On Monday, Evercore ISI adjusted its outlook on Foot Locker (NYSE:FL), reducing the sportswear retailer's price target to $32 from $38, while continuing to endorse the stock with an Outperform rating. The revision comes ahead of Foot Locker's anticipated earnings report on December 4.
The firm's analyst cited a recalibration of third-quarter same-store sales (SSS) estimates, now expecting a modest increase of 1.3% compared to the previous forecast of 3.3%. The earnings per share (EPS) projection was also revised downward to $0.43 from $0.49, though this still remains above the consensus estimate of $0.41.
According to the analyst, Foot Locker's stock has experienced a notable decline, dropping 21% since September 1 and underperforming the broader XRT retail index by 31 percentage points during the same period. This downtrend was attributed to a combination of adverse weather conditions and a postponed Jordan brand product launch earlier in November.
Despite these setbacks, the analyst anticipates a positive shift in sales trends as Foot Locker moves past these temporary disruptions. The expectation is that the company's stock will rebound as same-store sales stabilize, benefiting from a return to a more typical holiday product release schedule.
In other recent news, Foot Locker has been the focus of several important developments. Needham has initiated coverage on Foot Locker with a Buy rating, predicting a promising earnings recovery by 2025, driven by factors such as an improved relationship with Nike (NYSE:NKE) and growth of non-Nike brands. Citi has maintained a Neutral rating on the company, anticipating a third-quarter earnings per share beat of $0.46, surpassing the consensus estimate of $0.42. This optimism is rooted in stronger-than-expected comparable sales and lower selling, general, and administrative costs.
Foot Locker's recent earnings report showed a slight beat in sales, EBIT, and EPS for the second quarter of 2024, largely due to robust comparable store sales in North America and the EMEA region. However, the company has revised its gross margin forecast for the full fiscal year 2024 downward due to increased promotional activities. In other developments, Foot Locker has announced a multi-year partnership with the Chicago Bulls, aimed at enhancing fan engagement through community events and exclusive content.
On the analyst front, Barclays (LON:BARC) has reiterated an Overweight rating on Foot Locker shares, indicating confidence in the company's LaceUp Plan, aimed at driving a turnaround. However, Baird has reduced its price target for Foot Locker from $35.00 to $27.00, maintaining a Neutral stance due to concerns over the retailer's short-term prospects.
InvestingPro Insights
Recent InvestingPro data provides additional context to Evercore ISI's analysis of Foot Locker (NYSE:FL). The company's market cap stands at $2.32 billion, with a P/E ratio of 36.49 for the last twelve months as of Q2 2025. This relatively high P/E ratio aligns with one of the InvestingPro Tips, which notes that Foot Locker is "Trading at a high EBIT valuation multiple."
The recent stock performance mentioned in the article is reflected in the InvestingPro data, showing a 3-month price total return of -29.29%, corroborating the analyst's observation of a significant stock decline. This is further supported by another InvestingPro Tip stating that the "Price has fallen significantly over the last three months."
Looking ahead, InvestingPro Tips suggest that "Net income is expected to grow this year" and "Analysts predict the company will be profitable this year." These insights could support Evercore's optimistic outlook and Outperform rating, despite the recent challenges faced by Foot Locker.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips for Foot Locker, providing a deeper understanding of the company's financial health and market position.
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