Baird Downgrades Genesco To Neutral On 'Stunning' Fall-Off In Comps

Baird has downgraded specialty retailer

Genesco Inc.GCO

to Neutral citing that its thesis on the company has changed. Baird substantially reduced Genesco's price target to $53, down from its previous target of $80.

The company was disappointed to step aside from Genesco post Q2 earnings, which saw its stock fall off a cliff, down 32 percent on the week.

"We are highly disappointed to be stepping aside on GCO, particularly since our positive view related to the multi-year Lids recovery is intact. However, the stunning comps falloff at Journeys provides too many uncertainties related to the timing and shape of a recovery," Baird said in an analyst noted released Friday.

What Went Wrong At Journeys?

The footwear retailer was able to correctly identify recent trends of casual/athletic footwear with adidas AG (ADR) ADDYY comeback along with PUMA SE NPV PMMAF, but was "unable to secure adequate allocations to offset declines elsewhere (likely Vans VF Corp VFC/Converse Nike Inc NKE/Sperry Wolverine World Wide, Inc. WWW), pressuring conversion despite reasonably solid traffic," Baird Analysts said. Comps were particularly troubling for Journeys, down 4 percent in the quarter.

Genesco stock was up 1 percent in midday trading Friday.

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