Deutsche Bank: Foot Locker To Benefit From 'Sneaker Culture'

Foot Locker Inc.

stands to benefit from the "sneaker culture" which increasingly appears less like a fad and more like a lasting historical epoch, an analyst said Monday. Sales of children's footwear have been growing at an annual rate of 20 percent in recent quarters at the Los Angeles-based retailer. That suggests a trend "likely here to stay for years to come, as customers' feet grow," Deutsche Bank's Paul Trussell said in a note reiterating a Buy and $59 target. Footlocker shares gained sharply on Friday after Nike Inc.

posted better-than-expected first-quarter results. Footlocker gets about 8 percent of its sales from Nike products. On Monday, Footlocker closed at $56.56 a share, down 0.7 percent. Much of the company's recent strength has been based on the popularity of basketball footwear and Trussell said "nothing on the horizon suggests basketball will slow." But if tastes should shift, Footlocker is "well positioned from a product standpoint" and Trussell sees further growth as the company cracks new markets like France, Poland, Scandinavia and Turkey. In the U.S., planned product offerings in apparel and women's categories "remain future catalyst opportunities," Trussell said. "We're confident sales over the next few quarters will be robust," Trussell said.