Foot Locker, Inc. (ticker: FL) is the latest retail stock to fall victim to a challenging market. On Friday morning, the footwear retailer’s earnings and sales fell short of market expectations, sending the stock tumbling more than 16 percent. But Foot Locker may have more reason for optimism than most retailers.
Foot Locker reported first-quarter earnings per share of $1.36, just shy of consensus analyst estimates of $1.38. Revenue of $2 billion also came up short of consensus estimates of $2.02 billion.
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Perhaps the most disappointing number for investors is comparable store sales. Foot Locker reported a 0.5 percent increase in comparable store sales when Wall Street analysts expected growth of 1.4 percent.
“The first quarter was one of our most profitable quarters ever, but it did fall short of our original expectations,” CEO Richard Johnson says. “The slow start we experienced in February, which we believe was largely due to the delay in income tax refunds, was unfortunately not fully offset by much stronger sales in March and April.”
Foot Locker joins fellow mall retailers J.C. Penney Co. ( JCP), Macy’s ( M), Nordstrom ( JWN), Kohl’s Corp. ( KSS) and others that reported lackluster first-quarter numbers and were punished by the market. Mall retail stocks have been hit hard by Amazon.com ( AMZN) and other online competitors, but like another mall retailer doing well — Children’s Place ( PLCE) — Foot Locker may have an advantage over many of its mall peers.
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Earlier this week, Children’s Place topped Wall Street expectations for both earnings and revenue. CNBC analyst Jim Cramer says Foot Locker and Children’s Place are retailers more immune to Amazon because both cater to growing kids who are often hard to shop for online.
“You have to try on clothes for kids because kids change size, and that’s why Children’s Place has done well,” Cramer said earlier this week. “Foot Locker is the same deal — because feet change in size when you’re growing up.”
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Despite the first-quarter bump in the road, Foot Locker shares are up 21 percent in the past three years. Children’s Place shares have risen 133 percent in that same time.
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Foot Locker, Inc. (FL) Earnings Disappoint, But There’s Reason for Optimism originally appeared on usnews.com
