GCO - Genesco: Faces A Challenging Demand Environment

2024-03-18 23:15:48 ET

Summary

• Genesco is a footwear retailer with operations in the US and UK, selling third-party and first-party brands.
• Genesco is facing a challenging demand environment, with falling sales and compressing margins. Despite this, the company has maintained operational profitability and is growing YoY.
• Longer-term, Genesco's characteristics are not great for competition. The main problem is selling third-party brands, which puts pressure on margins.
• I believe the current multiple on earnings (15x for a negative scenario and 7.5x for a positive one) is not a sufficient discount given Genesco's long-term competitive characteristics.

Genesco ( GCO ) is a footwear retailer with operations in the US and UK, selling third-party and first-party brands.

Like many retailers, the company is facing a challenging demand environment, with falling sales and compressing margins. Despite this, the company has maintained operational profitability and is growing YoY....

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