Foot Locker Tops 3Q Estimates; Shares Dip 5% On Covid-19 Woes

Foot Locker reported better-than-expected 3Q results on Friday. The sportswear and footwear retailer’s adjusted earnings of $1.21 per share topped analysts’ expectations of $0.60 and increased 7.1% year-over-year. However, shares closed about 5% lower as the company announced that over 10% of its stores are temporarily closed due to COVID-19.

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Meanwhile, Foot Locker’s (FL) 3Q revenues grew 9% to $2.11 billion year-on-year and beat the Street consensus of $1.94 billion. The company’s comparable-store sales rose by 7.7% during 3Q.

“We delivered a strong top and bottom-line performance in the third quarter, underscoring the strength of our in-store and online product assortments and the resilience of the Foot Locker, Inc. brands,” the company’s CEO Richard Johnson said. “Although the back-to-school selling season kicked in later than usual due to COVID-19-related delays, momentum built as the quarter progressed, and we were pleased with our customers’ continued strong engagement across our family of brands.” (See FL stock analysis on TipRanks)

Following its earnings release, Guggenheim analyst Robert Drbul raised the stock’s price target to $45 (14.6% upside potential) from $35 and reiterated a Buy rating. In a note to investors, Drbul wrote, “Digital grew >50% in the quarter, with particular strength in September and October. The athletic/casual category remains strong, supporting both footwear and apparel success at FL. We believe the company is well-positioned to capitalize further on these trends in coming quarters.”

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 10 Buys and 4 Holds. The average price target stands at $42.36 and implies upside potential of about 7.8% to current levels. Shares were up less than 1% year-to-date.