FL hikes dividend and announces capital plan
Foot Locker (FL) recently announced an 11.0% hike in its quarterly dividend to $0.345 per share, payable on May 4, 2018, to shareholders as of April 20, 2018. The company’s annualized dividend per share now stands at $1.38 compared with $1.24 in 2017.
Foot Locker has hiked its dividend by 12.7%, 10.0%, 13.6%, and 10.0% for fiscal 2017, fiscal 2016, fiscal 2015, and fiscal 2014, respectively.
Along with the dividend hike, Foot Locker (FL) announced that it would spend $230.0 million toward capital expenditure. The company plans to focus on developing its digital sales platform (mobile, web, point-of-sale technology, and data analytics) and streamlining its supply chain.
The remodeling of its outlets and the opening of new outlets is expected to utilize a major portion of FL’s allocated capital spending budget, although it’s lower than in previous years. The company had projected $277.0 million in capex for fiscal 2017.
Dividend yield versus peers
Dividend yield refers to the cash flow an investor gets for each dollar invested in a company’s stock. Foot Locker’s current dividend yield of 2.9% based on its February 22 closing price of $48.26 is lower than some of its peers.
Finish Line’s (FINL) current dividend yield stands at 4.4%, while DSW’s (DSW) current dividend yield is 4.1%. Based on its February 22 closing price, Nike’s (NKE) current dividend yield for 2018 is 1.2%, lower than that of Foot Locker.
In addition to paying dividends, Foot Locker also has an extensive share buyback plan in place. Share repurchases provide an upside to its EPS (earnings per share) by reducing the average share count. The company hasn’t made any announcements regarding the share repurchase plan along with its recently announced capital allocation strategy.
Foot Locker (FL) repurchased about 8.7 million shares worth $304.0 million during fiscal 3Q17. At the end of fiscal 3Q17, $863.0 million in shares were left under the existing authorization. Foot Locker has returned $482.0 million in repurchases and dividends to shareholders in the first three quarters of fiscal 2017.
In the next article, we’ll analyze Foot Locker’s past top-line performance and expectations for fiscal 4Q17.