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Foot Locker (FL) to Report Q4 Earnings: Factors to Consider

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·5 min read
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Foot Locker, Inc. FL is expected to register growth in its top line from the year-ago quarter’s reported figure when it releases fourth-quarter fiscal 2021 results on Feb 25, before market open. The Zacks Consensus Estimate for quarterly revenues is currently pegged at $2,314 million, indicating growth of 5.7% from the year-ago quarter’s reported figure.

However, the bottom line is likely to decline from the prior-year period’s reported number. The Zacks Consensus Estimate for quarterly earnings currently stands at $1.45, suggesting a dip of 6.4% from the year-ago quarter’s tally. The consensus mark has decreased a penny over the past seven days. A glance at this athletic shoes and apparel retailer’s performance over the trailing four quarters shows that it witnessed an earnings surprise of 58.1%, on average.

For fiscal 2021, the consensus mark for revenues is currently pegged at $8.9 billion, suggesting growth of 18.2% from the last fiscal year’s tally. The Zacks Consensus Estimate for earnings currently stands at $7.55, suggesting a sharp rise from $2.81 earned last fiscal year.

Key Factors to Note

Foot Locker’s sales for the fiscal fourth quarter are likely to have benefited from robust consumer demand and product categories like apparel and accessories. FL’s efforts to boost digital capabilities and strengthen assortments are likely to keep yielding favorably. Management has been trying to improve performance through operational and financial initiatives for a while now.

Foot Locker is steadily enhancing its omni-channel experience via adding functionalities and activating a Shop My Store feature on its website. Its direct-to-consumer channels have been exhibiting immense strength for a while. FL is progressing well with its FLX membership program too. All the aforesaid factors coupled with gains from its strategic deals, including partnerships and acquisitions are expected to have bolstered FL’s revenues in the to-be-reported quarter.

On the earnings call for the fiscal third quarter, management cited that fiscal 2021 results are likely to gain from the acquisitions of WSS and atmos. For the full fiscal, Foot Locker anticipated delivering sales growth in high teens, with comp sales in mid teens. Management forecast gross margin expansion of 540-550 basis points (bps) year over year on a rational promotional environment. It expected SG&A expense leverage of 40-50 bps year over year. FL envisioned adjusted earnings of $7.53-$7.60 per share for the fiscal year.

However, management had earlier cautioned about encountering industry-wide supply-chain headwinds. This includes port congestions and factory shutdowns, which might have dampened the fiscal fourth-quarter performance. It expects the supply-chain constraints to linger throughout the fiscal fourth quarter. Higher freight expenses are added deterrents.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Foot Locker this reporting cycle. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Foot Locker currently has a Zacks Rank #3 and an Earnings ESP of +3.51%.

More Stocks With a Favorable Combination

Here are a few other companies worth considering from the same sector as our model shows that these also have the right combination of elements to beat on earnings this season:

Casey's General Stores CASY currently has an Earnings ESP of +15.39% and a Zacks Rank of 3. CASY is anticipated to register a top-line increase when it reports third-quarter fiscal 2022 results. The Zacks Consensus Estimate for Casey's General Stores’ revenues is pegged at $3,081 million, indicating a rise of 53.2% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Casey's General Stores’ quarterly earnings is pegged at $1.43 per share, suggesting an improvement of 37.5% from the year-ago quarter’s reported figure. CASY delivered an earnings beat of 20.1%, on average, in the trailing four quarters.

American Eagle Outfitters AEO currently has an Earnings ESP of +2.07% and is Zacks #3 Ranked. AEO is likely to register a bottom-line decrease when it reports fourth-quarter fiscal 2021 numbers. The Zacks Consensus Estimate for quarterly earnings per share of 36 cents suggests a fall of 7.7% from the year-ago quarter’s reported figure.

American Eagle Outfitters’ top line is expected to rise from the prior-year quarter’s reported number. The Zacks Consensus Estimate for quarterly revenues is pegged at $1,532 million, which indicates an improvement of 18.4% from the figure reported in the prior-year quarter. AEO has a trailing four-quarter earnings surprise of 12.7%, on average.

Costco COST currently has an Earnings ESP of +0.75% and a Zacks Rank #3. COST is likely to register an increase in the bottom line when it reports second-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $2.67 suggests an increase of 24.8% from the year-ago quarter’s reported number.

Costco’s top line is expected to increase from the year-earlier quarter’s reported number. The Zacks Consensus Estimate for quarterly revenues is pegged at $51.1 billion, which suggests growth of 14% from the prior-year quarter’s reported number. COST has a trailing four-quarter earnings surprise of 8.3%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report
 
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
 
Foot Locker, Inc. (FL) : Free Stock Analysis Report
 
Casey's General Stores, Inc. (CASY) : Free Stock Analysis Report
 
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