Foot Locker Continues To Surprise Even Bullish Investors

Foot Locker, Inc. (NYSE: FL) reported its Q3 results ahead of expectations. The performance “showcases FL’s breadth of assortment and ‘ear to the street’ as they transition through trends,” Deutsche Bank’s Paul Trussell said in a report. He maintains a Buy rating on the company, while raising the price target from $76 to $81.

Results And Guidance

Foot Locker reported its Q3 adjusted EPS at $1.13, ahead of the Street’s $1.10. Sales came in at $1.89 billion, backed by SSS (same-store sales) growth of 4.7 percent. “SSS were positive each month of the quarter,” analyst Trussell noted.

Management reiterated its full-year guidance of double-digit earnings growth and mid-single-digit SSS.

More Bullishness

“One year ago, not even the bulls for FL (like us) would have assumed the company would be able to comp +MSD with the basketball category and European geography comping negative,” Trussell commented. He pointed out that in Q3, both running and casual registered high-single-digit growth and witnessed positive traffic, unlike most retailers.

The analyst stated that the diversity of the company’s business model in terms of vendors, categories, geographies and omni-channel mix “is best-in-class leading to consistently strong SSS, EBIT flow-through, and FCF to support buybacks & a healthy dividend.” He added, “[W]e continue to believe FL is one of the few mall-based stocks worth owning.”

At last check, Foot Locker was up 0.96 percent at $72.47.

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