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Factors Likely to Cast a Pall Over Genesco (GCO) Q2 Earnings

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Zacks Equity Research
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Genesco Inc. GCO is likely to register a decline in the top line when it reports second-quarter fiscal 2021 numbers on Sep 3, before the opening bell. The Zacks Consensus Estimate for revenues is pegged at $392.1 million, which indicates a decline of 19.3% from the year-ago quarter’s reported figure.

In fact, the Zacks Consensus Estimate for the bottom line is pegged at a loss of $1.26 that suggests deterioration from earnings of 15 cents in the year-ago quarter. The consensus estimate has remained stable in the past 30 days.

Notably, this footwear and accessories retailer has a trailing four-quarter earnings surprise of 132.2%, on average. In the last reported quarter, the company missed the Zacks Consensus Estimate by a wide margin.

Factors to Note

Genesco’s top-line in the second quarter is likely to have been hurt by store closures at some point of time during the quarter. Management, in its last earnings call, highlighted that store reopening would be carried out in a phased manner, with all stores likely to have been opened by the end of July. Moreover, for some of the reopened stores, traffic pickup rates have been slower. Additionally, lower wholesale revenues and currency exchange rates might have been drags.

Nevertheless, rising e-commerce business amid the pandemic, thanks to consumers altered shopping habits is likely to have favored the company’s performance in quarter to be reported. During the first quarter, e-commerce comparable sales improved 64%. Further, Genesco has been on track with upgrading website offerings and expansion of distribution and fulfillment centers. However higher e-commerce penetration might have led to increased shipping and warehouse expenses, thereby pressurizing gross margin.

Genesco Inc. Price, Consensus and EPS Surprise

Genesco Inc. Price, Consensus and EPS Surprise
Genesco Inc. Price, Consensus and EPS Surprise

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

What Does the Zacks Model Say?

Our proven model does not conclusively predict an earnings beat for Genesco this season. 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.

The company’s Earnings ESP of 0.00% along with Zacks Rank #4 (Sell) makes surprise prediction difficult.

Stocks With Favorable Combination

Here are a few companies you may want to consider, as our model shows that these have the right combination to post an earnings beat:

Signet Jewelers SIG currently has an Earnings ESP of +38.82% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco COST has an Earnings ESP of +2.61% and a Zacks Rank #3.

Tractor Supply Company TSCO has an Earnings ESP of +2.63% and a Zacks Rank #3.

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Costco Wholesale Corporation (COST) : Free Stock Analysis Report
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Tractor Supply Company (TSCO) : Free Stock Analysis Report
Genesco Inc. (GCO) : Free Stock Analysis Report
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