Why Genesco Shares Popped and Then Dropped

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What:  Shares of Genesco jumped as much as 11% today before going negative as it posted a strong earnings report, but weak guidance.

So what: Adjusted earnings for the parent of brands such as Lids and Johnston & Murphy came in at $1.43, better than expectations at of $1.38, but a penny lower than last year's mark at $1.44. Revenue was also ahead of the bar, inching up 0.3% to $666.3 million, beating the consensus at $662.6 million. Same-store sales fell by 1% for the quarter. Still, management lowered its full-year EPS guidance to a range of $5.10-$5.20, from a range of $5.20-$5.30.


Now what:The brief spike at the market open seemed to be more of a fluke than anything else, as a modest beat on top and bottom lines wouldn't seem to warrant an 11% especially with lower guidance. Management noted that comparable sales in the current quarter have thus been flat, which is a mild improvement over the third quarter but nothing to get excited about. Analysts do expect sales to increase 7% next year, which would be a welcome sign for this otherwise stable company. Still, with the current weakness, I wouldn't call Genesco a compelling investment by any means.  

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The article Why Genesco Shares Popped and Then Dropped originally appeared on Fool.com.

Fool contributor Jeremy Bowman and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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