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Genesco (GCO) Hits 52-Week Low: Why is it Losing Sheen?
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Nashville-based Genesco Inc. (GCO - Free Report) has been losing sheen as shares of this Zacks Rank #4 (Sell) company continue to decline. Notably, this specialty retailer’s share price has plunged over 26% in the past six months. Also, the stock hit a 52-week low of $48.02 on Sep 2. The stock lost much of its steam after the announcement of its second-quarter fiscal 2017 results. Shares have plunged roughly 32.5% since Aug 31.
Thus, it is evident that Genesco is no longer a favored pick, at least for the short term. Let’s delve deeper to find out what’s leading to the bearish run for the stock.
What’s Weighing on Genesco?
Genesco has been facing waning sales trends for quite sometime now, as is evident from the fact that the company delivered lower-than-expected top-line results for three straight quarters, when it reported second-quarter fiscal 2017 results.
Net sales of the company dropped 4.6% to $626 million and also missed the Zacks Consensus Estimate of $641 million. The year-over-year decline in the top line was due to the sale of the Lids Team Sports business in the fourth quarter of fiscal 2016. Although the bottom line beat expectations, it dropped 5.6% year over year.
The company reported a 1% decline in consolidated comparable-store sales (comps). Also, Genesco recorded a 2% decrease in store comps, while comps via the eCommerce platform dipped 1%.
Comps were particularly challenging for the month of July, primarily due to the fashion rotation at Journeys Group. As a result, there was a shift from the key fashion trends, which had earlier led to the segment’s solid sales. This was partly compensated by the persistent success of Johnston & Murphy and the development noticed at the Lids Sports Group business, coupled with share buybacks made last year.
Based upon the challenges at Schuh Group and fashion misses at Journeys Group due to its fashion rotation, and comps trends, Genesco lowered its outlook for fiscal 2017. Management now anticipates adjusted earnings for fiscal 2017 in the band of $3.80–$4.00 a share, compared with $4.80–$4.90 guided earlier. Also, this guidance reflects expectations of a low single-digit decline in comps.
Further, the third quarter of fiscal 2017 has witnessed a difficult start, primarily due to fashion misses at Journeys Group and challenges faced by the Schuh Group. For the third quarter through Aug 27, comps declined 5% on a year-over-year basis.
We also observed that the Zacks Consensus of $3.85 and $5.41 for fiscal 2017 and fiscal 2018, respectively, has decreased $1.04 and 8 cents, respectively, over the past 7 days. Moreover, the Zacks Consensus Estimate for the third quarter currently stands at $1.29 a share, down 14 cents over the same time frame.
Stocks to Consider
Some better-ranked stocks in the same industry include The Children's Place, Inc. (PLCE - Free Report) , Tilly’s Inc. (TLYS - Free Report) and Urban Outfitters Inc. (URBN - Free Report) , all sporting a Zacks Rank #1 (Strong Buy).
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Genesco (GCO) Hits 52-Week Low: Why is it Losing Sheen?
Nashville-based Genesco Inc. (GCO - Free Report) has been losing sheen as shares of this Zacks Rank #4 (Sell) company continue to decline. Notably, this specialty retailer’s share price has plunged over 26% in the past six months. Also, the stock hit a 52-week low of $48.02 on Sep 2. The stock lost much of its steam after the announcement of its second-quarter fiscal 2017 results. Shares have plunged roughly 32.5% since Aug 31.
Thus, it is evident that Genesco is no longer a favored pick, at least for the short term. Let’s delve deeper to find out what’s leading to the bearish run for the stock.
What’s Weighing on Genesco?
Genesco has been facing waning sales trends for quite sometime now, as is evident from the fact that the company delivered lower-than-expected top-line results for three straight quarters, when it reported second-quarter fiscal 2017 results.
Net sales of the company dropped 4.6% to $626 million and also missed the Zacks Consensus Estimate of $641 million. The year-over-year decline in the top line was due to the sale of the Lids Team Sports business in the fourth quarter of fiscal 2016. Although the bottom line beat expectations, it dropped 5.6% year over year.
The company reported a 1% decline in consolidated comparable-store sales (comps). Also, Genesco recorded a 2% decrease in store comps, while comps via the eCommerce platform dipped 1%.
Comps were particularly challenging for the month of July, primarily due to the fashion rotation at Journeys Group. As a result, there was a shift from the key fashion trends, which had earlier led to the segment’s solid sales. This was partly compensated by the persistent success of Johnston & Murphy and the development noticed at the Lids Sports Group business, coupled with share buybacks made last year.
Based upon the challenges at Schuh Group and fashion misses at Journeys Group due to its fashion rotation, and comps trends, Genesco lowered its outlook for fiscal 2017. Management now anticipates adjusted earnings for fiscal 2017 in the band of $3.80–$4.00 a share, compared with $4.80–$4.90 guided earlier. Also, this guidance reflects expectations of a low single-digit decline in comps.
Further, the third quarter of fiscal 2017 has witnessed a difficult start, primarily due to fashion misses at Journeys Group and challenges faced by the Schuh Group. For the third quarter through Aug 27, comps declined 5% on a year-over-year basis.
We also observed that the Zacks Consensus of $3.85 and $5.41 for fiscal 2017 and fiscal 2018, respectively, has decreased $1.04 and 8 cents, respectively, over the past 7 days. Moreover, the Zacks Consensus Estimate for the third quarter currently stands at $1.29 a share, down 14 cents over the same time frame.
Stocks to Consider
Some better-ranked stocks in the same industry include The Children's Place, Inc. (PLCE - Free Report) , Tilly’s Inc. (TLYS - Free Report) and Urban Outfitters Inc. (URBN - Free Report) , all sporting a Zacks Rank #1 (Strong Buy).
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>