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Foot Locker (FL) to Gain From Lace Up Plan, Market Adaptation
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Foot Locker, Inc. (FL - Free Report) emphasized its strategic ‘Lace Up’ plan, focusing on enhancing the omnichannel experience, expanding sneaker culture, transforming its portfolio and deepening customer relationships.
This initiative is a critical component of the company's strategy to simplify business operations and establish itself as a leading omnichannel retailer in the sneaker and sneaker culture markets. The plan also includes expanding the new store formats to represent 20% of the global square footage by fiscal 2026.
The company also reported improvements in digital and store performances, particularly in October, with enhanced digital sales and conversion rates in the third quarter of fiscal 2023. Foot Locker is working toward 25% e-commerce penetration and is focusing on improvements in in-store conversion rates and overall store performance.
Image Source: Zacks Investment Research
Another key aspect is Foot Locker's partnership with the NBA, emphasizing basketball products and culture. This partnership is poised to enhance marketing and customer engagement for the company. Additionally, FL is investing in its 'Home Court' basketball experience, further solidifying its presence in this segment.
Foot Locker maintains strong partnerships with major brands, such as Nike, Adidas, Puma, and New Balance. These relationships are central to the company's product strategy, focusing on exclusive product launches and a diversified brand mix to cater to various customer preferences, and resonate with sneaker culture.
In terms of cost management and inventory, Foot Locker maintains a disciplined approach to expense management, executing a cost-saving plan for improved financial efficiency. In the fiscal third quarter, Foot Locker's cost optimization efforts resulted in savings of approximately $30 million. The company aimed to end fiscal 2023 with inventory levels flat to slightly down from that reported in fiscal 2022.
Additionally, Foot Locker is transforming its store portfolio with new formats and increasing its off-mall presence. Refreshing existing stores and aligning banners to specific market segments are part of the company's strategy for better customer targeting. FL is aiming to increase its off-mall presence, with a target of reaching 50% off-mall exposure by fiscal 2026. The company is focused on expanding its footprint at WSS, its off-mall banner. For WSS, FL targets opening 26 stores in fiscal 2023.
Wrapping Up
Foot Locker has been emphasizing strategic initiatives under the Lace Up plan, focusing on digital enhancements, customer engagement, brand partnerships and operational efficiency. Evidently, FL is adapting and positioning itself for growth in the competitive sneaker and athletic apparel market. However, the company has been struggling with soft margins for a while now, driven by higher markdowns, higher promotions, occupancy deleverage and increased shrink.
Nonetheless, this Zacks Rank #3 (Hold) stock has rallied 30% compared with the industry’s growth of 30.4% in past three months. An uptrend in the Zacks Consensus Estimate echoes the positive sentiment. The consensus estimate for fiscal 2023 and 2024 has increased 3.1% and 3% to $1.35 and $2.09, respectively, in the past 60 days.
Red-Hot Stocks to Watch
Here we have highlighted three better-ranked stocks, namely The Gap, Inc. (GPS - Free Report) , Hibbett Sports, Inc. (HIBB - Free Report) and American Eagle Outfitters Inc. (AEO - Free Report) .
The Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. The company sports a Zacks Rank #1 (Strong Buy) at present. GPS delivered a significant earnings surprise in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for The Gap’s current fiscal-year earnings implies growth of 387.5% from the fiscal 2022 reported number. GPS has a trailing four-quarter average earnings surprise of 137.9%.
Hibbett Sports has evolved its offerings from sports goods to an athletic-inspired, fashion-focused assortment. The company currently flaunts a Zacks Rank #1. HIBB delivered an 81.4% earnings surprise in the last reported quarter.
The Zacks Consensus Estimate for Hibbett Sports’ current fiscal-year sales implies growth of 1.7% from the fiscal 2023 reported number. HIBB has a trailing four-quarter average earnings surprise of 24.2%.
American Eagle Outfitters is a specialty retailer of casual apparel, accessories and footwear for men and women. It presently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal-year earnings and sales indicates growth of 43.3% and 5%, respectively, from the fiscal 2022 reported figures. AEO has a trailing four-quarter average earnings surprise of 23%.
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Foot Locker (FL) to Gain From Lace Up Plan, Market Adaptation
Foot Locker, Inc. (FL - Free Report) emphasized its strategic ‘Lace Up’ plan, focusing on enhancing the omnichannel experience, expanding sneaker culture, transforming its portfolio and deepening customer relationships.
This initiative is a critical component of the company's strategy to simplify business operations and establish itself as a leading omnichannel retailer in the sneaker and sneaker culture markets. The plan also includes expanding the new store formats to represent 20% of the global square footage by fiscal 2026.
The company also reported improvements in digital and store performances, particularly in October, with enhanced digital sales and conversion rates in the third quarter of fiscal 2023. Foot Locker is working toward 25% e-commerce penetration and is focusing on improvements in in-store conversion rates and overall store performance.
Image Source: Zacks Investment Research
Another key aspect is Foot Locker's partnership with the NBA, emphasizing basketball products and culture. This partnership is poised to enhance marketing and customer engagement for the company. Additionally, FL is investing in its 'Home Court' basketball experience, further solidifying its presence in this segment.
Foot Locker maintains strong partnerships with major brands, such as Nike, Adidas, Puma, and New Balance. These relationships are central to the company's product strategy, focusing on exclusive product launches and a diversified brand mix to cater to various customer preferences, and resonate with sneaker culture.
In terms of cost management and inventory, Foot Locker maintains a disciplined approach to expense management, executing a cost-saving plan for improved financial efficiency. In the fiscal third quarter, Foot Locker's cost optimization efforts resulted in savings of approximately $30 million. The company aimed to end fiscal 2023 with inventory levels flat to slightly down from that reported in fiscal 2022.
Additionally, Foot Locker is transforming its store portfolio with new formats and increasing its off-mall presence. Refreshing existing stores and aligning banners to specific market segments are part of the company's strategy for better customer targeting. FL is aiming to increase its off-mall presence, with a target of reaching 50% off-mall exposure by fiscal 2026. The company is focused on expanding its footprint at WSS, its off-mall banner. For WSS, FL targets opening 26 stores in fiscal 2023.
Wrapping Up
Foot Locker has been emphasizing strategic initiatives under the Lace Up plan, focusing on digital enhancements, customer engagement, brand partnerships and operational efficiency. Evidently, FL is adapting and positioning itself for growth in the competitive sneaker and athletic apparel market. However, the company has been struggling with soft margins for a while now, driven by higher markdowns, higher promotions, occupancy deleverage and increased shrink.
Nonetheless, this Zacks Rank #3 (Hold) stock has rallied 30% compared with the industry’s growth of 30.4% in past three months. An uptrend in the Zacks Consensus Estimate echoes the positive sentiment. The consensus estimate for fiscal 2023 and 2024 has increased 3.1% and 3% to $1.35 and $2.09, respectively, in the past 60 days.
Red-Hot Stocks to Watch
Here we have highlighted three better-ranked stocks, namely The Gap, Inc. (GPS - Free Report) , Hibbett Sports, Inc. (HIBB - Free Report) and American Eagle Outfitters Inc. (AEO - Free Report) .
The Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. The company sports a Zacks Rank #1 (Strong Buy) at present. GPS delivered a significant earnings surprise in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for The Gap’s current fiscal-year earnings implies growth of 387.5% from the fiscal 2022 reported number. GPS has a trailing four-quarter average earnings surprise of 137.9%.
Hibbett Sports has evolved its offerings from sports goods to an athletic-inspired, fashion-focused assortment. The company currently flaunts a Zacks Rank #1. HIBB delivered an 81.4% earnings surprise in the last reported quarter.
The Zacks Consensus Estimate for Hibbett Sports’ current fiscal-year sales implies growth of 1.7% from the fiscal 2023 reported number. HIBB has a trailing four-quarter average earnings surprise of 24.2%.
American Eagle Outfitters is a specialty retailer of casual apparel, accessories and footwear for men and women. It presently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal-year earnings and sales indicates growth of 43.3% and 5%, respectively, from the fiscal 2022 reported figures. AEO has a trailing four-quarter average earnings surprise of 23%.