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Category: Stock Market and Footlocker
Date: 24 November 2019 Stock Price: $40.25 We take a look at the 3rd quarter 2019 earnings report of Footlocker, a specialty sports apparel retailer headquartered in New York.
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About Footlocker
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 Foot Locker's 3rd quarter 2019 earnings report
Data below refers to the latest quarter's data unless specified otherwise:
Foot Locker store count in various regions
- Sales: $ 1.932 billion (up from $ 1,860 billion for the same quarter of the prior year)
- Sales increased by 3.9% over the last 12 months
- Cost of sales: $1.312 billion (up from $1.272 billion for the same quarter of the prior year)
- Cost of sales increased by 3.2% over the last 12 months
- Net income: $125 million (down from $130 million for the same quarter of the prior year)
- Diluted earnings per share: $1.16 (up 1.8% from $1.14 for the same quarter of the prior year)
- PE ratio of Foot Locker: 9.3
- Shares outstanding : 107.2 million (down 6.8% from 115 million for the same quarter of the prior year)
- Cash and cash equivalents: $744 million
- Cash and cash equivalents per share: $6.94
- Cash and cash equivalents makes up 17.2% of Foot Locker's market capital
- Cash and cash equivalents makes up 11.2% of Foot Locker's total assets
- Merchandise inventories: $1.304 billion
- Merchandise inventories makes up 19.7% of Foot Locker's total assets
- Stockholders equity in Foot Locker: $2.427 billion
- Stockholders equity per Foot Locker share: $22.63
- Foot Locker is trading at 1.78 times its stockholders equity per share which is just outside the expected range of between 2 and 4 times that most firms tend to trade at
Foot Locker store count in various regions
- USA: 886
- Europe: 642
- Canada: 107
- Pacific: 94
- Asia: 5
Foot Locker's management commentary on their 3rd quarter 2019 earnings
NEW YORK, NY, November 22, 2019 – Foot Locker, Inc. (NYSE: FL), the New York-based specialty athletic retailer, reported today financial results for its third quarter ended November 2, 2019.
“We are pleased with our performance in the quarter, which reflects the success of our strategic focus on building even deeper connections with our customers and further strengthening relationships with our vendors,” said Richard Johnson, Chairman and Chief Executive Officer. “Across the Company, we are making great strides in implementing our four strategic imperatives, which are designed to ensure we are best positioned to compete in the retail marketplace by inspiring and empowering youth culture while also strengthening our bottom line and driving value for our shareholders.”
Lauren Peters, Executive Vice President and Chief Financial Officer, said, “The strong results we delivered in the quarter reflect our work to drive the top line, while continuing to strengthen our operational execution, as reflected in our improved gross margin, SG&A, and inventory productivity. As we enter the all-important holiday selling season, we will remain focused on execution to continue to position us to achieve our long-term financial objectives.”
“We are pleased with our performance in the quarter, which reflects the success of our strategic focus on building even deeper connections with our customers and further strengthening relationships with our vendors,” said Richard Johnson, Chairman and Chief Executive Officer. “Across the Company, we are making great strides in implementing our four strategic imperatives, which are designed to ensure we are best positioned to compete in the retail marketplace by inspiring and empowering youth culture while also strengthening our bottom line and driving value for our shareholders.”
Lauren Peters, Executive Vice President and Chief Financial Officer, said, “The strong results we delivered in the quarter reflect our work to drive the top line, while continuing to strengthen our operational execution, as reflected in our improved gross margin, SG&A, and inventory productivity. As we enter the all-important holiday selling season, we will remain focused on execution to continue to position us to achieve our long-term financial objectives.”
Financial Position
As of November 2, 2019, the Company’s merchandise inventories were $1,304 million, 0.1 percent lower than at the end of the third quarter last year. Using constant currencies, inventory increased 0.2 percent. The Company’s cash totaled $744 million, while the debt on its balance sheet was $122 million. The Company repurchased 4.6 million shares for $178 million during the quarter and paid a quarterly dividend of $0.38 per share, for a total of $41 million.
Store Base Update
During the third quarter, the Company opened 11 new stores, remodeled or relocated 34 stores, and closed 25 stores. As of November 2, 2019, the Company operated 3,160 stores in 27 countries in North America, Europe, Asia, Australia, and New Zealand. In addition, 128 franchised Foot Locker stores were operating in the Middle East, as well as 10 franchised Runners Point stores in Germany.
As of November 2, 2019, the Company’s merchandise inventories were $1,304 million, 0.1 percent lower than at the end of the third quarter last year. Using constant currencies, inventory increased 0.2 percent. The Company’s cash totaled $744 million, while the debt on its balance sheet was $122 million. The Company repurchased 4.6 million shares for $178 million during the quarter and paid a quarterly dividend of $0.38 per share, for a total of $41 million.
Store Base Update
During the third quarter, the Company opened 11 new stores, remodeled or relocated 34 stores, and closed 25 stores. As of November 2, 2019, the Company operated 3,160 stores in 27 countries in North America, Europe, Asia, Australia, and New Zealand. In addition, 128 franchised Foot Locker stores were operating in the Middle East, as well as 10 franchised Runners Point stores in Germany.
Foot Locker stock price history
The image below obtained from Google, shows the stock price Foot locker (NYSE:FL) for the last 5 years. As the image shows its been a pretty volatile ride for Footlocker shareholders over the last number of years. And while it has been very volatile the underlying trend is downwards. 5 years ago the stock of Foot locker was trading at around $57.30 and its currently trading at $40.25 a stock. That's a loss of -29.7% suffered by Foot locker stockholders.
The stock of Foot locker is trading at a lost closer to its 52 week low of $33.12 than it is to its 52 week high of $68 which to us is a clear indication that the short term sentiment and momentum of Foot locker's stock is negative.
The stock of Foot locker is trading at a lost closer to its 52 week low of $33.12 than it is to its 52 week high of $68 which to us is a clear indication that the short term sentiment and momentum of Foot locker's stock is negative.
Recent coverage of Foot locker
The extract below covers the latest earnings release of Foot Locker as obtained from TheStreet.com
Foot Locker (FL - Get Report) posted stronger-than-expected third quarter earnings Friday as same store sales topped analysts' forecast after a solid August quarter for Nike Inc. (NKE - Get Report). Shares in the group traded lower, however, after it forecast flat comparable store sales for the Christmas quarter and a 10 to 30 basis point erosion in its gross profit margin.
Foot Locker said earnings for the three months ending on November 2 came in at $1.13 per share, down one penny from the same period last year but 5 cents ahead of the Street consensus forecast. Group revenues, Footlocker said, rose 3.9% to $1.932 billion, just shy of analysts' estimates of a $1.94 billion tally, although same-store sales rose by 5.7%, a full percentage point ahead of the Refinitiv forecast.
Read the full article here
Foot Locker (FL - Get Report) posted stronger-than-expected third quarter earnings Friday as same store sales topped analysts' forecast after a solid August quarter for Nike Inc. (NKE - Get Report). Shares in the group traded lower, however, after it forecast flat comparable store sales for the Christmas quarter and a 10 to 30 basis point erosion in its gross profit margin.
Foot Locker said earnings for the three months ending on November 2 came in at $1.13 per share, down one penny from the same period last year but 5 cents ahead of the Street consensus forecast. Group revenues, Footlocker said, rose 3.9% to $1.932 billion, just shy of analysts' estimates of a $1.94 billion tally, although same-store sales rose by 5.7%, a full percentage point ahead of the Refinitiv forecast.
Read the full article here
Foot locker (NYSE:FL) stock valuation
So what do we value Foot Locker stock at following the release of their 3rd quarter 2019 earnings report? Based on their 3rd quarter 2019 earnings report our valuation model provides a target (full value) price for Foot Locker at $42.10 a stock (up slightly from our 2nd quarter 2019 earnings report valuation of Foot Locker) . We therefore believe the stock of Foot Locker is slightly undervalued
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price which in this case is $42.10 A good entry point into the stock of Foot Locker would therefore be at $37.90 or below. We expect the stock of Foot Locker to trade in a narrow range around our target (full value) price in coming weeks and months.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price which in this case is $42.10 A good entry point into the stock of Foot Locker would therefore be at $37.90 or below. We expect the stock of Foot Locker to trade in a narrow range around our target (full value) price in coming weeks and months.
Next earnings release of Foot locker (NYSE: FL)
It is expected that Foot Locker will release their 4th quarter and full fiscal 2019 earnings report towards the end of February 2020