Core Viewpoint - The article discusses the potential of Genesco (GCO) as a strong candidate for investment due to its recent price momentum and favorable valuation metrics. Group 1: Stock Performance - GCO has experienced a significant price increase of 52.3% over the past 12 weeks, indicating strong momentum [3] - The stock has a four-week price change of 30.6%, reflecting growing investor interest [8] - GCO has a Momentum Score of A, suggesting it is an opportune time to invest [9] Group 2: Earnings and Valuation - GCO has seen upward revisions in earnings estimates, contributing to its Zacks Rank 1 (Strong Buy) status [4] - The stock is currently trading at a Price-to-Sales ratio of 0.20, indicating it is attractively priced at 20 cents for each dollar of sales [13] Group 3: Investment Strategy - Momentum investing is highlighted as a strategy that contrasts with traditional methods, focusing on buying high and selling higher [7] - The Zacks Momentum Style Score and the 'Fast-Paced Momentum at a Bargain' screen are tools to identify promising momentum stocks [7]

Sales Performance - Net sales increased 2.9% to $596.3 million in Q3 Fiscal 2025 compared to $579.3 million in Q3 Fiscal 2024, driven by a 6% increase in comparable sales[58] - E-commerce comparable sales rose by 15%, while same store sales increased by 4%[58] - Journeys Group net sales increased 3.8% to $362.5 million, with an 11% increase in comparable sales[73] - Schuh Group net sales increased 3.1% to $121.8 million, but operating income decreased by 43.1% to $3.1 million[78] - Johnston & Murphy Group net sales decreased 3.6% to $78.5 million, with a significant decline in operating income[80] - Genesco Brands Group's net sales increased by 10.2% to $33.5 million for Q3 Fiscal 2025 from $30.4 million in Q3 Fiscal 2024, driven primarily by increased sales of Levi's and Dockers footwear[83] - For the first nine months of Fiscal 2025, net sales decreased by 0.4% to $1.579 billion from $1.586 billion in the same period last year, impacted by decreased comparable store sales and net store closings[87] - Johnston & Murphy Group's net sales decreased by 5.4% to $228.7 million for the first nine months of Fiscal 2025, primarily due to decreased wholesale sales and a 3% decrease in comparable sales[100] - Schuh Group's net sales increased by 1.4% to $338.7 million in the first nine months of Fiscal 2025, but total comparable sales decreased by 3%[97] - Genesco Brands Group's net sales decreased by 10.0% to $90.9 million for the first nine months of Fiscal 2025, primarily due to the repositioning of the business[102] Financial Metrics - Gross margin increased by 2.5% to $285.3 million, but as a percentage of net sales, it decreased from 48.1% to 47.8%[59] - Selling and administrative expenses rose by 2.8% to $274.9 million, but decreased as a percentage of net sales from 46.2% to 46.1%[60] - Operating margin was 1.7% in Q3 Fiscal 2025, down from 1.9% in Q3 Fiscal 2024, primarily due to decreased gross margin[61] - The effective income tax rate was 311.5% in Q3 Fiscal 2025, reflecting a $26.3 million U.S. valuation allowance due to uncertainty in realizing tax benefits[63] - The operating margin improved to 11.1% in Q3 Fiscal 2025 from a loss of 5.1% in Q3 Fiscal 2024, attributed to increased gross margin and decreased selling and administrative expenses[84] - The net loss for Q3 Fiscal 2025 was $18.9 million, or $1.76 diluted loss per share, compared to net earnings of $6.5 million, or $0.60 diluted earnings per share in Q3 Fiscal 2024[65] - The net loss for the first nine months of Fiscal 2025 was $53.3 million, or $4.90 diluted loss per share, compared to a net loss of $44.0 million, or $3.88 diluted loss per share, in the same period last year[94] Expenses and Cash Flow - Corporate and other expenses rose to $9.7 million in Q3 Fiscal 2025 from $7.8 million in Q3 Fiscal 2024, reflecting increased performance-based compensation[85] - Net interest expense decreased by 45.0% to $1.2 million in Q3 Fiscal 2025 compared to $2.2 million in Q3 Fiscal 2024 due to reduced average borrowings[86] - Corporate and other expenses for the first nine months of Fiscal 2025 were $27.2 million, down from $52.1 million in the same period of Fiscal 2024, reflecting a significant reduction in impairment charges[104] - Net interest expense decreased by 44.8% to $3.4 million in the first nine months of Fiscal 2025, compared to $6.2 million in the same period of Fiscal 2024, due to decreased average borrowings[107] - Cash used in operating activities increased by $5.6 million in the first nine months of Fiscal 2025, primarily due to a $54.8 million increase in cash flow from changes in accounts payable[109] - Cash used in investing activities was $22.3 million lower in the first nine months of Fiscal 2025 compared to the same period in Fiscal 2024, reflecting decreased capital expenditures[110] - Cash provided by financing activities increased by $7.3 million in the first nine months of Fiscal 2025, compared to the same period in Fiscal 2024, due to decreased share repurchases[111] Capital Expenditures and Debt - Total capital expenditures for Fiscal 2025 are expected to be approximately $45 million to $50 million, with 67% allocated for new stores and remodels[119] - As of November 2, 2024, the company had $96.1 million in U.S. revolver borrowings and $4.0 million related to GCO Canada ULC, remaining compliant with all credit facility terms[113] - Contractual obligations increased by 7% compared to February 3, 2024, primarily due to increased long-term debt[118] Tax Refunds - The company anticipates generating approximately $55 million of net tax refunds under the CARES Act, with $26 million received in Fiscal 2022[114]

Financial Performance - Total net sales for Q3 Fiscal 2025 increased 3% to $596 million, with comparable sales rising 6%[4] - Comparable e-commerce sales surged 15%, while comparable store sales grew by 4%[4] - The company raised its sales guidance for Fiscal 2025 to a decrease of 1% to flat compared to Fiscal 2024[2] - Adjusted diluted EPS guidance for Fiscal 2025 is now projected to be between $0.80 and $1.00, up from previous guidance of $0.60 to $1.00[12] - The company reported a net loss of $18,932 thousand for the quarter, translating to a loss of $1.76 per share, compared to net earnings of $6,539 thousand and earnings of $0.60 per share in the previous quarter[19] - For the nine months ended Nov. 2, 2024, net sales were $1,579,113 thousand, slightly down from $1,585,674 thousand in the same period last year[22] - The operating loss for the nine months was $32,192 thousand, representing -2.0% of net sales, an improvement from -3.2% in the previous year[22] - Loss from continuing operations for the nine months was $53,065 thousand, or -3.4% of net sales, compared to -2.8% in the previous year[22] Sales and Revenue Breakdown - Journeys Group reported a comparable sales increase of 11%, recovering from an 8% decline in the previous year[5] - The Journeys Group accounted for 60.8% of net sales in the quarter, with sales of $362,517 thousand, up from 60.3% in the previous quarter[24] - The Schuh Group maintained a consistent 20.4% of net sales in both the current and previous quarter, with sales of $121,826 thousand[24] - Total comparable sales increased by 6% for the quarter ending November 2, 2024, compared to a decline of 4% in the same quarter last year[31] - Comparable sales for the Journeys Group increased by 11% for the quarter ending November 2, 2024, compared to a decline of 8% in the same quarter last year[31] Profitability and Margins - GAAP EPS was ($1.76), while Non-GAAP EPS was $0.61, reflecting a significant impact from a U.S. valuation allowance[2][8] - Gross margin decreased by 30 basis points to 47.8% due to changes in product mix at Journeys[7] - Gross margin for the quarter was $285,256 thousand, accounting for 47.8% of net sales, compared to 48.1% in the previous quarter[19] - The adjusted operating income for the total company was $10,210 thousand for the quarter ending November 2, 2024, compared to $10,852 thousand in the same quarter last year[41] - The adjusted gross margin for the period was $748,926,000, which is 47.4% of sales, down from 47.7% in the previous period[44] Assets and Liabilities - Cash as of November 2, 2024, was $33.6 million, up from $21.7 million a year earlier, while total debt decreased to $100.1 million[9] - Total assets decreased to $1,435,521 thousand from $1,492,931 thousand, a decline of approximately 3.8%[28] - Total current liabilities increased to $422,082 thousand from $397,164 thousand, an increase of about 6.3%[28] - The company’s long-term debt decreased to $100,114 thousand from $128,163 thousand, a reduction of approximately 21.9%[28] Store Operations - The company closed 12 Journeys stores in Q3, totaling 41 closures for Fiscal 2025, with plans for up to 10 more closures[12] - The company had a total of 1,341 retail stores as of November 2, 2024, down from 1,410 stores a year earlier[29] Future Projections and Guidance - Forecasted earnings from continuing operations for fiscal year ending February 1, 2025, are projected between $8.8 million and $11.0 million, translating to an EPS of $0.53 to $1.00[47] - The company anticipates a tax rate of approximately 27% for fiscal 2025[47] - The company disclaims any obligation to update future expectations and estimates, which may vary materially from actual results[48] - Charges related to the distribution model transition are estimated at $1.3 million, impacting EPS by $0.12[47] - Total asset impairments and other adjustments are expected to be around $1.3 million, affecting EPS by $0.12[47]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Strategy - Momentum investors often face challenges in determining the right entry point for fast-moving stocks, which can lose momentum if future growth does not justify high valuations [2] - A safer approach involves investing in bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score to identify these opportunities [3] Group 2: Genesco (GCO) Stock Analysis - Genesco (GCO) has shown a significant price increase of 29.7% over the past four weeks, indicating growing investor interest [4] - Over the past 12 weeks, GCO's stock has gained 55.8%, with a beta of 2.47, suggesting it moves 147% higher than the market in either direction [5] - GCO has a Momentum Score of B, indicating a favorable time to invest based on momentum [6] Group 3: Earnings Estimates and Valuation - GCO has received a Zacks Rank 1 (Strong Buy) due to upward revisions in earnings estimates, which typically attract more investors [7] - The stock is currently trading at a Price-to-Sales ratio of 0.19, suggesting it is undervalued at 19 cents for each dollar of sales [7] Group 4: Additional Investment Opportunities - Besides GCO, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting additional investment opportunities [8] - Investors can explore over 45 Zacks Premium Screens tailored to different investing styles to identify potential winning stocks [9]

Company Overview - Genesco (GCO) shares increased by 8.4% to $29.45 in the last trading session, with a higher-than-average trading volume [1] - The stock has shown a modest gain of 0.2% over the past four weeks [1] Market Sentiment and Positioning - The rise in Genesco's stock price is attributed to positive market sentiment following a clear political mandate for Trump, indicating a stable political environment [2] - The company is focusing on product innovation, expanded assortments, and enhanced consumer experiences, particularly in the youth footwear market [2] - Ongoing digital growth and effective marketing strategies are expected to bolster Genesco's long-term growth potential [2] Financial Expectations - Genesco is projected to report quarterly earnings of $0.22 per share, reflecting a year-over-year decline of 61.4% [3] - Expected revenues for the upcoming quarter are $573.56 million, which is a 1% decrease from the same quarter last year [3] - The consensus EPS estimate for Genesco has remained unchanged over the last 30 days, indicating a lack of upward revisions in earnings estimates [4] Industry Context - Genesco operates within the Zacks Retail - Apparel and Shoes industry, where Lulu's Fashion Lounge Holdings, Inc. (LVLU) recently experienced a 15.7% decline in stock price [4] - LVLU's consensus EPS estimate has also remained unchanged, with a projected loss of -$0.07, but showing a 30% improvement compared to the previous year [5]

Financial Performance - Net sales increased by 0.4% to $525.2 million in Q2 Fiscal 2025 compared to $523.0 million in Q2 Fiscal 2024, driven by a strong back-to-school sales week and an 8% increase in e-commerce comparable sales[61]. - Gross margin decreased by 1.6% to $245.6 million, with gross margin as a percentage of net sales declining from 47.7% to 46.8%[62]. - Selling and administrative expenses decreased by 1.7% to $255.1 million, with expenses as a percentage of net sales improving from 49.6% to 48.6%[63]. - Operating margin improved to a loss of 2.0% in Q2 Fiscal 2025 from a loss of 7.4% in Q2 Fiscal 2024, reflecting improved margins in Journeys Group and Genesco Brands Group[64]. - The pretax loss for Q2 Fiscal 2025 was $11.7 million, significantly reduced from a pretax loss of $41.2 million in Q2 Fiscal 2024[65]. - Net loss for Q2 Fiscal 2025 was $10.0 million, or $0.91 diluted loss per share, compared to a net loss of $31.7 million, or $2.79 diluted loss per share, in Q2 Fiscal 2024[66]. Segment Performance - Journeys Group net sales increased by 4.0% to $298.8 million, with total comparable sales decreasing by 1%[73]. - Schuh Group net sales increased by 1.4% to $124.6 million, while total comparable sales decreased by 2%[75]. - Johnston & Murphy Group net sales decreased by 8.7% to $71.0 million, with a 5% decrease in comparable sales[77]. - Johnston & Murphy Group reported an operating loss of $0.4 million in Q2 Fiscal 2025, compared to operating income of $2.7 million in Q2 Fiscal 2024[78]. - Genesco Brands Group's net sales decreased 12.6% to $30.7 million for Q2 Fiscal 2025 from $35.2 million in Q2 Fiscal 2024, primarily due to business repositioning[80]. Operating Income and Expenses - Operating income increased 44.4% to $2.7 million in Q2 Fiscal 2025 compared to $1.9 million in Q2 Fiscal 2024, driven by decreased selling and administrative expenses[81]. - Net interest expense decreased 43.6% to $1.3 million in Q2 Fiscal 2025 from $2.4 million in Q2 Fiscal 2024, reflecting decreased average borrowings[83]. Year-to-Date Performance - For the first six months of Fiscal 2025, net sales decreased 2.3% to $982.8 million compared to $1.006 billion in the first six months of Fiscal 2024, impacted by decreased comparable store sales and net store closings[84]. - Gross margin decreased 3.4% to $461.9 million in the first six months of Fiscal 2025, with gross margin as a percentage of net sales declining from 47.5% to 47.0%[85]. - Journeys Group's net sales decreased 0.2% to $558.3 million in the first six months of Fiscal 2025, with total comparable sales down 3%[91]. - Schuh Group's net sales increased 0.5% to $216.9 million in the first six months of Fiscal 2025, but operating income decreased 78.2% to $1.4 million[93]. - Johnston & Murphy Group's net sales decreased 6.3% to $150.2 million in the first six months of Fiscal 2025, primarily due to a 4% decrease in comparable sales[97]. - Genesco Brands' net sales decreased 18.8% to $57.3 million for the first six months of Fiscal 2025 from $70.6 million in the first six months of Fiscal 2024[99]. - The net loss for the first six months of Fiscal 2025 was $34.3 million, or $3.14 diluted loss per share, compared to a net loss of $50.6 million, or $4.37 diluted loss per share, in the first six months of Fiscal 2024[90]. Corporate Expenses and Cash Flow - Corporate expenses for the first six months of Fiscal 2025 were $17.5 million, down from $44.3 million in the same period of Fiscal 2024, primarily due to a decrease in non-cash impairment charges[102]. - Net interest expense decreased by 44.6% to $2.2 million in the first six months of Fiscal 2025 compared to $4.0 million in the same period of Fiscal 2024, reflecting reduced average borrowings[103]. - Cash used in operating activities was $19.1 million lower in the first six months of Fiscal 2025, driven by a $50.2 million increase in cash flow from changes in accounts payable[104]. - Cash used in investing activities decreased by $20.9 million in the first six months of Fiscal 2025, primarily due to reduced capital expenditures related to omni-channel capabilities[105]. Capital Expenditures and Liquidity - Total capital expenditures for Fiscal 2025 are expected to be approximately $52 million to $57 million, with 63% allocated for new stores and remodels[111]. - The company repurchased 381,711 shares at a cost of $9.3 million during the first six months of Fiscal 2025, with an average cost of $24.49 per share[112]. - As of August 3, 2024, the company had $75.1 million in U.S. revolver borrowings and $2.7 million related to GCO Canada ULC, remaining compliant with all credit facility terms[106]. - The company anticipates that cash on hand, cash from operations, and borrowings will be sufficient to support liquidity needs in Fiscal 2025 and the foreseeable future[108]. - Contractual obligations decreased by 1% compared to February 3, 2024, mainly due to reduced lease obligations and purchase obligations[110]. - The company expects to generate approximately $55 million of net tax refunds from tax strategies implemented under the CARES Act, although the timing may be extended due to an IRS audit[109].

BLACK_FACTORY/iStock via Getty Images Genesco's (NYSE:GCO) 2Q25 results were not very out of line with the company's guidance for the year, with comparable figures improving a little from 1Q25. Still, the market may have been expecting a faster recovery because the stock fell close to 12% on the day after the earnings were released. The company is still struggling to find the right assortment for its customers as the fashion cycle challenges its main category, vulcanized shoes (brands like Vans and Conv ...

Genesco Inc. (GCO) posted second-quarter fiscal 2025 results, with a narrower-than-expected loss per share and sales beat. Quarterly results benefited from improved Journeys business and diversified product assortment. The Journeys business gained from the early back-to-school demand, which boosted comparable sales (comps). Its cost-saving program is on track to achieve a reduction in the range of $45-$50 million in the annualized run rate by the end of fiscal 2025.Shares of this Zacks Rank #1 (Strong Buy) ...

Juanmonino Genesco Inc. (NYSE:GCO), the footwear & apparel retailer, reported its fiscal Q2 results on the 6th of September, sending the stock down nearly -12%. The stock crashed despite a very slightly raised FY2025 outlook and a Q2 earnings beat, with the market seeming to price in a much better performance than Wall Street’s analysts expected. Previously, I published an article on the stock on the 27th of February, titled “Genesco: Focus On Future Margin Trajectory”. Since I initiated the stock at a n ...

Financial Data and Key Metrics - Consolidated revenue for Q2 was $525 million, exceeding expectations and resulting in better leverage [29] - Total company comps were down 2%, with store comps down 4% and direct comps up 8% [30] - Adjusted gross margin decreased by 90 basis points YoY, with Journeys down 90 bps, Schuh down 210 bps, and J&M up 40 bps [30] - Adjusted operating loss improved to $9.3 million from $10 million YoY, with adjusted diluted loss per share at $0.83 compared to $0.85 last year [33] - Net debt position at the end of Q2 was $32 million, with inventories down 8% YoY [34] Business Line Performance - Journeys saw positive comps in July and August, driven by improved product assortment and strong back-to-school sales [7][13] - Schuh faced challenges due to a tough summer season, with increased promotional activity impacting gross margins [15][16] - Johnston & Murphy (J&M) experienced pressure from robust two-year comps and a softening men's premium non-athletic footwear market, but new product launches like Amherst 2.0 resonated well [17][18] - Genesco Brands Group achieved higher profitability despite lower sales, driven by a simplified license portfolio [20] Market Performance - Journeys' digital business grew double-digits, accounting for 22% of total retail sales [30] - Schuh maintained its position as the 10th largest footwear retailer in the UK, with digital sales representing nearly 40% of total sales [16] - J&M's apparel and accessories now represent almost half of its direct-to-consumer business, with strong performance in woven shirts, blazers, and bags [19] Strategic Direction and Industry Competition - The company is focused on improving Journeys' performance through product leadership, brand building, and enhancing the omnichannel experience [22][23] - Efforts to optimize the store footprint and reduce costs are ongoing, with 29 Journeys stores closed year-to-date and up to 50 potential closures expected this year [37] - The company is investing in store refreshes and new store concepts to enhance the customer experience, with a rollout planned for October [24][58] Management Commentary on Operating Environment and Future Outlook - The consumer remains selective, shopping primarily for key footwear items during peak periods like back-to-school and holidays [10] - The company expects continued challenges in non-peak shopping periods but remains optimistic about the holiday season [27][38] - Full-year guidance remains unchanged, with expected sales down 1% to 2% and adjusted gross margin down 10 to 20 basis points [41] Other Important Information - The company repurchased 382,000 shares for $9.3 million in Q2, with $42.8 million remaining under the current authorization [36] - Capital expenditures in Q2 were $8 million, primarily directed toward retail stores and digital initiatives [35] - The company is targeting $45 million to $50 million in annualized cost savings by the end of fiscal 2025 [36] Q&A Session Question: Third quarter guidance and Journeys comp expectations - The company expects low single-digit consolidated comps, with Journeys also in the low single digits [45] - Positive comps are expected to continue into September and October, driven by improved product assortment and consumer demand [47][48] Question: Holiday season and newness in the boot category - The company has diversified its assortment to include both athletic and casual styles, with strength in multiple brands [50] - While boots are not expected to drive significant growth, there are early signs of traction in some boot brands [51] Question: Serving the teen girl consumer - The company is focusing on refining its assortment, marketing, and store environment to better serve the teen girl demographic [53][54] - Efforts include updated segmentation, premium brand offerings, and enhanced in-store experiences [55] Question: Store refresh and new concept rollout - A store refresh will be completed before the holiday season, with a new store concept rollout starting in October [57][58] - The new concept emphasizes product visibility, flexibility, and a modern aesthetic while maintaining Journeys' youthful energy [59] Question: Johnston & Murphy marketing and brand trends - J&M's marketing campaign highlights the brand's evolution into casual and comfortable styles, with a focus on new product launches and innovation [62][64] - The company is seeing strong interest in diversified footwear styles and higher average selling prices [66][67]