Foot Locker (NYSE:FL) shares plunged by nearly 11% in the early session today after the specialty athletic retailer announced its fourth-quarter results.
Don't Miss Our Christmas Offers:
- Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
Foot Locker is experiencing sequential gains in sales and improvements across multiple KPIs. The retailer also resorted to markdowns to achieve leaner inventory levels in Q4. During the quarter, revenue increased by 2.1% year-over-year to $2.38 billion. The figure came in better than expectations by nearly $100 million. In tandem, adjusted EPS of $0.38 outpaced consensus by $0.06. However, its comparable sales declined by 0.7% due to soft consumer demand and the repositioning of the Champs Sports banner.
At the same time, the higher markdowns led to a 350-basis point contraction in FL’s gross margin. The company incurred a GAAP net loss of $389 million in Q4, compared to a net income of $19 million in the year-ago period. For Fiscal Year 2024, Foot Locker expects sales growth of -1% to 1%. EPS for the year is seen landing between $1.50 and $1.70. Further, comparable sales are expected to improve by 1% to 3% during this period.
Still, investor sentiment took a hit today after the company noted that it will not resume dividends. While Foot Locker expects its margins and cash flows to improve over the coming periods, the retailer is prioritizing improving its financial flexibility. Consequently, it expects 2024 to act as a “cash rebuilding year.”
Is FL a Good Stock to Buy?
Today’s price erosion comes after a mega 85% rally in FL’s stock price over the past six months. Overall, the Street has a Hold consensus rating on Foot Locker alongside an average price target of $28.75. However, analysts’ views on the stock could see changes following today’s earnings report.
Read full Disclosure
