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Foot Locker (FL) Likely to See a Decline in Q1 Earnings

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Foot Locker, Inc. (FL - Free Report) is expected to see a year-over-year decline in the top and bottom line when it reports first-quarter fiscal 2020 results, scheduled to release on May 22. The Zacks Consensus Estimate for first-quarter earnings is pegged at 11 cents, indicating a significant decline from $1.53 earned in the prior-year quarter. Also, the consensus mark has moved down 83.6% over the past 30 days. Further, the consensus mark for quarterly revenues stands at $1,472 million, suggesting a fall of more than 29% from the year-ago quarter’s tally.

However, the athletic shoes and apparel retailer has a trailing four-quarter positive earnings surprise of about 1%, on average.

Key Factors to Note

We note that Foot Locker is not immune to challenges tied to the coronavirus pandemic. The retailer has shut stores for all brands across North America, EMEA and Malaysia, including Foot Locker, Lady Foot Locker, Kids Foot Locker, Footaction, Champs Sports, Runners Point and Sidestep. Loss of sales from closed stores has most likely marred the company’s performance in the fiscal first quarter. In addition, any deleverage in SG&A expenses due to cost of investments in digital capabilities and infrastructure has likely weighed on its bottom-line performance. On top of these, Foot Locker is exposed to foreign currency translation risks. Disappointingly, the Zacks Consensus Estimate for first-quarter comparable-store sales suggests a decline of 28.8% year over year.

Meanwhile, Foot Locker’s online channels might have provided some cushion to its top line in the fiscal first quarter. Moreover, the company has been trying to improve performance through operational and financial initiatives. It has been focusing on supply-chain development, improvement of mobile and web platforms, and expansion of data analytics capabilities. Furthermore, the company has been augmenting its direct-to-consumer operations.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Foot Locker this time around. 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. But that’s not 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 has a Zacks Rank #4 (Sell) and Earnings ESP of -43.40%.

Stocks With Favorable Combinations

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Kroger (KR - Free Report) has an Earnings ESP of +4.52% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lowe's Companies (LOW - Free Report) has an Earnings ESP of +3.33% and a Zacks Rank #3.

Dollar General (DG - Free Report) has an Earnings ESP of +1.25% and a Zacks Rank #3.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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