Street View: Foot Locker's long-term margin outlook reels from higher promotions

On Holding AG

07/03/2024 19:20

** Athletic retailer Foot Locker  FL.N  on Wednesday
forecast two-year delay in achieving its long-term profit margin
target, prompting PT cuts from brokerages 
    ** At least nine brokerages slashed PT on FL; median PT is
$25
    
    DELAY IN LONG-TERM TARGET SPELLS UNCERTAINTY
    ** Telsey Advisory Group ("market perform", PT: $28) says
skeptical of FL's strong near-term rev growth until there is
more evidence that accelerated growth and market share gains are
possible
    ** Barclays ("equal weight", PT: $22) believes with
lower-income shoppers pressured, making promotional recapture
would be potentially more challenging
    ** Jefferies ("hold", PT: $24) warns footwear space remains
challenged due to weak demand and elevated promotions
    ** Adds, investments in customer experience and loyalty
program would weigh on co's margins ahead
    ** Piper Sandler ("overweight", PT: $31) believes there
could be upside on SG&A this year, which could support positive
earnings revisions
    ** Adds, we are encouraged by Nike's expected return to
growth, strong trends from New Balance and other brands like
Adidas, On Running and HOKA

 (Reporting by Anuja Mistry in Bengaluru)
 ((AnujaBharat.Mistry@thomsonreuters.com))