of net sales in all of our operating business units except Journeys Group. The overall increase in gross margin as a percentage of net sales reflects an elevated product mix and assortment and reduced duties as a result of opening an Ireland based distribution center at Schuh, decreased air freight at Johnston & Murphy and supply chain efficiencies at Genesco Brands, partially offset by increased markdowns at Journeys.

Selling and administrative expenses in the second quarter of Fiscal 2024 increased 5.9% and increased as a percentage of net sales from 45.8% to 49.6%, reflecting increased expenses as a percentage of net sales in all of our operating business units except Schuh Group. The overall increase in expenses as a percentage of net sales reflects the deleverage of expenses as a result of decreased revenue in the second quarter of Fiscal 2024. The increase in expense was primarily related to a prior year reversal of performance-based compensation expense, along with increased compensation expense and higher IT expenses to drive technology initiatives in the second quarter of Fiscal 2024. Explanations of the changes in results of operations are provided by business segment in discussions following these introductory paragraphs.

The loss from continuing operations before income taxes (“pretax loss”) for the second quarter of Fiscal 2024 was $41.2 million compared to earnings from continuing operations before income taxes ("pretax earnings") of $8.6 million for the second quarter of Fiscal 2023. The pretax loss for the second quarter of Fiscal 2024 included a non-cash goodwill impairment charge of $28.5 million and asset impairment and other charges of $0.2 million for asset impairments. Pretax earnings for the second quarter of Fiscal 2023 included an asset impairment and other charge of $0.1 million for asset impairments.

We recorded an effective income tax rate of 23.1% and 11.3% in the second quarter of Fiscal 2024 and Fiscal 2023, respectively. The higher tax rate for the second quarter this year compared to the second quarter last year reflects~~that our earnings in certain foreign jurisdictions are no longer offset by a valuation allowance and the tax impact of restricted stock vesting.~~

The net loss in the second quarter of Fiscal 2024 was $31.7 million, or $2.79 diluted loss per share, compared to net earnings in the second quarter of Fiscal 2023 of $7.6 million, or $0.59 diluted earnings per share.

Journeys Group


	Three Months Ended									Three Months Ended
	July 29, 2023			July 30, 2022			% Change			October 28, 2023			October 29, 2022			% Change
	(dollars in thousands)									(dollars in thousands)
Net sales	$	287,275		$	321,332			(10.6	)%	$	349,367		$	380,619			(8.2	)%
Operating income (loss)	$	(14,878	)	$	9,222		NM
Operating income										$	11,975		$	27,083			(55.8	)%
Operating margin		(5.2	)%		2.9	%					3.4	%		7.1	%

Net sales from Journeys Group decreased ~~10.6%~~ to ~~$287.3~~$349.4 million in the ~~second~~third quarter of Fiscal 2024, compared to ~~$321.3~~$380.6 million in the ~~second~~third quarter of Fiscal 2023 primarily due to a total comparable sales decrease of ~~11%~~8% driven by decreased store sales, partially offset by increased digital sales, and a 2%3% decrease in the average number of stores in the ~~second~~third quarter this year. We believe the Journeys consumer ~~already~~continues to be pressured by inflation and has chosen to conserve discretionary spending and primarily shop when the consumer has a specific item to purchase, continuing to trade down to lower price points and take advantage of the abundance of discounted athletic product elsewhere in the market. We did see the ~~magnitude~~negative sales trends in the first half of ~~store channel traffic and sales decline~~the year sequentially improve in the ~~second~~third quarter this ~~year versus the first quarter this year along with an acceleration in the e-commerce business. We continue to work diligently~~year. The changes we made across product mix resonated with our ~~brands~~consumer and sales of high demand, must-have items were strong. However, this was not enough to ~~reposition our product assortment at~~offset the lack of newness and industry discounting in athletic or the unanticipated late start to fall selling due to the warmer weather in October. Our Journeys ~~to meet~~store closure plans are on track, with approximately 75% of the ~~customer's appetite for newness. We expect~~100 planned doors closed through the end of the third quarter, and the remainder targeted to close ~~approximately 100 Journeys stores in~~by the end of Fiscal 2024. ~~In addition, we continue to conduct a holistic review of our cost structure. We expect to realize significant cost savings from our Journeys Group in Fiscal 2024 and Fiscal 2025.~~ Journeys Group operated ~~1,095~~1,080 stores at the end of the ~~second~~third quarter of Fiscal 2024, including ~~229~~224 Journeys Kidz stores, 41 Journeys stores in Canada and 34 Little Burgundy stores in Canada, compared to ~~1,131~~1,123 stores at the end of the ~~second~~third quarter of last year, including 230 Journeys Kidz stores, 4645 Journeys stores in Canada and 3635 Little Burgundy stores in Canada.

Journeys Group had an operating ~~loss~~income of ~~$14.9~~$12.0 million in the ~~second~~third quarter of Fiscal 2024 compared to ~~operating income of $9.2~~$27.1 million in the ~~second~~third quarter of Fiscal 2023. The ~~$24.1 million~~ decrease in operating income for Journeys Group was due to (i) decreased net sales, (ii) decreased gross margin as a percentage of net sales reflecting increased ~~markdowns~~promotional activity, including introductory coupons for its new loyalty program, and increased shipping and warehouse expense and (iii) increased selling and administrative expenses as a percentage of net sales reflecting the deleverage of expenses, especially occupancy, ~~expense, performance-based compensation, resulting from last year's reversal of performance-based compensation expense, selling salaries~~depreciation, marketing and compensation ~~expense~~expenses as a result of the decreased revenue in the ~~second~~third quarter of Fiscal 2024.

Schuh Group


	Three Months Ended									Three Months Ended
	July 29, 2023			July 30, 2022			% Change			October 28, 2023			October 29, 2022			% Change
	(dollars in thousands)									(dollars in thousands)
Net sales	$	122,799		$	101,518			21.0	%	$	118,129		$	104,809			12.7	%
Operating income	$	8,416		$	2,094			301.9	%	$	5,484		$	5,912			(7.2	)%
Operating margin		6.9	%		2.1	%					4.6	%		5.6	%

Net sales from Schuh Group increased ~~21.0%~~ to ~~$122.8~~$118.1 million in the ~~second~~third quarter of Fiscal 2024 compared to ~~$101.5~~$104.8 million in the ~~second~~third quarter of Fiscal 2023, primarily due to increased total comparable sales of ~~17%~~5% driven by a healthy back-to-school season with increased ~~store sales~~e-commerce and ~~e-commerce~~store sales and a favorable impact of ~~$4.1~~$8.4 million in sales due to changes in foreign exchange rates. Schuh was impacted by a later start to fall selling due to the warmer weather in October. The strength of the Schuh business is broad based across stores and digital ~~with an increase in both store and web traffic and increased average selling prices. In addition, Schuh Group's~~as their digital business iscontinues to account for almost 40% of its sales in the ~~second~~third quarter of Fiscal 2024. Schuh's sales increased ~~17%~~5% on a local currency basis for the ~~second~~third quarter of Fiscal 2024. Schuh Group operated 124 stores at the end of the ~~second~~third quarter of Fiscal 2024, compared to 122 stores at the end of the ~~second~~third quarter of Fiscal 2023.

Schuh ~~Group's~~Group had operating income of ~~$8.4~~$5.5 million in the ~~second~~third quarter of Fiscal 2024 ~~increased over three times the operating income of $2.1~~compared to $5.9 million in the ~~second~~third quarter of Fiscal 2023. The ~~$6.3 million improvement~~decrease in operating income compared to last year ~~in Schuh Group~~ reflects ~~(i)~~ increased net sales, (ii) increased gross margin as a percentage of net sales reflecting an elevated product mix and assortment and reduced duties as a result of opening an Ireland based distribution center and (iii) decreased selling and administrative expenses as a percentage of net sales, reflecting increased performance-based compensation and compensation expenses and selling salaries, partially offset by decreased occupancy ~~and marketing expenses, while selling salaries remained flat for the quarter.~~expense. In addition, operating income included a favorable impact of ~~$0.3~~$0.4 million due to changes in foreign exchange rates compared to last year.

Gross margin increased as a percentage of net sales reflecting reduced duties and freight from its new Ireland based distribution center as well as a more elevated product mix, which was partially offset by increased shipping and warehouse expense, reflecting higher e-commerce penetration and increased warehouse costs..

Johnston & Murphy Group


	Three Months Ended									Three Months Ended
	July 29, 2023			July 30, 2022			% Change			October 28, 2023			October 29, 2022			% Change
	(dollars in thousands)									(dollars in thousands)
Net sales	$	77,785		$	74,818			4.0	%	$	81,411		$	79,614			2.3	%
Operating income	$	2,666		$	3,212			(17.0	)%	$	2,706		$	3,494			(22.6	)%
Operating margin		3.4	%		4.3	%					3.3	%		4.4	%

Johnston & Murphy Group net sales increased ~~4.0%~~ to ~~$77.8~~$81.4 million for the ~~second~~third quarter of Fiscal 2024 from ~~$74.8~~$79.6 million for the ~~second~~third quarter of Fiscal 2023, primarily due to a ~~12%~~1% increase in comparable sales, ~~with increases in both store~~reflecting increased e-commerce sales and ~~e-commerce~~wholesale sales, partially offset by decreased ~~wholesale~~store sales. Johnston & Murphy sales for the third quarter of Fiscal 2024 were impacted by the implementation of a new ERP system along with warmer weather in October that delayed the start to the fall selling season. Johnston & Murphy has repositioned ~~the brand to offer more~~its business as a multi-category lifestyle brand. The brand's casual ~~and comfortable footwear and~~category as well as apparel and ~~it continues~~accessories continued to resonate well with its consumers. ~~Johnston & Murphy Group delivered record second quarter sales in Fiscal 2024 and double-digit comparable sales gains for the fifth consecutive quarter.~~ Retail operations accounted for ~~81.2%~~72.5% of Johnston & Murphy Group's sales in the ~~second~~third quarter of Fiscal 2024, updown from ~~75.4%~~72.9% in the ~~second~~third quarter of Fiscal 2023. The store count for Johnston & Murphy retail operations at the end of the ~~second~~third quarter of Fiscal 2024 was 156 stores, including six stores in Canada, compared to 159 stores, including six stores in Canada, at the end of the ~~second~~third quarter of Fiscal 2023.

Johnston & Murphy Group had operating income of $2.7 million for the ~~second~~third quarter of Fiscal 2024 ~~decreased 17%~~ compared to ~~$3.2~~$3.5 million in the ~~second~~third quarter of Fiscal 2023. The decrease ~~was primarily due~~in operating income compared to increased selling and administrative expenses as a percentage of sales reflecting deleverage of expenses, especially increased occupancy expense, compensation expense and selling salaries, partially offset bylast year reflects decreased ~~performance-based compensation expense. Gross~~gross margin as a percentage of net sales, reflecting more normalized markdowns and closeouts and increased inshipping and warehouse expense, reflecting increased warehouse costs. Selling and administrative expenses decreased as a percentage of net sales for the ~~second~~third quarter of Fiscal 2024, reflecting ~~a decrease in air freight,~~decreased performance-based compensation expense and occupancy expense, partially offset by increased ~~retail markdowns compared to the second quarter of Fiscal 2023.~~marketing expense.

Genesco Brands Group


	Three Months Ended									Three Months Ended
	July 29, 2023			July 30, 2022			% Change			October 28, 2023			October 29, 2022			% Change
	(dollars in thousands)									(dollars in thousands)
Net sales	$	35,168		$	37,664			(6.6	)%	$	30,408		$	38,746			(21.5	)%
Operating income	$	1,851		$	685			170.2	%
Operating loss										$	(1,560	)	$	(1,927	)		19.0	%
Operating margin		5.3	%		1.8	%					(5.1	)%		(5.0	)%

Genesco Brands' net sales decreased ~~6.6%~~ to ~~$35.2~~$30.4 million for the ~~second~~third quarter of Fiscal 2024 from ~~$37.7~~$38.7 million for the ~~second~~third quarter of Fiscal 2023 primarily due to ~~higher sell-in in the prior year as retailers were replenishing inventory due~~an intentional strategy to ~~supply chain constraints.~~pull back value channel sales.

Genesco Brands' operating ~~income increased~~loss improved to ~~$1.9~~$1.6 million in the ~~second~~third quarter of Fiscal 2024 compared to ~~$0.7~~$1.9 million in the ~~second~~third quarter of Fiscal 2023. The ~~$1.2~~$0.4 million ~~increase in~~smaller operating ~~income~~loss was primarily due to increased gross margin as a percentage of net sales reflecting supply chain efficiencies and ~~changes in product mix.~~price increases. Selling and administrative expenses increased as a percentage of net sales in the ~~second~~third quarter of Fiscal 2024 reflecting ~~increased compensation and credit card~~the deleverage of expenses as a result of decreased revenue in the third quarter this year, partially offset by decreased ~~shipping~~royalty, marketing and warehouse expense. We have a license agreement with Levi Strauss & Co. (“LS&Co.”) (the “License Agreement”) for use of certain Levi’s brand trademarks on footwear through November 30, 2024 (the “Initial Term”) with a possible renewal term through November 30, 2028, or the option by LS&Co. to terminate the License Agreement after the Initial Term and make a buyout payment pursuant to the terms of the License Agreement. LS&Co. is taking the position that it does not intend to renew the License Agreement past November 30, 2024 or make the buyout payment. We are disputing LS&Co.’s refusal to renew or to make the buyout payment but can provide no assurances about the outcome of this dispute, which is currently unknown.other expenses.

Corporate, Interest Expenses and Other Charges

Corporate and other expense for the ~~second~~third quarter of Fiscal 2024 was ~~$36.7~~$7.8 million compared to ~~$6.1~~$8.5 million for the ~~second~~third quarter of Fiscal 2023. Corporate expense in the ~~second~~third quarter of Fiscal 2024 included non-cash impairment charges of $28.5 million related to goodwill and a $0.2 million charge in asset impairment and other charges for asset impairments. Corporate expense in the second quarter of Fiscal 2023 included a $0.1 million charge in asset impairment and other charges for asset impairments. The corporate expense ~~increase,~~decrease, excluding ~~the goodwill impairment and~~ asset impairment and other charges, primarily reflects ~~increased insurance expense and performance-based compensation expense due~~a decrease in miscellaneous expenses in the third quarter this year compared to the ~~reversal of performance-based compensation expense in the second~~third quarter last year.

Net interest expense increased ~~$2.0~~$1.3 million to ~~$2.4~~$2.2 million in the ~~second~~third quarter of Fiscal 2024 compared to net interest expense of ~~$0.4~~$0.9 million in the ~~second~~third quarter of Fiscal 2023 primarily reflecting increased average borrowings and higher interest rates in the ~~second~~third quarter this year compared to the ~~second~~third quarter last year.

Results of Operations – ~~Six~~Nine Months of Fiscal 2024 Compared to ~~Six~~Nine Months of Fiscal 2023

Our net sales decreased ~~4.7%~~4.5% to ~~$1.006~~$1.586 billion in the first ~~six~~nine months of Fiscal 2024 compared to ~~$1.056~~$1.660 billion in the first ~~six~~nine months of Fiscal 2023. The sales decrease compared to last year's first ~~six~~nine months was driven by decreased store sales in Journeys Group and decreased wholesale sales, partially offset by a 10% increase in comparable e-commerce sales for the total Company, strong store performance at Schuh and ~~an unfavorable~~Johnston & Murphy and a favorable impact of ~~$5.2~~$2.6 million in sales due to changes in foreign exchange ~~rates, partially offset by an 11% increase in comparable e-commerce sales~~rates. Ongoing inflationary pressures and ~~strong store performance at Schuh and Johnston & Murphy.~~economic uncertainty continue to impact the discretionary spending behavior of our consumers. Journeys Group sales decreased ~~12%~~11% and Genesco Brands Group sales decreased ~~17%~~18%, or an aggregate of ~~$14.2~~$22.6 million, while Schuh Group sales increased ~~14%~~13% and Johnston & Murphy Group sales increased ~~10%~~7% for the first ~~six~~nine months of Fiscal 2024 compared to the first ~~six~~nine months of Fiscal 2023. Schuh's sales increased ~~15%~~11% on a local currency basis for the first ~~six~~nine months of Fiscal 2024. Total comparable sales decreased 4% for the first ~~six~~nine months of Fiscal 2024, with same store sales down 7% and comparable direct sales up ~~11%~~10%.

Gross margin decreased 5.4% to ~~$478.3~~$756.8 million in the first ~~six~~nine months of Fiscal 2024 from ~~$505.8~~$799.6 million in the first ~~six~~nine months of Fiscal 2023 and decreased as a percentage of net sales from ~~47.9%~~48.2% to ~~47.5%~~47.7%, reflecting decreased gross margin as a percentage of net sales in Journeys Group, ~~and~~partially offset by an increase in gross margin as a percentage of net sales in all of our other operating business units. The overall decrease in gross margin as a percentage of net sales reflects increased ~~markdowns~~promotional activity at Journeys and increased shipping and warehouse expense at Journeys and Johnston & Murphy, primarily reflecting increased warehouse costs, partially offset by ana more elevated product mix ~~and assortment~~ at Schuh as well as reduced duties and freight from the new Ireland based distribution center, decreased air freight at Johnston & ~~Murphy.~~Murphy and supply chain efficiencies, favorable changes in product mix and increased prices at Genesco Brands.

Selling and administrative expenses in the first ~~six~~nine months of Fiscal 2024 increased ~~4.6%~~2.9% and increased as a percentage of net sales from ~~46.3%~~45.6% to ~~50.8%~~49.1%, reflecting increased expenses as a percentage of net sales ~~at Journeys Group and Genesco Brands Group and decreased expenses as a percentage of net sales at Schuh Group and~~in all operating business units except Johnston & Murphy Group. The overall increase in expenses as a percentage of net sales reflects the deleverage of expenses, especially compensation expense, ~~selling salaries,~~marketing expense, occupancy expense and ~~performance-based compensation expense, as prior year results included a reversal of performance-based compensation,~~selling salaries as a result of decreased revenue in the first ~~six~~nine months of Fiscal 2024. Explanations of the changes in results of operations are provided by business segment in discussions following these introductory paragraphs.

The pretax loss for the first ~~six~~nine months of Fiscal 2024 was ~~$65.9~~$57.4 million compared to pretax earnings of ~~$16.5~~$41.6 million for the first ~~six~~nine months of Fiscal 2023. The pretax loss for the first ~~six~~nine months of Fiscal 2024 included a non-cash goodwill impairment charge of $28.5 million and asset impairment and other charges of ~~$0.5~~$0.6 million for asset impairments. Pretax earnings for the first ~~six~~nine months of Fiscal 2023 included an asset impairment and other gain of $0.2 million for a $0.7 million gain on the termination of the pension plan, partially offset by $0.5 million in asset impairments.

We recorded an effective income tax rate of ~~23.4%~~23.5% in ~~both~~ the first ~~six~~nine months of Fiscal 2024 ~~and~~compared to 20.6% in the first nine months of Fiscal 2023. The higher tax rate for the first nine months this year compared to the same period last year reflectsthat we are no longer subject to a valuation allowance in certain jurisdictions.

The net loss in the first ~~six~~nine months of Fiscal 2024 was ~~$50.6~~$44.0 million, or ~~$4.37~~$3.88 diluted loss per share, compared to net earnings in the first ~~six~~nine months of Fiscal 2023 of ~~$12.6~~$33.0 million, or ~~$0.95~~$2.56 diluted earnings per share.

Journeys Group


	Six Months Ended									Nine Months Ended
	July 29, 2023			July 30, 2022			% Change			October 28, 2023			October 29, 2022			% Change
	(dollars in thousands)									(dollars in thousands)
Net sales	$	559,465		$	635,777			(12.0	)%	$	908,832		$	1,016,396			(10.6	)%
Operating income (loss)	$	(33,240	)	$	24,152		NM			$	(21,265	)	$	51,235		NM
Operating margin		(5.9	)%		3.8	%					(2.3	)%		5.0	%

Net sales from Journeys Group decreased ~~12.0%~~ to ~~$559.5~~$908.8 million in the first ~~six~~nine months of Fiscal 2024, compared to ~~$635.8 million~~$1.016 billion in the first ~~six~~nine months of Fiscal 2023 primarily due to a total comparable sales decrease of ~~12%~~10% driven by decreased store sales, partially offset by increased digital sales, and a 1%2% decrease in the average number of stores in the first ~~six~~nine months this year. We believe the Journeys consumer ~~already~~continues to be pressured by inflation and has chosen to conserve discretionary spending and primarily shop when the consumer has a specific item to purchase, continuing to trade down to lower price points and take advantage of the abundance of discounted athletic product elsewhere in the market. WeWhile we made changes to our product mix in the third quarter of Fiscal 2024, we will continue to work ~~diligently~~ with our brands to reposition our product assortment at Journeys to meet the customer's appetite for newness.

Journeys Group had an operating loss of ~~$33.2~~$21.3 million in the first ~~six~~nine months of Fiscal 2024 compared to operating income of ~~$24.2~~$51.2 million in the first ~~six~~nine months of Fiscal 2023. The ~~$57.4~~$72.5 million decrease in operating income for Journeys Group was due to (i) decreased net sales, (ii) decreased gross margin as a percentage of net sales primarily reflecting increased ~~markdowns~~promotional activity and (iii) increased selling and administrative expenses as a percentage of net sales reflecting the deleverage of expenses, especially occupancy expense, selling salaries and compensation expense as a result of the decreased revenue in the first ~~six~~nine months of Fiscal ~~2024, along with increased performance-based compensation expense in the second quarter this year as a result of last year's reversal of performance-based compensation expense.~~2024.

Schuh Group


	Six Months Ended									Nine Months Ended
	July 29, 2023			July 30, 2022			% Change			October 28, 2023			October 29, 2022			% Change
	(dollars in thousands)									(dollars in thousands)
Net sales	$	215,904		$	189,677			13.8	%	$	334,033		$	294,486			13.4	%
Operating income (loss)	$	6,626		$	(652	)	NM
Operating income										$	12,110		$	5,260			130.2	%
Operating margin		3.1	%		(0.3	)%					3.6	%		1.8	%

Net sales from Schuh Group increased ~~13.8%~~ to ~~$215.9~~$334.0 million in the first ~~six~~nine months of Fiscal 2024 compared to ~~$189.7~~$294.5 million in the first ~~six~~nine months of Fiscal 2023, primarily due to increased total comparable sales of ~~15%~~11% driven by increased e-commerce and store sales and ~~e-commerce sales, partially offset by an unfavorable~~a favorable impact of ~~$2.7~~$5.7 million in sales due to changes in foreign exchange rates. Schuh's sales increased ~~15%~~11% on a local currency basis for the first ~~six~~nine months of Fiscal 2024.

Schuh ~~Group's~~Group had operating income of ~~$6.6~~$12.1 million in the first ~~six~~nine months of Fiscal 2024 ~~increased $7.3 million over an operating loss of $0.7~~compared to $5.3 million in the first ~~six~~nine months of Fiscal 2023. The ~~$7.3 million improvement compared to last year~~increase in operating income for Schuh Group reflects (i) increased net sales and (ii) increased gross margin as a percentage of net sales reflecting an elevated product mix and ~~assortment~~reduced duties and ~~reduced duties~~freight as a result of ~~opening an~~the new Ireland based distribution center as well as reduced shipping and warehouse costs and (iii) decreased selling and administrative expenses as a percentage of net sales reflecting decreased occupancy and marketing expenses, partially offset by increased selling salaries.center. In addition, operating income included a favorable impact of ~~$0.5~~$0.9 million due to changes in foreign exchange rates compared to last year. Selling and administrative expenses as a percentage of net sales increased slightly, reflecting increased selling salaries and performance-based compensation expense, partially offset by decreased occupancy expense.

Johnston & Murphy Group


	Six Months Ended									Nine Months Ended
	July 29, 2023			July 30, 2022			% Change			October 28, 2023			October 29, 2022			% Change
	(dollars in thousands)									(dollars in thousands)
Net sales	$	160,412		$	145,834			10.0	%	$	241,823		$	225,448			7.3	%
Operating income	$	7,472		$	3,762			98.6	%	$	10,178		$	7,256			40.3	%
Operating margin		4.7	%		2.6	%					4.2	%		3.2	%

Johnston & Murphy Group net sales increased ~~10.0%~~ to ~~$160.4~~$241.8 million for the first ~~six~~nine months of Fiscal 2024 from ~~$145.8~~$225.4 million for the first ~~six~~nine months of Fiscal 2023, primarily due to a ~~15%~~10% increase in comparable sales, with increases in both store sales and e-commerce sales, partially offset by decreased wholesale sales. Johnston & Murphy has repositioned the brand to offer more casual and comfortable footwear and apparel, and it continues to resonate well with its consumers. Retail operations accounted for ~~77.0%~~75.4% of Johnston & Murphy Group's sales in the first ~~six~~nine months of Fiscal 2024, up from 73.0% in the first ~~six~~nine months of Fiscal 2023.

Johnston & Murphy Group had operating income of ~~$7.5~~$10.2 million for the first ~~six~~nine months of Fiscal 2024 ~~increased 98.6%~~ compared to ~~$3.8~~$7.3 million in the first ~~six~~nine months of Fiscal 2023. The increase was primarily due to (i) increased net sales, (ii) increased gross margin as a percentage of net sales reflecting a decrease in air freight, partially offset by increased warehouse costs, retail markdowns and ~~warehouse costs~~increased inventory reserves and (iii) decreased selling and administrative expenses reflecting greater leverage of expenses as a result of revenue growth, especially occupancy expense and ~~freight expense,~~performance-based compensation, partially offset by increased marketing and compensation ~~expense and performance-based compensation expense.~~expenses.

Genesco Brands Group


	Six Months Ended									Nine Months Ended
	July 29, 2023			July 30, 2022			% Change			October 28, 2023			October 29, 2022			% Change
	(dollars in thousands)									(dollars in thousands)
Net sales	$	70,578		$	84,792			(16.8	)%	$	100,986		$	123,538			(18.3	)%
Operating income	$	1,819		$	4,478			(59.4	)%	$	259		$	2,551			(89.8	)%
Operating margin		2.6	%		5.3	%					0.3	%		2.1	%

Genesco Brands' net sales decreased ~~16.8%~~ to ~~$70.6~~$101.0 million for the first ~~six~~nine months of Fiscal 2024 from ~~$84.8~~$123.5 million for the first ~~six~~nine months of Fiscal 2023 primarily due to higher sell-in in the first half of the prior year as retailers were replenishing inventory due to supply chain ~~constraints.~~constraints as well as an intentional strategy to pull back value channel sales.

Genesco Brands' operating income decreased ~~59.4%~~ to ~~$1.8~~$0.3 million in the first ~~six~~nine months of Fiscal 2024 compared to ~~$4.5~~$2.6 million in the first ~~six~~nine months of Fiscal 2023. The decrease in operating income was primarily due to (i) decreased net sales and (ii) increased selling and administrative expenses as a percentage of net sales in the first ~~six~~nine months of Fiscal 2024 reflecting deleverage of expenses as a result of decreased

revenue in the first ~~six~~nine months of Fiscal 2024. Gross margin increased as a percentage of net sales for the first ~~six~~nine months of Fiscal 2024 reflecting supply chain efficiencies, changes in product ~~mix.~~mix and price increases.

Corporate, Interest Expenses and Other Charges

Corporate and other expense for the first ~~six~~nine months of Fiscal 2024 was ~~$44.3~~$52.1 million compared to ~~$14.4~~$22.9 million for the first ~~six~~nine months of Fiscal 2023. Corporate expense in the first ~~six~~nine months of Fiscal 2024 included non-cash impairment charges of $28.5 million related to goodwill and a ~~$0.5~~$0.6 million charge in asset impairment and other charges for asset impairments. Corporate expense in the first ~~six~~nine months of Fiscal 2023 included a $0.2 million gain in asset impairment and other charges for a gain on the termination of the pension plan, partially offset by asset impairments. The corporate expense increase in the first six months this year, excluding the goodwill impairment and asset impairment and other charges, primarily reflects increased compensation expense, performance-based compensation expense, as a result of last year's reversal of compensation expense and insurance expense, partially offset by duplicate rent expense and moving costs incurred in the prior year.

Net interest expense increased ~~$3.3~~$4.6 million to ~~$4.0~~$6.2 million in the first ~~six~~nine months of Fiscal 2024 compared to net interest expense of ~~$0.7~~$1.6 million in the first ~~six~~nine months of Fiscal 2023 primarily reflecting increased average borrowings and higher interest rates in the first ~~six~~nine months this year compared to the first ~~six~~nine months last 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.


	Six Months Ended									Nine Months Ended
Cash flow changes:	July 29, 2023			July 30, 2022			Increase (Decrease)			October 28, 2023			October 29, 2022			Increase (Decrease)
(in thousands)
Net cash used in operating activities	$	(25,135	)	$	(224,211	)	$	199,076		$	(23,540	)	$	(243,970	)	$	220,430
Net cash used in investing activities		(35,211	)		(29,005	)		(6,206	)		(49,651	)		(39,845	)		(9,806	)
Net cash provided by (used in) financing activities		49,108			(20,736	)		69,844			47,198			(1,647	)		48,845
Effect of foreign exchange rate fluctuations on cash		664			(1,634	)		2,298			(306	)		(2,950	)		2,644
Net decrease in cash and cash equivalents	$	(10,574	)	$	(275,586	)	$	265,012		$	(26,299	)	$	(288,412	)	$	262,113

Reasons for the major variances in cash used in the table above are as follows:

Cash used in operating activities was ~~$199.1~~$220.4 million lower in the first ~~six~~nine months of Fiscal 2024 compared to the first ~~six~~nine months of Fiscal 2023, reflecting primarily the following factors:

•

a ~~$203.8~~$232.8 million increase in cash flow from changes in inventory, primarily reflecting the re-inventorying of our operating business units in the first ~~six~~nine months last year due to the supply chain disruptions in Fiscal 2023 compared to a much smaller increase in inventory, primarily retail inventory, in the first ~~six~~nine months this year, partially offset by a $25.8 million decrease in cash flow from changes in accounts payable, primarily reflecting changes in buying patterns in the first nine months of Fiscal 2024 and the decrease in inventory growth year over year; and

•

a ~~$45.6~~$41.7 million increase in cash flow from changes in other accrued liabilities, primarily reflecting a significantly lower payment of Fiscal 2023 performance-based compensation accruals in the first ~~six~~nine months of Fiscal 2024 compared to the first ~~six~~nine months of Fiscal 2023; partially offset by

•

a $47.9 million decrease in cash flow from changes in accounts payable, primarily reflecting changes in buying patterns in the first six months of Fiscal 2024 and the decrease in inventory growth year over year; and

•

~~a $63.1~~$77.0 million decrease in net ~~earnings.~~earnings, which was partially offset by a $28.5 million non-cash goodwill impairment charge.

Cash used in investing activities was ~~$6.2~~$9.8 million higher for the first ~~six~~nine months of Fiscal 2024 as compared to the first ~~six~~nine months of Fiscal 2023 reflecting increased capital expenditures primarily related to investments in retail stores and omni-channel as a result of catching up from the pause due to COVID, partially offset by decreased capital expenditures related to the new corporate headquarters building.

Cash provided by financing activities was ~~$69.8~~$48.8 million higher in the first ~~six~~nine months of Fiscal 2024 as compared to the first ~~six~~nine months of Fiscal 2023 reflecting increased net borrowings and decreased share repurchases this year compared to the same period last year.

Sources of Liquidity and Future Capital Needs

We have three principal sources of liquidity: cash flow from operations, cash and cash equivalents 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 2023.

As of ~~July 29,~~October 28, 2023, we have borrowed ~~$120.4~~$117.2 million U.S. revolver borrowings, ~~$8.4~~$4.9 million ~~(£6.5~~(C$6.8 million) related to ~~Genesco (UK) Limited~~GCO Canada ULC and ~~$2.8~~$6.1 million ~~(C$3.7~~(£5.0 million) ~~related to Genesco Canada ULC.~~U.K. revolver borrowings. We were in compliance with all the relevant terms and conditions of the Credit Facility and the Facility Agreement as of ~~July 29,~~October 28, 2023.

We believe that cash on hand, cash provided by operations and borrowings under our Credit Facility and the ~~Schuh~~ Facility Agreement will be sufficient to support our liquidity needs in Fiscal 2024 and the foreseeable future.

InDuring the second quarter of Fiscal 2024, in light of ~~current~~ store traffic trends and general consumer uncertainty, we ~~have~~ identified approximately 100 Journeys stores for closure in Fiscal ~~2024~~2024. Our Journeys store closure plans are on track, with approximately 75% of the 100 planned doors closed through the end of the third quarter, and ~~continue~~the remainder targeted to close by the end of Fiscal 2024. We are continuing our efforts in making occupancy costs more variable. In addition, we ~~continue~~are continuing to conduct a holistic review of our cost structure. We expect to realize significant cost savings in Fiscal 2024 and Fiscal 2025. We expect that a significant portion of these savings will be realized by our Journeys Group.

In the fourth quarter of Fiscal 2021, we implemented tax strategies allowed under the 5-year carryback provisions in the CARES Act which we believe will generate approximately $55 million of net tax refunds. We received approximately $26 million of such net tax refunds in Fiscal 2022 and anticipated receipt of the remaining outstanding net tax refund in Fiscal 2023. However, in the third quarter of Fiscal 2023, we were notified the IRS would conduct an audit of the periods related to the outstanding net tax refund. While we do not believe any uncertainty with the technical merits of the positions generating the net tax refunds exists, we do anticipate the timing of the net tax refund will be extended as a result of the audit process. Accordingly, we have recorded the outstanding refund to non-current prepaid income taxes on the Condensed Consolidated Balance Sheets as of ~~July 29,~~October 28, 2023.

Contractual Obligations

Our contractual obligations at ~~July 29,~~October 28, 2023 ~~increased~~decreased 2% compared to January 28, 2023, primarily due to ~~increased long-term debt,~~decreased lease obligations and purchase obligations, partially offset by ~~decreased lease obligations.~~increased long-term debt.

Capital Expenditures

Total capital expenditures in Fiscal 2024 are expected to be approximately ~~$50~~$55 million to ~~$55~~$60 million of which approximately 57% is for new stores and remodels and 43% is for computer hardware, software and warehouse enhancements for initiatives to drive traffic and omni-channel capabilities. 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 Fiscal 2023 Form 10-K. We also do not currently have any off-balance sheet arrangements.

Common Stock Repurchases

We ~~repurchased 1,006,295~~did not repurchase any shares during the ~~second~~third quarter of Fiscal 2024 ~~at a cost of $22.9 million, or $22.71 per share,~~ and repurchased 1,261,295 shares during the first ~~six~~nine months of Fiscal 2024 at a cost of $32.0 million, or $25.39 per share. We have $52.1 million remaining as of ~~July 29,~~October 28, 2023 under our expanded share repurchase authorization announced in June 2023. We repurchased ~~826,034~~451,343 shares during the ~~second~~third quarter of Fiscal 2023 at a cost of ~~$45.4~~$20.8 million, or ~~$54.99~~$46.01 per share, and repurchased ~~928,929~~1,380,272 shares during the first ~~six~~nine months of Fiscal 2023 at a cost of ~~$51.9~~$72.7 million, or ~~$55.90~~$52.66 per share. We accrued $4.8 million of share repurchases in the fourth quarter of Fiscal 2022 due to timing of the cash settlement which is included on the Condensed Consolidated Statements of Cash Flows for the ~~six~~nine months ended ~~July 30, 2022, offset by a $0.4 million accrual of share repurchases in the second quarter of Fiscal 2023.~~October 29, 2022. During the third quarter of Fiscal 2024, through ~~September~~December 6, 2023, we have not repurchased any shares.

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 8,7, "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 ~~second~~third quarter of Fiscal 2024 are included in Note 1 to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We incorporate by reference the information regarding market risk appearing in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “Financial Market Risk” in our Annual Report on Form 10-K for the fiscal year ended January 28, 2023. There have been no material changes to our exposure to market risks from those disclosed in the Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We have established disclosure controls and procedures designed to ensure that information required to be disclosed by us, including our consolidated subsidiaries, in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is made known to the officers who certify our financial reports and to other members of senior management. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving desired objectives.

Based on their evaluation as of ~~July 29,~~October 28, 2023, the principal executive officer and principal financial officer of the Company have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) were effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within time periods specified in SEC rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

During the third quarter of Fiscal 2024, we implemented a new inventory management system for our wholesale operations and we updated and modified internal controls over financial reporting related to wholesale inventory. There were no other changes in our internal control over financial reporting that occurred during our ~~second~~third quarter of Fiscal 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

2422

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We incorporate by reference the information regarding legal proceedings in Item 1, Note 8,7, “Legal Proceedings”, to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

You should carefully consider the risk factors discussed in Part I, “Item 1A. Risk Factors” in the Annual Report on Form 10-K for the fiscal year ended January 28, 2023, which could materially affect our business, financial condition or future results. The risks described in this report, and in our Annual Report are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Repurchases (shown in thousands except share and per share amounts):

ISSUER PURCHASES OF EQUITY SECURITIES

Period

(a) Total
Number of
Shares
Purchased

(b) Average
Price
Paid
per Share

(c) Total
Number of
Shares
Purchased
as Part
of Publicly
Announced
Plans or
Programs

(d) Maximum
Number
(or Approximate
Dollar Value)
of Shares that
May Yet Be
Purchased
Under the
Plans or
Programs

May 2023

4-30-23 to 5-27-23(1)

—

$
—

—

$
24,966

June 2023

5-28-23 to 6-24-23(1)

676,295

$
21.41

676,295

$
10,488

July 2023

6-25-23 to 7-29-23 (1)

330,000

$
25.39

330,000

$
52,109

6-25-23 to 7-29-23 (2)

71,914

$
24.42

—

—

Total

1,078,209

$
22.83

1,006,295

$
52,109

(1) Share repurchases were made pursuant to a $100.0 million share repurchase program approved by the Board of Directors and announced in February 2022. In June 2023, the Board of Directors approved an additional $50.0 million for share repurchases. We expect to implement the balance of the repurchase program through purchases made from time to time either in the open market or through private transactions, in accordance with the regulations of the SEC and other applicable legal requirements.

(2) These shares represent shares withheld from vested restricted stock to satisfy the minimum withholding requirement for federal and state taxes.


ISSUER PURCHASES OF EQUITY SECURITIES

Period	(a) Total Number of Shares Purchased		(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
August 2023
7-30-23 to 8-26-23(1)		—	$	—		—	$	52,109

September 2023
8-27-23 to 9-23-23(1)		—	$	—		—	$	52,109

October 2023
9-24-23 to 10-28-23 (1)		—	$	—		—	$	52,109
9-24-23 to 10-28-23 (2)		1,518	$	28.71		—		—
Total		1,518	$	28.71		—	$	52,109

(1) Share repurchases were made pursuant to a $100.0 million share repurchase program approved by the Board of Directors and announced in February 2022. In June 2023, the Board of Directors approved an additional $50.0 million for share repurchases. We expect to implement the balance of the repurchase program through purchases made from time to time either in the open market or through private transactions, in accordance with the regulations of the SEC and other applicable legal requirements.

(2) These shares represent shares withheld from vested restricted stock to satisfy the minimum withholding requirement for federal and state taxes.

Item 5. Other Information

(c) During the ~~second~~third quarter of Fiscal 2024, no director or Section 16 officer of the Company adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements (in each case, as defined in Item 408 (a) of Regulation S-K).

2523

Item 6. Exhibits


Exhibit Index
(31.1)		Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

(31.2)		Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

(32.1)		Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(32.2)		Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document (The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.)

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

2624

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




	Genesco Inc.

	By:			/s/ Thomas A. George
				Thomas A. George
				Senior Vice President - Finance and Chief Financial Officer

Date: ~~September~~December 7, 2023

2725


Three Months Ended July 29, 2023
(In thousands)	Journeys Group			Schuh Group		Johnston & Murphy Group			Genesco Brands Group			Corporate & Other			Consolidated
Sales	$	287,275		$	122,799	$	77,788		$	35,461		$	—		$	523,323
Intercompany sales		—			—		(3	)		(293	)		—			(296	)
Net sales to external customers(1)		287,275			122,799		77,785			35,168			—			523,027
Segment operating income (loss)		(14,878	)		8,416		2,666			1,851			(8,055	)		(10,000	)
Goodwill impairment(2)		—			—		—			—			28,453			28,453
Asset impairments and other(3)		—			—		—			—			174			174
Operating income (loss)		(14,878	)		8,416		2,666			1,851			(36,682	)		(38,627	)
Other components of net periodic benefit cost		—			—		—			—			148			148
Interest expense, net		—			—		—			—			2,383			2,383
Earnings (loss) from continuing operations before income taxes	$	(14,878	)	$	8,416	$	2,666		$	1,851		$	(39,213	)	$	(41,158	)
Total assets (4)	$	769,844		$	218,913	$	187,379		$	56,977		$	261,646		$	1,494,759
Depreciation and amortization		7,810			1,624		1,137			201			1,061			11,833
Capital expenditures		11,193			3,845		2,097			623			305			18,063