Zacks Investment Research downgraded
) to a Zacks Rank #5 (Strong Sell) on Dec 13. Weak comps and
margins in the third quarter coupled with a tempered fiscal 2014
outlook led to the downgrade.
Why the Downgrade?
Genesco has been reporting declining comps for the past
several quarters. On Dec 6, 2013, during its third quarter fiscal
2013 conference call, Genesco slashed its fiscal 2014 outlook
based on downward trend in comps and lower earnings reported in
the third quarter. Genesco now expects adjusted earnings per
share for fiscal 2014 to be in the range of $5.10 to $5.20
compared with the prior range of $5.20 to $5.30.
Genesco also began the fourth quarter on a disappointing note
recording a flat comp for the five weeks ended Nov 2013.
During the third quarter Genesco reported a 1% decline in
comps due to lower comps in most of its business segments.
Operating margin also contracted 110 basis points due to higher
selling, general and administrative expenses. Although both the
bottom line and top line results were beat the Zacks Consensus
Estimate, they declined year over year following restrained
consumer spending in the country.
Genesco is facing tough retail conditions due to restrained
consumer spending environment in the U.S. emanated from the
recent hike in payroll taxes and higher gas prices. Besides
taxes, weak pay and a tepid rate of hiring also curbed consumer
spending leading to lackluster sales. Moreover, the company
believes the gloomy consumer spending environment will not
improve much in the next few quarters.
This footwear retailer witnessed sharp downward estimate
revisions after the announcement of the third-quarter fiscal 2014
results. While the Zacks Consensus Estimate for the fourth
quarter decreased 4.3% in the past 30 days that for fiscal 2014
went down 1.1%.
Some better-ranked stocks in the shoes & relative apparel
Iconix Brand Group Inc.
Anta Sports Product Ltd
). All these stocks carry a Zacks Rank #2 (Buy).
ANTA SPORTS PRD (ANPDF): Get Free Report
GENESCO INC (GCO): Free Stock Analysis Report
ICONIX BRAND GP (ICON): Free Stock Analysis
SEQUENTIAL BRND (SQBG): Get Free Report
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