Aggressive · Stocks to Consider and Updates

Foot Locker Posts Strong Results; Outlook Weaker than Expected

FL  Athletic shoe and apparel retailer Foot Locker, Inc. (NYSE: FL – $64.16) reported net income of $158 million for the fourth period ended January 30, 2016. This equates to adjusted earnings of $1.16 per share, an increase of 16% percent over earnings per share of $1.00 for the fourth quarter 2015 and four cents better than consensus. Sales were $2 billion, up from $1.91 billion reported for the same period last year and in line with the Street estimate. Fourth quarter comparable-store sales increased 7.9% and total fourth quarter sales increased 5.0%, compared to a year ago. Excluding the effect of foreign currency fluctuations, total sales for the fourth quarter increased 8.8%. At the quarter’s end, the company had 3,383 total stores globally across a number of brands, compared with 3,432 at the end of the third quarter.

Consensus estimates are for the company to earn in the range of $4.68 – $4.75 in fiscal 2017 vs. $4.29 for the full year just ended. For the upcoming quarter, Foot Locker is expecting low-single digit comparable sales growth and the full-year outlook was less than what the Street was expecting. The closure of a significant number of Lady Foot Locker stores, was also troubling. Hence, the stock price dropped off sharply following the earnings conference call. However, I believe the shares are still reasonably priced and can remain a holding in an aggressive portfolio for now.



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