Earnings Preview: Foot Locker

| About: Foot Locker, (FL)

Foot Locker (NYSE:FL) is expected to report Q3 earnings after market close Thursday, November 20, with a conference call scheduled for Friday at 9:00 am ET.


Analysts are looking for a profit of 25c on revenue of $1.35B. The consensus range is 17c to 28c for EPS, and revenue of $1.3B to $1.4B, according to First Call. In August, Foot Locker forecast FY08 EPS 70c to 85c vs. First Call consensus of 82c. In September, the company agreed to acquire the direct-to-consumers business, CCS, from dELiA*s for $102M in cash. Foot Locker later terminated Richard Mina's employment as the company's U.S.A. president and CEO.

Analyst Views

Of the quarter, Citigroup's Kate McShane said that with ongoing turmoil in the financial markets, increasing concerns over the upcoming holiday shopping season, and weaker consumer spending into 2009, balance sheet strength and liquidity access appear to have become significantly more important investment considerations. In addition to its strong balance sheet, McShane said Foot locker will likely expand margins in FY08 due to lower promotional activity and tighter inventory controls. While same-store sales may likely drop slightly due to the challenging retail environment, they will outpace YoY comparables over the next two quarters. She believes Foot Locker will eventually capitalize on a technical athletic footwear trend and a healthier consumer.