drmalaka

Foot Locker's Achilles Heel

I have owned FL puts for some time and am not going well. I added to the position when it went up near $15 after that crazy quarter. They missed lowered guidance by two cents and then said they still expected to meet this year's guidance. Then the buying began by people who had smoked too much crack that morning and I started losing more money.

Bottom line is I love this short. I was in a FL in Houston last week, it was empty and that is one of the few cities doing well in our country. The idea that this store can hit yearly numbers is insane to me. But the market is still considering a second half recovery.

The stock is still above where it was before the quarter announcement and to me is still a great short here. To me this is a double whammy, a lousy business to be in and in a weak economy. I am sitting tight and awaiting the next quarter numbers as I seriously doubt they will pre announce bad numbers coming. The company already painted a rosy picture by claiming yearly numbers would be met, seems like they will wait to the last second to admit what reality is.