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Foot Locker (FL) Down 3.4% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Foot Locker (FL - Free Report) . Shares have lost about 3.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Foot Locker due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Foot Locker posted fourth-quarter fiscal 2022 results, wherein both the top line and the bottom line beat the Zacks Consensus Estimate. The company delivered the 11th straight earnings beat in the reported quarter.
Q4 Metrics
The athletic shoes and apparel retailer posted adjusted earnings of 97 cents per share, which surpassed the Zacks Consensus Estimate of 52 cents. The bottom line decreased from adjusted earnings per share of $1.46 recorded in the prior-year quarter.
Total sales of $2,334 million surpassed the Zacks Consensus Estimate of $2,149 million. However, the metric declined 0.3% from the year-ago reported period. Excluding the foreign-currency fluctuation impact, total sales grew 3.6%. Digital penetration was 17% of net sales in the reported quarter.
Comparable-store sales (comps) inched up 4.2% driven by increased traffic and improved access to high-quality inventory.
An Insight Into Margins
Foot Locker's gross-margin rate in the reported quarter dropped 290 basis points (bps) from the prior-year quarter’s tally. Higher markdowns on increased promotional activity across the industry caused a margin decline.
The selling, general and administrative (SG&A) expenses decreased by 10 bps as a percentage of sales from the prior year due to savings from the cost optimization program partially offset by inflation.
Other Financial Details
Foot Locker ended the fiscal fourth quarter with cash and cash equivalents of $536 million. Long-term debt and obligations under finance leases amounted to $446 million and shareholders’ equity summed $3,293 million. As of Jan 28, 2023, merchandise inventories were $1.6 billion, up 29.8% from the year-earlier quarter’s end-level.
During the fourth quarter of fiscal 2022, Foot Locker paid a quarterly dividend of 40 cents per share. In entire fiscal 2022, FL repurchased 4.1 million shares for a total of $129 million and paid a total of $150 million in dividends.
Outlook
For fiscal 2023, management expects the sales to decline 3.5-5.5% including 1% from the extra week and the comps to fall 3.5-5.5% year over year. Gross margin is anticipated in the range of 30.8-31% and the SG&A rate is forecast at 22.6-22.8%.
The company envisions fiscal 2023 adjusted earnings per share of $3.35-$3.65, including 15 cents from the extra week. Management predicts adjusted capEx at $305 million for fiscal 2023.
Foot Locker’s Lace Up plan appears to be encouraging. FL has set long-term targets for fiscal 2024 through 2026 and expects total sales growth in the range of 5-6%, comparable sales growth of 3-4% and adjusted EPS growth of low to mid-twenties.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -22.94% due to these changes.
VGM Scores
At this time, Foot Locker has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Foot Locker has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Foot Locker belongs to the Zacks Retail - Apparel and Shoes industry. Another stock from the same industry, Gap (GPS - Free Report) , has gained 0.4% over the past month. More than a month has passed since the company reported results for the quarter ended January 2023.
Gap reported revenues of $4.24 billion in the last reported quarter, representing a year-over-year change of -6.2%. EPS of -$0.75 for the same period compares with -$0.02 a year ago.
For the current quarter, Gap is expected to post a loss of $0.16 per share, indicating a change of +63.6% from the year-ago quarter. The Zacks Consensus Estimate has changed +4.2% over the last 30 days.
Gap has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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Foot Locker (FL) Down 3.4% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Foot Locker (FL - Free Report) . Shares have lost about 3.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Foot Locker due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Foot Locker Q4 Earnings & Revenues Surpass Estimates
Foot Locker posted fourth-quarter fiscal 2022 results, wherein both the top line and the bottom line beat the Zacks Consensus Estimate. The company delivered the 11th straight earnings beat in the reported quarter.
Q4 Metrics
The athletic shoes and apparel retailer posted adjusted earnings of 97 cents per share, which surpassed the Zacks Consensus Estimate of 52 cents. The bottom line decreased from adjusted earnings per share of $1.46 recorded in the prior-year quarter.
Total sales of $2,334 million surpassed the Zacks Consensus Estimate of $2,149 million. However, the metric declined 0.3% from the year-ago reported period. Excluding the foreign-currency fluctuation impact, total sales grew 3.6%. Digital penetration was 17% of net sales in the reported quarter.
Comparable-store sales (comps) inched up 4.2% driven by increased traffic and improved access to high-quality inventory.
An Insight Into Margins
Foot Locker's gross-margin rate in the reported quarter dropped 290 basis points (bps) from the prior-year quarter’s tally. Higher markdowns on increased promotional activity across the industry caused a margin decline.
The selling, general and administrative (SG&A) expenses decreased by 10 bps as a percentage of sales from the prior year due to savings from the cost optimization program partially offset by inflation.
Other Financial Details
Foot Locker ended the fiscal fourth quarter with cash and cash equivalents of $536 million. Long-term debt and obligations under finance leases amounted to $446 million and shareholders’ equity summed $3,293 million. As of Jan 28, 2023, merchandise inventories were $1.6 billion, up 29.8% from the year-earlier quarter’s end-level.
During the fourth quarter of fiscal 2022, Foot Locker paid a quarterly dividend of 40 cents per share. In entire fiscal 2022, FL repurchased 4.1 million shares for a total of $129 million and paid a total of $150 million in dividends.
Outlook
For fiscal 2023, management expects the sales to decline 3.5-5.5% including 1% from the extra week and the comps to fall 3.5-5.5% year over year. Gross margin is anticipated in the range of 30.8-31% and the SG&A rate is forecast at 22.6-22.8%.
The company envisions fiscal 2023 adjusted earnings per share of $3.35-$3.65, including 15 cents from the extra week. Management predicts adjusted capEx at $305 million for fiscal 2023.
Foot Locker’s Lace Up plan appears to be encouraging. FL has set long-term targets for fiscal 2024 through 2026 and expects total sales growth in the range of 5-6%, comparable sales growth of 3-4% and adjusted EPS growth of low to mid-twenties.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -22.94% due to these changes.
VGM Scores
At this time, Foot Locker has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Foot Locker has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Foot Locker belongs to the Zacks Retail - Apparel and Shoes industry. Another stock from the same industry, Gap (GPS - Free Report) , has gained 0.4% over the past month. More than a month has passed since the company reported results for the quarter ended January 2023.
Gap reported revenues of $4.24 billion in the last reported quarter, representing a year-over-year change of -6.2%. EPS of -$0.75 for the same period compares with -$0.02 a year ago.
For the current quarter, Gap is expected to post a loss of $0.16 per share, indicating a change of +63.6% from the year-ago quarter. The Zacks Consensus Estimate has changed +4.2% over the last 30 days.
Gap has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.