Genesco (GCO 30.84%) published its third quarter of fiscal 2026 earnings report Thursday morning, and it probably wishes it hadn't. The footwear retailer missed consensus analyst estimates for revenue and profitability, further compounded by reductions to its guidance. Investors punished the company by aggressively selling their shares, causing the stock price to fall by almost 31% that day.
Voting with their feet
During the quarter, Genesco reported net sales of $616 million, representing a 3% year-over-year increase. That was on the back of comparable sales that increased at the same rate. Net income not in accordance with generally accepted accounting principles (GAAP) rose more robustly, advancing by 27% to $8.4 million, or $0.79 per share.
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Despite the gains, neither metric reached its respective average analyst estimate. Pundits tracking Genesco stock were modeling more than $618 million in net sales and $0.88 per share for non-GAAP (adjusted) net income.
In the earnings release, Genesco touted the strength of its leading retail brand.
It quoted CEO Mimi Vaughn as saying that "This performance reinforces that when consumers shop for footwear, they are increasingly choosing Journeys, underscoring the momentum of our product elevation and diversification strategy as we continue to gain market share and establish ourselves as the destination for the style-led teen."
That's one deep cut
That might be accurate, but Genesco's downward adjustment to full-year 2026 guidance suggests it isn't fully confident about the future. The company now expects sales to increase by 2% over the fiscal 2025 total, driven by a comparable sales growth of 3%. Previously, it was guiding for 3% to 4% for the former metric, and 5% for the latter.
Earnings guidance was also reduced, as Genesco set a new expectation for adjusted net income of $0.95 per share for the year. That's down significantly from the preceding range of $1.30 to $1.70.
Although the company's stock probably didn't deserve such a concentrated sell-off following these results, the chop in bottom-line guidance is definitely worrying. It's understandable that investors are choosing to avoid the company for now.
