Genesco Inc. (GCO), a Zacks Rank #5 (Strong Sell) a Nashville-based specialty retailer, sells footwear, headwear and accessories in retail stores in the United States and Canada. The Company sells its products principally under the names Journeys, Journeys Kidz, Shi by Journeys, Johnston & Murphy, Underground Station, Hatworld, Lids, Hat Shack, Hat Zone, Head Quarters and Cap Connection, and on internet websites. The Company also sells footwear at wholesale under its Johnston & Murphy brand and under the licensed Dockers brand.
Recent Earnings Report
In early December, the company posted Q3 17 earnings results were it missed the Zacks consensus earnings estimate for the third consecutive quarter, but beat the revenue estimate (the first revenue beat in 8 quarters). Due to its current negative trends at its Lids stores, management reduced its FY 17 EPS guidance to a range of $3.05-3.35 from $3.35-3.65. The Lids stores were feeling pressure from declining demand for NFL licensed merchandise, and a -2.0% decline it comparable same store sales at their brick and mortar stores. While the Journeys segment saw improvements, the Lids issues are outweighing its growth.
Management’s Take
According to Robert J. Dennis, Chairman, President and CEO, “Our third quarter results are the tale of two businesses. Journeys built on its momentum following its emergence from the recent fashion shift in its markets and posted a solid comp gain. Meanwhile Lids, after a tough second quarter, faced additional challenges that pressured its performance. The dramatic shift in consumer shopping behavior away from stores to digital continued across all of our divisions, although we did see bright spots in both store traffic and store purchases during Back-to-School in more than one of our concepts. The combination of these factors with gross margin headwinds in many of our businesses, the deleverage resulting from negative store comps and higher expenses from our omnichannel initiatives led to earnings below last year's level but slightly ahead of our internal forecasts.”
Price and Earnings Consensus Graph
As you can see in the graph below, the stock price has continued to decline after its third consecutive earnings miss, and continued pressure at its Lids stores.
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