Market Overview

Foot Locker Surprises Analysts with Revised Five Year Plan


The referees at Foot Locker (NYSE: FL) have called a time-out to update their strategic plan and revise the general 2012 outlook on the company. The athletic retailer surprised researchers at its analyst meeting on Tuesday, March 6, by stating that FL earnings can potentially double over the next five years.

In a research report published earlier today, Deutsche Bank said that Foot Locker shows potential to accomplish its five-year plan, but will endure difficulties between now and then.

“With sector tailwinds currently strong, the plan looks achievable on the surface, however, some hurdles remain with the recent underperformance of FL Europe, LFL, and CCS negatively weighing on results and a turnaround in these banners not looking imminent. We reiterate our Hold rating,” Deutsche Bank commented in the report.

Over the next five years, Foot Locker expects to make $7.5 billion and open 60-70 new stores, despite several store-closings in 2011. What is most surprising about this great endeavor is that it may not be attainable in the time-span allotted.

Among the aforementioned goals, Sterne Agee revealed the other achievements Foot Locker has its sights set on procuring in a research report this morning. If all goes according to plan, there will be $500 in sales per square foot, an EBIT margin of 11 percent, 14 percent ROIC increase, and increasing inventory turn to over three times.

According to, Foot Locker's five year plan will be achieved by accomplishing the following tasks:

  • Creating a clear customer focus to drive performance in its core athletic banners
  • Making its stores and internet sites more exciting, relevant places to shop and buy
  • Delivering exceptional growth in high-potential business segments
  • Aggressively pursuing brand expansion opportunities
  • Increasing the productivity of all of its assets
  • Building on its Industry Leading Retail Team

The company exuded a positive outlook throughout the analyst meeting, but left researchers to wonder whether or not the whistle will be blown on this optimistic plan within its five year span.

Chairman and CEO of Foot Locker, Ken C. Hicks, commented on his team's efforts and the hopeful future his company is chasing:

“The entire team at Foot Locker, Inc. deserves a tremendous amount of credit for all they have accomplished in such a short amount of time. One of the foremost strengths of our team, however, is its clear focus on the future, and meeting these new financial objectives will require us to reach well beyond what the Company has ever achieved as Foot Locker, Inc.” reported. “Given the strength of the Company and the opportunities we see ahead of us, we believe we are well-positioned to succeed.”

Foot Locker is currently up +25.08% YTD and trading at $29.84.

Posted-In: Deutsche BankAnalyst Color News Retail Sales Topics Analyst Ratings General Best of Benzinga


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