Shares of Foot Locker (FL, $44.02) plummet after missing Street estimates
Shares of the American sportswear and footwear retailer, Foot Locker, plunged more than 16% on Friday after the shoe retailer reported fiscal first-quarter earnings that missed Wall Street profit and revenue estimates.
Company’s adjusted earnings per share for Q1 stood at $1.53 compared to Wall Street’s estimate of $1.60. While the revenue for the quarter stood at $2.08 billion against the expectation of $2.11 billion, despite the net sales increasing by 2.62% during the quarter.
On an unadjusted basis, Foot Locker reported fiscal first-quarter net income of $172 million, or $1.52 per share, up from $165 million, or $1.38 per share a year earlier.
The main reason for such an unsatisfactory performance of the company is its excessive dependence on major shoe companies like Nike (NKE) who are increasingly bypassing the retailers by directly selling its product to their customers. According to analysts, Foot Locker is excessively dependant on Nike for its sales as the manufacturer accounted for nearly 66% of its sales in fiscal 2018.
The overall situation further worsened as more and more shoppers continued avoiding the retailer, majority of Foot Lockers stores are located in malls, for online shopping.
During the quarter the company also undertook the repurchase of 32,100 shares worth $1.8 million, but which again fell short of the analyst expectations.
With the broader shoe industry facing its own set of challenges, as President Trump has threatened to levy more tariffs on footwear imported from China, the shoe retailers are set for a tough time ahead.
Taking into count the overall situation the company said it now expects its earnings per share to be “up high-single digits” for the year, rather than double-digit growth.
FL sees its 50-day moving average cross bullishly above its 200-day moving average
The 50-day moving average for FL moved above the 200-day moving average on August 15, 2024. This could be a long-term bullish signal for the stock as the stock shifts to an upward trend.
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Notable companies
The most notable companies in this group are TJX Companies (NYSE:TJX), lululemon athletica (NASDAQ:LULU), Gap Inc (The) (NYSE:GAP), Abercrombie & Fitch Co (NYSE:ANF), Foot Locker (NYSE:FL), Guess (NYSE:GES), Stitch Fix (NASDAQ:SFIX).
Industry description
Companies in the apparel and/or footwear retail industry sell clothing, accessories and footwear, for different age groups and genders. The industry’s product categories could range from basics, such as underwear, to luxury items. Some retailers source items from wholesalers or an apparel brand to sell in their stores; some others are licensed to make and market their own retail goods under particular brands. Several companies outsource production of clothing to developing/emerging economies where labor costs are relatively inexpensive. Apparel retail is often influenced by fashion trends, and many companies feel the need to adapt to what’s “in vogue” to retain customers and attract new ones. A major disruption in this industry has been the burgeoning trend in digital shopping – to compete with rapidly growing e-commerce, even traditional retail players are upping the ante on their online platforms. Much of the products’ performance in apparel/footwear retail is cyclical, i.e., economic boom times encourage consumer spending, while recessions induce thriftiness among people. Some large-cap U.S. apparel/footwear retail companies include TJX Companies Inc., Ross Stores, Inc., Lululemon Athletica Inc. and Burlington Stores, Inc.
Market Cap
The average market capitalization across the Apparel/Footwear Retail Industry is 13.34B. The market cap for tickers in the group ranges from 256K to 119.4B. IDEXY holds the highest valuation in this group at 119.4B. The lowest valued company is DESTQ at 256K.
High and low price notable news
The average weekly price growth across all stocks in the Apparel/Footwear Retail Industry was -4%. For the same Industry, the average monthly price growth was 2%, and the average quarterly price growth was 0%. RENT experienced the highest price growth at 24%, while BIRD experienced the biggest fall at -32%.
Volume
The average weekly volume growth across all stocks in the Apparel/Footwear Retail Industry was -45%. For the same stocks of the Industry, the average monthly volume growth was 8% and the average quarterly volume growth was -56%
Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
Valuation Rating: 54
P/E Growth Rating: 49
Price Growth Rating: 54
SMR Rating: 65
Profit Risk Rating: 74
Seasonality Score: -7 (-100 ... +100)