Please ensure Javascript is enabled for purposes of website accessibility

Why Foot Locker Stock Popped Today

By Steve Symington - Feb 28, 2020 at 5:50PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The footwear retailer ended 2019 on a strong note despite sales headwinds in the fourth quarter.

What happened

Even as the broader markets continued to slide, shares of Foot Locker (FL -2.65%) jumped more than 8% on Friday after the athletic footwear retailer announced better-than-expected fourth-quarter 2019 results.

That's not to say Foot Locker's headline numbers looked good at first glance. Quarterly revenue declined 2.2% year over year to $2.22 billion, translating to a modest 4% increase in adjusted (non-GAAP) earnings of $1.63 per share. 

So what

By comparison, however, most analysts were only looking for earnings of $1.58 per share, albeit on slightly higher revenue of $2.24 billion. 

Man in white shirt and black/white tie celebrating in front of a wooden arrow chart indicating gains.

Image source: Getty Images.

Foot Locker chairman and CEO Richard Johnson noted the company's "leading positions in key on-trend footwear styles" weren't quite enough to offset soft demand and high promotions in the key holiday seasons.

"We took actions during the quarter to manage slower moving items which pressured our gross margin rate more than expected," elaborated Foot Locker CFO Lauren Peters. "Importantly, our ongoing disciplined expense management enabled us to better align our variable expenses with the softer sales trends, while continuing to invest in our key strategic imperatives."

Now what

During the subsequent conference call, Foot Locker management offered an early look at their goals for the full fiscal-year 2020, including low single-digit comparable-sales growth (swinging from a 1.6% decline in Q4), and low- to mid-single-digit increases in earnings per share.

After coupling that encouraging outlook with Foot Locker's strong end to 2019, and with shares already nearly 50% in the year leading up to this report, it was hardly surprising to see this consumer discretionary stock rebounding in response today.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Foot Locker, Inc. Stock Quote
Foot Locker, Inc.
$29.07 (-2.65%) $0.79

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/10/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.