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Foot Locker (FL) Rides High on Growth Strategies: Apt to Hold

Foot Locker, Inc. FL continues to cheer investors, as is evident from the stock’s bullish run on the bourses, thanks to its robust business strategies. FL is trying to improve its performance through operational and financial initiatives. It is effectively managing inventory, improving supply-chain efficiencies and enhancing the omni-channel capabilities.

Shares of this athletic footwear and apparel company have appreciated 34.6% over the past three months against the industry’s 1.9% decline. The long-term expected earnings growth rate of 32.3% coupled with a Value Score of A speaks volumes for this currently Zacks Rank #3 (Hold) stock.

Additionally, analysts look optimistic about Foot Locker. The Zacks Consensus Estimate for earnings of $4.44 for fiscal 2022 and $4.28 for fiscal 2023 has been revised upward 1.4% and 1.9%, respectively, in the past 30 days.

More on Strategies

Foot Locker’s digital business is performing well. Management remains committed to the omni-channel progress, including the expansion of its direct-to-consumer (DTC) operations. In second-quarter fiscal 2022, FL’s digital sales penetration rate was 16.9% compared with 14.3% recorded in the same period of fiscal 2019. In the first week of the fiscal third quarter, FL completed the global rollout of the new Foot Locker e-commerce platform via implementations in Singapore and Malaysia.

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Management had earlier activated a Shop My Store feature on its website. FL had also added Apple Pay and Google Pay to its digital payment options to provide greater flexibility and convenience to customers. Foot Locker has been enhancing its buy online and pickup in-store capabilities as well as elevating its mobile app experience for sometime.

Management has been accelerating efforts, including greater diversification of merchandise and vendor mix, and the rollouts of important growth banners and the implementation of the cost-saving program. Foot Locker announced a cost-optimization initiative and is presently in the final development stages of this plan. FL expects the program to deliver $200 million of annual savings after being completely executed with the benefits starting in the third quarter of fiscal 2022.

Foot Locker is progressing well with its membership program FLX, inspiring customers to remain within the Foot Locker portfolio of banners. During the fiscal second quarter, the FLX program continues to exhibiting momentum and helping FL serve customers efficiently. On its last earnings call, management had highlighted that it is steadily capturing above 70% of sales through its members in the United States, comparing favorably with 50% two years ago. Additionally, international expansion is another catalyst.

On a concluding note, Foot Locker appears to be well-poised for growth, based on the aforementioned strengths.

Key Picks in Retail

Some better-ranked stocks are Designer Brands DBI, Buckle BKE and Capri Holdings CPRI.

Designer Brands, the leading footwear and accessories designer, presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Designer Brands’ fiscal 2022 sales and earnings per share (EPS) suggests growth of 6.9% and 23.5%, respectively, from the corresponding year-ago levels. DBI has a trailing four-quarter earnings surprise of 55.1%, on average.

Buckle, a leading retailer of apparel, footwear and accessories, has a Zacks Rank #2 (Buy) at present. BKE has a trailing four-quarter earnings surprise of 8.3%, on average.

The Zacks Consensus Estimate for Buckle’s fiscal 2022 sales and EPS suggests growth of 6.8% and 4.5%, respectively, from the year-ago corresponding figures.

Capri Holdings, a global fashion luxury group consisting of iconic brands Versace, Jimmy Choo and Michael Kors, carries a Zacks Rank of 2 at present.

The Zacks Consensus Estimate for Capri Holdings’ current financial-year sales and EPS suggests growth of 3.3% and 10.1%, respectively, from the corresponding year-ago reported numbers. CPRI has a trailing four-quarter earnings surprise of 32.4%, on average.


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Foot Locker, Inc. (FL) : Free Stock Analysis Report
 
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