Analyst Paul Lejuez of Citi maintained a Sell rating on Foot Locker (FL – Research Report), boosting the price target to $22.00.
Paul Lejuez has given his Sell rating due to a combination of factors affecting Foot Locker’s business outlook and strategic position. He points out the anticipation of a fourth-quarter earnings per share beat, which is expected to result from stronger than anticipated comparable store sales. However, he emphasizes that the improved performance is likely due to aggressive promotions. Furthermore, Lejuez projects conservative guidance for fiscal year 2024, reflecting the challenges Foot Locker faces and multiple downward revisions in fiscal year 2023, suggesting a lack of momentum going forward. He believes management will set the earnings per share guidance for the next fiscal year below the consensus, with negative low single-digit comparable store sales against a backdrop of promotional activity in the previous year.
Lejuez also discusses the significant reliance of Foot Locker on Nike products, which account for a substantial portion of sales, indicating a potential vulnerability in Foot Locker’s business model and a lack of control over its own destiny. The high dependency on one supplier could be risky if the partnership dynamics change or if Nike’s performance falters. The analyst is skeptical about the company’s ability to grow sales amidst these dynamics and the prevailing promotional environment. Additionally, Lejuez adjusts his earnings estimates and target price to reflect these concerns but maintains that the risk/reward profile for Foot Locker’s stock skews negative, suggesting that the stock’s current valuation does not adequately reflect the potential headwinds facing the company.
See the top stocks recommended by analysts >>
TipRanks tracks over 100,000 company insiders, identifying the select few who excel in timing their transactions. By upgrading to TipRanks Premium, you will gain access to this exclusive data and discover crucial insights to guide your investment decisions. Begin your TipRanks Premium journey today.
Foot Locker (FL) Company Description:
Foot Locker, Inc. engages in the retail of athletic shoes and apparel. It operates through the Athletic Stores and Direct-to-Customers segments. The Athletic Stores segment sells athletic footwear and apparel under the Foot Locker, Lady Foot Locker, SIX:02, Kids Foot Locker, Champs Sports, Footaction, Runners Point, and Sidestep brands. The Direct-to-Customers segment includes Footlocker.com, Inc., Eastbay, Inc., and international electronic commerce businesses. The company was founded on April 7, 1989 and is headquartered in New York, NY.
Read More on FL:
