Genesco Reports Quarterly Beat; Shares Up 11.8%

Genesco (NYSE: GCO) shares jumped 11.8% on March 10, after the company delivered robust fourth-quarter results topping both earnings and revenue estimates.

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Strong holiday performance aided by unprecedented levels of full-price selling and robust in-store sales drove the impressive beat.

Q4 Beat

Notably, adjusted earnings of $3.48 per share grew 26.1% year-over-year and significantly beat analysts’ expectations of $2.61 per share. The company reported earnings of $2.76 per share for the prior-year period.

Net sales jumped 14% year-over-year to $728 million and exceeded consensus estimates of $723.47 million. The increase in revenues reflected a surge in same-store sales, which increased 10%.

On top of that, gross margin improved 310 bps year-over-year to 48.9% driven by better pricing at Journeys, Schuh, and Johnston & Murphy retail, and partially offset by the negative mix of e-commerce, wholesale businesses and higher logistics costs.

CEO Comments

Genesco CEO, Mimi E. Vaughn, commented, “Fiscal 2023 has gotten off to a strong start compared with last year, however, we expect this trend to moderate in the near-term as we anniversary last year’s March stimulus payments and first half sales revert to more normalized, pre-pandemic patterns.”

She further added, “That said, we believe we can deliver another year of solid top-line growth on top of a very strong Fiscal 2022 driven by a strong second half as inventory levels improve and recent price actions provide an additional tailwind.”

Wall Street’s Take

Following the robust Q4 results, Jefferies analyst Corey Tarlowe increased the price target on Genesco to $77 (9.24% upside potential) from $67 and reiterated a Hold rating.

The Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 2 Buys and 1 Hold. The average Genesco price target of $76.67 implies 8.77% upside potential to current levels.

TipRanks’ Smart Score

GCO scores an 8 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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