What Happened?
Shares of footwear, apparel, and accessories retailer Genesco (NYSE:GCO) jumped 4.3% in the afternoon session after the stock appeared to rebound following a steep sell-off in the previous session that was caused by a disappointing third-quarter earnings report.
The prior plunge, which saw the stock drop by approximately 30%, occurred after the company reported a miss on profit expectations and lowered its full-year earnings guidance. While Genesco's sales met Wall Street's estimates, its non-GAAP profit per share fell 8.1% below what analysts had predicted. Furthermore, the company cut its full-year adjusted earnings per share forecast by about 37%. Following the report, Truist Securities reduced its price target on the stock to $27 from $31, citing the earnings miss and weaker-than-expected guidance. The upward move seemed to be a technical bounce after the significant prior losses.
After the initial pop the shares cooled down to $23.72, up 4.3% from previous close.
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What Is The Market Telling Us
Genesco’s shares are extremely volatile and have had 42 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 17 days ago when the stock gained 9.3% on the news that comments from a key Federal Reserve official bolstered hopes for an interest rate cut. New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.
Genesco is down 43.3% since the beginning of the year, and at $23.72 per share, it is trading 46.1% 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 $716.68.
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