Sterne Agee CRT Remains Neutral on Genesco (GCO) Following 2Q EPS Beat

Sterne Agee CRT maintained a Neutral rating on Genesco (NYSE: GCO) following the company's 2Q16 earnings results. EPS of $0.36 beat consensus by 12c. Revenue was reported at $656M, ahead of consensus' $650.7M.

Analyst Sam Poser commented, "Reiterate Neutral rating. 7% SSS in 2Q is not indicative of the earnings profile of the company, which will decelerate below historical levels. Square footage growth will decelerate to approximately to a 2% level (from 4%-5% in years past). GM will be challenged going forward due to negative mix of Locker Room (versus the hat business) and increased e-commerce penetration both at Lids and Journeys. SG&A will be challenged due to increased marketing needed to drive store traffic, increasing rent expense, and increasing labor costs. Current valuation of ~5.5X FY17E EBITDA is more than fair, given modest EPS growth trajectory. Raising FY16E EPS from $4.58 to $4.70, lowering FY17E from $5.23 to $5.10, and introducing FY18E EPS of $5.57."

For an analyst ratings summary and ratings history on Genesco click here. For more ratings news on Genesco click here.

Shares of Genesco closed at $62.71 yesterday.

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