Genesco's GCO Plummets 26.7% on Q3 Earnings Disappointment and Revised Guidance

Summary
• Genesco (GCO) trades at $25.83, down 26.7% from its previous close of $35.25
• Q3 net sales rose 3% to $616M, but adjusted EPS of $0.79 missed estimates by 11%
• Full-year guidance slashed to $0.95 EPS, a 30-44% cut from prior range
• Intraday range: $22.05–$26.00, with 207,992 shares traded
Genesco’s stock imploded pre-market after the company signaled a bleak outlook for fiscal 2026, citing U.K. market struggles and soft consumer spending. The sharp decline reflects investor panic over revised guidance and margin pressures, despite Journeys’ strong comp growth.

Guidance Cut and Margin Pressures Trigger Sell-Off
Genesco’s 26.7% drop stems from a stark revision of full-year adjusted EPS guidance to $0.95 from $1.30–$1.70, a 30-44% reduction. Management cited deteriorating conditions at Schuh, its U.K. retail arm, and weaker non-peak consumer spending. Gross margin compression (down 100 bps to 46.8%) and Schuh’s 2% comp decline underscored operational challenges. While Journeys delivered 6% comp growth, the broader outlook for footwear demand and Schuh’s performance forced a profit warning, triggering a liquidity-driven selloff.

Options Playbook: High-Leverage Puts and Gamma-Driven Calls
• MACD: 1.40 (bullish), Signal Line: 1.02 (neutral), Histogram: 0.38 (positive divergence)
• RSI: 66.36 (overbought), 200D MA: $26.24 (near-term support)
• Bollinger Bands: $28.52 (lower band), $36.65 (upper band), current price at 22.5% below upper band
• 30D MA: $31.65 (resistance), 200D MA: $26.24 (critical support)
Genesco’s technicals suggest a short-term rebound potential from $26.24 (200D MA) but long-term bearish bias. Key levels to watch: $22.50 (psychological floor), $25.00 (strike concentration), and $28.50 (Bollinger lower band).

Top Options Contracts:
1. GCO20251219C25
• Call Option, Strike: $25, Expiry: 2025-12-19
• IV: 81.78% (high volatility), Delta: 0.627 (moderate sensitivity), Theta: -0.088 (rapid time decay), Gamma: 0.085 (price sensitivity)
• Turnover: 1,948 (liquid), Leverage: 11.26%
• This contract offers high leverage and liquidity, ideal for a short-term bullish play if the stock breaks above $25. A 5% upside from $25.83 to $27.12 would yield a 25% gain on the $25 call.
2. GCO20260320C25
• Call Option, Strike: $25, Expiry: 2026-03-20
• IV: 57.02% (moderate), Delta: 0.625 (moderate), Theta: -0.019 (slow decay), Gamma: 0.047 (modest sensitivity)
• Turnover: 760 (adequate), Leverage: 6.84%
• This longer-dated call balances time decay and gamma, suitable for a mid-term bullish bet. A 10% rebound to $28.41 would generate a 35% return.
Payoff Estimation:
• 5% downside to $24.54: GCO20251219C25 payoff = $0 (out-of-the-money), GCO20260320C25 payoff = $0.54 (limited gain).
Action: Aggressive bulls may consider GCO20251219C25 into a bounce above $25.50.

Backtest Genesco Stock Performance
It looks like the automated event-backtest engine couldn’t fetch GCO’s price series (“get_asset_price” node not found). That means the system wasn’t able to complete the performance-after-plunge analysis in one shot.Here are two practical ways we can move forward:1. Retry with a different engine • Use our strategy-backtest engine instead of the event-backtest engine. • We treat every –27 %‐or-worse intraday plunge as an “open” signal, then close positions after a rule you choose (e.g., sell after 5 trading days, 10 trading days, a fixed stop-loss/take-profit, etc.). • This often bypasses the price-retrieval glitch.2. Produce a quick descriptive study (no full back-test) • Calculate average/median 1-day, 5-day, 10-day, 20-day returns after each plunge. • Show distribution of outcomes and time to regain the pre-plunge close.Please let me know which option you prefer (and, if option 1, the exit rule you’d like: fixed holding days, stop-loss / take-profit levels, etc.). I can then rerun the analysis accordingly.

Bullish Breakout or Bearish Breakdown? Watch $26.24 Support
Genesco’s 26.7% drop reflects a bearish reversal, but the 200D MA at $26.24 and Bollinger lower band at $28.52 could act as near-term floors. A break below $22.50 (psychological level) would validate a long-term downtrend. Investors should monitor Schuh’s U.K. performance and Black Friday sales data for catalysts. Meanwhile, the sector leader Nike (NKE) is down 0.5%, signaling broader retail fragility. Act now: Buy GCO20251219C25 if $25.50 is cleared, or short the stock if $26.24 breaks.