The improvements Foot Locker needs for a turnaround

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Shares of Foot Locker (FL) are trading lower as the company posted its fourth quarter report. Despite beating expectations on the top and bottom lines, the footwear retailer offered weaker forecasts for full-year guidance, pushing back financial targets set by its CEO last year.

BTIG Consumer Retail and Lifestyle Brands Analyst Janine Stichter and Wedbush Securities Senior Equity Research Analyst Tom Nikic join Yahoo Finance to discuss Foot Locker's performance and future operations plans.

Stichter puts the company's performance into perspective: "I think it's all in the context of the go-forward outlook. For some perspective here, this is a stock that rose significantly into earnings, from a valuation standpoint was trading well above historical averages, so you had high expectations into the print. And I think they met that for Q4, but the challenge is really the go-forward outlook which came in significantly below consensus, and when you break it down with the color they gave on the call, a lot of that improvement that they're expecting is really in the back half of 2024, so we're not getting any immediate improvement. The first half of the year numbers need to come down."

While Nikic explains that trimming inventory could be a vital move, Nikic also speaks to the benefit of store closures: "As far as underperforming stores go, this company has been a net store closer for as long as I can remember. I think every year since 2007, I believe, if you don't include acquisitions they've made, they've been a net closer of stores. So they're continually improving the store fleet and saying we want to be a little bit more prudent with the size of the store fleet and having fewer, but bigger and more productive, stores. It's the right thing to do, but it does cause some near-term pain. "

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Nicholas Jacobino

Video Transcript

[AUDIO LOGO]

BRAD SMITH: Foot Locker's shares slipping this morning. As you're seeing, shares down by 27% under pressure on its quarterly results here. Despite beating the Street's expectations on the top and bottom line, the footwear retailer forecasting weaker full-year guidance and pushing back financial targets, CEO Mary Dillon outlined last year.

For more, we're joined by Janine Stichter, who is the BTIG consumer retail and lifestyle brands analyst. Plus, we've got Tom Nikic, who is the Wedbush Securities senior equity research analyst for apparel and footwear. Great to have you both here with us.