Seaport downgrades Genesco amid weakening retail trends
Investing.com -- Genesco shares may face a tougher road ahead after analysts at Seaport Research Partners downgraded the retailer from “Buy” to “Neutral,” citing worsening macroeconomic conditions and a less attractive risk-reward profile.
Seaport analyst Mitch Kummetz said the company’s core banners, particularly Journeys and UK-based schuh, are facing increasing pressure from cautious consumers, higher gas prices, and weakening spending trends in Europe.
Genesco, which operates brands including Journeys, schuh, and Johnston & Murphy, is scheduled to report first-quarter fiscal 2027 earnings on May 29. The company expects a slight increase in comparable sales but an overall decline in revenue for the quarter, with earnings projected to fall below last year’s levels.
According to Seaport’s estimates, first-quarter sales are expected to slip to roughly $468 million, while adjusted earnings per share could decline to a loss of $2.58 from a loss of $2.05 a year earlier.
Despite the softer near-term outlook, Genesco maintained full-year guidance calling for modest comparable-sales growth, gross margin expansion of 50 to 60 basis points, and adjusted EPS between $1.90 and $2.30.
However, Seaport warned that recent economic conditions may make those targets harder to achieve. The firm said Journeys likely benefited from strong tax refund spending in February, but trends weakened in March and April as rising fuel costs squeezed consumers. Early May sales trends also appeared soft.
The outlook for schuh has also become more uncertain. Seaport noted that weakening consumer confidence in the UK and broader European region could weigh on performance despite improved inventory conditions and fewer planned promotions. Comments from suppliers including Birkenstock Holding plc and VF Corporation pointed to slowing traffic and softer consumer sentiment across Europe.
Even with the downgrade, Genesco’s stock has rallied significantly in recent months, trading near $37.38 versus a 52-week range of $19.62 to $38.95. Seaport argued that the recent share-price gains leave limited upside potential given the increasingly uncertain retail environment.