B. Riley downgrades Genesco to Neutral, shares slide

investing.com:

B. Riley Securities analysts downgraded Genesco (NYSE:GCO) stock from Buy to Neutral and reduced the price target from $45 to $31 based on valuation.

“We lower our NTM EBITDA estimate from $85M to $61M, which drives our lowered PT and stock rating.”

“We are still believers that the investment thesis on which we based our Buy-rated initiation on December 14 will play out, however, we see the inflection point being pushed out 6, or possibly 12 months longer than we previously anticipated,” analysts added.

GCO fell over 5% on Tuesday.

Analysts suggested Genesco Inc .'s recovery will be more challenging and prolonged than previously thought, extending over the next six months with a deeper impact.

Specifically, the company’s Journeys division might face difficulties in the first half of 2024 due to its inability to quickly adjust its product lineup, resulting in less optimal spring offerings.

This, coupled with weak demand and a competitive promotional environment, is expected to reduce Genesco's trailing twelve-month (TTM) EBITDA to $53 million from an earlier forecast of $78 million, analysts said.

“Lastly, we would not be surprised if GCO announced another round of store closures, which would be a positive longer term. We still believe new Journeys' leadership will prove to be quite beneficial, however, their influence may not fully be felt until 4Q24 or 1H25,” analysts wrote.