What Happened?
Shares of footwear, apparel, and accessories retailer Genesco (NYSE: GCO) jumped 3% in the morning session after analysts raised their price targets on the stock following its second-quarter earnings report.
This positive sentiment from Wall Street comes a day after the footwear retailer announced its financial results. Truist Securities increased its price target to $31 from $25, and Jefferies raised its target to $29 from $24, though both firms maintained a Hold rating on the shares.
In its second-quarter report, Genesco exceeded expectations, posting a 4% increase in net sales and raising its full-year sales forecast. The company highlighted its fourth consecutive quarter of positive comparable sales growth, driven by a 9% increase at its Journeys brand.
Despite the sales beat, the stock initially fell on Thursday as the company maintained its earnings guidance, citing pressures from tariffs and a promotional market in the UK.
After the initial pop the shares cooled down to $32.03, up 3.2% from previous close.
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What Is The Market Telling Us
Genesco’s shares are extremely volatile and have had 47 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock dropped 11.5% on the news that the company reported a wider loss for its second quarter, overshadowing revenue that beat expectations. The footwear retailer announced total sales of $546 million, a 4% increase from the same period last year, driven by a 5% rise in same-store sales. However, the company posted an adjusted loss of $1.14 per share, a wider loss than the $0.83 per share reported in the prior-year quarter. Profitability remained a key concern, with the company's operating margin holding steady at negative 2.6%, in line with the previous year, highlighting persistent challenges. Despite the wider loss in the quarter, Genesco reiterated its full-year earnings guidance. The negative market reaction suggests investors were more focused on the ongoing profitability issues than the top-line growth.
Genesco is down 23.4% since the beginning of the year, and at $32.03 per share, it is trading 27.2% below its 52-week high of $43.99 from December 2024. Investors who bought $1,000 worth of Genesco’s shares 5 years ago would now be looking at an investment worth $1,643.
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