After losing more than 60% of its value in 2017, the Foot Locker (NYSE:FL) stock regained two-thirds of those losses and current indicators hint at a possible continuation of the current trend into the near future.
The company’s share price dropped almost 90% in the 1990s. However, just after recovering most of those losses, the 2008 crisis delivered a 75% share price decline. After the post-crisis low at the end of 2008, Foot Locker advanced its share price steadily for nearly eight years with just one significant pullback. After the first five years of this uptrend, the share price reached its previous all-time high from 1990. The share price maintained its uptrend and continued hitting new all-time highs for nearly three years between the end of 2013 and December 2016.
However, after peaking at $79.20 on December 8, 2016, the share price plummeted more than 60% after April 2017 to hit its five-year low of $29.85 at the end of October 2017. After another direction reversal, the Foot Locker share price has been rising steadily since then, but with some volatility.
While remaining above the 200-day moving average at all times during the last 12 months, the 50-day average fluctuated with the price movement and dropped to the 200-day average in early November 2018. Since the beginning of 2019, the 50-day average remained above the 200-day average and the share price rose above both moving averages, except for three trading sessions in late March 2018. The 50-day average has distanced itself and is currently 12.5% above the 200-day average. With the share price above both moving averages and the 50-day average above its 200-day counterpart, the indication is that the share price could continue to rise for a few more periods. The current share price has more than 16% room on the upside before it reaches the analysts’ $70.26 average target price.
Financial Results
On March 1, 2019, Foot Locker reported a 2.8% year-over-year revenue increase to $2.3 billion and a net income of $158 million. That income corresponds to earnings per share (EPS) of $1.39 for the fourth-quarter 2018, which ended on February 2, 2019. The positive results for the last-quarter 2018 were significantly better compared to a net loss of $49 million, or $0.40 per share, for the same period in the previous year. Adjusted quarterly earnings increased 37% year over year to $1.56 and beat analysts’ expectations of $1.40 by 11.4%.
Full-year revenues increased 2% above the $7.8 billion figure for 2017 and reached nearly $8 billion in 2018. The 2018 reported figure was the highest annual revenue in the company’s history. Comparable-store sales in 2018 were 2.7% higher than in the previous year.
The company reported full-year 2018 net income of $541 million, or $4.66 per share. On an adjusted basis, the Foot Locker’s earnings per share of $4.71 were 18% higher than the prior year.
Foot Locker, Inc. (NYSE:FL)
Founded in 1879 and headquartered in New York, Foot Locker, Inc. operates as an athletic shoes and apparel retailer. The company operates in two segments: Athletic Stores and Direct-to-Customers. The Athletic Stores segment retails athletic footwear, apparel, accessories and equipment through various store formats, including Foot Locker, Kids Foot Locker, Lady Foot Locker, Champs Sports, Footaction and Runners Point. As of February 2019, the company operated 3,221 stores in 27 countries, including North America, Europe, Australia and New Zealand. Additionally, the company also has 112 franchised Foot Locker stores operating in the Middle East, as well as 10 franchised Runners Point stores in Germany. The Direct-to-Customers segment sells athletic footwear, apparel, equipment and team-licensed merchandise for high school and other athletes through catalogs and more than a dozen brand websites.
Share Price
Foot Locker’s share price entered the 12-month period on a general uptrend and hit its 52-week low of $40.52 on May 7, 2018. However, after bottoming out in the first month of the trailing 12-month period, the share price advanced nearly 60% before reaching its 52-week high of $64.45 on April 4, 2019. Following this new peak, the share price pulled back 6.5% to close at the end of trading on April 10, 2019, at $60.24. While slightly below the 52-week high, the April 10, closing price was 29.2% higher than it was one year earlier and almost 49% above the 52-week low from early May 2018. Furthermore, the current closing price was also 33% higher than it was five years ago.
The company’s dividend income distributions combined with the asset appreciation of nearly 30% to reward Foot Locker’s shareholders with a 32.4% total return over the past year. While the share price rode a general uptrend over the last several years, the 60% drop in 2017 held the three-year total return below 5%. However, because the share price recovered nearly two-thirds of its losses, even with the significant share price drop in 2017, Foot Locker’s shareholders still enjoyed a 45% total return over the past five years.
Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.
