Foot Locker's Weak Q1 Performance Was Due to Company-Specific Issues, Says Analyst

• Oppenheimer analyst Brian Nagel offered an insight into Foot Locker Inc’s FL weak first quarter FY23 earnings.


• The analyst said while macro-conditions are now more challenging, at least somewhat, recent sales and profit issues at Foot Locker appeared largely company-specific and self-inflicted.


• On average, thus far in 2023, shares of leading athletic brands and retailers were down 2% versus a gain of 9% in the S&P 500, noted the analyst.


• Upon the analyst’s view that while macro-challenges persist, incremental fundamental weakness at Foot Locker appeared to reflect primarily issues specific to the operator.


• A weaker guidance, the analyst believed is a further weakening of top-line trend at the company.


• The analyst highlighted Foot Locker CEO Mary Dillion’s reason that sales and margin trends have worsened lately due to incremental economic pressures on core, lower-income consumers, effects of a significant merchandise reset with Nike Inc NKE and disruptions related to re-positionings within the Foot Locker collection of brands.


• A Foot Locker/Nike merchandise reset could lend to improved market share opportunities, particularly for Dick’s Sporting Goods Inc DKS and, to a lesser extent, Academy Sports and Outdoors Inc ASO, said the analyst.


• For select, leading, well-positioned operators, the analyst believed depressed valuations likely discount for near-term fundamental choppiness.


• Also, improved strategic positioning and enhanced digital tool sets could allow for more profitable, stronger market share gains, as sector malaise abates, concluded the analyst.


• FL Price Action: Foot Locker shares are trading lower by 6.19% at $28.34 at publication Monday.

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