|
Related Topics
|
Category: Stock Market and Footlocker
Date: 22 May 2020 Stock Price: $25.63 We take a look at the 1st quarter 2020 earnings release from sporty clothing and apparel company, Foot Locker. The group's revenue almost halved due to the stay at home orders and lockdowns across the USA due to Covid-19 which meant that people couldn't go to their stores.
Against the backdrop of the pandemic and our global store closures, our team has focused intently on controlling what we can in order to protect our business." - Richard Johnson, Chairman and Chief Executive Officer. |
About Foot Locker
Foot Locker, Inc. (NYSE:FL) is a leading global retailer of athletically inspired shoes and apparel. Headquartered in New York City, the company operates approximately 3,200 athletic retail stores in 27 countries, as well as websites and mobile apps, under the brand names Foot Locker, Champs Sports, Eastbay, Kids Foot Locker, Footaction, Lady Foot Locker, Runners Point, and Sidestep.
With its various marketing channels and experiences across North America, Europe, Asia, Australia, and New Zealand, the Company's purpose is to inspire and empower youth culture around the world, by fueling a shared passion for self-expression and creating unrivaled experiences at the heart of the sport and sneaker communities. The image below shows the business highlights for the group.
With its various marketing channels and experiences across North America, Europe, Asia, Australia, and New Zealand, the Company's purpose is to inspire and empower youth culture around the world, by fueling a shared passion for self-expression and creating unrivaled experiences at the heart of the sport and sneaker communities. The image below shows the business highlights for the group.
Overview of Footlocker's 1st quarter 2020 earnings report
The data below refers to the latest quarter unless specified otherwise
Footlocker store numbers as at May 2020
- Sales: $1.176 billion (down from $2.078 billion for the same quarter of the prior year)
- Sales decreased by -43.4% over the last 12 months
- Cost of sales: $905 million (down from $1.389 billion for the same quarter of the prior year)
- Cost of sales decreased by -34.8% over the last 12 months
- Net loss: $98 million (down from $172 million for the same quarter of the prior year)
- Diluted loss per share: -$0.93 (down from $1.52 for the same quarter of the prior year)
- PE ratio of Foot Locker: Since the group is making a loss we cannot calculate a PE ratio
- Shares outstanding : 104.3 million (down from 113.1 million for the same quarter of the prior year)
- Cash and equivalents: $1.012 billion
- Cash and equivalents per share: $9.70
- Cash and equivalents makes up 37.8% of Foot Locker's market capital
- Cash and equivalents makes up 14.9% of Foot Locker's total assets
- Inventories: $1.459 billion (up from $1.211 billion for the same quarter in the prior year)
- Inventories increased by 20.4% over the last 12 months
- Inventories makes up 21.4% of Foot Locker's total assets
- Stockholders equity in Foot Locker: $2.326 billion
- Stockholders equity per share: $22.30
- So Foot Locker is trading at 1.14 times its stockholders equity which is outside the expected the range of between 2 and 4 times that most firms tend to trade at.
- For some perspective the average price to book ratio of firms in the S&P 500 is 3.7 Read more about the S&P 500 here
Footlocker store numbers as at May 2020
- Foot Locker U.S. : 867
- Foot Locker Europe: 633
- Foot Locker Canada: 104
- Foot Locker Pacific: 91
- Foot Locker Asia: 14
- Kids Foot Locker: 430
- Lady Foot Locker: 44
- Champs Sports: 537
- Footaction: 242
- Runners Point: 76
- Sidestep: 75
- Total: 3,113
Foot Locker management commentary on their 1st quarter 2020 earnings
EW YORK, May 22, 2020 /PRNewswire/ -- Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, today reported financial results for its first quarter ended May 2, 2020.
"Against the backdrop of the pandemic and our global store closures, our team has focused intently on controlling what we can in order to protect our business. We have taken full advantage of the investments we have made in technology in recent years in order to stay connected with our customers and serve them online, worked aggressively to protect our financial position and flexibility, and taken actions to ensure we are well positioned to drive our business forward," said Richard Johnson, Chairman and Chief Executive Officer. "Today, thanks to the unwavering efforts of our team, we are in the early stages on our road to recovery. Our phased reopening of stores is underway, and our plan is to build, be back, and be better than before."
"Against the backdrop of the pandemic and our global store closures, our team has focused intently on controlling what we can in order to protect our business. We have taken full advantage of the investments we have made in technology in recent years in order to stay connected with our customers and serve them online, worked aggressively to protect our financial position and flexibility, and taken actions to ensure we are well positioned to drive our business forward," said Richard Johnson, Chairman and Chief Executive Officer. "Today, thanks to the unwavering efforts of our team, we are in the early stages on our road to recovery. Our phased reopening of stores is underway, and our plan is to build, be back, and be better than before."
Lauren Peters, Executive Vice President and Chief Financial Officer, added, "As the severity of COVID-19's impact on the global retail industry became more evident, we took actions across our organization to control costs, bolster our financial position and increase our liquidity. We believe the operational and financial actions we have taken will enable us to create a safe environment in our stores and protect the health of our business to ensure that we emerge even stronger."
Actions taken by the Company to preserve cash and increase liquidity included: borrowing $330 million under the Company's $400 million credit facility; limiting capital expenditures to essential projects and reducing the full year capital expenditure forecast by 50% to $138 million; minimizing non-essential spending, including reductions in marketing, extending payment terms, limiting rent payments, and reducing merchandise purchases; and reducing salaries and deferring incentive compensation for the CEO and senior executives.
Additionally, while Foot Locker remains committed to returning capital to shareholders, the Company's Board of Directors has decided to temporarily suspend the cash dividend beginning with the second quarter payment. The Board will continue to evaluate the dividend policy on a quarterly basis. As previously disclosed on April 22, the Company also temporarily suspended its share repurchase program.
Financial Position
As of May 2, 2020, the Company's merchandise inventories were $1,458 million, 20.4 percent higher than at the end of the first quarter last year. Using constant currencies, inventory increased 21.3 percent. The Company's cash and cash equivalents totaled $1,012 million, while the debt on its balance sheet was $451 million, which includes $330 million borrowed from the Company's credit facility. During the quarter, the Company paid a quarterly dividend of $0.40 per share.
Store Base Update
During the first quarter, the Company opened 5 new stores, remodeled or relocated 9 stores, and permanently closed 21 stores. As of May 2, 2020, the Company operated 3,113 stores in 27 countries in North America, Europe, Asia, Australia, and New Zealand. In addition, 54 franchised Foot Locker stores were operating in the Middle East, as well as 4 franchised Runners Point stores in Germany.
Actions taken by the Company to preserve cash and increase liquidity included: borrowing $330 million under the Company's $400 million credit facility; limiting capital expenditures to essential projects and reducing the full year capital expenditure forecast by 50% to $138 million; minimizing non-essential spending, including reductions in marketing, extending payment terms, limiting rent payments, and reducing merchandise purchases; and reducing salaries and deferring incentive compensation for the CEO and senior executives.
Additionally, while Foot Locker remains committed to returning capital to shareholders, the Company's Board of Directors has decided to temporarily suspend the cash dividend beginning with the second quarter payment. The Board will continue to evaluate the dividend policy on a quarterly basis. As previously disclosed on April 22, the Company also temporarily suspended its share repurchase program.
Financial Position
As of May 2, 2020, the Company's merchandise inventories were $1,458 million, 20.4 percent higher than at the end of the first quarter last year. Using constant currencies, inventory increased 21.3 percent. The Company's cash and cash equivalents totaled $1,012 million, while the debt on its balance sheet was $451 million, which includes $330 million borrowed from the Company's credit facility. During the quarter, the Company paid a quarterly dividend of $0.40 per share.
Store Base Update
During the first quarter, the Company opened 5 new stores, remodeled or relocated 9 stores, and permanently closed 21 stores. As of May 2, 2020, the Company operated 3,113 stores in 27 countries in North America, Europe, Asia, Australia, and New Zealand. In addition, 54 franchised Foot Locker stores were operating in the Middle East, as well as 4 franchised Runners Point stores in Germany.
Foot Locker stock price history
The image below, obtained from Google shows the stock price history of Foot Locker (NYSE:FL) for the last 5 years. As the image shows it's been a pretty volatile but largely negative ride for Foot Locker shareholders over the last number of years. 5 years ago the stock of Foot Locker was trading at $63.50 a stock and its currently trading at $25.62 a stock. That's a loss of -59.6% suffered by Foot Locker.
The stock of Foot Locker is trading at a lot closer to its 52 week low of $17.46 than it is to its 52 week high of $54.33 which to us is a clear indication that the short term sentiment and momentum of Foot Locker's stock is overwhelmingly negative
The stock of Foot Locker is trading at a lot closer to its 52 week low of $17.46 than it is to its 52 week high of $54.33 which to us is a clear indication that the short term sentiment and momentum of Foot Locker's stock is overwhelmingly negative
Recent Google search trends for FL stock price
The graphic below shows the search trends for FL stock price and Footlocker stock price over the last 12 months in the United States as obtained from Google Trends. As the graphic shows the searches for FL stock is far greater than that of Footlocker stock price. There is pretty consistent interest for FL stock price
Footlocker (NYSE: FL) stock vs Dicks Sporting Goods (NYSE:DKS) stock
The image below shows the stock price performance of Footlocker (FL) compared to Dicks Sporting Goods (DKS) over the last 3 years. As the graphic shows Dicks Sporting Goods stock has comfortably outperformed the stock of Footlocker over the last 3 years, with it declining by -20.3% compared to a 53.5% decline in the stock price of Footlocker
Recent coverage of Foot Locker
The extract below covers the latest earnings report from Foot Locker as obtained from Investor.com
Key Nike (NKE) retailer Foot Locker (FL) reported a bigger-than-expected first-quarter loss and revenue decline, amid coronavirus shutdowns. Foot Locker stock fell sharply.
Foot Locker Earnings Report
Estimates: Analysts expected Foot Locker to swing to a loss of 17 cents per share from a year-ago profit of $1.53 a share, according to Zacks Investment Research. Revenue was seen falling 36% to $1.32 billion. Same-store sales had been expected to tumble 34.5% according to Consensus Metrix.
Results: Foot Locker lost 67 cents a share with revenue tumbling 43% to $1.18 billion. Same-store sales plunged 43% as well.
Foot Locker said the "phased reopening" of its stores is underway. Back in March the firm announced stores across all its brands in North America, EMEA, and Malaysia were shuttered due to the impact of Covid-19. The chain also began a company-wide furlough of employees starting April 26.
Read the full article here
Key Nike (NKE) retailer Foot Locker (FL) reported a bigger-than-expected first-quarter loss and revenue decline, amid coronavirus shutdowns. Foot Locker stock fell sharply.
Foot Locker Earnings Report
Estimates: Analysts expected Foot Locker to swing to a loss of 17 cents per share from a year-ago profit of $1.53 a share, according to Zacks Investment Research. Revenue was seen falling 36% to $1.32 billion. Same-store sales had been expected to tumble 34.5% according to Consensus Metrix.
Results: Foot Locker lost 67 cents a share with revenue tumbling 43% to $1.18 billion. Same-store sales plunged 43% as well.
Foot Locker said the "phased reopening" of its stores is underway. Back in March the firm announced stores across all its brands in North America, EMEA, and Malaysia were shuttered due to the impact of Covid-19. The chain also began a company-wide furlough of employees starting April 26.
Read the full article here
Foot Locker (NYSE:FL) stock valuation
So what is Foot Locker's stock worth based on their latest earnings report? Based on Foot Lockers latest earnings report and the fact that they are losing making right now, we have decided to value the group at their stockholders equity per share, which is $22.30 a stock. We therefore believe that the stock of Foot Locker is overvalued at its current price.
We usually recommend that long term and fundamental investors look to enter a stock at least 10% below our target price (full value price) which in this case is $22.30 . A good entry point into Foot Locker would therefore be at $20.10 or below
While we value the group at its stockholders equity per share right now, we do expect Foot Lockers earnings to recover and their stock to kick up again once the lockdowns and stay at home orders in the US starts being lifted and the effects of the pandemic starts to slow. But right now we believe there are better investments to be made than the stock of Footlocker
We usually recommend that long term and fundamental investors look to enter a stock at least 10% below our target price (full value price) which in this case is $22.30 . A good entry point into Foot Locker would therefore be at $20.10 or below
While we value the group at its stockholders equity per share right now, we do expect Foot Lockers earnings to recover and their stock to kick up again once the lockdowns and stay at home orders in the US starts being lifted and the effects of the pandemic starts to slow. But right now we believe there are better investments to be made than the stock of Footlocker
Next earnings release of Foot Locker (NYSE: FL)
It is expected that Foot Locker will release their 2nd quarter 2020 earnings report towards the end of August 2020