New York City announced Monday that children would return to in-person learning this fall as the pandemic rounds the corner. It's likely a precursor to schools across the country announcing similar actions, which sets the stage for a kids sneaker buying boom for the coming back-to-school shopping season that usually kicks off in early August.
"I think there really will be a back-to-school season this year, and that will be different from last year when kids and families were making the decision about do they go back to school or is it a hybrid model," explained Foot Locker (FL) CEO Richard Johnson on Yahoo Finance Live. "They will want to look fresh and new when they get to see people again. They haven't seen a lot of their friends for a while in some cases. So their ability to have great products on their feet, a fresh new fleece or new T-shirt — whatever it happens to be — those are great opportunities for them to look really great when they get back to the school environment."
Added Johnson, "We see the economy truly starting to open up."
Even without the potential back-to-school shopping boom, Foot Locker is riding high as people spend their stimulus checks on the hottest footwear styles from Nike, Puma and Adidas this summer. Foot Locker said last week that first quarter same-store sales surged 80.3% from a year ago (stores were closed last year due to the pandemic) while online sales popped 43%.
Here is how Foot Locker performed compared to Wall Street estimates for the first quarter.
Net Sales: $2.15 billion, up 83% year-over-year vs. $1.89 billion
Same-Store Sales: +80.3% vs. +61.9%
Adjusted EPS: $1.96 vs. $1.08
Wall Street is staying very bullish on Foot Locker shares, citing the momentum in the business and the stock's relatively cheap valuation (go in-depth on Foot Locker's valuation here).
"We believe Foot Locker should emerge from the COVID-19 disruption as a continued strong partner for top brands in a strong athletic category. FL has a diversified portfolio of store locations globally, while the company's investments in its omni-channel ecosystem are paying off in delivering a seamless customer experience. We also expect Foot Locker to continue to bring "heat" around its product calendar," said Guggenheim analyst Robert Drbul in a research note to clients.
Drbul reiterated his Buy rating on Foot Locker with a $70 price target. Foot Locker shares rose 1.12% in Monday's session to close at $61.55.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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