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Foot Locker Tops Consensus Expectations, Shares Rally

Stock Markets Nov 18, 2022 11:42
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By Sam Boughedda

Foot Locker (NYSE:FL) stock surged Friday after the company reported third quarter earnings that beat analyst expectations.

The retailer reported earnings per share of $1.27, $0.13 better than the analyst estimate of $1.14, while revenue for the quarter came in at $2.17 billion versus the consensus estimate of $2.1 billion.

Comparable sales also rose, increasing 0.8% year-over-year.

Foot Locker's President and Chief Executive Officer Mary Dillon said in the midst of ongoing macroeconomic challenges, its expanding customer base remained resilient.

"I see tremendous opportunity to further leverage the power of our brand equity and our incredible field team to drive our growth in this exciting category," added Dillon.

The company also raised its full-year guidance and now expects FY2022 earnings from $4.42 to $4.50, compared to the consensus of $4.25. It was above the previous guidance of between $4.25 and $4.45.

Reacting to the report, Goldman Sachs analysts said, "Foot Locker noted that comps were driven by strong demand, a diversified brand portfolio, and better availability of high quality product. Management also highlighted their growing customer base as a key driver in the quarter."

Meanwhile, Citi's analysts told investors in a note that Foot Locker's "3Q was much better than expected with comps +0.8%, well ahead of cons -6%. GM -270bps was also better than expected."

"Most surprisingly, mgmt raised full year guidance from ~$4.25 to $4.42-4.50 and guided 4Q above cons to $0.45-0.53 (vs cons $0.43). This comes despite the recent announcement that Adidas (OTC:ADDYY) was ending their contract with Yeezy and pulling all product from stores. We thought this would be a much bigger headwind to FL's biz in 4Q, especially given FL already faced pressure from losing allocation of high-heat Nike (NYSE:NKE) product beginning in 4Q," the analysts added.

Credit Suisse analysts listed what stood out to the firm: "1) 4Q SSS guided above Consensus despite reduced Nike mix and recent abrupt Yeezy exit. 2) Non-Comp Sales now neutral to year, previously a -2pp drag. 3) Updated FY22 SG&A rate to 22% from 21.3-21.4%."

Foot Locker shares are up 8.9% at the time of writing.

Foot Locker Tops Consensus Expectations, Shares Rally
 

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Jemal Abu
Jemal Abu Nov 18, 2022 11:52
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