Foot Locker, Inc FL unexpectedly announced the departure of current CEO Richard Johnson and named former Ulta Beauty Inc ULTA CEO Mary Dillon as his replacement, which is a “thesis changing move,” according to BofA Securities.
The Foot Locker Analyst: Lorraine Hutchinson upgraded the rating for Foot Locker from Underperform to Neutral, while raising the price target from $28 to $43.
The Foot Locker Thesis: Dillon is a “highly respected consumer executive” who had been CEO at Ulta Beauty for eight years, Hutchinson said in the upgrade note.
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“While at the helm at Ulta, Dillon engineered a best-in-class loyalty program, revenue increased at a 16% CAGR, and the stock tripled,” the analyst wrote. Hutchinson expressed optimism around the “potential positive strategic changes under new leadership.”
“While we are encouraged by this announcement, we still think FL faces secular challenges as a mall-based retailer and has an uphill journey replacing NKE’s reduced allocation,” Hutchinson further mentioned.
FL Price Action: Shares of Foot Locker had risen by 21.11% to $38.73 at the time of publication Friday.
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