Sportswear and athletic footwear retailer FootLocker (NYSE:FL) slipped in pre-market trading on Monday after top-rated Citi analyst Paul Lejuez downgraded the stock from Hold to Sell. By Lejuez’s estimate, the retailer is expected to report Q3 earnings of $0.10 per share, below the consensus estimates of $0.22 per share. This is due to weaker comparables and gross margins.
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The analyst added that the company is becoming more promotional this fall due to a challenging macro environment and high inventory levels. Lejeuz anticipates that FootLocker will likely sacrifice its margins over the short term to address inventory issues. He pointed out that Foot Locker faced challenges beyond its control, with the retailer relying heavily on Nike (NKE) products that make up 64% of its sales.
The analyst maintained a price target of $18 on the stock, implying a downside potential of 22.8% at current levels.
Is Foot Locker a Buy or Sell Stock?
Overall, analysts remain sidelined about FL stock with a Hold consensus rating based on two Buys, six Holds, and four Sells. FL stock has dropped by more than 30% year-to-date, and the average FL price target of $18.70 implies a downside potential of 19.8% at current levels.
