Why This Foot Locker Analyst Sees Margin Pressure Ahead

Foot Locker, Inc. FL is likely to lose market share, with the expansion of global brand Solo Brands Inc DTC and wholesale competition, according to JPMorgan.

The Foot Locker Analyst: Matthew Boss downgraded Foot Locker from Neutral to Underweight and reduced the price target from $60 to $42.

The Foot Locker Thesis: The company is likely to suffer “multi-year margin pressure points on both COGS (rising occupancy costs) & SG&A (wages/DC costs), Boss said in the downgrade note.

There is likely to be “a mixed bag setup on Specialty Softlines,” he added.

“P/L specific, we model FY23 EPS power ~30% below the Street (JPM at $5.06 < Consensus at $6.94) lowering our FY22 EPS to $5.57 (below Street at $6.54) embedding 1H22 EPS ~40% below Consensus (JPM $1.97 < St $3.24) w/ 1Q $0.89 (~50% < St. $1.69),” the analyst wrote.

FL Price Action: Shares of Foot Locker were down 4.07% at $42.94 late Tuesday morning. 

Photo by Dwight Burdette via Wikimedia.