Why Are Foot Locker (FL) Shares Soaring Today
What Happened:
Shares of footwear and apparel retailer Foot Locker (NYSE:FL) jumped 8.2% in the morning session after the company reported third quarter results that beat analysts' revenue and EPS expectations, driven by better-than-expected (but still declining) same-store sales growth. Full-year earnings guidance exceeded Wall Street's estimates. The company is showing solid business momentum as it signed a multi-year deal with the NBA to become its official marketing partner on November 16th and announced that it will expand into India in 2024. On the other hand, its earnings forecast for next quarter underwhelmed. Overall, this was a really good quarter that should please shareholders.
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What is the market telling us:
Foot Locker's shares are not very volatile than the market average and over the last year have had only 21 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago, when the stock gained 5.5% on the news that the company reported second quarter earnings that missed analysts' revenue and earnings per share estimates. In addition, it posted lower-than-expected margins (likely driven by markdowns on items to move merchandise) and paused its dividend to free up resources. Lastly, the company continued to burn cash.
Moving ahead, Foot Locker lowered its full-year revenue and EPS estimates again after doing the same just five months ago during its Q1 earnings. Turning to macro, CEO Mary Dillon noted that the company is seeing a tough consumer backdrop, calling consumers price sensitive. Overall, this was a bad quarter for Foot Locker, as the outlook suggests that sales and profits could face pressure in the latter half of the year.
Foot Locker is down 25.1% since the beginning of the year, and at $27.84 per share it is trading 40.2% below its 52-week high of $46.54 from February 2023. Investors who bought $1,000 worth of Foot Locker's shares 5 years ago would now be looking at an investment worth $500.99.
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