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Here's How Genesco (GCO) Looks Just Ahead of Q4 Earnings

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Zacks Equity Research
·4 min read
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Genesco Inc. GCO is likely to register top- and bottom-line declines when it reports fourth-quarter fiscal 2021 numbers on Mar 11, before the opening bell. The Zacks Consensus Estimate for revenues is pegged at $615.6 million, which indicates a decline of 9.1% from the prior-year quarter’s reported figure. The company witnessed top-line decrease of 11% in the last reported quarter.

The Zacks Consensus Estimate for fourth-quarter earnings is currently pegged at $1.94 per share. The consensus mark, which has remained stable in the past 30 days, suggests deterioration of 37.2% from earnings of $3.09 per share reported in the prior-year quarter. We note that Genesco delivered an earnings surprise of 374.2% in the last reported quarter.

Key Aspects to Note

Genesco’s top line is like to have been affected by consumers’ altered shopping preferences amid the COVID-19 pandemic. This is likely to have resulted in weak traffic trends across stores. Also, weak demand conditions and possible store closures due to the pandemic are likely to have dragged sales across the company’s brands and divisions.

Notably, on Jan 11, 2021, the company issued dismal sales number for the quarter-to-date period ended Dec 26, 2020. For the said duration, Genesco's overall sales fell 8%. Going by divisions, sales plunged 38% at Johnston & Murphy Group, 5% at Journeys Group, and 9% at Schuh Group. Moreover, the company’s total store sales fell 21%. Additionally comparable sales (comps), including both stores and direct sales, dropped 3%. Further, same-store sales went down 14% for the same period.

Nevertheless, we expect that growth in the e-commerce realm is likely to have provided some cushion in the to-be-reported quarter. Quarter-to-date, up until Dec 26, 2020, e-commerce sales jumped 49% on a comparable basis. The company’s well-chalked investments toward boosting technological and omni-channel capabilities across platforms such as mobile, websites and distribution centers have been boosting online sales.

However, we cannot ignore the concerns surrounding rising expenses that might have put some pressure on margins. The company has been incurring higher shipping and warehouse expenses across most of its retail divisions, mainly due to higher penetration of online sales.

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 the Zacks Model Unveils

Our proven model doesn’t 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Genesco currently carries a Zacks Rank #1 but an Earnings ESP of 0.00%.

Stocks Poised to Beat Estimates

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat.

Ulta Beauty Inc. ULTA currently has an Earnings ESP of +6.24% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zumiez Inc. ZUMZ currently has an Earnings ESP of +0.37% and a Zacks Rank #3.

Dollar General Corporation DG has an Earnings ESP of +1.23% and a Zacks Rank #3, at present.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>

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