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What to Expect from Foot Locker’s Fiscal 4Q17 Results

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Foot Locker’s fiscal 4Q17 earnings

Footwear retailer Foot Locker (FL) is slated to announce its fiscal 4Q17[1. fiscal 4Q17 ended February 3, 2018] results on March 2, 2018. Analysts expect the company to report ~5.0% growth in sales compared with fiscal 4Q16.

However, FL’s adjusted earnings per share (or EPS) are expected to fall ~9.0% to $1.25. The company’s bottom line could be negatively impacted by a lower gross margin and a higher SG&A (selling, general, and administrative) expenses rate.

Like most other retailers, Foot Locker (FL) has been severely impacted by greater competition and an intense promotional backdrop. Although brick-and-mortar stores still are the major contributors to overall sales, the retail landscape is changing rapidly.

e-Commerce expansion has resulted in lower mall traffic, and many retailers have been compelled to close some stores. Retailers Toys R Us, Gordmans, and Gander Mountain filed for bankruptcy in 2017.

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To improve its market share, Foot Locker has implemented several initiatives such as overhauling merchandise, cutting costs, and expanding its digital presence. Recently, the company announced its capital expenditure plan. As part of this plan, it expects to spend more than $230.0 million in 2018 with major emphasis on the development of its digital sales portal.

Stock price movement

As of February 22, 2018, Foot Locker (FL) stock is up 18.2% since it reported its fiscal 3Q17 results on November 17, 2017. In 2017, FL’s stock price was down 33.9% compared with the 19.4% gain seen in the S&P 500 Index (SPX-INDEX). On a YTD (year-to-date) basis as of February 22, 2018, Foot Locker’s stock price has risen 2.9% to $48.26.

In 2017, Foot Locker’s peers Finish Line (FINL) and DSW (DSW) fell 22.8% and 5.5%, respectively, while Skechers (SKX) rose 53.9%.

On a YTD basis, Finish Line has fallen 28.8% to $10.35 as of February 22, 2018, while DSW is down 8.0% to $19.70. Skechers’ stock price is up ~1.0% to $38.21 as of February 22, 2018.

Series overview

In this series on Foot Locker’s (FL) upcoming fiscal 4Q17 results, we’ll discuss the company’s recent capital allocation announcement. We’ll also discuss analysts’ expectations in detail for the company’s sales and earnings ahead of its upcoming fiscal 4Q17 announcement. Finally, we’ll take stock of analysts’ ratings for the company.

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