Market Overview

Analyst: Full Price Selling Is Significantly Improving At Foot Locker

Analyst: Full Price Selling Is Significantly Improving At Foot Locker
Related FL
Toy Story: Bank Of America Bullish On Funko's 2019 Opportunities
Even After Its Huge Earnings Pop, Expect Shares Of Foot Locker To Keep Rising This Week
Wells Fargo defends retail (Seeking Alpha)

Strong promotional activity may be waning at Foot Locker, Inc. (NASDAQ: FL).

The Analyst

Cowen's John Kernan on Monday maintained a Market Perform rating and raised his price target from $46 to $56.

The Thesis

Cowen’s channel checks are showing significantly improved full-price selling trends in North America, but concerns over long-term growth and margin structure prevent Kernan from upgrading the stock.

Kernan said Nike Inc (NYSE: NKE)'s product cycle inflected and the controversial "Just Do It" campaign headlined by Colin Kaepernick resonated strongly with 18-34 year old men and Nike consumers that spend $300 or more annually. The analyst also said there are positive early reads on the LeBron 16.

Nike makes up nearly 67 percent of all Foot Locker purchases.

Foot Locker bought too much inventory into a negative same-store sales trend heading into the second quarter of last year, leading to declining margins for the next three quarters.

Heading into the third quarter, Kernan said Foot Locker's channel has gotten cleaner, with sales versus inventory spread improving in each of the last four quarters; The greatest increases occurred in the last year.

Kernan raised his third-quarter EPS estimate from 93 cents to $1.00, ahead of consensus estimates. The analyst also assumes positive trends will carry forward into the fourth quarter.

Price Action

Foot Locker shares traded around $51.02 at time of publication.

Related Links:

What The Kaepernick Campaign Means For Nike

Retail Analyst: Foot Locker, Skechers And Steve Madden Poised To Run Higher

Photo credit: Raysonho @ Open Grid Scheduler / Grid Engine (Own work), via Wikimedia Commons

Latest Ratings for FL

Nov 2018CitigroupMaintainsBuyBuy
Nov 2018Credit SuisseMaintainsOutperformOutperform
Nov 2018JefferiesMaintainsBuyBuy

View More Analyst Ratings for FL
View the Latest Analyst Ratings

Posted-In: Colin Kaepernick Cowen John Kernan LeBron 16Analyst Color Price Target Analyst Ratings Best of Benzinga


Related Articles (FL + NKE)

View Comments and Join the Discussion!

Latest Ratings

CEQPGoldman SachsUpgrades43.0
CLXTGoldman SachsUpgrades18.0
EQMGoldman SachsDowngrades49.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Sell-Side Analysts See Upside Potential In Zynerba

Loup Ventures: Facebook, Twitter Should Let Users Filter Political Content From News Feeds