This article first appeared on GuruFocus.

Total Revenue: $616 million, up 3% compared to last year.

Comparable Sales Growth: 3% overall, with Journeys up 6% and XX and J&M down 2%.

Store Comps: Increased 5%.

Direct Comps: Declined 3%.

Gross Margin: 46.8%, down 100 basis points from last year.

SG&A Expense: 44.7% of sales, leveraging 140 basis points year over year.

Adjusted Operating Income: $12.9 million, up from $10.3 million last year.

Adjusted Diluted Earnings Per Share: $0.79, compared to $0.61 last year.

Free Cash Flow: Improved nearly $5 million year over year.

Inventory: Up 7% compared to last year.

Capital Expenditures: $18 million.

Store Count: 1,245 stores, with 4 opened and 12 closed.

Full Year EPS Guidance: Adjusted to approximately $0.95.

Full Year Revenue Growth Expectation: About 2%.

Full Year Comparable Sales Growth Expectation: About 3%.

Gross Margin Expectation: Down approximately 100 basis points year over year.

SG&A Leverage Expectation: About 100 basis points as a percent of sales.

Capital Expenditures Guidance: $55 million to $65 million.

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Release Date: December 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Journeys achieved a 6% comp growth and more than a 50% increase in operating income, marking its fifth consecutive quarter of positive comp growth.

Total comparable sales increased by 3%, with store comps up 5%, demonstrating the strength of the in-store experience.

The Life on Loud brand campaign for Journeys has surpassed 70 million social views, indicating strong brand engagement.

Johnston and Murphy's partnership with Peyton Manning led to a double-digit traffic increase, enhancing brand visibility.

The introduction of Nike at Journeys is expected to attract more teen customers, aligning with the company's strategy to diversify its product offerings.

The exit of licenses in Genesco Brands Group and tariff impacts have negatively affected profitability.

The UK market faced heightened promotional activity, leading to unexpected gross margin pressure at SHU.

E-commerce comps declined by 3%, facing tougher comparisons against last year's double-digit gains.

The challenging UK retail environment has led to a decline in SHU's overall comps, with increased promotional activity needed to drive demand.

Full-year EPS guidance has been adjusted downward due to ongoing difficulties in the UK market and moderated growth assumptions across other businesses.

Q: Can you provide insights into Journey's sales outlook for the fourth quarter, given the lowered sales projections for the year? A: Mimi Vaughn, CEO, explained that while Journeys had a strong back-to-school season, consumer pullback was observed in non-peak periods. For Q4, they expect positive comps during peak shopping times, with strong store growth but moderated e-commerce comps due to tough comparisons. Overall, they anticipate a stronger portfolio with positive stack comps similar to Q3.

Q: How did the 4.0 store format perform in the third quarter? A: Mimi Vaughn noted that the 4.0 stores continued to show strong performance, even during non-peak periods, with higher transaction sizes and conversion rates. By year-end, they expect to have over 80 of these stores, which are attracting new customers and enhancing the shopping environment.

Q: Was Journey's comp positive in November, and how do you expect the rest of the quarter to unfold? A: Mimi Vaughn confirmed that Journey's comp was positive in November, with a record Black Friday. They anticipate a positive holiday season with strong assortments, including the addition of Nike. However, they expect a consumer pullback in January, similar to post-back-to-school trends.

Q: Can you elaborate on the demand trends between Canvas and Athletic footwear, and the innovation pipeline for 2026? A: Mimi Vaughn highlighted that athletic footwear is seeing more year-round demand, with growth in lifestyle athletic styles. Canvas remains part of the mix but is less in demand. The innovation pipeline for 2026 is more robust on the athletic side, with less emphasis on canvas.

Q: What are the major factors affecting gross margins, and how do you plan to improve them? A: Mimi Vaughn and CFO Sandra Harris identified three main factors: liquidation of Levi's licenses, tariff pressures, and promotional activity at SHU. They plan to manage pricing, optimize inventory, and strengthen assortments to improve margins. The exit of Levi's licenses and adjustments in SHU are expected to provide margin relief next year.

Q: How are marketing and ad spend impacting conversion and traffic, and what is the future outlook? A: Mimi Vaughn emphasized the shift towards brand marketing, such as the Life on Loud campaign and Peyton Manning partnership, to build awareness and attract new customers. Despite increased marketing spend, they achieved expense leverage, and these investments are expected to pay off over time by enhancing brand visibility.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.