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Foot Locker Inc - Fundamental Investment Idea

Research

Publication Date: 26 Nov 2018 - By Robert Prather By Robert Prather
Actionable
Differentiated

Equity Fundamental Equity USA Consumer

Qualitative Concerns

  • Nike, roughly 65% of sales, continues to invest heavily  in ecommerce and direct to consumer initiatives. The  company’s app is growing rapidly and Nike looks to  double direct to consumer revenues in the future.
  • Nike is not the only supplier shifting sales into their  own channel with Under Armour and Adidas doing the  same.
  • Foot Locker has multiple locations in many malls and  significant exposure to lower tier malls.

 

Fundamental Concerns:

  • While the inventory drawdown has been a positive, lower inventory and dramatically lower purchase obligations could indicate weaker future revenues.
  • Long term gross and EBITDA margins are weakening with e-commerce trends only increasing.
  • SSS show little sign of improvement, only growing in the margin dilutive direct to consumer business.
  • Valuation well above Finish Line acquisition and a large  premium to itself historically.

Foot Locker Inc

Source: VR Fundamental

Pages: 37

Released: 26 Nov 2018

Unlock for 35 credits

The Author

Robert Prather

Equity Analyst

Technology, Consumer, Industrials, Telecom & Media

Book

 

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London, United Kingdom

info@reachx.co
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