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Factors Setting the Tone for Foot Locker (FL) in Q2 Earnings

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We expect Foot Locker, Inc. (FL - Free Report) to register year-over-year growth in the bottom line when it releases second-quarter fiscal 2021 results on Aug 20, before market open. The Zacks Consensus Estimate for quarterly earnings currently stands at $1.07, suggesting an improvement from 71 cents a share earned in the year-ago quarter. The consensus mark has increased a penny over the past seven days.

A glance at this athletic shoes and apparel retailer’s performance over the trailing four quarters shows that it witnessed an earnings surprise of 47.6%, on average.
 
However, the consensus estimate for quarterly revenues, which is currently pegged at $2,021 million, indicates a decrease of about 3% from the year-ago quarter’s tally.

Key Factors to Note

Foot Locker is trying to improve performance through its operational and financial initiatives. It is consistently bolstering the omni-channel experience via adding functionalities. The company is seeing robust product tailwinds, driven by basketball and footwear, comfort trends in apparel as well as new brands across its portfolio. International expansion is another key catalyst. It is also progressing well with its FLX membership program. The retailer is benefiting from its strategic partnerships too. These positives are expected to have contributed to the company’s quarterly earnings.

On the last earnings call, management had highlighted the challenges of store closures in Europe and Canada, and the congestion at the U.S. ports. These might have affected Foot Locker’s quarterly performance to an extent.

Management had pointed out that due to delays in inventory receipts in the first quarter, some sales shifted into the second one. As a result, it anticipated total sales to be relatively flat year over year for the quarter under review. In connection with second-quarter gross margin, the company had projected less promotional pressure on merchandise margins than the year-earlier quarter’s level owing to fresh inventory. However, any increase in freight costs as well as SG&A expenses might have remained a concern.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Foot Locker this reporting cycle. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat., which is the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Foot Locker, Inc. Price and EPS Surprise

Foot Locker, Inc. Price and EPS Surprise

Foot Locker, Inc. price-eps-surprise | Foot Locker, Inc. Quote

Foot Locker currently has a Zacks Rank #3 and an Earnings ESP of +1.44%.

More Stocks With a Favorable Combination

Here are a few other companies worth considering from the same sector with the right combination of elements to beat on earnings:

Target (TGT - Free Report) currently has an Earnings ESP of +2.89% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco (COST - Free Report) currently has an Earnings ESP of +0.44% and a Zacks Rank of 3.

Lowe's (LOW - Free Report) presently has an Earnings ESP of +0.38% and a Zacks Rank #3.