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Factors You Should Know Ahead of Genesco's (GCO) Q3 Earnings

Zacks Equity Research

Genesco Inc. GCO is slated to release third-quarter fiscal 2020 results on Dec 6.

Notably, the company’s earnings significantly outpaced the Zacks Consensus Estimate over the trailing four quarters.

Further, the Zacks Consensus Estimate for the to-be-reported earnings is pegged at $1.10, suggesting 15.8% growth from the year-ago reported figure. The consensus estimate has been constant over the past 30 days. The consensus mark for sales stands at $544.1 million, indicating a decline of 23.7% from the year-earlier reported number.

Genesco Inc. Price, Consensus and EPS Surprise

Genesco Inc. Price, Consensus and EPS Surprise

Genesco Inc. price-consensus-eps-surprise-chart | Genesco Inc. Quote

Key Factors

Strength in the company’s footwear business, particularly Journeys Group, is a key driver. Journeys Group is benefiting from its product assortment and trendy athletic styles. Moreover, gains from the brick-and-mortar and digital channels might have driven the company’s consolidated comparable sales (comps) and its overall top-line performance in the fiscal third quarter.

Moreover, Genesco is witnessing a steady uptick on its brand portfolio, loyalty efforts and strong consumer base. Also, it has been making investments in the digital and omni-channel capabilities to serve customers better and efficiently. All the aforesaid factors along with Genesco’s solid product offerings and cost-saving initiatives are expected to have aided the top and bottom-line improvements in the quarter to be reported.

However, increased cost of investments in digital capabilities, supply chain and marketing might have adversely impacted the company’s operating income and profitability in the fiscal third quarter. Moreover, softness in Schuh business and stiff industry competition are headwinds. Moreover, the company has been seeing a tough operating landscape in the U.K., thanks to persistent weakness in consumer demand for apparel and footwear categories. Additionally, a challenging retail traffic and Brexit uncertainty are deterrents.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Genesco this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Genesco carries a Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks With Favorable Combination

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to beat on earnings:

Costco Wholesale Corporation COST currently has an Earnings ESP of +1.01% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General Corporation DG has an Earnings ESP of +0.65% and a Zacks Rank of 2.

lululemon athletica inc LULU presently has an Earnings ESP of +0.73% and a Zacks Rank of 3.

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