Foot Locker, Inc. (FL) shares experienced a sharp decline today following the release of their second-quarter earnings report. While the company managed to beat analysts’ sales expectations, reporting $1.896 billion in revenue against a projected $1.888 billion, it fell short on earnings per share (EPS). Foot Locker reported an adjusted EPS loss of 5 cents, surpassing the estimated 7-cent loss.
Despite the mixed results, J.P. Morgan analyst Matthew Boss maintained an Underweight rating on Foot Locker stock. Boss highlighted several positive developments, including an improvement in same-store sales, attributed to Foot Locker’s enhanced product offerings, stronger marketing efforts, and improved in-store experiences. He also noted that the company’s revamped FLX rewards program, coupled with a new workforce management tool, boosted customer loyalty penetration to 24% of net sales, up from 22% last year.
Looking ahead, Boss anticipates same-store sales to rise by 2.5% in the second half of 2024. This indicates a modest improvement from the 2.6% growth seen in the second quarter and 0.4% in the first half. Furthermore, the analyst expects a significant increase in gross margins, with a projected 360 basis point year-over-year expansion in the second half, reaching the midpoint of the company’s fiscal year 2024 guidance of 29.5-29.7%.
Investors seeking exposure to Foot Locker can consider ETFs like Tidal Trust II YieldMax Ultra Option Income Strategy ETF (ULTY) and SPDR S&P Retail ETF (XRT).
Foot Locker shares were trading down 10.5% at $29.36 at the last check Wednesday.
