What Happened?
Shares of footwear, apparel, and accessories retailer Genesco (NYSE: GCO) fell 11.5% in the morning session after the company reported a wider loss for its second quarter, overshadowing revenue that beat expectations.
The footwear retailer announced total sales of $546 million, a 4% increase from the same period last year, driven by a 5% rise in same-store sales. However, the company posted an adjusted loss of $1.14 per share, a wider loss than the $0.83 per share reported in the prior-year quarter. Profitability remained a key concern, with the company's operating margin holding steady at negative 2.6%, in line with the previous year, highlighting persistent challenges. Despite the wider loss in the quarter, Genesco reiterated its full-year earnings guidance. The negative market reaction suggests investors were more focused on the ongoing profitability issues than the top-line growth.
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What Is The Market Telling Us
Genesco’s shares are extremely volatile and have had 46 moves greater than 5% over the last year. But moves this big are rare even for Genesco and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 2 days ago when the stock gained 11.7% on the news that Seaport Global upgraded the stock to 'Buy' from a previous 'Neutral' rating. Analyst Mitch Kummetz announced the rating change and also initiated a price target of $38.00 for the company. This new target represents a significant potential upside from Genesco's closing price of $28.46 on the previous day. An upgrade like this often reflects an analyst's increased confidence in a company's financial outlook and can attract positive attention from investors, leading to a rally in the stock price.
Genesco is down 30.3% since the beginning of the year, and at $29.17 per share, it is trading 33.7% below its 52-week high of $43.99 from December 2024. Investors who bought $1,000 worth of Genesco’s shares 5 years ago would now be looking at an investment worth $1,529.
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