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Foot Locker, Inc. (FL) - $25 value - yours FREE >>
The Children's Place, Inc. (PLCE) - $25 value - yours FREE >>
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Foot Locker, Inc. (FL) - $25 value - yours FREE >>
The Children's Place, Inc. (PLCE) - $25 value - yours FREE >>
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Foot Locker Exhibits Operational Strength: Should You Hold?
Foot Locker, Inc. (FL - Free Report) is one of the widely recognized names in the athletic footwear and apparel industry. It boasts a strong portfolio of leading brands under a variety of store banners that helps it to target specific markets and effectively meet consumer demand. The company had outlined its long-term financial goals that include attaining sales of $10 billion, sales per gross square foot of $600, operating margin of 12.5%, net income margin of 8.5%, and return on invested capital of 17%.
Management believes that by continually exploiting opportunities like children’s business, shop-in-shop expansion in collaboration with its vendors, store banner.com business, store refurbishment and enhancement of assortments, the company can benefit in the long run. International expansion, especially in Europe, is another growth catalyst. The company is also focused on augmenting its E-commerce platform, growing direct-to-consumer operations, margin expansion and tapping underpenetrated markets.
Despite operational strength, Foot Locker succumbed to a negative earnings surprise in the first quarter of fiscal 2016, after ten straight quarters of earnings beat. On the other hand, total sales also fell short of our estimate after three successive quarters of beat.
Nevertheless, sturdy comparable-store sales performance and cost containment efforts helped Foot Locker to continue to register year-over-year growth in both the top and bottom lines. Total sales in the first quarter rose 3.7%, while earnings per share increased 7.8%. Management reaffirmed its projection of a mid-single digit increase in comparable sales in fiscal 2016. Foot Locker still expects to attain double-digit growth in earnings per share for the fiscal year.
Given the pros and cons embedded, the stock currently carries a Zacks Rank #3 (Hold).
Stocks that Warrant a Look
Investors interested in the retail space may consider some better-ranked stocks such as Delta Apparel Inc. (DLA - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and The Children's Place, Inc. (PLCE - Free Report) and Carter's, Inc. (CRI - Free Report) , both holding a Zacks Rank #2 (Buy).
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