Genesco Reverts to Positive Comps - Analyst Blog

By Zacks Equity Research,

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Genesco Inc. ( GCO ) has witnessed a slight improvement in its comparable-store sales (comps) performance in the fourth quarter ended Jan 11, 2014. This footwear retailer announced on Tuesday, Jan 14 that its comps including stores and direct sales for the period inched up 1% against a 1% fall registered in the comparable prior-year period.

The year-over-year rise in comps was primarily driven by an increase of 11% at its e-Commerce and catalog direct sales. However, the company's comps performance at its stores remained flat year over year.

Genesco has been witnessing decline in comps for the past several quarters. During the first, second and third quarter of fiscal 2014, Genesco reported comps decline of 4%, 2% and 1%, respectively due to lower comps in most of its business segments. Genesco also began the fourth quarter of fiscal 2014 on a disappointing note by recording flat comps for the five weeks ended Nov 2013.

The recent comps data has somewhat boosted confidence among the investors. Since the announcement, shares of the company have gained approximately 2.7% in the last two trading days.

We believe the stock price could have risen further if the company had not trimmed its fiscal 2014 earnings guidance based on tough retail conditions in the U.S. that stemmed from a restrained consumer spending environment and heavy promotions. Genesco now expects earnings to come at the lower-end of its earlier guidance range of $5.10-$5.20 per share.

Currently, the Zacks Consensus Estimate is pegged at $5.14 per share, which may witness a downward revision in the coming days due to Genesco's downbeat guidance. The company is slated to release fourth quarter and fiscal 2014 results on Mar 7, 2014.

In the recent holiday season, most retail companies reported lackluster results, followed by lowered forecasts. These companies suffered from reduced traffic, an intensified promotional environment, lesser shopping days between Thanksgiving and Christmas, numerous icy storms and sluggish consumer spending. Retailers that lowered their guidance battered by the holiday results include Family Dollar Stores Inc. ( FDO ), American Eagle Outfitters Inc. ( AEO ) and L Brands Inc. ( LB ).

Currently, Genesco carries a Zacks Rank #3 (Hold).

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L BRANDS INC (LB): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: AEO , FDO , GCO , LB

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