Journeys' Comp Surge; Initiate at Strong Buy
We initiate on GCO with a Strong Buy rating and a $56 PT. Genesco Inc. operates a portfolio of footwear and apparel banners – Journeys, Schuh, Johnston & Murphy, and core licensed brands – providing broad exposure to U.S., U.K., and pan-European youth and lifestyle segments.
Our call: It’s all comp and Journeys. Our thesis is squarely anchored to a strong top-line inflection at Journeys Group, where 4Q’FY25 and 1Q’FY26 SSS rebounded +14% and +8% respectively (a structural break from prior stagnation) on 4.0 showroom remodels delivering ~25% lifts/store.
We believe consensus underappreciates management’s ability to accelerate pace (70+ targeted in FY26), while digital’s 23% mix (+7% comp) primes omnichannel tailwinds. Importantly, our FY26/FY27 revenue of $2.395bn (+3.0%) and $2.520bn (+5.2%), respectively, are meaningfully above The street (stuck in “low gear”).
Our $56 PT is based on conservative 0.24x forward P/S (0.5x peers’ 0.60x), while GCO’s Op Leverage & mix drive margin resiliency. We consider key risks, esp. tariff headwinds, mitigated by active cost actions and SKU repricing, capping margin risk.
The bottom line: We see a fundamentally mispriced retail transformation unfolding, creating one of the most attractive R/R profiles in small-cap consumer today.
Omni/Digital Build Out: Durable Underappreciated Tailwinds
Here’s where the magic happens: the Journeys 4.0 showroom remodel program is not just a facelift — it’s a transformational catalyst, resetting gen expectations and comp trajectory at Genesco’s flagship banner.