Foot Locker Q3 missed on higher promotions, says Citi

Citi analyst Paul Lejuez says Foot Locker (FL) reported a Q3 earnings miss driven by weaker gross margins. The company cited higher than planned promotions in Q3 that drove the miss and spoke to a trend deceleration post back-to-school that continued through the first half of November, the analyst tells investors in a research note. The firm says that while trends accelerated over Black Friday weekend, management lowered fiscal 2024 earnings guidance and guided Q4 below consensus, anticipating higher promos in Q4 versus the prior plan. Citi says Q3 was a disappointing quarter and it expects the shares to trade lower today. However, while Q3 was below consensus, both comps and gross margin delivered healthy expansion despite the challenges, adds Citi. It keeps a Neutral rating on Foot Locker.