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Why Foot Locker (FL) Shares Are Sliding Today

StockStory - Wed Mar 6, 10:06AM CST

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What Happened:

Shares of footwear and apparel retailer Foot Locker (NYSE:FL) fell 24.2% in the morning session after the company provided a full-year earnings forecast that missed analysts' expectations by a large amount, and this is dragging the stock down. Gross margin also declined. In addition, the company continued to close some of its stores, reducing its footprint. 

On the other hand, revenue and EPS outperformed Wall Street's estimates. Looking ahead, the company extended the timeline for achieving some of its long-term profitability goals, adding, "We maintain conviction in the longer-term earnings potential that our Lace Up plan will generate and reiterate the 8.5-9% EBIT margin target communicated at our March 2023 Investor Day. Given our lower starting point exiting 2023, we expect a two-year delay in achieving that goal and now see reaching that target by 2028." Overall, it was a weaker quarter for Footlocker, with the weaker guidance likely to raise concerns among investors.

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What is the market telling us:

Foot Locker's shares are not very volatile than the market average and over the last year have had only 28 moves greater than 5%. 

The biggest move we wrote about over the last year was 3 months ago, when the stock gained 8.2% on the news that the company reported third quarter results that beat analysts' revenue and EPS expectations, driven by better-than-expected (but still declining) same-store sales growth. Full-year earnings guidance exceeded Wall Street's estimates. The company showed solid business momentum as it signed a multi-year deal with the NBA to become its official marketing partner on November 16th, 2023 and announced that it will expand into India in 2024. On the other hand, its earnings forecast for next quarter underwhelmed. Overall, this was a really good quarter that should please shareholders.

Foot Locker is down 19.2% since the beginning of the year, and at $24.97 per share it is trading 43.7% below its 52-week high of $44.32 from March 2023. Investors who bought $1,000 worth of Foot Locker's shares 5 years ago would now be looking at an investment worth $395.17.

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