Genesco Inc. (GCO) had a rough Thursday, with shares tumbling after the footwear retailer delivered disappointing third-quarter results and issued a dramatic guidance cut that caught investors off guard.

The Numbers Tell a Mixed Story

Genesco reported adjusted earnings per share of 79 cents, falling short of the 88-cent analyst consensus. Quarterly sales reached $616.2 million, up 3% year over year but still missing the $618.6 million estimate.

Beneath the surface, the sales picture actually looked decent across divisions. Journeys grew 4%, Schuh increased 2%, and both Johnston & Murphy and Genesco Brands posted 3% gains. Comparable sales rose 3% overall, with physical stores up a healthy 5% while e-commerce declined 3%. E-commerce represented 23% of total retail sales for the quarter.

The profit picture was less encouraging. Gross margin compressed to 46.8% from 47.8% a year earlier, squeezed by tariff pressures and license exits at Genesco Brands Group, plus heavier promotions at Schuh. Adjusted operating margin improved slightly to 2.1% of sales from 1.7% in the prior year period.

As of November 1, 2025, Genesco held $27.0 million in cash against $89.5 million in total debt. The company didn't repurchase any shares during the quarter and has $29.8 million remaining under its share buyback program from June 2023.

What Management Is Saying

Board Chair, President and CEO Mimi E. Vaughn highlighted the back-to-school strength: "The third quarter demonstrated the power of our strategic initiatives, with Journeys delivering strong double-digit comp growth during back-to-school on top of double-digit growth last year."

But then the bottom fell out. "We experienced a meaningful pullback in the back half of the third quarter, as consumers retreated following the back-to-school season when there was less of a reason to shop," Vaughn explained. The company did see improvement during Black Friday and Cyber Monday, contributing to a positive start to the fourth quarter.

A Steep Guidance Reduction

Here's where things get painful. Genesco slashed its fiscal 2026 adjusted EPS guidance to just 95 cents, down dramatically from the previous range of $1.30 to $1.70 and well below the $1.57 consensus estimate.

The company now expects total sales to rise about 2% for the full year with comparable sales up roughly 3%, compared to earlier projections of 3% to 4% total sales growth and a 4% to 5% comp increase. Management also said it won't be buying back any more shares in fiscal 2026.

Vaughn was direct about the challenges: "We have materially changed our sales and margin projections for Schuh to reflect the ongoing difficult U.K. market and performance. We have also moderated the growth assumptions for our other businesses based on the lower footwear consumer traffic and spending patterns we've recently witnessed on non-peak shopping days."

Translation: When consumers don't have a specific reason to shop, they're staying home. And the UK market has been particularly tough on the Schuh business.

Investors didn't take the news well. GCO shares dropped 29.42% to $24.88 at the time of publication Thursday.