Sam Poser, an analyst from Williams Trading, maintained the Sell rating on Foot Locker (FL – Research Report). The associated price target is $17.00.
Sam Poser has given his Sell rating due to a combination of factors which suggest a challenging outlook for Foot Locker. While the company did perform better than expected in the fourth quarter of 2023, the forecasts for fiscal years 2024 and beyond appear overly optimistic. The targets for revenue and earnings before interest and taxes (EBIT) margins set for fiscal year 2026 have now been delayed to fiscal year 2028, with the achievement of these goals—over $9 billion in revenue and an EBIT margin between 8.5% and 9%—seeming increasingly unlikely. Consequently, Poser has revised downward both the earnings per share estimates for fiscal years 2024 and 2025 and the price target from $19 to $17, anticipating that guidance for fiscal year 2024 will likely be reduced as the year unfolds, mirroring the pattern seen in fiscal year 2023.
Moreover, Poser’s assessment points to strategic missteps and a lack of focus at Foot Locker, which he believes will result in continued market share losses to competitors such as JD/Finish Line, Hibbett, and Dick’s Sporting Goods. Despite management’s confidence, Poser is skeptical, particularly given Foot Locker’s historical position as a mall-based athletic specialty retailer in the U.S. and its operation of smaller stores internationally. The decision to transform its Champs business into a moderate, active-based retailer rather than concentrating on improving its core operations is viewed as a move that could further erode the company’s competitive stance.
In another report released today, CFRA also downgraded the stock to a Sell with a $18.00 price target.
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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.
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