Foot Locker, on Friday, reported 2Q results which exceeded analysts’ expectations fueled by a 173% surge in direct-to-consumer sales.
Foot Locker’s (FL) 2Q revenues grew 17.1% to $2.07 billion year-on-year and surpassed Street estimates of $2 billion. The athletic footwear and apparel retailer’s adjusted EPS increased 7.6% to $0.71 year-over-year and beat analysts’ expectations of $0.57. Its comparable-store-sales surged 18.6% during the quarter from the same period a year earlier.
“Despite the challenging backdrop of the pandemic, and social unrest, we achieved strong second quarter results, led by our digital business, with a return to growth in both the top and bottom line,” Foot Locker’s CEO Richard Johnson said. “As the COVID-19 situation continues to evolve, we believe we have the right strategies and strong leadership in place to strengthen our customer connectivity, deepen our strategic relationships with our vendors, navigate the challenges ahead, and emerge from this period better positioned than ever.” (See FL stock analysis on TipRanks).
Following the 2Q earnings, Guggenheim Securities analyst Robert Drbul said “Considering FL’s strong balance sheet and favorable position in the activewear/athletic category, we remain BUY-rated with a $35 PT (26.9% upside potential). Drbul is impressed with the company’s digital sales which grew in the triple-digit figures despite stores reopening.
Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 6 Buys and 8 Holds. With shares down about 29% so far this year, the average price target of $33.64 implies an upside potential of about 22%.
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