Shares of Genesco Inc. (NYSE:GCO) were getting hammered today after the apparel maker reported a drop in revenue in its second-quarter report and gave a disappointing full-year outlook. As of 12:53 p.m. EDT, the stock was down 31.5%.
The parent of the Lids hat chain and Johnston & Murphy shoe brand echoed the results of other struggling apparel sellers, saying it was caught off guard by shifting trends in the footwear business. It cited weakness in its Journeys chain in particular.
Revenue for the quarter fell 4.6%, to $625.6 million, on a 1% dip in comparable sales, missing estimates at $642.5 million. Thanks to an aggressive share buyback program, adjusted earnings per share only slipped from $0.36 to $0.34, topping expectations for $0.27.
CEO Robert Dennis noted that headwinds had continued into the third quarter, in particular at Journeys and Schuh, and the companywide comparable sales were down 5% thus far in the quarter.
What really seemed to sink the stock today was management's decision to lower full-year guidance for earnings per share from $4.80-$4.90 to $3.80-$4.00, indicating that recent trends are unlikely to improve for the rest of the fiscal year. Dennis, nonetheless, expressed his confidence in the Journeys team to get back to the right merchandise assortment and return to growth.
Like other mall staples, Genesco seems to be suffering from slower traffic and weak performance in the apparel industry. The stock touched a five-year low on today's news, and while that could ultimately be a buying opportunity, I'd wait for comparable sales to improve before taking the plunge.