Why Genesco Inc. Stock Climbed 26% Last Month

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What happened

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Shares of Genesco Inc. (NYSE: GCO) moved higher last month as the diversified apparel retailer recovered from a disappointing earnings report at the end of August, a sign that the market may now be seeing it as a value play.

The company finished September up 26% according to data from S&P Global Market Intelligence.

GCO data by YCharts

So what 

The parent of chains including hat-seller Lidz and footwear-brand Journeys tumbled after its second-quarter earnings report on Aug. 31. Like many mall-based retailers, Genesco's sales continue to slide; overall revenue was down 1.4% and companywide same-store sales fell 2%, though its e-commerce revenue jumped 30%. 

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That shift toward e-commerce hit the company on the bottom line as a profit of $0.34 per share a year ago flipped to a loss of $0.10 per share. 

Genesco shares fell 19% that day, but bounced back the next, gaining 9.7% and it continued to move higher from there. 

Now what

There was little news out on Genesco over the rest of the quarter, though investor interest continued to build, as the stock offers value if the company can stabilize itself.

Management lowered its adjusted EPS guidance for the year from a range of $3.90 to $4.05 to a range of $3.35 to $3.65 due to weakness at the Lids chain, weak mall traffic, and online competition. However, at the midpoint of the new range, Genesco is trading at a P/E of 7.5, even after last month's rally. While headwinds in retail remain strong, managements said sales at the Journeys and Schuh chains were strong during back-to-school season, a promising sign for the second half of the year. If management can execute on the guidance above, the stock should continue to move higher.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.