The Bullish And Bearish Points Of Foot Locker's Solid Q3

The better-than-expected EPS of Foot Locker, Inc. (NYSE: FL) underscores the company’s broad-based strength in both footwear and apparel and its swiftness in adapting to trend shifts, according to a note from Canaccord Genuity.

Rating

The brokerage, which reiterated its Buy rating and $79 target price, pointed out that Foot Locker was able to drive the mid-single-digit comp growth in footwear despite a decline in basketball, while both running and casual footwear were up high single-digits.

In the United States, the company managed to dish out mid-single-digit comp increase, while other retailers are struggling to cope with traffic declines.

Bull And Bear Analyses

Following are Canaccord’s bullish and bearish points in Foot Locker’s third quarter print:

Bullish Points

• “Strong women's performance (footwear +DD, SIX:02 +DD).”
• “Strength across geographies (FL US +MSD, FL Asia +LSD, FL Canada +DD).”
• “US banners.com +20 percent.”
• “International direct business +50 percent.”
• “Inventory +1.9 percent vs. sales +5.1 percent.”

Bearish Points

• “Basketball down.”
• “Headwinds in Europe (FL Europe down LSD, Runners Point and Sidestep down DD).”
• “Eastbay challenged (-HSD).”
• “Accessories soft (-LSD).”

Meanwhile, the company maintained its full-year comp/EPS guidance of +MSD/+DD. In the fourth quarter, Foot Locker expects +MSD comp coupled with slight improvement in both gross margin and SG&A.

“With multiple growth avenues ahead of it (remodels, women's, e-commerce, international), along with systems/process improvements that will drive more full price selling, we believe FL is well positioned to drive sustained +MSD comp growth and +DD EPS growth in Q4 and, beyond,” analyst Camilo Lyon wrote in a note.

At last check, shares of Foot Locker were up 1 percent at $72.40.